Jennifer Hill-Ling is the last family member still connected to the company that launched the iconic Hills Hoist clothesline. She chats to Zilla Efrat about the challenges of taking this business to the next perch.
At the top of Hills
In 1945, when Lance Hill returned to Adelaide from war, his wife complained that her traditional clothesline between two posts, propped up in the middle by a stick, was in the way of the lemon tree. So he set about designing a compact rotary line out of metal tubing that has since become such an icon of suburban Australia that it even featured in the closing ceremony of the Sydney 2000 Olympic Games.
Hill teamed up with his brother-in-law, Harold Ling, and together they started a manufacturing business that now generates revenues of more than $1.1 billion a year and is one of Australia’s big business success stories. But while the Hills Hoist was the company’s first and most well known product, it only accounts for two per cent of revenue today.
The company, Hills Industries, is now involved in a wide range of products – everything from ironing boards, trampolines, security doors, wheel barrows, building products, steel pipes and scaffold systems to aged care products, hospital beds, carports, storage tanks, antennas and electronic security and entertainment systems.
“People tend to think of the clotheslines, but we have become such a diverse group of businesses. The challenge today is to make sure the diversity of the businesses and our strategy is understood,” says Hill’s chairman Jennifer Hill-Ling MAICD, the sole family member still involved in what was a true Aussie family business for close to 50 years.
“We’ve found that over the years being a diversified group has stood us in good stead,” says Hill-Ling. “When one business is facing challenges because of a particular set of economic circumstances, other businesses are not, and vice versa. We’ve enjoyed 16 years of continued growth in sales and operating profits and I really think that’s in large part due to our diversification strategy.”
In 1952, Hill-Ling’s father, Bob, joined the business that his father Harold and uncle Lance had started. In 1965, at the age of 32, he became chairman and managing director, growing the business through a host of acquisitions that lessened its dependence on clotheslines.
Hill-Ling, who grew up in Adelaide, took over as non- executive chairman when Bob retired in 2005, but she has sat on the Hills board since 1985 and over the years, has been closely involved in its mergers and acquisitions and joint ventures, these being the areas she specialised in as a corporate lawyer. She is also a former director of Tower Trust in Adelaide.
“One of the positives of Hills is that we have been able to keep some of the very precious culture that Hills has,” says Hill-Ling.
“When I was a child, it was very much a family company and everybody was a part of it. We did then and we still have today a belief that it’s important for employees, from those on the factory floor to managing director, to be given the opportunity to hold shares in the company. We have employee and executive share schemes and they’ve been a terrific vehicle for allowing people to feel they are part of the company. We’ve been able to maintain this culture even though our employee numbers have increased to 3,140.”
Indeed, Hill-Ling says the one thing she’s learnt in business life is “the importance of having the right people in the right places and acknowledging and understanding the tremendous contribution they make, and how important it is that everybody feels part of and understands the strategy of the company.
“Then it boils down to how you communicate the company’s philosophy and strategy so that everybody is on board and you are all heading in a common direction for a common goal,” she says.
To communicate the message, she and managing director Graham Twartz try to schedule as many site meetings around the country as they can. “This gives us the chance to talk to different people at our different locations and to get a better understanding of what some of the day-to-day issues are, as well as to say ‘hi’ and put a name to a face,” says Hill-Ling.
“We have over 110 locations throughout Australia and New Zealand, so it is a challenge to get around to all of them. We also schedule our board meetings in different locations so that the board has the opportunity to meet the management teams and employees at these locations and to discuss what’s happening.”
So what is happening at the company? “The first quarter of this financial year was in line with last financial year, but it’s true to say that we are seeing a definite slowing of the economy and consumer confidence. How that translates over the balance of the financial year is still unclear. For us it will depend on things like what happens to the Australian dollar and to steel prices. Many of our businesses import, but because of our diversity we are fortunate that when some of our businesses struggle, others will do better,” notes Hill-Ling.
Hills’ board recently downgraded its forecast for earnings per share in the first half of the current financial year by 10 per cent, but made no other forecasts. “We have had such volatility in the last two months. How can you accurately forecast the next six months in the current economic environment? If the market continues to be this volatile, company forecasts will inevitably change.”
But for Hill-Ling, the market turmoil isn’t all doom and gloom. “I keep saying there will be some wonderful opportunities that come out of this, particularly for companies like Hills. We really think there will be opportunities for us to make some strategic acquisitions where we see a business fitting within one of our sectors. We are already seeing the price expectations of vendors coming down from where they have historically been and we’ve seen the number of businesses available for sale increasing.”
Hill-Ling also expresses concern about the market’s obsession with the short-term. “We are a company that has a strategy for the medium to long-term as well as dealing with the current economic conditions,” she says. “But the market is too focused on what companies can produce in the current quarter.
“When you have this enormous pressure to be forecasting results on a very frequent basis, it can mean companies become too short- sighted and boards have to continuously bring themselves back from thinking about what the market wants to hear today to focusing on the medium to long-term as well.”
Safety is a crucial issue for the Hills board. “It’s the first item in the managing director’s report,” says Hill-Ling. “We needed to improve safety at all levels of our business and to ensure safety became the number one priority in the corporate culture. We strive to be an accident-free workplace and have to ensure people have the resources to make the changes necessary for a safer environment. We still have a distance to go so we need to keep allocating board resources to safety.”
However, she adds: “The current occupational health and safety legislation is really onerous on directors and does not adequately address all levels within the organisation that should be responsible for safety in the workplace.
“Liability should be linked to responsibility for work practices and people who do the wrong thing should be penalised, but at the moment we have a system that is just not practical. In some states, directors are basically deemed guilty until proven innocent and that goes against our whole system of law... We should have a law that is fair, encourages good workplace practices and places responsibility on the appropriate people within the organisation.”
Hill-Ling also has strong views about where executive remuneration has been heading. “On the one hand, I acknowledge it’s important for shareholders to understand where their company’s money is being spent, but I think the fact that we now have to disclose details of executive remuneration has meant that many salaries have increased to levels that are not sustainable.
“It is human nature to say that ‘if Joe’s being paid that, I should be paid the same’ or ‘I am better than Joe and should be paid more’. The unintended consequence of what in principle was a good idea is that in some companies executive salaries have just got out of hand.”
On her role as chairman, Hill-Ling says she’s become acutely aware of the need to ensure all directors are given all the information they require to make informed decisions.
“Some directors require additional information on certain subjects so it’s important to understand their differing requirements and ensure all directors receive comprehensive board packs.”
She adds: “A challenge for boards is to maintain independence on the one hand while also having a good understanding of the business. My experience is that unless you understand what your businesses are doing and where they are headed, you can’t make the same contribution.”
She says the sheer size of Hills and the diversity of its businesses prevents the board from becoming too involved in management issues. “But sometimes we do have debates about whether we should be discussing an issue or be leaving it to management.”
Hill-Ling practised law for 23 years, but took leave from it earlier this year. She’s been weighing up her options – returning to law or taking on more directorships. The latter, it seems has won out and she wants to consider other non-executive board positions.
When not attending to Hills’ affairs, Hill-Ling can usually be found spending time with her husband and three children, aged between eight and 15, in Sydney. Weekends are usually taken up by the taxi service she runs getting the kids to sporting and social events, but she also finds time to swim and walk.
“I couldn’t survive without regular exercise. It clears the cobwebs. I often find that when I am walking I do my best thinking,” she says.
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