Wakatu Incorporation was established in 1977 by Government order in council to take over the administration of some 1400ha of Māori reserved land, the remnant of lands which had been set aside as a condition of purchase from the original Māori owners by the New Zealand Company in 1841.
The land had been administered on behalf of its owners from 1842 to 1977 by a succession of Crown-appointed Boards, Commissioners and Trustees. From the 1880s this land was subject to perpetual lease. Government enquiries found the leases unjust but no action was taken until the early 1970s, when a Royal Commission created the seed from which Wakatu was born.
The land vested in Wakatu Incorporation is held in trust for the owners. 1,668 owners received shares in Wakatu Incorporation, and are referred to as shareholders who receive dividends and not rents. The lands which Wakatu Incorporation administers today include the Nelson Tenths reserves, Motueka and Mohua (Golden Bay) occupational reserves and the land investments purchased since 1977. The shareholders today are descendants of the original owners, who are of Ngāti Rarua, Ngāti Koata, Ngāti Tama and Te Atiawa Iwi. (History taken from Wakatu website, http://www.wakatu.org.nz)
It is more correct to describe the Wakatu Incorporation as a group of companies, rather than a single business unit. Although it began as a land-based organisation, Wakatu Incorporation has grown and diversified its assets to include seafood, wine and property. Wakatu Incorporation is based in Nelson.
Keith Palmer is the Wakatu Incorporation Chief Executive and has a broad commercial background including extensive experience in financial analysis, marketing management, business development management, bank management and property development. He has been with Wakatu Incorporation for five years.
Wakatu Incorporation is a large private company owned by approximately 2800 shareholders. These shareholders are the descendants of 254 families that originally created the Nelson Tenths.
Wakatu is governed by a Board drawn from the shareholders. The organisation maintains a head office in Nelson and also maintains section groups comprised of subsidiary companies and joint ventures.
The development of Wakatu's structure has been an evolutionary process informed by strategic planning, as the organisation has developed from a simple land owning company to an international marketing company. The Wakatu group of companies markets all its products internationally and is export focused.
The core purpose of the Incorporation is to create wealth for its owners, while also upholding the tikanga of the owners. Keith explained that Wakatu is 90% wealth creation focused to enhance the ability of the whānau of owners to pursue their own social and cultural goals.
Wakatu works to achieve this by developing a diversified asset base. The mission statement reads, "A business of the land and the sea - he taonga tuku iho - for profit, social and cultural growth through professionalism, honesty and diligence and embracing our tikanga." (from Wakatu website, http://www.wakatu.org.nz)
Keith explained that the organisation's key relationships are with the shareholders and its business partners. Government is not really seen as part of this mix. Because Wakatu is a commercial organisation and not a political one, it maintains its key focus on commercial relationships.
As has already been stated there are seven seats on the Wakatu Board. Keith believes this is a good number. Shareholders appoint Board members for a three year period. Individuals are nominated for the Board six months before the elections. At this time, nominees must submit their curriculum vitae for voter consideration before the election. This process is well organised.
The Board of Wakatu tries to maintain a balance between commercial skills and tikanga Māori skills. Commercial skills involve understanding business and its analytical requirements, sound judgement and decision-making skills. Keith explained that it has not always been easy finding people with the required commercial skills, but it has been easier to find people with skills in tikanga Māori.
In recognition of the need to constantly develop future leaders, Wakatu runs an Associate Director scheme. A young person with appropriate skills is selected from a pool of applicants to attend board meetings and be treated as a board member. It is a non-voting position designed to give younger people experience. This programme was established in 2002 and will be run for five years. Those appointed are required to attend meetings for 12 days a year and receive a daily fee.
In addition, Wakatu runs a two-day director training scheme every three years for all board members. The organisation also ensures Board members undertake New Zealand Institute of Director's training. The Board communicates with its shareholders using a number of vehicles including quarterly newsletters and its website. Wakatu also has two shareholder meetings a year accompanied by a written report. One hui is held in Nelson and one is held in Wellington. Wakatu shareholders are spread across the country with the main concentrations being in Te Tau Ihu (northern South Island), Wellington, Maniapoto and Taranaki.
As has already been noted, Wakatu sees its relationship with its owners as being of primary importance. It therefore works hard at maintaining good communications and a good relationship with its owners.
