Ministers are responsible for the majority of appointments to public entity boards within their portfolios.
However, there are circumstances where ministers may not be responsible for these appointments. For example, when a director is an ex-officio member or where the board has the right under its legislation to appoint a director by co-option (such as on a Training and Further Education Council).
The board (via the chair or a special board committee) has the important role in informing the minister and the relevant department about the required knowledge and skills, personal qualities and specialist expertise based on the operations and future strategic direction of the public entity. The board may also be involved in nominating people for appointment following a selection process.
The department can also provide independent advice to the minister about director selection and appointment.
A committee of the board may also advise the board about who to recommend or co-opt to the minister for appointment.
Establishing a Public Entity Board
The following tasks are involved in establishing a public entity board or renewing a board, following a significant change in the public entity’s mandate:
- specifying the required capabilities, composition and diversity needed for the particular board. This is often achieved using tools such as a board and director capability map or matrix
- determining the initial board size and specifying minimum requirements for board committees that need to be formed
- developing position descriptions for roles including the board chair, directors, committee chairs, board secretary and chief executive officer for the recruitment process. This includes determining if all directors are to be non-executive directors and clarifying the role of any nominee directors
- developing a director recruitment strategy and developing information packs for potential new directors. This includes confirming whether directors will be paid (and if so, the quantum) and whether other director benefits are applicable, such as expenses, in accordance with guidelines
- recruiting and formally appointing the board chair (usually by the minister) with the required skills, experience and attributes
- recruiting and appointing directors with the required skills, experience and attributes
- appointing the chief executive officer and determining whether the chief executive officer is also an executive director, that is, a director of the public entity
- overseeing, as appropriate, other appointments, including the board secretary
- welcoming and inducting new directors.
Director Skills, Qualities and Experience
Directors bring a broad range of skills sets to the Board. The majority have a mix of the following skills, qualities and experience.
- strategic thinking
- planning and leadership
- risk management and audit
- understanding financial statements
- legal, financial and other professional skills
- marketing and communication
- industry-specific skills and knowledge
- stakeholder management.
- integrity and standing in the community
- demonstrated honesty
- openness to different views
- a track record of acting in good faith and in the best interests of an organisation
- ability to listen, analyse, think clearly and work well with others
- willingness to prepare for and attend meetings, ask questions and take responsibility.
- previous experience working on a board
- networking and dealing with stakeholders
- working in a regional, rural or remote context
- performing at high levels in relevant fields of expertise
- previous experience as a chair (if the person is to be a chair).
Director Pre-appointment Checks
When a potential director is interviewed, the following background checks are usually undertaken:
Potential directors nominate referees who can comment on their suitability for service as a director.
A person who has been, or who becomes, bankrupt will typically be disqualified from appointment, or continued membership of a board. The following two checks are undertaken:
- Australian Security and Investment Commission Register of Persons Prohibited or Disqualified by ASIC under provision of the Corporations Act 2001 (Cwlth).
- Insolvency and Trustee Service Australia National Personal Insolvency Index.
- Police check: A person convicted of an offence, unless it is very minor, may not be suitable for service on a board.
- A declaration of private interests provided by the potential director: This discloses actual or potential conflicts of interest.
- Disqualification from acting as a director: A person who has ever been disqualified by a court or the Australian Securities and Investments Commission from acting as a director or manager may not be suitable as a director.