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CHOICE voting member briefings 2020

June 2020 briefing

 CHOICE Board Chair Sandra Davey

Since I last wrote to you, the world as we know it has continued to change. I hope that you and those close to you are making it through these times in good health and good spirit.

The Board met on 25 May, where the key items on our agenda were:

  • an update on current year performance
  • our strategy and budget for the next year
  • our donations program
  • preparation for Board elections
  • an introduction to a feedback framework called ‘radical candour’

Current year performance

The Board received a range of reports on how the organisation is faring. We were pleased to see that CHOICE continues to attract new members, with the total number of memberships pushing close to 180,000 for the first time since October 2018. (They have since pushed through this mark in the past few weeks and continue to grow.)

This has partly been driven by interest in our traditional product reviews and partly by high numbers of visitors to choice.com.au, many attracted by the unique information that CHOICE has produced to help people with consumer issues arising from the COVID-19 pandemic. Our staff – who are still mostly working from home – have worked hard to make sure that the organisation remains relevant to the issues people are facing, as the health and economic impacts of the pandemic continue to change. 

We also received an updated financial forecast. While revenue from membership has increased year-on-year, revenue from our CHOICE Recommended licensing scheme has decreased in recent months and importantly, we haven't been able to do product testing for external clients while our testing labs have been closed. Overall, we had budgeted for a deficit in 2019–20 and now expect it to be slightly higher as a result of these unanticipated events. Our balance sheet means that we can sustain this without an impact on our viability.

Strategy and budget for next year

We received a final version of CHOICE's strategy for 2020–21. This will see us focus on three key areas:

  • building connections with members in new ways – through improving the experience of being a member, creating more connections between our different online communities and continuing our work to 'reimagine' what it means to be a member of CHOICE.
  • building connections with new people – through building a larger community of people who engage with us regularly, making our advocacy work more prominent and allowing more people to join online discussions with our experts.
  • growing revenue – by continuing to grow membership, growing our donations program and testing new products and services to help consumers.

We'll also continue to invest in maintaining a healthy culture within the organisation and building necessary data and technology capabilities.

We are budgeting for a return to surplus by June 2021, consistent with the investment strategy that we have presented to members at annual general meetings (AGMs) in recent years. The investment strategy has had several years of planned deficits but with deficits reducing as the effects of our investment kick in, with revenue growing faster than costs.

Our donations program

In quite a new move for us, last year we surveyed members about their interest in donating to CHOICE. We were cautious about asking people to donate because we know that members already provide most of our income but the survey showed strong interest from many members in giving more. As a result, we have been undertaking a number of experiments around inviting visitors to choice.com.au to make a donation to support our work. The results are really pleasing and the reactions positive so we plan to continue this work.

Given that we have been critical of the predatory nature of some fundraising tactics, we are keen to set high standards for the way that we go about it, and this was a major topic of conversation at the meeting. Teams within CHOICE have created important guardrails that are intended to ensure that we protect our independence, avoid fundraising methods that hurt consumers, respect our donors and provide strong governance for our fundraising work. The Board will be reviewing our approach to fundraising at least annually.

Preparation for Board elections

While our AGM is not until November, being committed to a transparent and robust approach to our Board elections means we need to start early. At this meeting, we agreed to invite more CHOICE members to take up voting membership and set in train a Board skills audit. The skills audit will help us to identify the skills that are most important to consider when electing Board members to the positions that fall vacant next year.

We'll be opening the call for nominations after our next meeting on 27 July.

Introduction to radical candour

The Board is keen to gain a deeper understanding of the culture within the organisation and to also consider how aligned the Board and the organisation is on culture. We do this through receiving regular reports on staff surveys, meaningful information on the health, safety and wellbeing of our people, as well as seeking to understand some of the key concepts and approaches that are being applied within the workplace. 

Off the back of strategic work around 'growth mindset', at this meeting we participated in a workshop on the concept of 'radical candour', a concept that is being applied within the organisation, to develop a culture in which helpful, meaningful and useful feedback is provided and valued by the people who receive it. We feel that this is just as relevant to the work of the Board, as a source of feedback to management, as it is within the organisation.

Thanks for reading this month; I'll be back in touch in early August, following our next meeting. 

As always, I welcome any questions or feedback on what we can be doing better to help CHOICE members, or to simply hear from you, your thoughts, insights or other :)

Warm regards,

 Sandra Davey signature

Sandra Davey, Chair of CHOICE Board

 CHOICE Board Chair Sandra Davey

With encouraging news emerging over the past few days with regards to our efforts to "flatten the curve", my levels of natural optimism have jumped up, just a notch. However, I hope that you are continuing to keep safe and you're looking out for loved ones, friends and neighbours.

The Board met on 3 April for our annual strategy workshop with the CHOICE management team. This is traditionally an intense full-day, face-to-face workshop in an offsite location. In the context of coronavirus, we still met offsite – although on this occasion we were all in separate locations, spread from Dubbo to New York using a variety of technology and tools, fast becoming the norm in business. 

