Company boards are stacked with friends of friends. So how can we expect change? – Analysis & Opinion – ABC News (Australian Broadcasting Corporation)

Two men walking in suits

 

Social connections drive board appointments and more than two-thirds of directors in the 200 largest public companies are on the board of multiple companies. So whoever replaces ex-AMP chairwoman Catherine Brenner will likely be drawn from a small pool of people.

This violates discrimination legislation that states recruitment should be open and accessible, based on clear assessment of skills, training and relevant experience.

The use of closed networks in the recruitment and selection of board members also creates other problems related to “group think“. Group think creates a situation where board members are more concerned with being a liked and connected member of a particular social group.

As a result members will conform to the status quo, which guarantees them membership perks, such as highly paid directorship roles.

A direct outcome of the group think mentality are boards signing off on questionable business practices as we currently see in the banking sector. Coupled with a self-regulated system, this is a recipe for disaster.

Company boards are stacked with friends of friends. So how can we expect change? – Analysis & Opinion – ABC News (Australian Broadcasting Corporation)

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