As directors, we take considerable time and effort to consider the powers and responsibilities of our position on a Board.
However, successive Royal Commissions in Australia have presented evidence directors must also consider the power of their position through another lens – the power imbalance that exists between the boardroom and the most vulnerable people that Boards serve.
Many a director, particularly those in unpaid positions, join a Board from a desire to give back to a cause or organisation – to help people – yet even the most altruistic intentions can fail to ensure the intent translates to the end result.
The Royal Commissions into institutional responses to child sexual abuse, financial services and now aged care, have laid bare the consequences of power imbalances between those making the decisions, and those governed by them, in particular, vulnerable people within organisations and those that organisations support.
Testimony to these commissions uncovered outrageous examples of behaviour that hurt people who were already vulnerable or disadvantaged, and whilst it seems obvious to those of us reading the findings, directors must ask themselves how they are governing to protect and serve vulnerable people.
Assumptions are at the base of the power imbalance
In his findings into the financial services sector, Commissioner Kenneth Hayne highlighted an ‘asymmetry of knowledge and power’ in which vulnerable people were taken advantage of or were at a disadvantage because of a lack of understanding of what they were being sold, or because their circumstances inhibited access to services and assistance.
The commissioner acknowledged there would always be a level of complexity within the sector but there was a clear need for disadvantaged customers to be able to access necessary and appropriate assistance.
Further to this, Commissioner Hayne pointed out that cookie cutter procedures – or standard offerings – often failed some sections of the community.
It is unsurprising that large entities, carrying on their businesses in all parts of Australia, apply the same policies and procedures whenever they can. But, as the Commission’s inquiries showed, not all Australians can always resort to those standard policies and procedures. ~ Kenneth Hayne
When directors assume that standard policies and procedures are sufficient, they fail to consider potential gaps and the associated risks those gaps present, not only the risk to the organisation but also the risks posed to vulnerable people.
The various Royal Commissions keep coming back to policy: that this is a strategic focus role of the Board yet at present, many Boards treat it as a ‘tick and flick’ compliance chore.
The Boards under the spotlight of the Commissions had policies around expectations of performance, yet the behaviour was different and there were no consequences.
There was a disconnect between the intentions and actions, and the result was organisational cultures in which vulnerable people were taken advantage of.
As directors, we need to take an overview approach and identify who the vulnerable people are within our organisations or those that we support, and whether we have an appropriate policy to engage with them and act on their behalf.
This means checking our personal and professional assumptions at the decision-making level in order to ensure all voices are heard at the boardtable. Directors should be wary of assuming that because they personally understand the decisions and policies, that all stakeholders will also.
Looking through the lens of vulnerable people
It’s doubtful that anybody looks through this lens, with the exception of some Boards who’s organisations oversee the welfare of specific sectors of vulnerable people.
Most superannuation Boards in Australia don’t consider their members as vulnerable, but they are. They’re all vulnerable investors because many people don’t understand superannuation or what they’re investing in. There is a knowledge gap.
All directors need to guard against a sense of complacency that this is not a necessary issue for them to consider, and also against the assumption that someone else within the organisation is considering these matters before it comes to the Board.
This is a real risk – the assumption that thinking through the lens of vulnerability has already been factored in to the materials you receive as a director. It isn’t until you ask the right questions that you will know if someone else has thought about it.
Directors need to ask pertinent questions like: How are those who have a vulnerability being heard and addressed as well? Does everybody understand?
Instead of making it a new or separate consideration, and treating vulnerable people as a different cohort, why not instead consider all stakeholders as vulnerable in some way? A way to achieve this is to make it the default lens through which we view everything. That is, why not assume vulnerability as the default, and then we could feel confident that our organisation understands all levels of capabilities have to be looked after.
GBD director Sonya Beyers recently reviewed and updated the AICD course Governing to Protect Vulnerable People. The updated course will be released October 2019.
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