While holding a meeting like this via video had its challenges, it also forced us to be creative with the use of technology. We found some great new ways of going about the work of the Board and I think we'll continue some of these after lockdowns are eased. As someone who works in the tech industry, I know intimately the efforts that the Management team and our external facilitator would have gone to in order to create a virtual space that still allowed for deep levels of conversation, debate and ideation, so I do want to thank our CEO Alan and his Management Team for their work. 

We discussed:

  • how CHOICE is going
  • risks in this environment
  • opportunities for CHOICE
  • our approach to governance.

How CHOICE is going

The management team presented a range of data, some of it updated on the day of the meeting, on how CHOICE is performing in the context of the coronavirus pandemic and our nation's economic shutdown.

The Board was pleased to recognise the huge amount of work that CHOICE has done – despite all staff working from home – to help consumers. Most of this is available from the COVID-19 coronavirus hub on our website, which is being updated constantly. This has included information on a very broad range of issues, including travel insurance, refund rights for cancelled services, and health insurance.

This has been welcomed by consumers, with large increases in traffic to the website and our mobile site, mostly driven by interest in coronavirus-related topics. Some of these visitors are seeing value in a CHOICE membership, with new members continuing to join at a healthy rate.

While membership makes up most of our revenue, income from other sources such as testing for manufacturers and our CHOICE Recommended licensing scheme is being affected by the closure of our labs and the shutdown of key parts of the economy. We are monitoring the overall financial situation closely but at this stage expect the effects on CHOICE to be manageable.

Risks in this environment

A key part of our role as a Board is to work with management to understand the key strategic risks facing the organisation and ensure that we have appropriate controls and mitigations in place. We spent some time discussing the key risks in the context of the pandemic and likely recession. While this situation is evolving rapidly, we were confident that management has identified the right issues and is managing them appropriately.

We also identified that there is a risk that CHOICE fails to respond to the new types of opportunities to help consumers in this environment and much of our subsequent conversation focused on these opportunities.

Opportunities for CHOICE

There is a clear need for CHOICE to help consumers in these unprecedented circumstances. In the immediate term, that involves helping people to understand what products they need to protect their health and which they should be more sceptical about. We have encouraged the organisation to continue this work and then extend it to helping people with the financial decisions they will face in a recession. 

We also discussed the need to ensure that we emerge from the crisis with an economy in which consumers are better protected. We have already seen weaknesses in our private health and housing systems exposed and we're likely to see further problems in other sectors as we move into recession. 

At the same time, there is an increased appetite for reform in this situation, so we have encouraged the organisation to think about how it uses the evidence it is already gathering to push for ambitious reforms.

We also took the opportunity to discuss and debate a "return to normal" post-coronavirus. Our collective view is that we should take the opportunity to create our new "normal", to put us in the best position to help consumers in the future. We have asked management to consider how internal processes should evolve, taking advantage of some of the new ways of working that have emerged from these extraordinary circumstances. 

Ultimately, this situation presents opportunities for CHOICE to shift the way that people think about us, by demonstrating the importance of a strong, independent consumer advocate when times are tough.

Governance

Finally, we noted that these circumstances require different approaches to governance. As a Board, we expect to be meeting more frequently in the coming months to discuss any major changes in our environment and how the organisation is responding. Some of these will be shorter meetings and depending on substance, I may or may not update you, but certainly I will continue to update you after each of our major meetings. 

We also noted the resignation of Ben Heuston, who had joined the Board in November 2018. We thank Ben for his contribution and wish him well for the future. We are currently looking for a future Board member with strong financial skills and if we find a suitable candidate, they may be able to be appointed to Ben’s vacancy. 

I hope that you and those close to you are keeping safe. As always, I welcome any questions or suggestions about what CHOICE can be doing to help our members.

Warm regards,

 Sandra Davey signature

Sandra Davey, Chair of CHOICE Board

 CHOICE Board Chair Sandra Davey

Welcome to my first Board briefing of 2020.

What a start to the year, with an unprecedented bushfire season, followed by flooding in some regions and now coronavirus.

I'm conscious that many people have been directly or indirectly affected by one or more of these issues. As someone from Canberra, I've spent much of my holiday life on the south coast of NSW, so I for one, feel intimately touched and affected by what's happened. For any of you, regardless of which part of our beautiful country you are from, if you've been affected in any way, my thoughts and warm wishes are with you.

From CHOICE's perspective we're doing our best to provide helpful consumer advice and to look out for shonky business practices in these unusual times.

If you have not already seen it, you may be interested in our information on cover for bushfire damage in home and contents insurance policies. We have also offered membership fee relief for members who have been directly affected by bushfire.

Our advice on travel insurance cover for coronavirus has been widely shared online and featured in a number of media stories, and our staff will be looking for other ways to help people as the coronavirus situation evolves over the coming weeks and months.

