Boards must step up to fill the vacuum created by dysfunctional government

Whilst government stagnates, companies and boards have never had more opportunity to drive social progress.

I hear many business leaders today expressing their frustration with the lack of leadership from government. But rather than complaining, boards need to take responsibility for our future and provide leadership in the government’s absence.

We all need to think about how our actions today will impact the economy over the next 10 years. To do this, boards need to think about the social and economic issues that must to be addressed and either deliver those solutions ourselves, or vocally demand that the government does.

Businesses should lead social progress

In the past decade, there’s been a big shift in the way people in society think. We’re more conscious about what we expect from our community and demand that others take more responsibility for their actions. This responsibility extends to companies, and in particular, our impacts on the community and the work environment that we provide. While the government appears to be stepping back from these issues, boards must step up and fill that vacuum.

As business leaders we have the opportunity to step up and drive social progress. For example, Alan Joyce recently the led the way by championing marriage equality. He clearly felt it was important to his organisation to demonstrate their commitment to diversity and providing a working environment where people are engaged and respectful of others.

Each business will have different issues that are relevant to their organisation. Different organisations and industries are broadly impacted by different social issues. But when the board identifies issues that matter every director must step up and play an instrumental role in ensuring that our society as a whole gets it right.

Boards need to succession plan for society

Boards spend a lot of time on succession planning for our executive team and the board. When we do this, we’re focused on ensuring that we have the leadership within the company required for long-term success.

I’m arguing that we need to start doing something similar for our society as well – we need to plan for the foundations for long-term success. Every board must prioritise what the business needs from the economy (and society more broadly) in order to succeed in the future.

For example, companies that are being accused of base erosion and profit shifting perhaps need to think about the decisions they are making today and how they will impact future profits for their shareholders. While these may seem like good decisions today, they may be impacting infrastructure that is needed for the economy to operate effectively in the future. By taking a more holistic and long-term view, boards can consider how their decisions may impact the economy and what infrastructure their business needs to operate in the future.

To be able to compete productively at a global level, businesses need low-cost energy and a well-educated and capable workforce. This won’t happen overnight. Businesses need to plan for this and demand the infrastructure that’s required to make this a reality. If we need certain skills in the future, then we need to demand that our education system can produce job-ready graduates.

I’ve recently spent some time working in New Zealand and have been exposed to a number of Maori leaders. They look at how businesses operate in their community – not just in the here and now – but how they will impact their children and their children’s children. I first came across a similar approach when I was dealing with Kobe Steel in Japan who were a shareholder in Acumentum. The Japanese are also very conscious of intergenerational strategic planning processes for their major institutions.

In a similar way, Australian boards also need to think about the impact our decisions will have on future generations. They need to consider the platforms they’re building, particularly in energy, climate change and education, and ensure they are addressing the needs of the future. The government is clearly not able to address these fundamental issues at present, so it falls on business leaders to make decisions for the benefit of our economy.

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