Long term outcomes vs short term goals

Lyn McMorran, Chief Executive of the Financial Services Federation

by Lyn McMorran
Lyn thanked Adrian Orr for his presentation

The members of TINZ were very lucky to have the Governor of the Reserve Bank of New Zealand (RBNZ), Adrian Orr, speak to them about what transparency means to him and how to achieve it, at their AGM held in Wellington on Monday 29 October.

Governor Orr has only been in the role for 6 months – fresh from his highly successful stint as CEO of the New Zealand Superannuation Fund – but of course he has had previous experience with steering the country’s monetary policy during his term as Deputy Governor of RBNZ.

Known for being a highly entertaining and thought-provoking speaker, Governor Orr was introduced by recently-appointed Commerce Commission CEO, Adrienne Meikle, and thanked by Financial Services Federation Executive Director, Lyn McMorran.

The Governor’s message to attendees started by saying that honesty and integrity in all sectors of society are critical for it to remain functional and, therefore, the work of TINZ is essential to maintaining these standards.

He said, however, that often constructs within society work against us doing the right thing. In terms of transparency he said that what gets measured gets managed. Too often what is measured are things that are short term and that managers are often being incentivised for the start line not the finish line.

It is, therefore, crucial to get the horizon right – determine what outcomes we want over time – horizons that matter.

Another excellent point Governor Orr made was about the principal/agent phenomenon where a manager owns the capital but is highly divorced from the managers and the managers of managers to whom they outsource this capital and it is hard for the person at the top to know how ethical all the layers are within their organisation.

In his view, it is important to focus capital on the long term to ensure transparency, integrity and ethical behaviour.

Governor Orr’s presentation included many aspects of his insightful September 2018 speech Geopolitics, New Zealand and the Winds of Change.

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