It can’t be easy rolling out Australia’s most expensive infrastructure project, especially when you’re besieged by both sides of politics. A new report into the corporate governance structures at NBN Co tabled last night says that, while they were all experienced managers and directors, they weren’t up to the job of managing NBN Co.
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KordaMentha’s review into the governance at NBN Co was released late yesterday, containing fairly damning findings against former directors.
Directors were all experienced at running large companies, but together they were unable to rein in NBN Co:
Each of the NBN Co directors since inception were skilled and experienced individuals.However our conclusion is that the mix of skills and experience of these individuals was not appropriate for a company of the nature, scale and complexity of NBN Co.
The necessary scale and complexity of NBN Co’s activities, especially in its initial years contributed to a heavy workload for directors. Monthly board papers were regularly in excess of 500 pages, with directors attending over 150 hours of meetings in both 2011 and 2012. Even a board with the exactly the right mix of skills would have struggled with the volume and complexity of the NBN Co board papers. We understand the current NBN Co board papers have been considerably shortened and focus on key strategic issues.
The report also found that very little planning was undertaken in regards to CEO succession if the departure of Mike Quigley were to materialise, which it eventually did. The performance of Mike Quigley was also hard to measure under the NBN’s plan:
There is very limited evidence of a formal Chief Executive Officer (‘CEO’) succession plan being implemented and maintained by the Board prior to the commencement of Project North in around May 2013. Annual assurances were not provided by the NBN Co Board to the Shareholder Ministers in writing, although it is possible such assurances were provided orally.
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The Board lacked effective management and evaluation of the Chief Executive Officer (‘CEO’) as follows:
a. There were no specific Key Performance Indicators (‘KPIs’) identified for the CEO, other than the overall one of delivering on the Corporate Plan.
b. The first assessment of the CEO, by the then Chair, was a limited review and occurred approximately from October 2012 through to February 2013, more than three years after the CEO’s appointment. The Chair orally presented the assessment to the Board, however no Board minutes, papers or similar official written records of its content were retained.
c. The 2013 Board took a more robust approach to the evaluation of the CEO. The second assessment of the CEO, by the then new Chair, took place in May 2013. It was a more detailed and formal assessment that measured the CEO’s performance against certain objectives. The Chair provided the written assessment to the Board which was retained. At this time, the Board also specifically addressed, in a formal manner, the question of succession planning for the CEO position..
It’s worth noting that, despite the findings, the former board has dismissed the report.
You can read the full report here (PDF).