The government sector is one of the largest in the Australian economy, and arguably the most dynamic. Accounting for over a quarter of all economic activity, it provides many of the essential goods and services that we rely upon to help society function.

The sector ranges from tiny community bodies to massive commercial enterprises that would eclipse many of the top 100 listed companies in revenue, or asset based measures.  The diversity of these organisations is mirrored by the diversity of their boards and directors.

In terms of age, socio-economic background, level of education, race, nationality, religious belief or gender, these boards hold their own when compared to those in the commercial, not-for-profit and international sectors.

Australian government boards are generally well governed and, apart from a few scandals and failures, they have delivered to shareholders and the community a level of performance that Australian directors are right to be proud of.

From good to great governance

Australian government owned organisations have always been early adopters or developers of innovations in corporate governance.

Currently, the government sector is driving stakeholder engagement and triple bottom line reporting to maintain the efficiencies gained by the processes of corporatisation, amalgamation and whole-of-government coordination. It has also helped to increase the responsiveness of organisations to community needs. 

Another innovation that has become the norm in the public sector is regular board appraisal and the reporting of these results to shareholders. Private and not-for-profit sector counter-parts could certainly learn from taking part in sensitive, yet robust, performance evaluation.

Selecting diversity

The commercial sector is grappling with remuneration and board selection, with a particular emphasis on gender inclusion. But once again, the government sector is already one step ahead with governments and councils selecting directors for their boards from sectors of the community that have previously been under-represented in boardrooms. The government sector has a far higher percentage of female representation in boardrooms than its corporate counterparts and these women are starting to ‘make the leap’ into the commercial sector, changing and challenging the status quo as they do so.

A focus on education

A natural corollary of the recruitment from a more diverse, and less ‘traditional and corporate’, director pool is ensuring that incoming directors have an appropriate level of governance understanding. The practice of providing group induction and specially tailored individual learning to bring directors ‘up to speed’ and achieve a highly productive boardroom team.

The Australian Institute of Company Directors has developed specific programs for director education that are tailored to the unique demands of the sector and that recognise the roles played by portfolio and treasury departments, ministers and other bodies within the sector. These can be delivered either in-boardroom or as public programs.

In October the Public Sector Governance Conference in Canberra highlighted the diverse and far-ranging areas where governance excellence is being progressed and provided a forum for exchange of ideas and spread of best practice. The event is always well attended and a highlight of the annual professional development calendar for company directors and others who work at a governance level within the sector.

Desirable recruits

When the focus on education is coupled with a sound performance appraisal process, the result is an expanding cadre of well qualified and experienced directors. These directors are increasingly sought after as recruits to corporate boards outside the government sector. The combination of experience in managing to budgets, meeting community outcomes and delivering on strategic objectives with a sound appreciation of governance and an ability to function as part of a board team is attractive to board recruiters.

In addition the frequent cross pollination between the government and corporate sectors provides opportunities for directors to network whilst working on boards and for directors on commercial boards to alert their colleagues of upcoming talent spotted in action on government sector boards.

Board members need to trust the judgement of their board colleagues and there is little, if any, room for a director who cannot make a strong contribution from the first day that they join a board. For this reason experienced directors are reluctant to suggest potential recruits whom they do not know well and whom they have never observed in action. For a director to be considered for a board position it is preferable that they have been seen to have performed well in a board position. Government boards can provide an excellent opportunity for emerging directors to gain that visibility.

As evidenced by directors as diverse and talented as Max Moore-Wilton, the hon. Nick Greiner, AO, and Catherine Livingstone, AO, experience in the government sector can precede, or accompany, a career in the nation’s most influential boardrooms.