Social Impact as a Value Proposition for Board Opportunities

Sally Parrish interviews Professor Andrew MacLeod

Professor Andrew MacLeod joins us for this episode to provide his thoughts on how to highlight social impact as a board proposition. Andrew draws upon his deep international experience and legal expertise, including the time he spent as a former terrorist hostage negotiator.

Social impact is an important key topics for boards and as Andrew explains, can provide opportunity to make a massive impact at board level.

This episode is a replay from our popular sister podcast “Non Executive Director Insider Insights”


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Click Here to View the Podcast Interview Transcript with Professor Andrew MacLeod

Andrew MacLeod 02:13
Absolute pleasure. I've got nothing else to do in COVID lockdowns except name the grass blades individually outside the front of the house. So it's a real pleasure.

Sally Parrish 02:20
We're all being very resilient at the moment from back bedrooms. But this I should imagine for you would be particularly difficult because you've round a bit in your lifetime, haven't you tell us a bit about where you've lived and what you've done? Yeah,

Andrew MacLeod 02:33
I'm an Army officer and lawyer by training. And I specialize in war crimes, crimes against humanity and genocide. And I need to say these days, the prevention of not the perpetration of and I spent the 1990s in former Yugoslavia and Rwanda working for the Red Cross, they moved over in the early 2000s. To work for the UN ran nine major natural disaster operations in places like Pakistan, Afghanistan, Tajikistan, anywhere ending and Stan that doesn't have an up to date, Lonely Planet in the cloud med is basically where I've spent my life 2009. I left that scene. For a series of reasons, the UN's lack of efficiency, lack of effectiveness and lack of desire to be held accountable was up there and the institutional failure to deal with the the child abuse and female abuse by UN stuff around the world and more people becoming aware of, and I set up a charity called hear their cries, which is aimed at trying to prevent the abuse that the aid workers perpetrate on innocent children and women in the developing world. But more importantly, I also for this podcast, developed a non executive career focused on trying to show companies how to get the corporate community relations, right particularly in the developing world to lower the social risk of operations and improve the net present value of their assets by the lower social risk discount rates and NPV calculations. It's a it's a funny way of saying it, but good, you don't have to choose between good corporate behavior and profit. Good corporate behavior can lead to better and enhanced profit and enhanced valuations. Therefore, better short term and long term incentive plans if you structure right and structure the risk, right. So what I've been able to create them is a real niche around what I do on boards, which is I provide geopolitical risk advice. I provide advice on social risk and advice on valuation. So as a non accountant, I find myself sharing a lot of audit risk committees nowadays. I will say this also, about COVID. COVID, provided a couple of difficulties, but a couple of opportunities. In the old days, you would say if I've got a eight board meetings a year, I'll turn up to six and I'll do two remotely, I'll dial into two. Nowadays, it's the other way around people understand you can do things by zoom, you've got to turn up to at least two board meetings a year, the strategic day and the Christmas party. But the other ones, you know, dialing in, can work and have during COVID join two additional boards, the Arabian leopard Fund and the outdoor education group where none of us have met in person yet. What that then does is if you're a bit of a global Nomad like I am, I'm an Australian, but I have I'm a dual national with the UK and I currently have board and advisory roles in London, Dubai, Riyadh and Melbourne. And you look at and go, How do you do that? Well, part of it is you're on airplanes, and part of it is you're on zooming. And it's gonna be a very interesting experiment to come out of COVID Now, of how much of the remote stuff can enhance your in person stuff to be able to spread your geographic footprint. So on one hand, I'm as frustrated as hell, I haven't gone this long without hopping on an aeroplane since I was in secondary school. But it's also forced me to look at new ways of working, which is opening up opportunities that otherwise would not have existed.

Sally Parrish 05:50
Yeah, there's so much to unpack there and what you've said, let me start with acknowledging the remote working because I'm really excited about this. Boards have always worked by postcodes in the past, right if you were in a Sydney, they were in a Sydney rolls in a Melbourne in a Melbourne roll. But this has really opened up the rails we've got a lot more rural executives coming through now. I've spoken to a couple of guys that say you know, when you're rural, you have these great big properties that you need to maintain. And being able to work in the Properties during the day and read both reports during the night. It just gives them that flexibility to make rural life really work for them. But I guess your perspective as well being able to get on planes and travel anywhere around the world that you want to and be able to dial in from any hotel. I mean, there's not many places you can't get Wi Fi now are they every airports got a Wi Fi now, so the ability to keep moving,

Andrew MacLeod 06:49
and many developing countries have got better access to high speed Wi Fi than the developed world has, because they've been able to draw that to leapfrog the copper cable technology and going straight to optic fiber or Wi Fi,

Sally Parrish 07:00
good corporate behavior leads to enhance valuations. So we know that we've got the four pairs or quadruple reporting now. So it used to be all about profit. But now it's about profit people planet and purpose. So to what end is good corporate behavior work around those sorts of principles.