Meanwhile at the Board meeting on 28 February, besides discussing these current issues, we covered:

  • financial results for the year to date
  • our program of work to ‘reimagine membership’
  • organisational culture
  • our investment risk appetite
  • Board succession planning

Financial results for the year to date

We received a report on financial results for the year to date and a reforecast for the remainder of the financial year. You may recall that over the past three years, we have invested in growing CHOICE's capabilities in areas that are critical to our sustainability, and this has involved planned deficit budgets as we have drawn down on some of the organisation's healthy cash reserves.

We reported at the AGM in November that we're budgeting for a significantly lower deficit in 2019-20 and our reforecast indicates that we are on track to meet the budget approved by the Board.


Reimagining membership

The Board received a briefing on a large program of work to 'reimagine' what it means to be a member of CHOICE. We are extremely conscious that our current approach to membership has grown out of our early life as a magazine publisher, and whilst many of our members still value our magazine (as do we!), we have a growing pool of members who engage with us in other ways.

In recent years, other membership organisations and publishers have developed new ways of connecting with their supporters, some with great success; The Guardian's development of new reader-driven funding programs is just one example. We want to learn from the best of these examples and apply them to CHOICE.

This is a large and ambitious project, involving many teams in the organisation. It requires us to understand:

  • what people most value about being a member of CHOICE
  • what else we can offer that new or potential members would value
  • how we can improve the way we communicate with members and involve you in our work.

Some members have already participated in research to help us understand these issues, which we appreciate.

It's such a critical initiative that it will likely stretch well beyond 2020, indeed past my tenure on the Board. Having said that, the organisation is applying agility principles which means we will continuously deliver small increments of value to members and the broader community, rather than wait till a new model of membership is perfect. It's also of such importance to our sustainability that it has Board oversight, so I will continue to report back to you on this program of work.

Organisational culture

Boards of organisations across the world are taking a deeper interest in the culture inside their organisations, and rightly so. The banking royal commission demonstrated what can go wrong when a board does not drive a positive culture from the top. As part of our commitment to better understand the culture within CHOICE, we spent some time understanding the concept of growth mindset, which is a priority within the organisation.

Growth mindset is essentially about believing that individuals have the ability to learn and adapt, rather than believing that their skills and capabilities are fixed. By supporting staff to develop and apply a growth mindset, we hope that this will in turn help the organisation to learn, adapt and respond in what is an increasingly complex, global and competitive marketplace.

The Board spent some time discussing the research behind growth mindset and participating in a range of exercises that mirrored those used in workshops with our staff. As well as ensuring that the Board and management have a common understanding about these concepts, by going through a similar learning process to staff we hope to better align the culture of the Board with the culture within the organisation.

Our investment risk appetite

It is an important part of our role as a Board to manage the organisation's assets in a prudent manner, including cash assets. We currently have around $8.9 million in cash, of which $7.6 million is invested in term deposits at interest rates of 1.3% to 1.6%. 

These cash reserves have been built up over a number of years and have allowed us to make the necessary investments to enhance CHOICE's sustainability as mentioned earlier in this update. We are still prudently holding amounts significantly above our cash reserves floor, to provide CHOICE with flexibility for the future in a rapidly changing world.

In this context, the Board has traditionally taken an extremely conservative approach to investment, restricting our cash investment to term deposits. We periodically review this approach and spent some time at our meeting discussing our investment risk appetite.

Our view at this stage is that it’s not appropriate to limit our investments to term deposits. We have ruled out higher-risk options such as hedge funds or derivatives but think that a balanced portfolio could include some low to moderate risk investments in order to enhance investment returns to CHOICE in the long term. At this stage, we have not made a decision about shifting investments – we were simply trying to define the boundaries of our risk appetite to allow management to prepare some further advice on a future investment strategy. 

We will apply very careful consideration here and would welcome any feedback you may have on the general direction we are considering, and on any other issues that you think should be considered.

Board succession planning

Helen Wiseman, the Chair of our Finance, Risk and Audit Committee who will be well known to members who have attended AGMs in recent years, has flagged an intention to step down when her second three-year term ends in November.

She has given considerable notice which we're grateful for and given the importance of this role, we have started the process of finding a potential successor who will initially be invited to join the Finance, Risk and Audit Committee.

When appointed to the Board, Helen had a background as a partner with KPMG, as well as experience on a range of not-for-profit and for-profit boards. We are ideally looking for somebody with a similar level of financial skill and experience, as well as some exposure to not-for-profit organisations. This position has been advertised online, so please feel free to forward it to anybody who may be interested.

The Board will next be meeting on 3 April for our annual strategy workshop with management and I'll be back in touch with an update after that. In the meantime, I hope you'll see some of the work we are doing to promote CHOICE's 60th anniversary in the media, in CHOICE magazine and on our website, which will be rolling out over the next few weeks.

As always, I value and welcome responses, thoughts and insights from all of you so please write to me anytime. 

Best wishes

 Sandra Davey signature

Sandra Davey, Chair of CHOICE Board

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See CHOICE voting member briefings from 2019