Diversity in thinking, not gender

Not before time, a corporate leader has set out a strategy for recruiting board members that would help businesses maximise shareholder returns and therefore boost the productive economy at a challenging time. On these pages, Janet Albrechtsen writes about Tanarra Capital fund manager John Wylie’s Short Form Modernised Set of Corporate Governance Principles. Its seven pages of common sense are a world away from years of umbrage takers’ hot air about gender, quotas and targets, which are secondary, at best, as regards improving business performance. Mr Wylie’s succinct, pertinent proposal is also light years from the latest 63-page draft of the fifth edition of the ASX Corporate Governance rules. These are still being debated within the ASX Corporate Governance Council.

The principles in Mr Wylie’s proposal are clear and sensible. He values diversity among board members, “in their thought processes, life experiences, personal qualities and skills”. Companies need more room, he argues, “to apply common sense and business judgment, and tailor their governance arrangements to their particular needs and circumstances, while maintaining a core commitment to good corporate governance and maintaining confidence in market integrity”.

Corporate governance, Mr Wylie says, also must be better aligned “with the national interest of growing the Australian economy and the wealth of Australian investors, given that the stockmarket is one of our most important and democratic mechanisms serving those purposes”. More focus on performance and less on compliance is essential when business profitability is needed to fund the expansion of defence and social services.

Mr Wylie has been urging business to go back to first principles on the issue for years. Outlining the essential problem with the ASX corporate governance council in August 2018 he said: “In 55 pages of prescriptive values and rules for Australian public companies, it’s a remarkable achievement for our national securities exchange not to mention, even once, the words ‘grow shareholder wealth’ as a core goal.” Pursuing that objective is even more important now.