Andrew MacLeod 07:24
Let me give you two examples of where it goes catastrophically wrong. Because social risk is the only area of risk that has the ability to destroy 100% of the net present value of your assets. Bowgun Ville little island off the north of Papua New Guinea, Rio Tinto or its precursor ran a copper mine they're called Panguna. And back in the 1980s, companies would say Community Development none of our business we pay our taxes and government does schools, water hospitals and things like that. One of the problem back in the 1980s is the taxes were paid to the central government and Port Moresby in Port Moresby did not build the hospitals, schools etc. On Bowgun Ville island. So the bug and billions got upset created a thing called the Bogan Ville Revolutionary Army and started the Civil War and you're like, come on, Andrew. That's ancient history. Really? When did the copper mine reopen? Answer NIFA. Is Rio Tinto having problems today with the residual reputation on Bergen? ZIL? You betcha. They are and you just need to google it and Reo is trying to figure out what its ongoing relationship is, even though it gave its residual shares and Bowgun Ville copper, to the people of Bergen Ville and the people of Papua New Guinea on a 5050 basis. In other words, they were running a mind with billions of dollars, billions in assets and hundreds of millions in profit were coming out of that mind. But because they didn't read the social risk temperature, right, a civil war started and the mind has never re opened and caused ongoing reputational risk to the company going forward. That could have been solved. If back in 1987. Rio actually had have invested in hospitals and schools and work with the community to say, hey, it's you and ask the community against the world, not us with the government of Port Moresby and knew the community don't count Rio has learned, which is why Rio Tinto spends more money on health and education in Mongolia than the government of Mongolia does. But the importance of boards and individual CEOs is also shown by the screw up that Rio Tinto did with Duke and gorge. So they blew up Jochen gorge to get access to a few 100 million dollars of extra ore body. But what is a custom it's costing billions in reputation. It's cost the CEO their role and more critically, it is slowed down land use negotiation with indigenous communities all around the world, which is now measured in massive draw from profitability, which far exceeds the value of the ore body that they would have got access to. So just those examples, you can see where it goes catastrophically wrong. Where can it go? Right? Well, BHP before they outsource to South 32, used to own an Aluminium Smelter around mozal, Mozambique, and they did a series of anti malaria programs. And you think, Wow, isn't that lovely CSR? And I'm like, No, it's not corporate social responsibility. And this is why it's not. They lowered adult malaria infections from 92% of the population to 5.6%. In improving community health and lowering malaria infection, they dropped absenteeism in the workforce from 22% to that a drop in absenteeism improve the productivity of the asset by an amount higher than the cost of the program. In other words, the anti malaria program when measured properly was profitable. But not only is it profitable, the community have genuine acceptance of the operation there because they see that their improved health is coming because of the company. And the problem that we've had for the last decade or so is if you start talking about corporate social responsibility, ESG sustainability, you get shunted down to human resources or marketing or external relations. If you start talking about asset protection, value, addition, profitability, you sit down with the matter, you don't sit down with the marketing people you sit down with the accountants and the CEOs. And what I've been talking about is how do you avoid a catastrophic failure like Bowgun Ville or jocund gorge? How do you gain improved profitability like most of Mozambique, and this is by understanding that what corporations need to do is look at all of their external facing footprints procurement, sales, human resources and say how to we fine tune each of those footprints to find Win Win scenarios. Shared Value as Michael Porter and Mark Kramer at Harvard University call it where we get improved profitability, company executives get better remuneration in the local communities subjectively when in their own mind, and objectively when on the data that you can produce.

Sally Parrish 11:48
When we talk about getting on a board role, we talk about understanding your board value proposition. And one of the things I say around that, you know, people often talk about their board value proposition is to increase profitability through blah, blah, blah, right. But what you're talking about is, is the understanding the impact that your board value proposition has on the organization? So I call this the what's in it for them, you know, you put me on the board, and what will the business see as a result? So what do you think the tricks are to understanding the board value proposition and position it in a way that it has impact for that company? So in other words, if through what you do, it's really clear that your board value proposition is all around social impact. But how you sell that is things like reputational risk, it's the valuation on the company. How do you how do you work through like, what advice do you have for executives who are starting out to think about their skill set on the board value proposition and then selling that to the business. So the first step is