The Board's overall performance is assessed using bottom line indicators such as absolute profit, return on funds from each asset group and net funds growth. Every manager involved in the Wakatu group is rated against key performance indicators, and salaries include a risk premium of 20% dependent upon management achieving its key performance indicators (KPIs). All managers and staff have annual performance assessments.
Keith explained that a Board member must have a very clear focus on what the organisation is about particularly in developing strategy. Once strategy has been developed the Board must have the discipline to stick to it. This is very important. He is also clear that the Board must be involved in creating a constructive atmosphere for the company to do its business.
Essentially the Wakatu Board is responsible for three main things - explaining what to do, how to do it, and making it happen. The board should give support to management and enable it to do its job. The Wakatu board ensures accountability with full open reporting to its owners. As has already been explained, this is done through two general meetings, pānui and the website. The company benchmarks its performance against similar organisations, but also has independent goals to raise financial returns over a five-year programme.
Wakatu's business environment is very competitive in all the regions. The organisation ensures it constantly benchmarks its business units against the competition.
Wakatu also carries out extensive business risk analysis which involves focusing on a number of key areas including the exchange rate, economic risk, climate and other environmental factors. The Incorporation uses industry analysis and internal analysis to create core strategies for each business arm. This is a formal planning cycle which involves reviewing and evaluating the previous year's operations, preparing forward business plans and preparing budgets. This process begins in February and runs until August, and is very important as it dictates where Wakatu will allocate funds.
In terms of regulatory constraints Keith noted that the seafood industry necessarily maintains strict health regulations. Keith believes it is essential to maintain New Zealand's high standards, but he notes this creates constraints on factory operations.
Wakatu has difficulties with Zespri having the monopoly to market New Zealand's Kiwifruit produce internationally. Wakatu is committed to developing its own indigenous brand and the organisation wants to be able to market its own kiwifruit produce as part of this brand. As Keith puts it, "We have a different strategy and philosophy to the way Zespri markets New Zealand kiwifruit. While we understand other growers might need this group, we don't."
Wakatu employs an annual planning cycle utilising hard data from industry analysis. Keith believes this process is very effective. Wakatu Incorporation is clear that governance should not interfere with management. The Wakatu board sticks to governance and management sticks to management.
Management has a monthly reporting responsibility at board meetings. In addition to this process, at least one member of the Wakatu board is on the subsidiary company board. This ensures clear communication and flow of information between the Wakatu board and its subsidiaries. Keith believes this process is very effective. The entire planning process is set out to avoid conflict. Keith believes this is where the discipline is necessary as he notes conflict only arises if people deviate from what has been agreed. The planning process is also a consensus building process.
Keith believes there are a number of changes that could be made which would enable Wakatu to further develop. Key issues for Wakatu include freeing up the marketing of Zespri/kiwifruit to allow Wakatu to market its kiwifruit under its own brand. He would also like to see a total finish to the perpetual lease regime that currently exists over Wakatu lands.
Additionally Keith would like to see progression on granting water for aquaculture initiatives and less red tape in attaining Government funding for innovative projects. As an export focused organisation Wakatu would like to see more control over the Reserve Bank to ensure the currency does not fluctuate. Keith would also like to see training programmes established for young people wanting entry in the horticulture industry.
Keith believes it is vital that Government invest more in research, development, and training and believes the breakdown of the apprenticeship system set New Zealand back. In terms of Government support for the way Wakatu manages itself, Keith is adamant that it does not need Government's involvement. "We have outgrown that. We are big enough to stand on our own. We don't need big brother."
Wakatu's success has meant it has outgrown its original structure. The Incorporation is currently sectorising its various businesses and organising into three independent companies focusing on primary industry, property and seafood. This is being done in order to allow the involvement of external expertise. Along with the increased complexity of the structure Wakatu has recognised the need to review the reporting structures to keep pace.
Since 1977, Wakatu Incorporation has diversified its portfolio from solely land-based leases, to include seafood, commercial property, horticulture, dairy farming, forestry, viticulture, property development and equities. As of July 2003, Wakatu's asset base was valued at $150 million.
Keith believes a successful Māori organisation gives its people mana. He states that the business must uphold the owners' tikanga and create and distribute wealth efficiently. He believes Wakatu achieves this.
Last modified: 15/06/2011
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