The thought of joining a board of directors wasn’t out of the question for Julia Shtepa but it also wasn’t top of mind – because she didn’t really know where to start.
All that changed in 2018 when Shtepa, who leads a financial crime transformation program in Westpac Institutional Bank, stumbled across the Board Observership Program run by Westpac Foundation.
“It offered an opportunity to go along to a community organisation’s board meetings as an observer over 12 months,” says the Melbourne-based lawyer by training.
“I thought, what a great way of learning more about a social enterprise and being able to contribute to an organisation that makes a difference in the community, while also learning more about governance and directors’ responsibilities. So, I applied.”
At that stage, Shtepa – who’d spent 14 years with Accenture before joining Westpac in 2017 as part of the bank's Equilibrium Program – didn’t anticipate that after just a few board meetings she’d be invited to become a director of the social enterprise she’d been matched with, Ability Works.
“I had no expectations whatsoever that it would come about, but it was a privilege to be invited,” she says.
“I find the energy and passion exhilarating and feel so energized after board meetings. It's such a wonderful group of people, and so exciting to be at the forefront, seeing the value we’re creating.”
Shtepa’s experience is not unusual among participants, according to Westpac Foundation’s Sally McGeoch, who led the design of Board Observership Program in partnership with MinterEllison in 2017.
“Roughly 60 per cent of observers so far have been invited to join the boards they’re matched with, either as a director or a strategic advisor – even though it’s clear at the outset there is no obligation on either side,” McGeoch says.
Demand for positions in the program – both from employee participants and community organisation boards – shows “people are really hungry for governance opportunities”, she says, which will see another 50 observers join this year, adding to 115 who have been involved with almost 80 boards over the past three years.
“For many people, when they’ve succeeded in their own professional domain… directorships are a very aspirational next career goal,” McGeoch says.
“But often it’s tricky to know how to actually go about it. Through this program, we make introductions for the observers, based on the needs of the boards and the range of diverse skills they are seeking, taking all that hard work and guess work out of it,” she says.
Participants are also set up with a “governance mentor” – generally seasoned not for profit directors, the likes of Carolyn Hewson and Jon Nicholson – and provided coaching and education facilitated by the Future Directors Institute.
“We help prepare them to most effectively use their skills in that setting, so even though they are an observer, when they're sitting around the board table, they have the confidence to actively contribute and constructively challenge and therefore create that value exchange for the board,” McGeoch says.
And for social enterprises like Ability Works, the value has been enormous, according to chairman Russell Jones, who joined the board of the organisation – which creates employment opportunities for people living with disability – almost four years ago.
“It's been valuable for the board, in that we've gained an excellent board member in Julia at a time we were seeking to attract new talent,” the former human resources specialist says.
“And it’s been valuable for Ability Works more broadly… as we were looking to gain contacts and networks in the financial services sector and improve our profile, and Julia has certainly helped us achieve that.”
The rise of board entrée programs like this – others include PwC’s OnBoard, NAB’s Board Ready, the independently run The Observership Program, and another soon to be launched by EY – are also going some way to addressing the notorious diversity problem prevalent in so many boards, according to Future Director Institute’s founder, Paul Smith.
“These programs are shifting the diversity dial, certainly around age, gender and race,” he says.
“But it’s only happening in the third sector boardrooms, where you already have greater diversity than you do in the corporate landscape. Corporates have not been as engaged in bringing in observers in the same way.”
This may need to change, given mounting pressure on corporate boards – including from regulators and shareholders – driven by the premise that more diverse boards make better decisions because they consider different viewpoints.
According to the Governance Institute’s Board Diversity Index, of the 2004 board members in companies within the S&P/ASX 300 last year, men still dominated, making up 72 per cent of roles; 90 per cent had Anglo Celtic heritage; and their average age got a little older, at 60.6 years. In addition, almost 30 per cent of the chairs had been in place for 10 years, and the mix of skills remained fairly static, with financial and accounting skills dominating.
“It’s a slow pace of change, but the demand dynamic for who’s the right board director and what board structure is fit for purpose is really changing,” Smith says.
“The best boardrooms understand that having a bit less experience but the right mindset and skillset is highly prized, because the world is changing and there’s a widening view of who the stakeholders of a company are. One thing for certain is that boards can no longer think, look or act in the same way as they have done for the last few hundred years.”
While Smith acknowledges “not everyone is ready or able to be a great board director”, change will only happen if more people with diverse backgrounds are “exploring the possibility as early as possible” through initiatives like the board observer programs.
And while the experience gained from joining a not-for-profit board can be useful for a corporate board candidate, he says it should not be seen as a “stepping-stone”.
“Not-for-profits are as serious businesses as corporates, with the same responsibilities and duties, they just don't have shareholders… and they’re voluntary. Whatever board you join takes real commitment,” he says.
For Shtepa, who feels she has “a few more executive career years left” before she considers moving to a board portfolio career, her quest to absorb greater directorship skills to best support Ability Works has uncovered for her an array of organisations, forums and accelerators – such as Take on Board and Women on Boards – that provide support akin to “book clubs for board directors”.
“For me, what was most exciting about the invitation to join the Ability Works board was that I very much felt that I was in lockstep with the organisation and I felt passionately about what we are trying to do for the community. And I also felt I could actually really add value,” she says.
“And it was the board observership program that gave me an opportunity to see that.”
Applications are open for community organisations interesting in hosting board observers in 2022 via the Westpac Foundation and MinterEllison Board Observership Program.