Andrew MacLeod 12:55
understand what makes you different, or what makes you the same as a certain classes board director. And then if you're the same as a certain class of board director, you know, you're competing in that space, like how many board directors are there that I concentrate on governance, and I'm a very good lawyer understanding the legal regulatory regime, great, every board needs that most board already have it. But if that's your value, and that's cool, and what you've got to then do is hunt the boards that are lacking that skill set. One of the most valuable things I did in trying to understand how to market myself into a board role was when I actually was chairing a governance and remuneration committee and lead the process of increasing a board numbers on an organization I was involved in the foundation for a smoke free world. And we created a matrix of what are the skill sets that the board needs? What are the skill sets we have? And what are the skills that we're kind of looking for. And why that was instructive is if I play for apply for a job on a board, because I'm a lawyer, and I'm focusing on governance, and they say, No, it's not necessarily personal, because they might already have a governance person on the board, they don't need that they needed the accountant, or they needed the social risk person, or they needed the person that understood the manufacturing of widgets. So firstly, is you've got to depersonalized, you've got to understand what your skill set is. And understand that you're trying to market into a board that doesn't have that skill set, which means you've got to not only see a company as a company you want to join, but actually right now needs you. And depending on the rarity of your skill set, you might actually find 99 out of 100 companies whose board roles you hear about, and we'll come on to how you hear about them in a second. They might just not need your skill set. Don't take it personally.

Sally Parrish 14:45
Yeah. So we always say, you know, stand for something stand out, make sure that you understand why you're different. So, you know,

Andrew MacLeod 14:53
if I can jump in? Yeah, it's equally important to understand when you don't stand out. And don't take it personally, you know, yeah, you go with it already has three lawyers and you're a lawyer. Yeah.

Sally Parrish 15:07
It's like the White House style, right? I get a lot of older gents, say, oh, you know, White House down and say, lean into that, understand that that's the perception that people are going to have of you and go find boards that don't have pale stale men on them, and you're you have much more chance of succeeding?

Andrew MacLeod 15:24
Well, and I'll dig into that a little bit more, because it's helpful. I'm a middle aged white guy, right. So on on the surface, I have zero diversity to bring to a board. And I'm like, really? Look at my CV. You know, I am going to bring thoughts around the board that you guys and girls just won't have. You haven't had to negotiate with terrorist groups in northern Pakistan. I have. I've had to deal in multinational partnerships between the US UK and Cuba. You know, if you can negotiate security and access guarantees for Christian Aid workers into Islamic controlled northern Pakistan, believe me, you can negotiate anything. Negative i bring is I'm not a middle aged white guy. I'm someone who is unapologetically internationalist. I therefore only pick companies that have an international aspect to what they need to do. I wouldn't bother applying for an engineering firm and out of suburban Melbourne that wants steady state because I don't have steady state skill set and I will would be stale and pale. But then what I've really got to make sure that I pitched them myself as is a diversity of thinking, even if I don't have the diversity of physicality, because one of the problems we have with the diversity agenda is it's not just about skirts and trousers at Cornerstone capital, where I was on the board about three weeks before the VW scandal, the diesel scandal broke, we actually put out a report about nominally diverse boards that are actually not diverse, that we think are really fragile. And one of the boards we picked was Volkswagen, because, yes, they had females on the board. But it was a group of men and a group of women who came from the same group of private schools in Bavaria, you know, there was zero diversity of thinking, even though they ticked some of the diversity boxes. And the lack of diversity of thinking, meant that when the diesel scandal came out, don't tell me people on the board didn't know that there were multi million multi billion dollar projects to change the hardware and software of cars with no other objective, but to cheat the regulator and cheat the consumer. And that didn't get to the board level, or didn't get the senior executive level. Don't tell me it didn't because it absolutely did. But those senior people that came from the same group of private schools in Bavaria were like, Yeah, I don't see anything wrong with that group thing? And what and what was the consequence, and here's why I go back to value protection again. So what did Volkswagen call a few billion fires, little bit of reputation, protection, yada, yada, yada, yada. But the share price valuation of the company dropped 30% and never recovered. Volkswagen was on a trajectory of growth on its share price like this, the diesel scandal happened and the stock price dropped. And then the trajectory after the draw was shallower than the trajectory before the drop. So you can actually argue that they had the loss of shareholder equity that then grew with time, because that trajectory of growth never came back. And that's what this risk is, it's not about doing good. It is about doing good. But the value that you bring to the board is this is ruthless capitalism as well. Because there is a financial risk to ethical screw ups.

Sally Parrish 18:52
Yeah, absolutely. And when you talk about social responsibility, that kind of information used to get buried in an annual report that got released once a year that shareholders saw in a meeting face to face. Now that kind of information is out in an instant in a heartbeat. And it's, it's all around the world, and everyone can have an opinion. So it's, it's very much magnified now, isn't it when you screw up, it's not necessarily the screw up. It's the response to that that has the biggest impact sometimes.

