Julie Steiner: What do you consider to be the critical issues affecting board development in Australasia, with particular reference to board dynamics and structure?
Ann Sherry: In general terms, the relationship between a Chair, CEO and Independent Directors, can make for great performing businesses.
Independent Directors and a Chair need to bring to the table a sense of inquiry based on their broader experience outside a particular business. They need to offer insight that helps a CEO ask the right questions inside a business, to really add value to what comes from executives inside businesses. Boards that don’t really add any value and just become extra workload and ticking boxes don’t serve a good purpose. Ultimately boards need to add clear value whether it is a view on the long term thinking, bringing a shareholder perspective or just asking the right questions of the CEO and executives at the right time to make sure you’re getting the best outcome, the best business strategy and the best thought processes applied to the complex issues involved in running businesses day to day. At the same time, they should not lose sight of the long-term for the sake of looking good in the short term.
For Chairs and Directors in particular, this involves reading the external environment on issues such as making sure there is diversity on boards. There are now also regulatory expectations in that area so if you’re not picking that shift in the external environment, you are clearly not staying in touch with contemporary issues that you need to and, similarly, I think the impact of technology on businesses is in many sectors completely reshaping the competitive landscape. When it comes to getting revenue into businesses, directors have an obligation to stay abreast of what is happening in the external market again so they can bring that to their questioning of business strategy and awareness.
The impact of technology on businesses is in many sectors completely reshaping the competitive landscape.
JS: What are the key infrastructure issues facing the Australian economy?
AS: Government has traditionally been the major player in the pathway to infrastructure development in Australasia but increasingly government needs private sector support, thinking and cash to undertake major infrastructure projects. There are challenges in that because cultures inside government are often highly risk averse, not very commercial and often not really on top of the way to negotiate a great outcome where the structure is a public-private partnership or even to outsource to the private sector.
There is a bit of a skills mismatch which is a challenge at the moment and we are seeing it in government either from the over-pricing of assets for sale, underpricing projects they are looking to do or over ‘specing’ projects and, as a result, blowing out budgets.
JS: What is your view on the rate of change in technology and the changes occurring in consumer behaviour?
AS: The world of the consumer is moving very fast and there are many businesses that have been successful over a long period of time that are now struggling either because they’ve been disintermediated by technology, or because patterns of consumer behaviour have fundamentally changed. Having run consumer businesses for such a long time I know that unless you are watching what is happening in the external market, unless you’ve got your finger on the consumer pulse, it is very easy to believe that your existing strategy will serve you long term, only to find yourself in a declining business rather than a growing business.
That is quite challenging for long established businesses, closed businesses, and for businesses that say they are customer focused but in fact don’t talk to their customers enough or don’t have ways of listening to their customers.
Technology has opened up both opportunity and threat because it makes it that much easier for your customers to talk to you but also it means there are competitors in every sector seeking to get in between you and your customer. They are also looking for weak links in businesses. The classic example is Uber and traditional taxis. Uber saw an opportunity in a highly regulated industry where customers weren’t happy, the service was old fashioned and the quality of the service had reduced over time. Suddenly, you have got a different mechanism with more motivated drivers, reliability, visibility, so that the whole Uber promise touches all the weak links of the taxi industry in various parts of the world. This is one of those areas where you have to be constantly on the lookout for the service failures in your own business and the opportunities that others might be seeing.
JS: What is your view on the status of diversity in Australian boardrooms?
AS: Diversity in Australian boardrooms is happening too slowly but there is some momentum at the moment. This is partly because some companies have moved much faster than others and as the world turns quite quickly there is a lot of positive focus on companies that have much better gender diversity than others. These companies have stopped talking about 20 per cent or 30 per cent; they have gone straight to 50 per cent. They are now thinking not just about gender diversity but about ethnic and other areas to reflect Australia of the 21st century and beyond rather than Australia of the 1950s. There is no lack of talent among women but you can’t have merit-based procedures if everyone looks the same. Too often people have adopted the language without changing the culture.
Companies need to get under the cultures that shut women out. There are three things that still stand in the way. People don’t give up power easily. Secondly, board members look for people they already know. So, the ‘clubiness’ on boards is real. Board members tend to look to people that they’ve worked with either in an executive role, or on another board, and you can end up with the same group of people going round and round.
Finally, there has really been no requirement to choose diversity. ASX guidelines on diversity have shown that change can be achieved. No amount of government policy or general conversation about diversity created change. It needed a regulator to say that it has to be done and if you don’t do it we’re going to name and shame. The guidelines now have every board talking about their succession plan and where they need to go to find new directors. At least there is now a conversation about diversity on boards.
JS: You have worked both in the public and private sectors, in trades unions and big businesses. What significant things have you learned from that diverse history?
AS: Working across such a range of activities means you learn a lot, although there are lots of common things with all my boards, about customer, P&L and good business practices. You learn how businesses in different sectors work and the thinking that drives them.
I had previously been critical of the private sector from where I sat in government. So, when I was offered the chance to get into the system and try to change it, I figured I needed to put my money where my mouth was. There are very few opportunities to come into organisations at a senior level and be part of driving a change programme. So that was incredibly appealing. I learnt that even well-established institutions can change, and the culture change that you bring to an organisation is what makes them relevant.
I have grabbed opportunities when they came my way and I have taken more risks than most people. With that comes the opportunity to take learnings from sector to sector. In fact, I probably have a higher tolerance for risk than most people and I’ve learnt that taking a risk does pay dividends. At every point, whether moving geographically or from the public sector, the financial sector to the cruise industry, people have asked, ‘why would you do that? If you stay here the prize is yours’. The question is whether you want to try something different and grow from a personal and career perspective as a result.Embracing change enables you to learn whole new sectors and you find the issues that are similar that you can build on and you find the things that are different to which you can bring fresh eyes and approaches.
I have grabbed opportunities when they came my way and I have taken more risks than most people
Embracing change enables you to learn whole new sectors and you find the issues that are similar that you can build on and you find the things that are different to which you can bring fresh eyes and approaches. As an individual, you learn so it gives you stretch because it is both stimulating and interesting.
When I worked for a trade union I spent most of my time cleaning up after poor decisions made by executives in businesses where we had members. I discovered a lot about the result of poor decision making. I learned a lot, particularly that if you don’t treat people fairly or, if you are capricious or dishonest in the way you lead, there are consequences inside your organisation.
That is what gave the trade union I worked for many new members and plenty of work. The key learning was that the more you invest in being better at leading well, speaking honestly and carrying people with you in your organisation, the better your business will be and the less likely your people will feel they have to go somewhere else for help.
Ann Sherry CV
Ann Sherry AO is currently Executive Chairman of Carnival Australia, the largest cruise ship operator in Australasia and a division of Carnival Corporation & Plc. Carnival is the world’s largest cruise ship business. She joined in 2007 as CEO and has transformed the industry and growth has been double digit each year since 2007. Prior to this, Sherry was with Westpac for 12 years and was CEO, Westpac Banking Corporation, New Zealand and also CEO, Bank of Melbourne. She was a driver of cultural change, community engagement and customer focus in commercial and retail banking. Before joining Westpac, Sherry was First Assistant Secretary of the Office of the Status of Women in Canberra, advising the Prime Minister on policies and programmes to improve the status of women and was Australia’s representative to the United Nations forums on human rights and women’s rights. In addition to her executive role, Sherry holds a number of non-executive roles including Sydney Airport, ING Direct (Australia), The Palladium Group, Australian Rugby Union and Cape York Partnerships. In 2015, Sherry was named as the overall winner of the Australian Financial Review and Westpac 100 Women of Influence Award.
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