Working with Contractors

Working With Contractors
Know your Obligations

Take just a few moments to consider how your business interacts with contractors… The cleaners, security guards, IT support, Electricians, A/C Maintenance – even the photo copy maintenance people…

Who are the people you readily admit into your workplace without considering your exposure to personal risk?

Responding to Regulation change is a ‘Top 3 priority ‘for Australian CEO’s according to the latest KPMG report ‘Global CEO Outlook 2017: The outlook for Australia”. Are you aware of the regulatory requirements as a person conducting a business undertaking (PCBU) for managing contractors?

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Trust & Staff Development: The missing links & greatest opportunity

I read the latest KPMG survey ‘Global CEO Outlook 2017: The outlook for Australia” with great interest. Having been be an MD of a international subsidiary; charged with growth, profitability and sustainability, I was interested to see where the barometer of authentic leadership lay.

Whilst there were many ‘good news’ stories of forecast growth and a conclusion that CEO’s are up for a challenge and ‘…are demonstrating an ability to embrace change while approaching new ideas with enthusiasm”, we seem to be going backward globally on the very basic necessity that companies need to invest in. Their people.

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Global CEO Outlook 2017: The outlook for Australia

A warm welcome to you on a chilly Sydney morning. It’s been a little while!

I hope you have had a chance to read KPMG’s “Global CEO Outlook 2017: The outlook for Australia” , if not, I highly recommend it and you can download it here .

One of the key take aways for me was a that our CEO’s are making “responding to regulatory change” a top 3 priority!  That’s a nice change. In 2016, I found that nearly 43% of Aussie MD’s did not keep their staff updated to legalisation relevant to their functional areas. So, after what 2017 had dealt us so far, it’s great to see some focused, forward thinking leadership!

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Is this leadership?

Why do we apply different standards for those who lead our organisations to those whom they employ?

In 2016, I surveyed over 50 MD’s for a whitepaper. If you’d like a copy, visit here.

Excerpt
Interview question 1: Do you as an Australian MD of a foreign controlled entity consider you were adequately prepared or briefed on the corporate governance compliance accountabilities and liabilities facing a director before accepting the role?

Significant responses

‘Being part of a global organisation, I naturally assumed that everything would be in order in regards to governance. The overriding emphasis was on achieving budgets and adhere to monthly reporting, so in reality absolutely not’.

‘No, I accepted my role in (home country) and I learnt by doing. You must be self-motivated, but I did rely heavily on external consultants who instilled fear and prompted a response’

‘I did receive a handover from my predecessor however it was based on operational content and there was no OHS or director liability discussion’.

‘The company did not offer anything formalised however I requested to undergo the company directors course and they (eventually) agreed to my participation’.

‘absolutely not. If it weren’t for my extensive professional network, I would have been blind. I relied heavily on external expertise from my lawyer and accountant- sometimes daily consulting’.

If you are a company officer in Australia, I’d be interested in your experience. New survey is at found here

ELCA VIP Launch

On a rainy Tuesday evening, March 7, 2017 ELCA Founder Brett Flower invited a handful from within his closest professional network to a soft launch of his new business.

From L-R,
Nigel van Reyk – Former CEO of Vital Health Foods
Paul Bourke – Author, CEO of Leadership Development Australia and former CEO of Arnotts, Campbell’s and Cadburys
Monika Newman – Strategic Resources International
Brett Flower – Director and Founder ELCA
Elle Flower – Customer Engagement ELCA
David Ross – Director Phoenix Staregic Management
Stephen Pearse – Managing Director of CAPA, former director of the CEO Forum, Country Manager, United and Emirates Airlines.
Rob Salisbury – Managing Director of Strategic Resources International
Myrna Van Pelt – Managing Director Zeno Group
Narelle Hooper – Advisor, Author and Director. Former Editor of Boss Magazine and senior AFR Journalist
Mike Schoettler – Director of Sales Sense. Governor of the American Chamber of Commerce in Australia

This group represents the core of support; most for over 13 years – and is evidence of the benefits suggested by coach Wooden from the NBA , to
” Surround yourself with smart people who’ll argue with you”.

The loss of identity, morals and leadership.