Andrew MacLeod 19:24
And there's a dynamic change that's happening in the world today. Here's a controversial statement for you. Australia is now one of the most socialist countries in the world. What all What do you mean by that? I'm like, Well, let's look at socialism in its defined pure form, as opposed to communism, or the politics. And what we often mixed up is an economic system and a political system. You know, communism isn't a political system. It's an economic system. totalitarianism is not an economic system. It is a political system. Pure socialism is collective ownership of the means of production. Capitalism is how production is then sold into the market. And you can have a socialist ownership of production and a capitalist exchange of goods. So why do I say Australia is one of the most socialist countries in the world through our superannuation? By 20, the middle of 2030s, the majority of Australian stocks on the Australian Stock Exchange will be majority owned by the pension funds and the superannuation funds. ie. by us. Yeah, and I was interim CEO of a superannuation fund for a while, which was targeting young people. And I said, what we've got to do is get the phrase out there politics and protest isn't the only way to make change. Use the power of your capital, and young people. So I don't have any capital. I'm like, really, really ever had a part time job? Yeah. What's your superannuation balance? I don't know. I don't I look at superannuation. This is one of the problems that we have. We think in Australia, the largest financial decision people will ever make is about buying their home. No, it's not. It's their superannuation. The combined impact after you take into the power impact of compounding, if I put $50,000 into a 15 year old superannuation fund now, it'd be worth $4.6 million on retirement. I picked that number because a friend of mine is currently divorcing his wife and I've been 100 grand apart and their asset division, they've got two kids one is 12 and one to seven and I'm like it easy. Take that 100 grand to lots of 50 a whack at the two kids superannuation and in that one decision, you have now solved your child's retirement problem. And as an adult you can look for In time, imagine if we actually empowered 2025 and 30 year olds to understand their superannuation. They are part owners of the corporations, corporations and start getting nervous. I was like, no, no, no, no, no, no, don't get nervous. Because right now there's this interaction via media and social groups. That's the pits young people against the evil corporations. But what you do through Superannuation is you can go back to the young people, as a corporation, say you, the young person, or one of my owners, you are one of my bosses. So now you can influence what we do. But before you do, it's about your retirement and your profitability, and it forces the young person to actually rethink their engagement with capitalism. So whilst it's first a little bit provocative to say, we are the most socialist country in the world, it can actually potentially re Empower capitalism by engaging people with the capital they have through their superannuation. What that means for company boards is that there is a greater percentage of our shareholding base, that's now patient capital, not short term trading capital, and short term trading capital are focusing on quarterly returns. patient capital focuses on 10 or 20 year returns. And patient capital is much more concerned about the long term ethical framework of a company. Because the long term ethical framework as a company is what is most likely to destroy value over the longer term. And if you don't believe me, there are two letters V. W.

Sally Parrish 22:56
Look, I'm in financial services. So you don't have to sell me compounding you know, if every five year old in the country had a investment fund, they'd be making very different decisions at 25. To what they're making now. Very, very different.

Andrew MacLeod 23:10
And the question boards is how do we manage the activist shareholder agenda in what we're going, what we're doing, and you look at it, and you can see Rio and BHP and Woodside all responding to these sorts of pressures. Now, what do you do about assets that will be distressed assets in 20 years time and and we do need them now. The Saudi Aramco float was a really interesting thing to watch in Saudi because the government was trying to float off Saudi Aramco, their oil owning company, basically all the assets under the sand in Saudi on a net present value assumption on the supply of oil will run out before the demand of oil will run out. And that was the standard Peak Oil discussion that we had until about 10 years ago, what we now realise with the massive expansion of non fossil fuel electricity generation, particularly, and alternatives to the internal combustion engine that are coming for cars, boats, and now potentially even aeroplanes, is we know the old paradigm of the supply of oil will run out before the demand of oil is wrong. Demand for oil will run out before supply does now. And what that means is you've got a whole bunch of distressed assets under the sand in Saudi Arabia, Venezuela, Iran. And what do these companies do about converting their under sand assets into cash assets to be able to keep their economies going once oil becomes a fundamentally distressed asset? Then the Saudi Aramco floats the bhp divestments and deals with Woodside are all in this broad dynamic about partly how do we see the economy changing, but hard, partly how we see our shareholder base changing and the demands that our shareholder base are now putting on companies, particularly through superannuation companies and patient capital. That comes from long term retirement funding boards, you've got to understand how all these dynamics come in together, because the risk is coming from different areas of the economy from where it used to come. And if you've got the pale, stale board, which might include a skirt or two in the pale, stale, that are not seeing where the world's going and not seeing the change, you're not going to see these risks that are coming steaming down the track achoo.

Sally Parrish 25:32
Yeah, and that's the perspective we give to execs looking for their first role is what are the risks that this business or more they're facing? So the personal liability risk to directors, the biggest one right now is cyber, you know, everyone's like that when it comes to cyber. So if you can show the directors on the board, how you can keep them safe from personal cyber risk, and you're instantly more valuable to that board.

