Profile Rebuilding tarnished names March 2008

Ann Sherry is an expert at rebuilding tarnished reputations. She did it at Westpac after its Swiss franc loans debacle. Now she’s doing it at P&O Cruises. Anne Lampe reports.

Ann Sherry’s eclectic career path reflects her two main passions – a drive for social justice alongside a desire and ability to enhance the bottom line of profit-making companies. Her path has taken her from radiography to high profile political advisor, then catapulted her into the highest echelons of banking. Last May, she was appointed CEO of cruise ship group, Carnival Australia.

Sherry’s banking career spanned 10 years. In her forties, she was appointed the first woman CEO of a bank, the Bank of Melbourne, which was bought by Westpac. Sherry played a key role in merging the two operations. Then, before she turned 50 she was growing Westpac’s New Zealand business.

Prior to her leap into the world of banking, Sherry’s job title was First Assistant Secretary of the Office of the Status of Women in Canberra, advising the Prime Minister on policies and programs to improve the lives of women around Australia. She was also Australia’s representative to the United Nations forums on human rights and women’s rights.

It was a big vault from those roles into the hard world of banking and its focus on profits and shareholder returns. Her present role also requires a profit focus, but no one would deny that cruising isn’t more fun than banking. For a start, the perks are more fun.

Sherry points out that the skills picked up from her stint as a ministerial advisor were applied at Westpac, enabling her to boost her strong human resources, business development and customer-focus skill sets. These skill sets, in turn, will assist her in the tough road ahead, rebuilding the tarnished reputation of P&O Cruises Australia in the wake of the highly publicised death of passenger Dianne Brimble in September 2002. The subsequent revelations of onboard drug use, spiked drinks, predatory and sordid male behaviour and the events leading up to Brimble’s death, hugged the front pages of newspapers for many days and flagellated the P&O brand.

Sherry, an energetic, bubbly, forthright woman, acknowledges that she has a big job ahead, but one she is keen to get on with.

After leaving Westpac at the end of 2006, Sherry notes: “I personally hit a point where I thought it is time for a bigger jump. It is something about reinventing yourself. You do get bored working in the same industry or direction, and look for something that is quite a radical shift.

“So it has driven me from government into banking and obviously, even within banking, human resources, doing the Bank of Melbourne merger and running the business in New Zealand. They are very different sorts of jobs, and then obviously this shift as well. For me personally, it is about continuous learning, I guess. It is about taking on new challenges. It is about taking what you learn in a lot of your previous jobs ... and taking it into this environment.”

But why tourism? “I guess for me it is the opportunity to rebuild something that has been in trouble. I do bring a lot of experience of resuscitating reputation. One of the things that attracted me to tourism is that there is a different energy about this industry. It is a more energetic industry [compared to banking].”

When Sherry joined Westpac, its public image had sunk so low that it became a sitting duck takeover target following its aggressive marketing of Swiss franc loans to unsophisticated borrowers and the resultant disastrous financial fallout for them. Sherry recalls at that time, staff took off their uniforms before they got onto public transport, so unhappy were they to be identified with their employer outside the office. In addition, to dealing with continuous bad publicity over its handling of Swiss franc loan disputes, Westpac was closing branches, hiking its fees to previously unheard of levels, as well as copping the odour of multiple court proceedings arising from the debacle. “All of those things really made the organisation feel that its face to the world was not what they wanted.”

Yet in a decade, the same bank had moved from number 100 on the corporate reputation index to number one position now. “So you can turn around company reputations,” Sherry observes. And, that reputation turnaround skill will be useful in the job ahead.

She explains that she has done a lot of similar things across sectors and across jobs.

“People leadership issues are not that different sector by sector. The content may be different, but getting people to engage with their organisation, working out what you do, what the priorities are, those things are transferable skills,” says Sherry. “A lot of the customer issues are transferable as well. Customers across sectors want value for money. They want documentation they can understand, they want you to get to them in a whole lot of different ways now. And, a lot of strategies are transferable.”

The learning for Sherry, and the challenge, is that she is in a whole new sector. “Tourism is a very different sector to banking. Shipping is very different to anything I have ever done before. The content of the job in the industry gives me an incredible stretch, because I don’t know it all.”

Even if she had been offered the top job at Westpac following the retirement of CEO David Morgan, Sherry is adamant she would not have taken it. Indeed, she maintains she needed a change from that industry.

Her Carnival contract is open ended and Sherry says she prefers that to a fixed term. “The psychology of fixed terms is interesting. A year before your term is up, you actually are focused on what you are going to do next, so the term is always shorter than it looks, somehow. And, people feel that you start with a view that you are passing through. The psychology inside the organisation is quite different as well.”

The Carnival group has global revenue of about US$12 billion. Its Australian brands include P&O, Princess Cruises, Cunard, Seabourn and it also represents Costa and P&O Cruises’ World Voyages. Products range through all price points from the budget end to luxury cruises and onshore packages bought by moneyed retirees.

Over the next three years, Sherry aims to double Australian turnover. “It is an interesting market here. Growth in the cruise market globally is to younger customers. Our demographic has traditionally been younger in Australia and what we are looking to do is to put offerings to older customers. That is an area of huge opportunity for us,” she says.

