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Review recommends business improvements for AWI

01
Sep '09
An independent review of Australian Wool Innovation's performance over the last three years (1 July 2006 to June 2009) has reaffirmed what many Australian woolgrowers already knew: the wool industry's marketing, research and development organisation has room for improvement.

The review is a formal obligation under the Statutory Funding Agreement (SFA) with the Australian Government. It is part of a three-year process in the lead up to WoolPoll, where AWI shareholders decide on the company's future level of funding.

Arche Consulting conducted the review and believes AWI could be more effective in the areas of strategic planning, governance, consultation and the measurement of performance.

After conducting a comprehensive line by line assessment of the company since December last year, current AWI directors have come to many of the same conclusions. The new board and management acknowledge the governance framework of the company and its subsidiaries has been inadequate over the past three years. This has resulted in an inability to set meaningful targets and objectives and to comprehensively assess the company's performance and outcomes against those objectives.

Recognising these deficiencies, present directors have made major changes to the systems within the business this year. In January, the AWI board commissioned experienced business manager and former AWI director Ken Boundy to report on the structure of the company. This was followed by the appointment of Brenda McGahan to increase marketing activities and address the funding shortfall of AWI.

In addition to an increase in marketing activity in key markets, funded by a reduction in overhead costs, on and off farm R+D have been integrated to allow a better flow of market signals.

Under Brenda McGahan's new Strategic and Operational Plan, many of the issues raised in the Review of Performance have been or are being addressed. For example, a six-monthly review of research projects. Tendering of business to increase competition and reduce costs. Project assessments have been improved and the benefits of initiatives such as the Japanese Marketing Program are now clearly outlined. The overall result is a proactive three-year R&D and extension program at AWI which is closely aligned with Australian Government research priorities.

The risk management consultancy, Risk Management Partners, has been contracted to review and revise AWI's Fraud and Risk Plans.

The Board has engaged board performance advisors, Cameron Ralph, to work with it on key issues of corporate governance and to implement an improved governance framework.

The new board and management of AWI acknowledge that over the period of the review there had been inadequate consultation with shareholders and other key industry groups when determining strategy and direction for the company. The board has responded to this by significantly increasing AWI'scommunication with woolgrowers. So far this year the AWI CEO, chairman, directors or executives have attended close to 60 woolgrower and wool industry functions in 6 months. At these field days, shows, expos, conferences and forums AWI has listened to the views of the industry it serves.


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