Andrew MacLeod 25:56
Let me give you another one. What about personal comportment of your staff overseas? Now okay, so we all know they're sex tourists that go off to Thailand, Philippines and stuff and they're pretty disgusting. I mentioned earlier, there is a huge risk within the aid industry around abuse of women and children in the developing world and it's there and Google it, trust me, it's, it's there. But those sorts of abuses happen whenever there's an imbalance of power, particularly in an imbalance of of wealth. And if you've got expatriate staff and say a mining camp I mean, in Central Africa or West Africa, I can tell you what 100% abuse of women and children has taken place. How big is it don't know. But it's been very hard to track in the past, because it's in countries where law enforcement doesn't necessarily apply and men have thought they've been able to get away with stuff. Well, in my role at King's College, I'm a visiting professor in the genetics department, we've created a new DNA technology to hold the aid workers to account. So where we find mixed race children with the permission of the mothers and the children, we take DNA from the child, marry that up against the databases like 23andme, find the extended families triangulated back and identify the fathers. For example, we did a test. Last year, we took DNA from six mother children, pairs of women who have been servicing the sex industry in North of Manila. Of the six mother children pairs, we've identified five fathers and now different stages of law enforcement against those fathers getting them to pay child support, etc. For the children that they've appropriated that they thought they got away with now, when the Oxfam scandal blew two or three years ago, organizations like the Oxfam's, and the UN's they have a certain degree of positive reputation in the community that protects them when these scandals come out. But if you had McDonald's had a scandal of all your staff were using seven prostitutes in Haiti and procreate and children without doing anything. How is McDonald's going to survive that? No, if it was Rio Tinto, they're not going to survive. If it was National Australia Bank, they wouldn't survive. I'll tell you this technology on developing that's that is aimed at the aid industry is equally applicable to the private sector as well, I have no doubt there are men working for private sector companies that are abusing women, children and procreating children in the developing world. And I know in locker room talk that in particularly the mining and resource sector, that's kind of accepted as the cost of doing business gonna say

Sally Parrish 28:26
it's not about opportunity. That's the culture, right. That's how, in Asia, I'm aware of the culture being that the men are presented with women for the purpose of their own entertainment as part of trade negotiations and contracts. You know, that's part of it. I'm aware of expats in Asia that have their Asian wife and their wife at home. And it's

Andrew MacLeod 28:57
probably a problem. And I'll promise you in 20 years time, there will be cases happening today that will come out in 20 years time, and it will destroy the evaluation of a company in 20 years time. And companies have now got to start forward looking this risk and saying to two people, you can't do this stuff anymore. Not because it's unethical, not because it's immoral, although it is unethical and immoral not to do that stuff. There are reasons not to do it. But it will destroy the reputation and the valuation of companies, as activist shareholders and patient shareholding, particularly through superannuation will no longer tolerate that sort of activity in companies.

Sally Parrish 29:33
Let me ask you that international law, one of the one of the problems with international boards, is what might be illegal in your company is culturally the way we do things. And another exit I've lived in Indonesia, Indonesia, you know, it's it's part of the course to get bribed. You know, that's how you do business, sometimes in Indonesia, pay bribes in personal life and professional life. So in Australian corporate law, bribery, not acceptable cartels not acceptable in some other countries. That's the way of doing business. So how do you go about this, where you've got this DNA testing, you've got these standards, and I'm really, really so pleased to see that you're going to start holding these people to account now. But how does that company do business with the country that has that as a cultural way of doing things? How we're going to break down that challenge? There are

Andrew MacLeod 30:34
two or three ways of handling that let me give you one, which is a bit more challenging and a bit more simple at the same time. So I was on the board of a US company. And a motion was in front of the board. And myself and the other Australian director both abstained from the vote. Everyone else voted yes. And the CEO pulled me aside afterwards. And she said, Why did you and the other director vote? No. i Sorry. Abstain. And I said, Well, what you were proposing, according to the US corporate ethics, and the US corporate law was fine. But in the Australian corporate ethics and Australian corporate law, no, it's absolutely not fine. But this is an American company in America doing making a decision about America. and behaviours. So we recognize that it is lawful and ethical within the American corporate culture to do that. So we can't vote no. But our guts tell us it was both unethical and unlawful in the Australian corporate culture. So we can't vote yes. And that's why we both abstained. So I think there's a very important point to know where your ethical frameworks are. But also where the ethical and legal frameworks are in the area in which you're operating bribery is a relatively easy one, because it's now an extra territorial crime. Anyway, the Foreign Corrupt Practices Act and equivalents around the world, you just can't do it, or you will go to jail, and there's personal liability attached to it, and you will get caught. Or in the case of stern hue, and China, the Chinese government sees it turns a blind eye for a while until they want to make a political point, and then you're gone. So bribery actually is a relatively easy one, the more difficult one is what happens if you're voting on something in the environment in which you are is acceptable. But the environment in which you come from it's not, but you're operating in the environment in which you are. And that's where abstaining can actually be a very powerful response and explaining your abstention as well. I think at the end of the day, when you go into international borders and international business, you've got to have a very comfortable space, and knowledge of your own internal ethical frameworks and know what you will accept and know what you won't accept. And hello, where there's cloudy space where you've got to go. Not sure on this one, let's have a think.