When I was growing up we were encouraged to join sporting teams and community organisations such as the boy scouts. We learnt life skills, leadership, teamwork, respect and discipline from a very young age.

In the early eighties, groups like the scouts started suffering from declining numbers and the community activities like a ‘bottle drive’ and “’bob-a-job’ week were vanishing. That was over thirty-five years ago. Those who were beneficiaries of that ‘community’ now should or could be our captains of industry. Our future should be looking bright because of the values that were instilled in them from an early age.

Regrettably…I see no reflection in today’s leadership. We have fallen into an Orwellian society where profit is the only indicator of success and is to be pursued at all costs. As evidenced by a myriad of corporate scandals from diverse industries such as media, paint, pain relief, car manufacturing, consumer electronics and even our national postal system – these leaders and their boards have exhibited the worst of ethical and immoral behaviour – playing the consumer for a fool– disrespecting their core markets and using their positions of power and privilege to erode our societal values.

Institutions that defend these actions are archaic. They do not need to change – they need to dissolve. There is no changing this deeply entrenched culture without systemic eradication and complete renewal. The gentleman’s club still reigns supreme as evidenced in the current US and Australian administrations – and the boardrooms of nearly all so called “top” 100 companies. Profit, it seems always eclipses people.

The people that dictate whether we prosper or perish are the same people that regularly drive the world into recession. They are rarely ever held accountable because our “belief” these days is that we need to drive the share price up – become (or remain) number 1 and keep the shareholders happy.

The shareholders and stakeholders of this world are you and I. We selfishly care more for our time right now with a blasé disregard for our environment and larger society. If we don’t start holding ourselves and our leaders accountable, what will be our legacy? You can make the choice with your wallet. It is our problem, we made it, so be accountable.

Choose companies that act and behave morally instead of endorsing brands that deceive the public, exploit employees, profit from deception and protect their guilty leaders. There are road signs everywhere. You just have to look.

It was over 300 years ago when Newton taught us: For every action, there is an equal and opposite reaction.

Accountability for All; Not Just the 1%

“Their power is mostly wielded behind closed doors and their disagreements protected by a code of silence” states the ABC’s Carrington Clarke

The article is a call for director accountability. It goes on to quote director board exchanges, learnings and the perceived lack of understanding of duties and failures. All adequately referenced to those who have regular interaction with boards and those “ASX listed company directors (that) receive very little attention outside the set piece annual general meetings that they are forced to endure once a year.”

Private companies are also accountable and should hold themselves to the same ethics and morals society demands. Two of the ‘big 4’ accountancy firms are held privately (PWC & EY), as is Dell, Mars and Aldi.

Here in lies the problem. The article only focuses on the 1%.

Directors of SME businesses know and experience a “totally different but exactly the same” world.

‘Different’ in that if they are a director of an international subsidiary, their input to the board and the decisions they make are limited – if non-existent.

‘Same’ in that the decisions made by their parent board will directly affect the stakeholders of their local business.

“…there is increasing pressure for company directors to move out of the shadows and into the disinfecting power of sunlight.”

Disinfecting….really? Yes accountability is key, but as a director of a SME – there is no need “to move out of the shadows and into the disinfecting power of sunlight” as the article obtusely suggests. These directors are the local figurehead and mouth piece of their organisation. To bundle all directors in this pigeon hole is both inaccurate and irresponsible.

However, the article does underpin what I have been preaching to all who want to listen: There is a huge void in support and understanding for the other 99% of directors who are not part of a publicly listed business. Arguably, the actual percentage of registered Australian directors that would fall under public scrutiny is 40%. (60% are sole traders) So, 39.3% ARE in the spotlight…. constantly. (source ABS 2016)

The article raises two valid observations.

1: Australian Directors should think long and hard about anydirectorship role they are offered. The risk far outweighs the reward….simple!

2: Those who aspire to a directorship and go on to attend classes on board preparation and interaction have invested (in the long term) wisely – but not strategically.

Like any leader, you must first learn the basics and then hone the skills. No one has ever gone from learning to kick a ball to the Premier League within just one season. The course mentioned in the article is excellent and I am a graduate of that investment; Essential if you work as a director in a publicly listed company.

