CHAIR’S SEAT | Naomi Edwards has been the chair of $7.6 billion Hobart-based superannuation fund Tasplan since 2011. In that time, she has had oversight of the merger with Quadrant in December 2015 and the transfer of the RBF Tasmanian Accumulation Scheme finalised in April 2017. In this Q&A with Investment Magazine, she shares her tips for getting deals done and building a strong governance culture.
Investment Magazine: What is your advice to any trustees currently engaged in merger discussions?
Naomi Edwards: Being clear about the business case is really important. As a first step in the RBF-Tasplan merger, the two funds commissioned a report into the likely impact of a merger on member fees and services. This showed a clear ability to reduce the fees paid by RBF accumulation members and Tasplan pension members. In addition, all members would benefit from reduced investment fees. Once the business case is established, all parties can see the benefits and issues like board seats become much less important. I have often heard boards use ‘different cultures’ as a reason not to merge, but I think this is overstated. A new and better culture can be formed out of the merged fund, taking the strengths from each fund. No fund is ever wholly good or bad.
IM: What was the most challenging aspect of completing the deal with RBF?
NE: The RBF merger required passing an Act of Parliament through both houses in Tasmania. This meant negotiating not only with the two trustee groups but also with three political parties and independents in the upper and lower house. As it turned out, the legislation passed smoothly with tri-partisan support, but it was nerve-wracking not being in control of the timeframe. The other challenge was to keep the communication happening with the staff and other stakeholders. Staff were facing a very uncertain future, and even though there were very few redundancies, there was a lot of potential for stress. The more we communicated, the less stressed people became.
IM: Only a few years ago, Tasplan exceeded $2 billion in funds under management, now it has more than $7.6 billion. As you transition from being a small to a medium-sized fund, what new issues arise for the board and investment committee?
NE: We recently held a strategic planning session, and the board and executive leadership group were very enthusiastically talking about the opportunities for more mergers. Perhaps we have become addicted to change, but I think we have seen the benefits that mergers can bring and are excited at the possibilities. Now that we have invested in bringing our administration and contact centre in house (using the Acurity system) we can generate great savings through future partnerships and mergers. Tasmania has many advantages as a shared services hub, thanks to our stable labour force and low rents, so we are not resting on our laurels.
IM: You have led the Tasplan board for coming up on six years. Does the Tasplan charter have tenure limits that dictate how much longer you can stay on? If so, how do they fit with your personal views on appropriate tenure limits?
NE: Tasplan has a tenure limit of 12 years for all directors. However, as an independent chair, I think that a shorter tenure makes sense, so that you are bringing new ideas and experiences to the fund. If I’m still there after 10 years, I’m pretty sure the board will be tapping me on the shoulder.
IM: How have your views about what makes a good chair changed over the last six years?
NE: I was appointed to my first chair role in 2008 when I was 40, at Australian Ethical Investments. In my younger days, I used to think the chair should be the boss of the board. Now I am realising the chair should be the servant of the board and that the best chairs are extremely humble. My fellow trustees would probably joke that this is still a work in progress, but observing great chairs in action has taught me heaps.
IM: What is your best tip for how to facilitate a constructive board meeting?
NE: Always leave space and headroom for some meaty discussions about strategic positioning, preferably at the start of the meeting. Kick-off with an in-camera session and end with a quick meeting review. Make sure the room has plenty of natural light and good airflow. Now I sound like an architect, but I really think the space the board meets in can make a big difference to its functioning.
IM: What processes do you use to strike the right balance between keeping in touch with what is happening in the fund and not getting bogged down in the details?
NE: Well-structured board papers should make it clear what the board is, and is not, being asked to form a view on. Keeping in touch with the vibe and culture of the fund means being close to the CEO but also forming some good relations with other staff.
IM: The Tasplan board comprises 40 per cent women directors. Do you believe this contributes to more robust debate and diversity of thinking?
NE: The Tasplan board is blessed with some very strong women directors, including Roz Madsen, the president of Unions Tasmania, and Susan Parr, the chair of the Tasmanian Chamber of Commerce. Their straight talk is a superb contribution to the board. But to me, diversity is also about mindset, life experience, age and socio-economic background. The lending of the board from three funds (from public, private and local government sectors) has also helped ensure diversity.
IM: What is the most valuable professional development or training you have had for your role as chair?
NE: This will sound strange, but not withstanding all the Australian Institute of Company Directors and other courses I have attended, it was a ‘speed Buddhism’ course over one weekend that changed my concept of working with others and creating a compassionate environment. The course was attended by a lot of high-powered Australian directors, so it was nice to be on trend.
IM: When faced with difficult decisions, whom do you turn to for advice?
NE: I have cultivated two very experienced chairs as my mentors: Rebecca McGrath, who is chair of OZ Minerals, and Brian Scullin, former chair of RBF and also chair of Hastings Funds Management. Both are wise heads and exemplify the humble chair model I am trying to emulate.
IM: You are also a director of the Tasmanian Economic Development Board. Does that role dovetail with your interests as Tasplan chair, given the obvious benefits of promoting the economic and job security of the fund’s members?
NE: I feel very privileged to sit on both boards. Tasplan manages the super of more than one in two Tasmanians, while the Economic Development Board helps attract industries to the state and supports industries that are here. Tasmania is in a period of unprecedented optimism and growth, and I encourage anyone feeling the pinch on the mainland to think about moving down here!
This article first appeared in the July 2017 print edition of Investment Magazine. To subscribe and have the magazine delivered CLICK HERE. To sign-up for our free regular email newsletters CLICK HERE.