Sally Parrish 33:02
Yeah, yeah. And the thing about law is, you know, what's an ethical and moral decision to ask today becomes legal, through test case studies, right through test cases, really simple

Andrew MacLeod 33:17
one for you. raping marriage didn't exist in Australia until the 1980s. So the behavior that was acceptable and rights in the 1970s is a crime in the 1990s. Now that that's going to continue to happen, because there's a saying I've which is you can never plan for the status quo. Humanity is always changing. The law is always changing. Perceptions are always changing. And we're in the middle of an amazing global shift at the moment, whether you like it or not, we are shifting from a European Anglo Saxon individual rights dominated system of global laws, cultures and trade into an Asian collectivist domination of global laws, customs and trade. So we are in probably one of the most changing periods in time in human history. You can fight it, or you can see it and learn how to adapt to it.

Sally Parrish 34:04
Yeah, absolutely. Look, I could talk to you for hours and hours and hours. And thank you for what you've already shared. There's already so so many great quotes and insights there. Let's just drill down on a few of those. Diversity. What's the key to diversity? You said that you can have tokenism? You said just because people are different genders doesn't mean that they think differently. But I've got a board director, they want to work on a board, I often tell them about perspectives. You know, your anyone could do what you do, but nobody can do it the way that you do it. So what are some of the differences in the perspectives that we can focus on to make ourselves more valuable to a board?

Andrew MacLeod 34:49
Well, again, it depends on the sorts of boards that you're going for. And let me compare between sentry and a steady state engineering company in out of suburban Melbourne, sentry is a fin tech company. And what we've realized it's enormously expensive for a lot of the low paid expatriate workers to remit money home countries like Philippines and Pakistan. 20 30% of their economy is remittance flows coming in the nurse sending money home, the construction worker sending money home, and through the old MoneyGram Western Union system, it's 1020 $30 a transaction which can be very expensive and a very high proponent, when you're only sending one or $200 across at a time. So we're digitising that process to make it cheaper in partnerships or a whole lot of corner stores. So people can do it easily. And then critically, for the recipient of the remittance flow, who regularly receives remittance incomes over a period of time, banks don't lend on that income stream. But if it's a regular income stream, why not. So we're also going to lend against that income stream so the recipient can do things like invest in a small business, invest in a house or what have you. That's a very different series of skill sets that's needed from an engineering company and out of suburban Melbourne. That's just one steady state get through COVID. Let's go back into the housing construction sector. So the first thing you've got to be able to do is really understand what sort of board you're wanting to help you refine what is the skill set that you are selling into that board? I can't sell steady state engineering can't do it. But century I can because have worked with the Filipino expat of working with the Pakistani expat, I understand how they're thinking, and I've lived in Pakistan, and I've lived in Philippines. So I understand the destination country as well. So you've got to look at that holistic part of your background and understand, as you said earlier, other people can do what I do, but they can't do it the way I do it, you've got got to understand what your value and what your diversity is. And then the chairs of the committees that are recruiting into boards, you've really got to, I hope more of us are doing it move beyond tokenism to get the diversity of thinking around the board table. But the diversity of thinking that's required for that business?

Sally Parrish 37:10
Yeah, so we talked about the board value proposition is how I can add value and the board career blueprint is where that value can be added. So you said that the two are really important. Okay. So in terms of starting out there, one of the big things that that I'm keen to do is to make sure that execs do their due diligence before they accept a board appointment. And you know, you've got, you've got logic and emotion and you get offered a board role and you're swept away in the flattery. So in terms of due diligence, I'd particularly like to ask you about that social audit that you do. So in terms of CSR, ESG, that kind of framework? What are some of the things that you would suggest that executives look into or thinking about in terms of what social risk and consequences might be within that company before accepting the role? You've got

Andrew MacLeod 38:03
to develop what I call a whole lot of tertiary level bullshit, testing questions. So if a company mining company says we really worried about the environment, it's like, yeah, okay. What do you do with the topsoil? For the open cut mine as part of the mind closure plan? Ah, ah, well, you're not that worried about the environment. Oh, we'll buy more topsoil after we close the mine. Because that's in 50 years time, you kind of think about it, we stockpile it ready to put it back on when we close the mine. That's good. We stopped pilot and we rotate nitrogen through it every couple of years to make sure when we put it back on stuff or grow on now you've got it, or we're worried about local community health really explained to me that how the first aid works on your mind site. We have a first aid kit. All right. We have a little medical shelter with a news. All right. We have a standby agreement with the local hospital that we get priority if we get them. All right. We recognize community diseases impact on our shift patterns. If a kid gets the flu at the school, and mom's got to stay at home and look after him, their mom can't do her shift on the underground machine. So what we're doing is we're investing in local community health because we understand the impacts on our shift patterns. Because what I don't want to see is CSR because we believe in giving back to the community. That's nice. But I want to see CSR that then links to the profit of your company, because then it's sustainable. So you've got to develop those tertiary level bullshit, testing questions to look beyond what they say, look at the behaviours, and then ask yourself how comfortable you are with those behaviours.

