Description of Infrastructure ITO – Governance Model
The proposed governance model for the Infrastructure ITO (IITO) is outlined below.
The optimum structure for the new entity is an incorporated society. This will enable the future
growth of the IITO to cover all infrastructure sectors. IITO members are organizations and
individuals who participate within the defined industry sectors the IITO operates and has recognised
coverage for.
The governance structure surrounding the new ITO needs to ensure the IITO is able to recruit and
maintain a high performing Board that is competency based, whilst also ensuring stakeholders
(members) have involvement in Board selection and appointment, and also have sufficient oversight
of Board performance.
A number of groups are proposed to support the structure and allow members to be involved at
various levels. These are described in the table below. The roles of each group and how they are
expected to function are detailed in the relevant section of the remainder of this paper.
Group
Description
Industry Group
A group of members representing a defined
industry sector for which the ITO has coverage
Stakeholder Council
A representative group of members nominated
from each Industry Group responsible for
providing strategic advice and providing
performance oversight of the Board
Director Selection Group
A group responsible for appointment of
Directors
Board
The governing body for the new IITO
Each group is described in more detail below. A diagram showing relationships between the groups
is appended to the paper as well as worked examples.
Industry Groups
An Industry Group is a group of members representing a defined industry sector for which the ITO
has recognised coverage. For the initial formation of the IITO there will be two Industry Groups,
being the Electricity Supply Industry and the Civil Construction Industry. These are the industries
currently granted coverage by the TEC.
Each Industry Group must be formally recognised by the Board before forming, and must allow open
membership to all parties involved within its sector. For example it cannot be comprised solely of a
group of contractors without allowing asset owners to also be members.
Each Industry Group can appoint a member to the Stakeholder Council. The process via which
Industry Groups select members to the Council will be defined by the Industry Groups themselves.
Members can belong to multiple Industry Groups as long as they can demonstrate active
involvement with each Industry Group’s sector. This is likely as there is a growing shift to broad
infrastructure companies, and there are already many examples of multi-utility asset owners and
service providers.
Stakeholder Council
The Stakeholder Council is a representative group made up of members appointed by Industry
Groups. The purpose of the Stakeholder Council is:
1. To provide industry specific advice to the Board, including general trends, intelligence and
the provision of industry specific information useful to the setting of strategy for the ITO
2. To monitor the performance of the Board against agreed performance criteria, including
performance against short-term (annual) measures and longer term strategic objectives
3. To agree the skills matrix from which Board appointments are made
4. To appoint members to the Director Selection Group (DSG)
Industry Groups will be able to appoint members to the Stakeholder Council based upon trainee
numbers in their Industry Group. If an Industry Group has less than 5% of the total IITO trainees
then it will not be able to directly appoint a member of the Stakeholder Council but may pool trainee
numbers with other Industry Groups to get above the 5% threshold and appoint a member. An
Industry Group will be able to appoint additional members to the Stakeholder Council for every 10%
of total trainee numbers above 5%, as follows
% of trainee numbers
No. of Stakeholder
Council members
<5%
0
5% to 15%
1
15.01% to 25%
2
25.01% to 35%
3
35.01% to 45%
4
45.01% to 55%
5
The role of each member of the Stakeholder Council is to ensure a clear and regular flow of
communication between the Council and the Industry Group they represent. This will include
collating and representing industry specific input to the Council and ensuring the Industry Group is
well informed of the performance of the ITO. If any Industry Group is dissatisfied with performance,
particularly in relation to meeting the training needs of its sector, then its ultimate remedy is to
withdraw membership of the ITO (and for the ITO to lose funding).
The Stakeholder Council will be led by a President who will Chair Council Meetings. The term of the
President will be one year with the ability to continue for a second and third term. Members will be
rotated on three year terms, with the right of one renewal. These terms will be staggered to ensure
continuity.
The Stakeholder Council will agree a reporting framework with the Board (including what to report
and how frequently). The Council will meet with the Board twice per year.
Director Selection Group
The purpose of the Director Selection Group (DSG) is to appoint Directors to fill the 5 places available
on the Board. Note that post transition it is likely to be 1-2 Directors per annum (based on 5 Board
seats with terms of no longer than 3 years).
The DSG shall be comprised of the Chair of the Board and (no more than 6) members appointed by
the Stakeholder Council, in consultation with the Board Chair. Board Directors, other than the Chair,
may not serve on this group, but Council members will be eligible. The DSG may co-opt other
resource as it sees fit. The DSG shall consider all nominees for the member appointed Board
positions. These nominees can come from several sources – either nominated by members or via
direct application by prospective Directors.
The Board shall be competency based and selection of all Directors will be based upon agreed
criteria (outlined in a skills matrix). The skills matrix will be developed by the DSG and agreed by the
Council. It will cover the diversity of skills, experience and thinking that is required for a high
performing Board.
Board
The Board shall be comprised of 5 Directors appointed by the DSG. The Board may appoint up to an
additional 2 Directors to provide skills and experience (including satisfying any regulatory
requirements) that will improve the overall ability and performance of the Board, and ensure the
appropriate level of diversity, as per the skills matrix. The Chair shall be elected by the Board.
Board directors will be rotated on three year terms with the right of one renewal. These terms will
be staggered, to provide continuity.
The proposed governance structure is an evolution of both existing structures driven by the need to
have a high performing Board to support what will ultimately be a significantly large ITO than either
of the existing organizations. Whilst it has evolved there are many things that haven’t changed.
What hasn’t changed?
- The proposed structure provides for the majority of the Board to be appointed by members.
- It allows members to nominate potential Directors for appointment to the Board
- It allows members to appoint representatives. In the new structure this is to act on their behalf to
interact with the Board and to be involved with Director selection.
What has changed?
- A shift from a representative Board to a competency based Board (with no ability to make
representative appointments to the Board)
Why?
- The new ITO requires a high performing Board to enable it to meet its strategic objectives.
A relationship diagram and worked examples are appended to this paper.
Relationship Diagram
Final Structure
Generation
Transmission
Distribution
Electricity Supply
Civil construction
Gen plant & maintenance
Roading & pavement surfacing
Roadmarking
Utilities & subdivisions
Demolition
Rural contracting
Surveying
Laboratory services
Directional drilling
Civil Construction
Stakeholder
Council
Director
Selection Group
IITO Board
Directors (5)
Board can appoint
2 additional
Directors
Chair
elected
by Board
Nominated
Directors
Worked Example 1
The electricity supply industry group retains their collegial voting system to elect their own council
to represent their industry sector (as per current approach to appoint Directors to the ESITO Board).
They appoint three of their members to the Stakeholder Council. One of these members is
subsequently appointed to the Director Selection Group. This group interviews potential candidates,
including several from the electricity sector. Unfortunately these candidates are passed over for
more qualified candidates.
Worked Example 2
Roading New Zealand members decide to let their association appoint a member to the Stakeholder
Council. They choose a member via the same process they have done previously to elect a
candidate to the InfraTrain Board. This member is subsequently appointed to the Director Selection
Group. A Director of Roading New Zealand is nominated for the IITO Board, is interviewed by the
selection group and on the basis of their key skills and experience is appointed to the Board as a
member appointed Director.
The attached appendix called “IITO Governance Model” steps through the process of director
elections and new industry groups.