Sport Governance Principles – The Scorecard

Kate Corkery This is a Sport Australia podcast production.

Kate Corkery Hello and welcome to the Sport Governance Podcast series. My name is Kate Corkery and I am the director of Sport, Governance and Strategy at Sport Australia. Over this series, we will take a deep dive into the sport governance principles and how they come to life in practice. Each podcast will focus on an individual principle with a special guest joining me to share their experiences and practical advice with respect to that principle.

Kate Corkery In today's episode, we're focusing on Principle nine, the Scorecard. Embedded systems of internal review to foster continuous improvement. Principle nine highlights that the board must have an appropriate system of internal controls to enable it to monitor performance, track progress against strategy and address issues of concern. To discuss the Scorecard, we are privileged to be joined by the very energetic and accomplished administrator and director, John Lee. John is known for his strategic thinking, commercial acumen and strong communication skills, which have been sharpened by strategic roles leading member organisations, including the Tourism and Transport Forum, NRL clubs, the South Sydney Rabbitohs and Sydney Roosters, as well as Australian Sailing. John is currently a director of Netball Australia, Melanoma Patients Australia, the North Queensland Cowboys and ORA Proprietary Limited. Thank you, John, for joining me to discuss the Scorecard.

John Lee Thanks very much, Kate. I hope I can live up to that introduction throughout the podcast.

Kate Corkery Look, no doubt you will. And the intro highlights that you've served as a director on many and varied boards. Could you share your experiences on the factors that give rise to directors and the board as a whole, being able to effectively oversee the stability and performance of their organisation?

John Lee Yeah, thanks for that. And look all people are different or we're all individuals and so are lots of boards and different organisations. I think it's really important to understand how an organisation might operate. If you become a director of that board or you are the CEO of that organisation, it's really critical that you undertake your own due diligence and you get a really good understanding of what makes that board and that organisation tick. And a lot of people usually go straight to annual reports or a whole lot of documentation, if you like to understand what is it that you're about to effectively oversee as a director. In some ways, I think those reports can be very financially weighted. In probably the last 10 years, we've seen a move to a better articulation, if you like, of what are the operational matters and challenges that a lot of these organisations may face. I think I used to talk about the four pillars of whether it was a government entity or a private sector company. And those four pillars, obviously, having the financial stability is really important for any organisation. As we've seen during a COVID year, many organisations have been struck or struggled with a lack of cash flow, which has had a big impact on how they've operated their businesses. The second pillar is really around risk and safety. Whether that's around OH&S or separately around the risk that might face an organisation around threats or other risk to the business is real. And who would have predicted a pandemic would have such an impact on so many businesses this year? And the other two are really around the people that make up the organisation and also the clients or customers that they deal with. So it's about understanding those four pillars. And I think for anyone, whether it's a new CEO or a new director, to really get a handle on those things and then to actually not only formally review those things, but to go out and meet with people and understand what were their experiences with that organisation, becomes a really good bank of knowledge as you go to take your spot on the board.

Kate Corkery So how does a board know if it's been effective in its role?

John Lee Yeah, look, it's a really simple but a very important question. I remember John Kotter who wrote that book, "Good to Great", used to talk about successful organisations and for a board, it's really important to be effective. You've got to know the history of the organisation. You've got to really understand what is the strategy or what is the plan, the practical plan for that organisation. And then are you witnessing that they're actually celebrating those milestones along the way. So I think for a board, really important that you know what you're meant to do and what you're not meant to do. And I'll never forget this story. I was working at the end of last century at a race club, a horse racing club and they actually hosted the largest race for two year olds on the planet. And at a strategic board review the day after the chairman opened the business to the directors and one well-known business person, his first point was that he was very unhappy with the quality of the prawns served during the entree in the directors room. And at that stage, I looked over at the chairman and you could physically see how frustrated he was getting as this board member was articulating that the avocado and prawns were not to his standard. At that stage the chairman intervened and said, our role here is to be strategic. Our role is not to make commentary on the catering. If you've got a catering issue, raise it with the catering manager. And was a really powerful point to me some 20 odd years ago that for boards there is a fine line between pleasure and pain and there's also a fine line between strategy and operations. So it's really important as a board member that you know what your role is and that you actually, if you're effective, you're really posing the right questions that make sure the executive then are responding appropriately to that style, that style of question around what is happening operationally that will make the organisation achieve its goals.

Kate Corkery So you've highlighted on a pain point and really an opportunity there in terms of that fine line between strategy and operations. And I've had so many directors say to me, how can I understand and monitor effectively if I'm not in the business? What advice would you give to directors in those circumstances?

John Lee It's a really good question. And I know a lot of people follow the NFL and probably the best coach in the NFL is Bill Belichick and he had a mantra when he came to the Patriots, which was simply, “do your job”, whether you're the gear steward or as he was, the head coach or the owners, everyone knew what their job was. And it's really important that you do your job. So I think it is important as a director. Yes to ask the right questions, ask probing questions and good questions. What your role is not as a director is to be a micromanager. I think that's really important that differentiation occurs. I think it's absolutely right to seek feedback and to seek if you like responses to your questions when you're seeking that from the executive. But it's another thing to go deep diving into the operational matters that might apply to the organisation at that time. In terms of monitoring, I think the best organisations, they really operate with good dashboards. I talked about the four pillars before. It's not hard to construct a really healthy dashboard around financial performance, around where the risks are, what are the HR and people issues in an organisation? And probably most importantly, where are we placed with our customers, our players, our clients? If you look at the feedback loop that happens in most organisations, there'll be red lights actually humming if you're not actually serving the people you're meant to serve, they'll tell you. And that's the great thing about the 21st century. There's so many avenues for people to give feedback or to comment.

