COVID-19 governance snapshot

08 June 2020

Sarah Smith

WOW - Chair
Lion Foundation - Director
Network Tasman - Director

What has governance looked like for you over the last two months?

With only 48 hours’ notice before going into lockdown, it was mild panic, not necessarily at the governance level but definitely with businesses getting themselves organised so that they could work from home. Once everybody was out of the offices, all my boards had weekly meetings. Our first focus has been on people, health and welfare, then cash, stakeholders and communications and lastly operations, because we mostly weren’t able to operate.

It was really key for the board to take a big breath and stand back. Give the CEO and the staff some time to pull all the information together before you make the decisions.

How did the WOW board reach the difficult decision to cancel its show for the first time in its 32 year history?

WOW has a lot of parts to it. There would be no show if there wasn’t a competition. Last year we had people from 46 countries enter garments. People have to get their entries to various places where we had pick up points around the world by the end of March. That clearly wasn’t going to happen this year. We also start spending quite a bit of money from April/May on organising the show for October. When lockdown hit we didn’t know what was going to happen and the risk of proceeding and getting to the point where we couldn’t have a show because people couldn’t get together - it just wasn’t an option.

It was a really hard decision but we got all our facts in line and said, “We can’t hand-on-heart do this and survive”. We have 60,000 people come to that show and we’ve dropped it for a whole year.

How do you manage the impact of that?

We had some cash reserves and the next step was to look at what our core business was and make sure we held on to the “mothership”. We had to question, “What do we need to do to maintain the IP and the key people to enable us to move forward and produce a show next year” and make hard decisions around that.

Given your previous experience as chair of Ngāi Tahu Tourism, what are your expectations for the future of tourism in NZ?

Depends whether the business is focused on domestic or international. International tourism won’t be coming back for 12 to 18 months. It’s going back 20 plus years to start from scratch all over again. It’s pretty sad. I was the chair of Ngai Tahu Tourism until December last year so other than WOW which is more domestic, I haven’t been involved in tourism since then.

What’s been your experience of the government’s wage subsidies?

The wage subsidies certainly enabled business to take a step back and look at what they really needed. It gave you breathing room. It’s going to be interesting to see what happens with the next eight week extension. You would only apply for that if you were sure the business was going to keep going. With the new subsidy that’s just become available giving 12 weeks payment to people who have lost their job due to COVID, they’re better getting that than another eight weeks and then losing their jobs.

How do you think governance is going to change from here?

There’s been a lot of talk in the last few years about the future of governance and what does that look like. People have seen governance as people meeting in the board room once a month and the real connection with businesses hasn’t been there. In the future directors will need to get more involved - not in the business - but having a much greater understanding of the business itself and the community/world around it.

It will no longer just be about companies making money. You’re going to have to widen your viewpoint. It’s your employees, your shareholders but also being out there looking after everyone else that’s involved. It’s your suppliers, your community, it’s everything - what are you adding to that? What’s your reason for being there?

I think the days of directors having six, seven or eight boards are ending. You won’t be able to manage that. The work load will go up. You’ll have to offer more to the companies that you’re a director of.

I think what’s going to happen around the board table is going to change as well. It’s been hugely based around compliance and financials. While it may have helped to have the business in a sound financial state, who had on their risk register - country closed? - pretty unlikely. It is a new world.

What’s the future looking like for organisations that rely on pokie funding?

Pokies stopped operating so there has been no funding generated for the last few months. One of the big questions in the charitable field is how many charities do we need all doing the same thing? There are lots and lots of small charities all with administration costs, all providing a similar function in their community. One of the key things is to look at ways to amalgamate to reduce administration costs so that the money that goes out, goes further.

What’s one key learning from this crisis that you would direct to the next crisis?

It comes back to the business risk register and the appetite for risk. I don’t think many had this on their risk register or if so, had considered the full risk. It’s opened eyes to what possibly could happen and the need to look at the risks to your business with a wider scope. This should consider the quality of leadership, making decisions based on sound information, a balance sheet and cash available that allows the business to come through a major shock and a focus on people and the role the business plays in the community.

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