Company directors 'face biblical challenge' in seeking to right the wrongs of poor human behaviour

Company directors face big challenges threatening their “comfortable” existence, as they confront the outcomes of poor human behaviour, says professional director Rob Campbell.

In a speech to the Canterbury branch of the Institute of Directors on Tuesday night, Campbell likened the challenge facing directors to the story of the Four Horsemen of the Apocalypse in the Bible’s Book of Revelation.

“They signal massive changes which bring to an end bad behaviour by humans in the eyes of God,” Campbell said. “We do face four big challenges which threaten our continued comfortable existence as directors, and they are the outcome of poor behaviour by humans, just like in the Revelations.”

He identified the challenges as the end of shareholder primacy; the climate and biodiversity crises; the breakdown of past defences of inequity; and the global power of technology.

Rob Campbell CNZM CFInstD, Chair Sky City

Campbell encouraged board directors to take a lead in addressing the challenges.

Directors needed to ask themselves what they were actively doing to justify the privileges of position, pay, stimulation and influence that they had, he said.

“You are not there for lunch, to look for typos in the minutes, to demonstrate your knowledge and intellectual power on some distantly related topic to the business, or to foot-trip management and show them up.

“You are there because you genuinely care about the business succeeding and meeting the interests of its stakeholders and because you are capable of contributing to the big issues facing the business from a perspective which assists and challenges management.”

While directors were incentivised to focus on immediate earnings delivery, they must also be the people doing a lot of the wider strategic and existential thinking, he said.

Despite the common expectation that directors should primarily look after the interests of shareholders, a director's duties under the Companies Act were “to act in food faith and in the best interests of the company”, which meant they didn’t have to accord primacy to shareholders, he said.

Directors needed to shift their thinking, and start testing how each significant board decision took into account and balanced the various stakeholder interests involved, he said.

Businesses would act differently if this view was applied to key decisions, and it would help address the other challenges that boards faced, he said.

Still, not all shareholders would be happy about the shift of emphasis.

“It is not hard to envisage a board which has weighed some combination of the interests of employees, community, suppliers or the environment as being more vital to the survival of the company than shareholders interests,” he said.

Campbell noted that only shareholders could vote for directors and he anticipated community pressure for other stakeholders to have representation on at least major company boards.

“This aspect of company control has not kept up with social mores and there will be, should be, pressure for change,” he said. “I, for one, support the change being made.”

"Boards have a vociferous new board member in Papatūānuku, or mother earth."

- Rob Campbell

“She is going to drive deep change in what your business does and how it does it,” Campbell said.

Structures needed an overhaul to effect swift, deep and lasting change, he said. That included questioning whether directors, managers, pay and incentive structures, recruitment and training, “and pretty much everything else that makes up a business” were appropriate for the times.

“The ‘stranded assets’ of this age will not simply be oil rigs and coal miners,” he said.

Campbell said inequality of position, income, wealth and influence was embedded in our system, and was intensifying not vanishing.

“The inequality regime always falls when those institutional arrangements are no longer accepted or appropriate to the new era,” he said. “Across a wide range of points, such a time is now.

“We do not yet know what future structures we need, but we know it is not the old ones,” he said. “It affects everything, including our business and our roles in that business.”

There was a great opportunity to build on the partnership between tangata whenua and all tauiwi and reject the concepts of cultural domination, he said.

Business, through its directors, could lead change, he said.

“If this change is not met where we produce and deliver what we eat, wear and live in then it will not amount to much,” he said.

Campbell noted the enormous power and rate of change of technology, which was blowing aside a wide range of economic and social structures, industries and nation state rules.

No business was immune to the change and yet very few in the boardroom really understood the technologies or their full risks and opportunities, he said.

Those that couldn’t get ahead of the challenge may be the wrong people at the table, no matter how perfectly skilled and appropriate when appointed to the board, he said.

“These challenges will destroy or certainly damage very dramatically the way we order our society and the way we produce, distribute and consume the means of life,” Campbell said. “This storm and its outcomes are what we really have to be thinking about and acting on.”

Many board members appreciated the scale of change they faced, he said.