Magazine article New Zealand Management

Gary Paykel: Chairman of a Harmonious Board

Magazine article New Zealand Management

Gary Paykel: Chairman of a Harmonious Board

Article excerpt

After 44 years with the company, a deep and intimate knowledge of the business comes naturally to Fisher & Paykel's Gary Paykel. But, he argues, all board members should truly understand a company's business and not just the governance of it.

Forget all the talk about healthy tension between board, chair and CEO, or the reports about the merits of adversarial attitudes between board and management. Gary Paykel, chairman of the board of Fisher & Paykel Appliances Holdings, won't have any truck with that kind of talk.

"In Fisher & Paykel's culture there is no place for that type of tension at all."

Mind you, this is a man who has held numerous roles in the 44 years he has been with the company, and a company that has a long history of melding board and management roles at the top. His father Maurice Paykel took over as chairman and managing director when Sir Woolf Fisher died in 1975, though he did subsequently relinquish the MD role to Don Rowlands. Gary Paykel in turn was managing director and chief executive, just as John Bongard, his successor at Fisher & Paykel Appliances Holdings, is now.

There was some tension on the board in the "Equiticorp days" he concedes, as he darkly refers to that period in F&P's history when Equiticorp (in 1987) bought 23 percent of Fisher & Paykel's shares. It was unlikely that Equiticorp's "short term opportunistic business philosophies" (the words of Philip Yates, another whose company suffered at the hands of the 1980s' corporate raider) would ever sit comfortably with the F&P board--and just as well that on its spectacular collapse less than two years later Equiticorp's then 30 percent holding was able to be placed with "friendly investors".

Aside from that aberration, board and management, separately and jointly, work and have always worked, as a team. On the board, says Paykel proudly, there has never been a dissenting vote.

However, that doesn't mean an acquiescent board, or the subjugation of either board or chief executive. Rather it stems from the F&P culture and the importance the company places, from the factory floor up, on the importance of teamwork. If there was tension between the board and management, says Paykel, "how would you get things done? And where does that place the executive?"

He believes the chair and chief executive together have a responsibility to build in the board an understanding of the issues facing the company. The CEO clearly handles day-today matters. As chairman, Paykel sees his role as ensuring that all the governance issues, "which are so important these days" are covered, "and that as a board we stay on track creating shareholder wealth. And the way to do that is support the executives, because after all, day to day, they run the company. The board doesn't."

Not that such support is given blindly. Another tenet of Paykel's philosophy is that board members must understand the business, not just the governance of it. He has deliberately--and frequently--turned down invitations to join other boards. "I don't know how you can be a board member unless you have a deep and intimate knowledge of the business."

It takes time, he says, for any new members (not that F&P has had too many in recent years) to get up to speed "on the level of knowledge that I believe is required to be an effective director of this company".

It's because of his insistence on the need for board members to fully understand the company and its markets that Paykel is sceptical about the value professional directors can deliver. He believes the days of professional directors, who hold positions on a number of boards, are numbered. "I think they are particularly brave--or very trusting.

"Even with a capacity to absorb all the information required, if they are not intimately involved with the company, they are unlikely to be fully conversant with the technological, design and marketing issues the company will face both here and internationally--and all the information they absorb is after the event, not before it. …

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