Sally Parrish 39:48
And don't be afraid to question them, right? This is a two way street, your personal reputation on the line has taken a liability

Andrew MacLeod 39:56
because if you look at people that have successfully managed a very good portfolio of boards, you'll see some boards. They've been on 578 10 years and some boards are on 12 months. And those boards you like first seem good got on realise there's a mismatch and then get off without antagonism. Because you can all be part of it. And to get to realise there's not a match. First, we thought there was a match, but no, there's not. And it's different from the old employer employee relationship. We've all had jobs we didn't like we didn't like our bosses or we didn't find it to match but it's hard to quit because you need the money. If you've got five or six board roles and you see there's not a match or you the board's not giving you what you want or you're not giving the board what you think you need to you can have much more graceful short term exits once the cloud of of mystique and ego is part of you see whether there is or there isn't a match. So it's really interesting to be able to do that it's a two way street. You're absolutely right in that.

Sally Parrish 40:56
Okay, so coming to a close now what advice would you have for any executive who's starting out so they're getting clarity on their board value proposition they understand what their board career blueprint looks like? What I'd like your top three tips.

Andrew MacLeod 41:11
First one is remove all the easy no’s. What are the easy ways someone can say no to you? Have you got any board experience with a local community group or something? No. Come back to us when you have. So figure out what are the easy ways people can say no to you and remove the easy nose That's step one. Step two, is start really, really working your network and telling people you're looking and asking for advice. Now, any executive should have a mentor and should be mentoring others go to your mentor and say, Wow, I want to go the next step. How can I do this, and pick a couple of board directors you would like to be like, and reach out to them and say, any chance I can buy you a cup of coffee, I'm not going to ask you for a job. I'm not going to lobby to join your board. I just want to know from you, what can I do over the next couple of years to increase my chance to be like you in 10 years time I seek out new mentors for the jump into the career that you're wanting to go. So one, remove the easy no’s to start telling your networks out there, that you're ready. And then third, really be open for our boards because 90% of board roles come out of networks, they don't come out of job advertisements and things like this. And I'll give you one really good example. About two kilometers that way is Port Phillip, hence poor to the Point Lonsdale, I'm a swimmer. And I've always wanted to swim that and I did last year, I've awesome. Three and a half kilometers of open ocean across shipping channels. Ah, fantastic. I got off at the other end and caught up with a friend a Margaret Webb and I've known her since I was a child. Her, her daughter and I were in nippers and junior lifesaving together. I've known her all my life. So just telling her water awesome swimmer wasn't we're chatting away, yada, yada, yada. She was on the board of the Outdoor Education Group, which is, which provides outdoor education services to schools like rock climbing, whitewater rafting, I reckon they're a great company. And I recommend a great company because I really benefited from school, the Outdoor Education turned me around from a misprint to something decent. Can I tell you, they're not looking for board roles, are they? And she's like, I really should have thought of you. Yes, actually, we do need a new board member now. And actually, you'd be really good on it. Because one of the problems in outdoor education is how do we bring in more international staff? What are we doing with board closers? We actually need your type of thinking now. So I went through the process. And now I'm on the board. That would not have happened if I did not ask the question, not looking for board members. So

Sally Parrish 43:46
yeah, and it's amazing how many people don't it's like salespeople that don't ask for the sale, right. And I think that that network thing, what executives need to do is they think that they've got this great network, but they don't mind that network in terms of being a net, they might not as an executive. So they're not thought of as potential board directors, because they don't communicate the message, hey, I'm looking for a board role.

Andrew MacLeod 44:13
And what you've then got to do because you're in an existing executive role. So what you've got to do is get permission from your boss. So if you're a managing director, get the permission from the CEO and a board member, if you're a CEO, you've got to get the permission from the chairman, and you do it as a joint task. I would like to now get ready for the next evolution of my career. And I would like to find a couple of board roles, which is synergistic with my current executive role where they work together, can you help me please,

Sally Parrish 44:44
but also that, you know, the paybacks of if I do that, that's going to enhance my skill set, I'm gonna have a better understanding of the board here, that will, that will enable me to be more effective, a lot of people are afraid of telling their employees that this is their goal, because they feel that it's competition or conflict. But if you find the right roles, it can be very valuable. And I think there's, there's data out there that says, When you develop your board career, your executive prospects actually develop at a much faster rate than if you were just an executive, alone. So there's a lot of lot of payback there. I want to thank you for your time, there's been so many lessons there. I love what you said about finding a mentor. Because to me, the fastest way to success is find someone who's already doing it and learn from them and model as much as you can. And that's the very reason that I've put this insider insights together so people can get to meet people like you, and really sort of lifts the lid and understand what's going on. And they didn't happen to

