Rudman's city: Headshrinkers take controls at seriously disturbed airline

By BRIAN RUDMAN

If you've been wondering who would be mad enough to become a director of Air New Zealand, you're not alone. Airline chairman John Palmer seems to have had the same thought.

The whisper around Auckland gentlemen's clubs is that he is insisting members of the new board undergo psychological tests as part of the selection process. This involves both new directors and carry-overs from the old board like former Business Roundtable chairman Ralph Norris.

When I caught up with Mr Palmer, he ducked for cover, saying it would be "foolhardy" of him to discuss the selection process, but that he would be happy to open up once the new board was announced.

Almost as coy was existing director Elizabeth Coutts, who when asked if she had done the test yet said she'd rather not comment and that the question put her in "a difficult situation".

The professional director and former Commerce Commission and Earthquake Commission member referred me to Mr Palmer for comment.

Asked if she'd had to undertake such a test in the past before joining a board, she said never before as a director, but that she had sat "many of them over the years in all sorts of roles".

Another director, Sir Ronald Carter, said he had not been asked. "I don't know that anyone's been asked to do it yet, or if they have been asked. But I haven't been asked."

I was unable to contact the other three directors, Dr Jim Farmer, QC, Mr Norris, who has just been appointed chief executive officer, and Roger France, but it is understood the last two have been tested.

In a speech he made at Air New Zealand's annual meeting on December 19, less than a month after his appointment, Mr Palmer hinted at his plans.

"Any new appointments [to the board] will be made on the basis of a rigorous process to ensure the board has the balance of personal skills and attributes to move the company out of its current fragile state and build a successful business."

Psychological assessment tests of one sort or another have been with us for years, and are apparently a common tool inthe selection of senior executives.

But until now, such "scientific" selection processes have rarely, if ever, been let loose on New Zealand boards. There, the spirit of the old school tie and the old mates act still dominate the choice of members.

This results in a situation, quipped one corporate headhunter, where "about a third of New Zealand directors wonder how they got there - and so does the rest of the population."

The director-selection process in this country seems more secretive than selecting a new Pope.

Most professionals delight in a little free publicity, but the firms engaged in this business pleaded not to be identified with this story.

I guess if their names pop up in the papers, it could worry clients, both existing and potential, about possible loose lippedness.

That is why I couldn't get anyone to confess, either on or off the record, to what was going on.

Off the record, however, consultants say Mr Palmer's testing of existing board members is sensible. They say that to create a high-performing team, you have to evaluate existing members before you can choose newcomers to complement them.

Another headhunter takes up the theme. Companies are starting to realise, he says, that simply complying with governance principles is not enough. You also need a team with the right "behavioural approach".

There is no place for a person with all the right "competencies" who is "unprepared to convey a view because they don't have basic courage or communications skills". That, he says, "happens more often than you think".

There are behavioural tests to try to pick a board that will be neither a bunch of yes men, nor a collection of warring loners unwilling to listen to or debate other views.

As for Mr Palmer, I'm not sure whether he has taken the tests. Or if he has, whom he shares his strengths and weaknesses with.

However, one approving expert says his very decision to select the board on this basis indicates he is a team player. "You'll never find a chairman who likes to divide and conquer his board go through a process like this."

Personally, it all makes a lot of sense. Keeping Air New Zealand in the air is going to take all the help going - so why not a little input from the men in white coats?