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.

Filter the Noise to Find Your Pathway

In November 2016, I received the grades for my final MBA subject, a Master’s Degree research paper into Corporate Governance entitled: A review of Directors liability for Australian based company officers: a novice Directors induction. The paper examined what the learning institute described as;

   ” This project has identified an interesting gap in the corporate governance literature. The collection and triangulation of interview, survey and secondary data could add in-depth, critical and reflective knowledge through analysis and discussion to the corporate governance literature”.

I’ve spent the last four months scrutinising the landscape in which I was entrenched for the past 3 years. My directorial journey was a solo one into a dark and unknown abyss. Researching the paper, I discovered significant knowledge and application gaps in Governance within Corporate Australia. It was graded a High Distinction.

This led to my decision to continue my learning and share the insights with novice and aspiring directors; to save them from wandering down the dark path I had been facing and make sure the fork they choose is to enlightenment. Ethical Leadership and Compliance Australia Pty Ltd was incorporated. There is a modest pathway to gaining approval as a Registered Training Organisation, but as President Roosevelt observed, anything truly worthwhile requires effort, pain and difficulty.

There are many in my personal and professional network that helped me along the way. My wife and family were extremely supportive.

For those who have helped a guy from country NSW, who left school at 14 to work as an engraver, served an apprenticeship and ended up with a MBA … Thank you!

‘A Change Is Gonna Come’​ And Other Lessons From History

The lyrics from Sam Cookes’ 1964 hit seem more poignantly relevant than ever.

First, we faced Brexit, where Britons voted to be rid of a system where back room deals and political favours were prioritised over sound policy and foresight. Next, a TV realty ‘star’ who’s qualifications include an endless stream of bankruptcies, bullying, sexist and racists rants, climate change denial and having paper wealth in the billions – yet paying no tax, gets elected as President of the USA … because apparently, he represents the working class American.

‘One day, the house of cards will collapse’ says Euro creator and now vocal opponent, Otmar Issing. Italy has voted overwhelmingly against the European establishment, which could determine its fate in the EU. In 2017 both France and Germany head to the polls. ‘The only constant is change’ Heraclitus mused and 600 years later his neighbour from across the Aegean, Pliny the elder stated ‘The only certainty is uncertainty’. So, the one thing we know for sure is that ‘change is gonna come’.

GREAT!

Oxfam stated in 2016 that the richest 1% now has as much wealth as the rest of the world combined. Most of this wealth is attained and maintained unethically. Maintained in that within Australia alone, tax loopholes allow 30% of big business to pay no corporate tax. (ATO 2016)

Qantas, Virgin Australia, Lend Lease, Glencorp and many other brands we see and support daily pay zero tax, yet, you and I are charged upward to 45 cents in the dollar. If we ran our personal finances the way these businesses are allowed to operate, we would have our debts reigned in and made bankrupt within a heartbeat. So, change must come.

The 1% are out of control and are in an ethical and moral race to the bottom. We look at global automobile giants whose only goal is to become number one and will lie, cheat and deceive to attain that goal. FIFA squandered millions, maybe billions so that a ‘gentlemen’s’ club of elite remained in control of ‘the people’s game’. Toshiba, a once proud Japanese icon, falsified earnings income by 4 Billion dollars and a spoiled presumptuous ‘entrepreneur’ named Martin Shkreli thought it was good business to buy a company and raise the price of its life saving drug by 5000%. That was just 2015/2016. So, change must come.

People make change. Not products. A product may change your life, but it is people who dreamed it, prototyped it, developed it, marketed it and sold it. It’s your choice to buy into it or to leave it alone. If we really want change, we must start to act and behave differently.

I ran a multi million dollar company and grew it beyond all expectations over a 6-year period … nearly losing my soul in the process. When a leader asks you to do something that ‘doesn’t feel right’ or questions systems put in place to protect employee’s rights … you know something is not right. But, only you can make a change if you want to. Sure, it will be tough, but as Roosevelt observed, anything truly worthwhile requires effort, pain and difficulty.

Choose and act wisely. Think about what you support, who you work for and what your purpose in life is. Mine is to teach and create awareness; to save someone from wandering down the dark path I was facing and making sure the fork they choose is to enlightenment. One final, favourite, quote – ‘Man cannot discover new oceans unless he has the courage to lose sight of the shore’ – Andre Gide.

So, You Want to Join a Board?

In the past 3-5 years, I have seen huge growth in the interest of people wanting to join boards, both as non-executive and executive directors. There is only one relevant question. WHY?

To discover the ‘Why’ each aspiring director should exercise the simple ‘5 whys’ of root cause analysis. Start by asking yourself ‘Why do I want to be a director of a company I (now) know very little of?’ Then, ask why? to that answer and so on…5 times. This is basic due diligence and yet I regularly see people with questionable skills, experience and motivation pursuing a career that could be costly…

Is your hunger for risk so ravenous that you would consider losing your reputation, house or everything you have worked for to gain another title or notch on your CV? What is your risk tolerance? Are you one who lies awake at night worried about cashflow, reputation, your next source of business?

Let me put you out of your misery. A directorship is not for you.

If your motivation is to provide change, well good luck with that too. You are not the decision maker. You are one of many who will provide a view to an issue, challenge or opportunity.

Have you ever been in a meeting where you have heard a manager or colleague speak and thought to yourself; “what are they on?” or, ‘you must be kidding?’… welcome to a board.

I’m more than qualified to comment having answered directly to boards and having been a MD of a multinational company. Most of my colleagues and peers ‘suffer’interacting with their boards. So, I ask again…why?

It is well documented that the risk versus the reward for a board role is disproportionately high. Would I choose to be a director as ‘part’ of the board of a large private or NFP company again? Quite simply, NO! Not without conducting thorough due diligence and THEN appeasing my own risk appetite. Start by asking employees, former directors and customers of the company you are interested in joining.

It is not a title. It is complete and unforgiving accountability.

Your duty as a director is two-fold. A director is entrusted to undertake their duties legally and ethically to ensure the best outcome for the company and its shareholders.

Think about that and then reference the daily news; Ardent Leisure and the Dreamworld tragedy, the A$6 M Reckitt Benckiser Nurofen deception fine, the conflict of interest that the big 4 banks acting as custodians for superannuation and let’s not mention VW…

All of these decisions were agreed upon and brought forward by members of a board.

I have 30 years’ experience in seeing companies putting profits before people. Please don’t think that the Not for Profit sector is your salvation either. I’ve been dismissed by a NFP board for ‘non-performance’– just 60 days after receiving a salary increase for ‘commitment and productivity’…approved by that same board. (The only time I have ever been dismissed.)

It’s ALL about politics and as the saying goes: ‘If you don’t do Politics, Politics will do you.

If you can clearly and confidently state that your contribution will bring about positive change, you must understand that you will, at times, (most times) be a puppet. You must be comfortable with that. You also must be able to look someone in the eye, make a statement whilst withholding the underlying motivation for that statement. If that sits well, then Welcome to directorship! You can now sleep easy.

 

Far from being a corporate puppet, I lead from the front and not the top. I have transformed businesses to exceed sales and profit expectations through constantly challenging entrenched and redundant corporate thinking.

My Master’s Degree research paper into Corporate Governance, examined the existing support and induction methodology for company directors. It was afforded the grade of High Distinction.

I work with novice and aspiring directors to provide a pathway to compliance.