Andrew MacLeod 45:47
use a secret. Successful people want to help other people become successful. Like to be a mentor, I love it. I had a friend come up to me the other day, and she was about three years ago. She's got two kids, both old teens, a girl and a boy. And she said, Can you mentor Tom for me? I'm like, no. She's like, why not? Well, Tom's not asking me. You are. I'm not going to waste my time if it's because he's got to do something mum said about a week later, his younger sister called me. I heard mum asked you to mentor Tom. I'm like, Yeah, but I said no. She's like, will you mentor me? I'm like, Ah, Now we're talking. And one of the things I love doing in life is actually finding those people mentoring downwards. But there are people who've reached out to me over the years who have asked me, you know, can I mentor you? Or do you need a hand or have reached out to to do the same? And it's, it's a process that never ends. And it's, it's funny, some people think You've almost got to be shamed. You know, I need help. It's like cautionary tale, everyone needs help. No one does it alone. So you have reached out find the right mentor. And the good mentors really, really want to do it, and they want to help you be successful.

Sally Parrish 47:02
Absolutely. And Ned's are incredibly generous with their time, and expertise, like people give up their time. And just, they come on to their theories for me, for no other reason than, you know, given everyone else help along the way. And they know that will come.

Andrew MacLeod 47:18
I have, I have one reason. And just to prove my point from what we were saying earlier. Hey, Sally, have you heard of any companies that need anybody like me?

Sally Parrish 47:29
I know you, you would be front of mind now. Right? If I know of anyone, and you're you are front of mind. But also, let's also validate the point that, you know, you have to reach out and you have to make connections. And that's how things work. Would you mind telling the people listening? how long we've known each other? How far back our relationship goes, like, when did we meet? And how did we meet?

Andrew MacLeod 47:53
We met via LinkedIn, didn't we? Last week? Yeah. You reached out on LinkedIn and said, you know, interesting, and I, and I get a lot of people reach out on LinkedIn. And I answer the same way I answered you, it's like, well, how do you see the collaboration going forward? I no longer click Yes, anymore. On LinkedIn, I always answer and say, Well, how do you see the collaboration? Show me that you just haven't put it on my search a couple tools and go and add it add add, add add? Yeah, yeah. Well, I'm doing this and I've got this podcast. Mikey, I'm up for that. And I'm after that, because it's it. This is mutually synergistic. Do I help you on your podcast? Absolutely. I do. I hope, what's now going to come out is you are my avenue to market me to people that I otherwise wouldn't have said to say, hey, we're looking for the odd non Executive Director or advisory role. If you've got one, give me a call. So this is the perfect synergistic relationship.

Sally Parrish 47:14
Yeah. And I've got ways of promoting you, Andrea, that we haven't even spoken about yet. So I am very optimistic of this been a long term relationship. I am. So thank you thankful for your time we've gone way over, but you did assure me at the beginning that that would happen. So I was prepared for it. I'd love to have you back again, when you come back next year?

Andrew MacLeod 48:43
Absolutely. I've done one of these things from the olden days, called aeroplanes, and got nothing from the olden days called an international border.

Sally Parrish 49:16
I think the irony is this year was the 100th anniversary of aviation in Australia was the best year to celebrate was it. Alright, so I'll leave you with the final word. And you What would you like to say as we wrap up today?

Andrew MacLeod 49:33
Well, firstly, thank you for having me on is something I'd like to say. And for the audience who are looking for their first non executive director role, you've really got to understand you're marketing yourself as a product. So the same way you market any other product, you've got to understand what are you good at? What are you not good at? What can you become good at with the right education and training, and then ruthlessly go and find the companies that need your skill set? And don't take it personally, if they've already got a lawyer? They're not going to hire you if you're a lawyer? Yeah, absolutely.

Sally Parrish 50:04
Try and be a lawyer with a personality or an accountant with a sense of humor and that will set you apart as well. Right. I'm a lawyer. Thanks so much for your time Andrew MacLeod Pleasure Sally speak later.

Outro 50:22
Thanks very much for tuning in. I'd love to know what you thought of this episode and what you took away from it. I'd also love to know what topics you're interested in hearing about in the future, and which experts you think should be featured on this Board Success Podcast. If you enjoyed listening, please share with your colleagues who might also have an interest and make sure you click to follow us subscribe to be advised about upcoming episodes. In the meantime, if you're a leader or a successful executive, and you're looking to launch your board career, or if you're an established non exec director, and you're ready for the next level, check out the resources we have available for you on the website at Until next time, here's to your board success.

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