That market has not been tapped as extensively in Australia as it has been in other parts of the world. And, it is a market segment that Princess Cruises is devoting much effort to. The P&O brand, which in the past saw its growth come from the hard partying youth market, now has an average customer age of 42 and is on its way to an older market. The group has stopped offering schoolies cruises and young adult Friendly 4 packages where all night partying was a major feature.

“We’ve changed our practices quite dramatically,” observes Sherry, noting that the reputation resuscitation of P&O Cruises could take five years. “People are slow to forgive in my experience. You’ve got to do a lot. Reputations are much easier to lose than to regain. People accept that we are doing new things and that we have better security, but you have to do more, and you have to keep doing it.

“The onus will be on us to keep innovating and to demonstrate how we deal with things when they go wrong. And, things will go wrong on the ships. We have huge numbers of people on them. So next time something goes wrong we need to show that our behaviour was different, that we managed it in a different way, that we treated people differently. We have to demonstrate that we will do all the things that have brought us into disrepute quite differently next time around.”

Turning to her definition of measuring success, Sherry says: “It is a concept that has become narrower and narrower over time. The public perception of success has become really narrowly defined as earning a lot of money and running a business of some sort.

“For me personally, success is a combination of things. Success comes from having people who want to work in your business. And, I always start with the people in the business, because unless you have got that, you can’t do anything individually at the top of organisations. You need energy and commitment from the people in your company for your company to work.

“The idea of turning something around for me has particular appeal. But the business also has to be successful and you have to deliver bottom line results and you must be able to get growth in the business. So it is more multi-dimensional than much of the literature, and certainly many of the business magazines, portray. The imagery of heroic individuals does not help other people broaden the definition of success. I think that is very narrow.”

Exorbitant executive pay is an area Sherry has concerns about. “The gap between the top of organisations and average pay in organisations is quite a stress point, and it has become so in many markets around the world. Having said that, when you are hiring people, the competition is so intense that you end up paying people salaries that you didn’t think you would have to pay, because that is the only way you can get them. The shortage of skills in Australia is driving up salaries and the country has to find its way through that. But I don’t have the answer to that.”

Demographics is the main driver of cruise growth, but nearly as important is the increasing inconvenience and security hullabaloo associated with air travel. “International air travel, in particular, has become increasingly inconvenient and more of a hassle for people. Our offering is that you get on the ship and you are literally on holiday from that moment. And, if you get on the ship where you live, you catch a cab to it.”

Cruise passengers are security screened once and then go on multiple destinations without further screening or bag lugging. Bags are unpacked at the beginning of the cruise and stay that way until the end of that cruise. “It is a relatively easy way of visiting six or seven different countries without having to unpack and spend hours going in and out of airports.”

The group’s most popular cruise route is the South Pacific. New Zealand is not far behind. The shortest offering is seven nights (apart from the Melbourne Cup cruise) and the longest is 75 nights around the world.

Carnival is dependent on destinations to deliver the passenger experience and to that end, it has started investing in much needed infrastructure in Pacific ports. As Sherry points out: “Pristine beaches don’t stay pristine for too long if you keep dropping 2,000 people on them and you don’t do anything else.”

Carnival has started to build toilet and ablution blocks, BBQs and rubbish collection facilities in these ports. It is also helping local leaders to put together cultural and tourism ventures that provide their communities with income and jobs in return for delivering more interesting onshore experiences for passengers.

“In the places we visit, the challenge and the ask of us in terms of the community footprint in particular is to make sure that it is not just about a place, it is about the people in the place. Because the place itself is what sells destinations, but the sustainability of us going to those destinations requires the people in that place to get something out of it.”

Sherry notes that rebuilding the reputation of P&O would be her main priority. Then comes growing the business and improving relationships with Pacific indigenous communities to ensure the sustainability of the destinations. Fourth is improving the group’s distribution strategy, focusing mainly on online presence, which is currently “pretty clunky”. Most customers research their travel plans online, even if they don’t book online. Ports are Sherry’s fifth priority, given that Australia’s port infrastructure is currently geared to cargo handling and not passengers.

She notes that there’s a need to get the cruising infrastructure working better. The big ships can’t get under the Sydney harbour bridge and there is currently only one berth on the eastern side of the bridge, at least until the future use of Garden Island is resolved. “That [infrastructure] promises to be a big debate in Australia in the next few years. Does Australia really want a big cruise industry? In many parts of the world, they are building infrastructure to attract the ships. Here we are still having a debate over whether that is what we want,” says Sherry.

Sherry points out that cruising injects about $400 million a year into the Australian economy, growing at the rate of close to 20 per cent per year. A big segment of the market consists of overseas residents flying to Australia and picking up a cruise from one of the ports, and proceeding to the Pacific or around Australia or New Zealand. Or they come in by sea, travel around Australia by sea and then fly back from one of the major cities. “Each time a ship docks in a city a million dollars walks into town,” notes Sherry.

“It is the fastest segment of tourism in Australia and we are debating whether we really want it or not.”