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Governing in a Shifting World - Critical Governance Issues Redefining Board Effectiveness in New Zealand
Insights from the
Institute of Directors, New Zealand
As chair of the Global Network of Director Institutes (GNDI), I have had the opportunity to travel and learn from governance professionals from around the world.
One of the things that has struck me is that the governance issues being faced by boards are broadly similar everywhere, but the conversations – and level of importance attached to issues are strongly dependent on the local governance culture and business environment.
At the Institute of Directors in New Zealand, where I serve as the Chief Executive, we listen to international governance perspectives, monitor trends in governance conversations and synthesise these varying perspectives with current ideas in our own governance culture and business environment.
Each year, we take our key observations of global governance trends and combine them with the surveyed views of our members to create a five-point shortlist that boards can use to guide discussions.
Productivity is New Zealand's decisive test. The country's living standards, competitiveness and fiscal resilience all depend on producing more value from the resources it already has.
This is not a comprehensive list of governance challenges. Rather, our Top Five Issues for Directors suggests key areas of focus for boards over the next 12 months. As they seek to navigate a fast-changing global environment and create a more positive future for their organisations in 2026, we suggest boards consider:
1. Governing for growth
2. Geopolitical climate
3. AI agents of change
4. The chair and CEO dynamic
5. The rise of committees and advisory boards
Governing for growth
Productivity is New Zealand's decisive test. The country's living standards, competitiveness and fiscal resilience all depend on producing more value from the resources it already has.
Boards sit at the centre of that task. Decisions on investment, capability and technology determine whether innovation lifts output or simply adds cost. A credible growth agenda – one that improves productivity is now a marker of good governance as much as good business.
Capital and funding discipline anchors credibility. Each investment should be tested for its contribution to long-term value, not just short-term return. The same rigour now applies to intangibles such as data, software and brand.
Sequencing is important; what must happen first, what follows and when capital should be redirected if results fall short. Execution completes the picture. Directors are asking for early, tangible signs of progress – efficiency, throughput, customer retention and cash generation – and expect management to act when they lag. Structure choices follow. Whether through partnership, consolidation or collaboration, growth must strengthen performance to deliver greater value, not dilute it.
Geopolitical climate
The geopolitical order that underpinned decades of open trade is fracturing. The world is shifting from a rules-based system to one shaped by power and policy. For New Zealand, the change is visible across trade due to uncertainty around tariffs, and in the way environmental and climate settings now influence entry into some markets.
Boards are assessing how tariff changes, data controls, environmental standards and geopolitical alliances influence cost structures, market access and risk. The task is to maintain agility in an environment where global settings shift faster than domestic policy.
In this environment, advantage lies in breadth and adaptability which allows to access more than one market, more than one supplier, and systems that meet multiple standards. Our boards need a clear view of exposures, how regulatory shifts alter delivery, and how to align credibly with partners whose expectations now extend well beyond price.
New Zealand boards are also confronting the limits of single-market strategies. Recent disruptions to global shipping routes and rising insurance costs have exposed how quickly logistics can shift from predictable to constrained, increasing the vulnerability of resource-intensive trade. Many exporters are now building parallel channels maintaining access to the US and China while developing options in Europe and other regions to reduce dependence.
AI agents of change
AI is already embedded in many of the systems that run everyday business. It schedules, analyses and responds across finance, operations and customer platforms, reshaping how work is organised and delivered.
Agentic AI is a newer form of AI that is now emerging within the same systems, enabling these agents to plan and act with greater autonomy as part of routine workflows.
For directors, the issue is assurance - verifying how these agents perform, who is accountable for their actions, and whether their outputs can be trusted. Oversight of automated decision making has become a core governance responsibility. Boards also need to see that real productivity gains are being made.
Platform dependence brings concentration risk. An outage, security breach or policy change by a major provider can interrupt essential services. In sectors such as banking, energy and government, that dependency deserves the same scrutiny as any other single point of failure.
The Chair - CEO dynamic
The relationship between a Chair and Chief Executive can demonstrate the cohesion of an organisation, or expose its fault lines.
Boards often say their most important job is appointing the Chief Executive. It is the one role that reports solely to them, and the choice sets expectations for tone, culture and leadership behaviour before anything else takes shape.
The relationship between the chair and the chief executive determines how issues are raised with the board, how context is shared, and how governance holds steady when pressure builds.
This relationship is the hinge between oversight and action. When it works, the chief executive shares issues and trade-offs early, the chair frames the decision path, and the board receives full and timely context. Information moves freely and directors can exercise their judgement with confidence. The tone is calm, communication open, and the organisation faces pressure with composure.
These dynamics are most exposed in moments of scrutiny or pressure – regulatory review, public inquiry or a leadership transition that arrives faster than expected. Strong chair-chief executive partnerships front together, keep roles clear and ensure the board sees the full picture before others do. Weaker ones fragment under pressure, with mixed messages and loss of confidence spreading quickly.
Rise of committees and advisory boards
Across organisations, governance is being redesigned for both assurance depth and agility. For larger companies and not-for-profit organisations with governance boards, specialist input now reaches decisions through two complementary channels: board committees which can co-opt non-director experts when depth is needed; and advisory boards that are convened for specific, time-bound problems and retired once their purpose is met.
This shift is less about adding structures and more about how expertise is provided as part of the overall governance architecture. For boards, the job is to sequence and integrate:
• committees delivering assurance with reliability
• advisory boards delivering options and context on defined issues
• the board's governance, as the holder of ultimate authority and accountability.
Getting those parts to work together so that committee conclusions and advisory board insights land within the board's decision-making cycle has benefits. It can reduce duplication, shorten decision lead times and improve the signal-to-noise ratio in board papers.
In Conclusion
Our 2025 Director Sentiment Survey found 55% of directors expected the economy to improve over the next 12 months, the highest level of optimism about the prospects for the national economy since the survey began in 2014. But despite the positive outlook, New Zealand boards continue to prioritise cost control, cashflow and productivity, reflecting uncertainty about the pace of recovery.
The five governance issues we have highlighted for 2026 reflect this reality. A focus on these will help boards position their organisations for growth as economic recovery takes hold. There are many other items on the board agenda including staff capability, diversity, regulatory change and myriad others. But these five are areas in which we believe New Zealand directors can make a real difference over 2026.
Back to HomeAuthor
Ms. Kirsten (KP) Patterson
Chair of the Global Network of Director Institutes (GNDI) and, Chief Executive of the Institute of Directors, New Zealand
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