Kate Corkery One of the key principles of the Scorecard is board evaluation. So the board evaluating itself. One of the challenges with that is boards saying they barely have time to undertake the business of the board. How on earth can they fit evaluation in too. What's your practical experience with opportunities for boards to evaluate in a formal sense or perhaps a more informal sense?

John Lee Really good question. And I think there is a real distinction needed between "formality" and "informality". They're both really important. It's a bit like when making decisions, you get all that objective data but you also use some subjectivity or instincts to make good decision making. And to give a really practical example, probably one of the most pre-eminent chairs I've reported to is Matt Allen, the former president of Australian Sailing. He had some really simple techniques, like at the end of a board meeting, he would say two minutes, let's just go round the room, let's score the meeting out of ten. And people would then would offer a score and a reason. I think it's a six because we spent too much time on X and not enough time on Y. I score it an eight, because I really appreciated that presentation from our head of high performance talking about fatigue. That is a really good example of a quick way to evaluate how you've gone.  Sailing also made sure that the team that met together, ate together, drank together and spoke together. So having a bit of a catch up after a meeting. Something a little bit more social also provides the opportunity for some of the less extroverted or outspoken members of the board to get their points across to key parts of the executive. They're probably the main ones and I suppose Survey Monkey, we've got all sorts of opportunities now for evaluation that you know, as long as it's not arduous, as long as it's not a fifty five minute survey, I would counsel people to make sure it can be achieved in less than seven minutes. You can get lots of feedback, 360 degree feedback about the executive or about the board. It's a two way thing and it's important that people can deal with constructive feedback and criticism so that they improve their own performance.

Kate Corkery Great tips in there, thank you and thanks to Matt Allen. Well, I'm sure lots of boards will be stealing that technique going forward. Another key responsibility of the board is to hire, monitor, reward and sometimes remove the CEO, having had experience as both a CEO and a director, can you give us some examples of where you've experienced effective oversight of the CEO and perhaps any less positive experiences you've had?

John Lee Well, I probably need legal advice before I go to attempt to give this answer. Look and I think I said to you in a preamble that's not recorded let's go a little bit high for a moment and let's talk about all sports. So in many ways, all sports, if we're talking sporting boards, they usually reflect their field of play. So in my experience, whenever I was dealing as a CEO with a board in an NRL club, it was brutal. Sometimes I nearly needed a concussion test at the end of the board meetings whilst at sailing, it was very different. It was very respectful and it was nearly a collegiate way in which the board would conduct itself with its CEO. I've given different examples where in many ways sporting organisations reflect the countries of the world and the AFL are so professional and in a way their governance model is a little bit dictatorial like China. While some other boards are more like the Pacific Islands or more like Europe. So I think from a high level, what I'm really trying to say is it depends. It depends on the nature of the organisation and the nature of the work of the board and how those relationships work between a CEO and a board. But my killer comment on this area is - I'm a bit of a lapsed Catholic but those that are Catholics - I think there's a trilogy that happens, especially at a sporting club. Between the chairman or the chairwoman, who is sort of like the 'God' of the organisation. And then the 'coach' is usually Jesus who has the disciples that go out and and and live the best for that club. And then the role of the CEO is really just to be the 'Holy Spirit'. Is to make sure all the component parts then fit together. So it can be really hard being a CEO in an organisation because usually you're getting different intelligence, communications inputs, you're getting complimentary feedback, you're getting criticisms. And the great task for any board is to really assess how their CEO weighs up all those stakeholder inputs and how they actually keep the organisation moving forward. So I've sort of in a roundabout way said, I think it's an important role for a chair to have a really good relationship with their CEO. But it's also important for the CEO to understand their sport that well, that they can communicate it back to their board. And if they do that well, they will be retained and rewarded.

Kate Corkery We started this conversation and I've referred to the four pillars, and that's really got me thinking about an Einstein quote which is, "not everything that can be counted counts and not everything that counts can be counted". We tend to be more comfortable with the data and quantitative measures to evaluate performance and finances is an obvious example of that. But what is the role of 'instincts' and 'human behaviour' in relationships in terms of our evaluative processes?

John Lee Now, again, a beautiful question. If only we could do justice to it in three to five minutes. Again, I go, you know, Peter Conde (AIS) who did a lot of great work in Australian Sailing, he was very much on reading a lot of the data but he also had a great understanding of the emotional and psychological impacts that were occurring with sailors. So I think it's really important to understand that people make up organisations and it is their relationships and the culture that's established in those organisations that bring about the hard data and the results. So I know coach Trent Robinson often talks about it's the connectivity between the teams. It's actually the relationships between players who stand next to each other or have to do things together, I think of the Nacra sailing team a male and female pair that have to work in unison to achieve a result? So it is one thing to have lots of timing and have lots of data around an organisation but to understand the essence of an organisation, you've got to listen. You've got to sense the pulse of that organisation. And you've got to witness the relationships and how people, in a way, you know, I'm probably what I'm saying is it's the body language of the organisation that you've got to look out for and that's very, very hard to measure.

Kate Corkery Thank you so much for your insights and advice on Principle nine, the scorecards.

John Lee Thanks very much, Kate. All the best.

Kate Corkery If you'd like to access a copy of the sport governance principles. You'll find them at the SportAUS website - sportaus.gov.au/governance. If you have any feedback or questions, please email us at sportsgovernance@ausport.gov.au  My name is Kate Corkery and I look forward to you joining me for the next podcast in the Sport Governance Series.