However, as a SME leader, a large portion of the content is irrelevant to a novice or aspiring director. These courses are a masterclass for the 1% and as such the time and investment needed is reflected.

Institutions, newspapers and academics tend to over-complicate what is essentially a very basic need every leader has: The access to relevant and timely information.

It is inconceivable that a construction worker must undergo a mandatory full day induction just to walk onto a building site, yet a director can be thrust into potential financial and personal ruin with a cursory three item checklist from the government regulator.

In 2016, I discovered that 86% of novice directors commence their roles without any formalised training…*

A director must choose their own pathway to compliance. They also must be aware in which ‘league’ they are playing and ensure their coach knows their game first hand; the challenges they face; provides them the skills and resources and then supports them for ongoing, long-term success.

Does Big Business Want to Change?

Like many people, I followed the VW omissions scandal with disbelief…well, disappointment. Did any of us believe that a company whose primary aim was to become number one would not bend just a few rules?

You have to dig a little deeper (read scratch the surface) to discover the underlying culture of big business. In 2009, an article appeared stating that “Volkswagen hopes to be the “number one” automaker in the world by 2018, an ambition it predicts will require a targeted approach to price, production and design.”… Its plan? To introduce eco-friendly vehicles with ‘innovative technologies’…

Why could VW do what all other car-makers couldn’t? It couldn’t! It lied and deceived the public…AND their own shareholders. Now, here is where part of the problem lies. The shareholders. The group of people who will not accept being number two as it reflects poorly on their return.

In 2015 VW CEO Martin WinterKorn, made no 20 in the Harvard Business Review ‘Best performing CEO’s in the world’ list; Up from position 89 in 2014. He gained this title by delivering a 108% shareholder return. Job well done hey? VW knew about the potential scandal in 2014 but were ooooohh so close to becoming number one.

‘Piëch and his wife subsequently tossed out their pretzels and resigned from the board, …and were quickly replaced by…two of Piëch’s nieces!!!’

Like many European companies, VW has a two-tiered board and is still a private company. WinterKorn (Management Board Chairman) and the VW Supervisory Board chairman, Ferdinand Piëch (grandson of Ferdinand Porsche), had been playing duelling banjos (or Tubas), and Winterkorn won the initial boardroom struggle. Piëch and his wife subsequently tossed out their pretzels and resigned from the board, (yes you read right…but wait for it) and were quickly replaced by…. two of Piëch’s nieces!!!

Now, ethically, could you invest any faith (or money) in a company that is so emphatically focused on family control and inward looking senior executives, that the hierarchy employs a corporate ‘game of thrones’ as its culture? The most progressive (not necessarily ‘successful’ in the shareholder view) companies in the world have strong, competent, and importantly independent chairpersons. Note I said chairperson…  heaven forbid any female become a ‘chairman’ of the German gentleman’s club known as VW.

Transparency International in Berlin said VW scores a grade of 5.5 out of 10 for corporate purity. So, does big business really want change? Or, is it façade to placate the masses whilst silently going about business as usual. In October 2015, the New York Times printed this from incoming chairman, Hans-Dieter Poetsch,;

 “Volkswagen faces great challenges,” Mr. Pötsch said in a statement on Wednesday. “We must overcome the current crisis, but we must also ensure that Volkswagen continues to grow, in an industry that is changing and developing at a previously unseen pace.”

Translated: we’ve had a little hiccup – haven’t learned our lessons and now it’s back to pursuing the number one title. Business as usual – nothing to see here, now please move along.

Don’t think that this a VW bashing rant; we have some serious issues at home too. Dreamworld’s boards handling of the tragic events of October; their decision to go into ‘business as usual’ mode and subsequent backdown was incompetence unbound. That’s another story for another day.

I know I will look a lot deeper when I buy my next car. With the new US leadership, and systemic short termism rampant, a Tesla may be the responsible choice. Elon Musks vision is to make a truly ‘clean’ car that is better for the environment. In doing so (Tesla) may just (eventually) become Number one in the world. Sure, it will cost more but it may be my small part to contribute in endorsing global ethical leadership. The world AND business works by physics – Newtons third Law ; For every action there is an equal and opposite reaction….Business far from usual.