Leading director Brian Schwartz talks to Christopher Niesche about the significance of learning and the need to do more to promote gender diversity.
When Brian Schwartz AM FAICD was CEO of Ernst & Young in the 1990s, he realised something wasnât quite right. The firm was employing 50 per cent males and 50 per cent females at the graduate level, but by the time they rose through the ranks to become a partner, only 2 or 3 per cent were females.
âIt was clear that something wasnât right, but this was in the late 90s,â says Schwartz. âI thought about it and I realised that my two daughters were fast approaching the stage where they would be in the workforce and I knew one thing for certain â they were a lot cleverer than me and they werenât necessarily going to get the same opportunities that I had.â
This realisation set Schwartz on a path that ultimately led him to try to redress the gender balance in Australiaâs executive suites and boardrooms. He is currently working on a project at the Australian Institute of Company Directors (AICD) examining the type of gender equality reporting organisations should conduct.
Schwartz is the chairman of the Scentre Group and deputy chairman of Westfield Corporation, a former chairman of Insurance Australia Group Limited and former deputy chairman of Football Federation Australia.
A qualified accountant, Schwartz emigrated from his native South Africa with his wife and two young daughters in the late 1970s. He joined what later became EY and while he hadnât planned on remaining an accountant, he stayed at the firm for 26 years.
âCareer long-term planning was never my strong suit,â Schwartz says. âEssentially, things happened because I was in the right place at the right time. I worked hard, kept challenging myself and found new opportunities arose.â
In the late 90s he gathered the EY partners and âspoke from the heartâ about gender equity. But it had little impact: âemotion doesnât generally grab accountants,â he says.
âWe thought about it some more and came to the realisation that it was costing the firm some $300,000 to recruit a new graduate and take them to the level of manager or senior manager in the firm, and then they left,â he says. âThe accountants understood that it wasnât a terribly good investment decision.â
By the time Schwartz left EY in 2004, some 12 per cent of partners were female, which he says was âbetter, but far from magnificentâ.
Women on boards
Schwartz has now turned his focus to female representation around Australiaâs boardroom tables. The number of women on boards has risen from about 9 per cent a few years ago to around 22 per cent today, but Schwartz says thatâs still not enough.
âEvery time the new numbers come out, we cheer and say: âWow. Arenât we doing well?â My answer is, weâre not. Why we should think that 22 per cent of all directors being female is fantastic, when 50 per cent of the population is female, is beyond me,â he says.
He has put his talk into practice at Scentre Group, where 15 months ago there were no female directors after the shopping centre group restructured. Today there are three â former banker and lawyer Carolyn Kay FAICD, Twitter executive Aliza Knox GAICD and former Random House Australia and New Zealand managing director Margaret Seale FAICD.
âIt wasnât terribly difficult to find outstanding and relevant directors. Itâs not as if any of those directors are there because theyâre female. Theyâre all there because they were really good at what they did. So, I donât buy the argument that the pool is not necessarily big or strong enough,â he says.
Schwartz isnât sure what the answer is to increasing female representation on boards, whether it is for senior directors to continue pushing hard or âsomething radicalâ like quotas of females for a period of time.
He acknowledges that quotas are a very controversial idea. âEvery time I raise it, I get the same raised eyebrows. But, in fact, when I raise it in smaller circles, I almost never get raised eyebrows â people seem braver in smaller circles,â he says.
âI get the sense that people are coming to the realisation that, if we keep doing what weâve always done, weâll grow to 23 per cent next year and to 24 per cent the year after then weâll come back down to 23 per cent,â he adds.
Schwartz and other directors (four men and three women) are working on an AICD project to examine the way companies report on their gender representation. He says that reporting requirements are too vague and companies can meet reporting standards without actually revealing what its targets are.
Leadership, accountability and transparent reporting of the facts, along with growing the female pool at executive level, will all help get more women in the boardroom, he says.
Pastures new
Schwartz left EY aged 51 because he had moved into an international role and found the constant travel to London and New York wearing. He called on his friend David Gonski AC FAICD for advice about what to do next. Gonski persuaded Schwartz that he should become CEO of the local arm of Investec Bank, which he chaired. He also joined the board of insurance company IAG soon after. He became chair of IAG in 2009.
When then IAG chairman James Strong approached him about taking on the top job, he felt that he didnât have sufficient expertise in insurance to lead a major publically-listed insurer. After considerable debate Strong told him that he believed the role of the chairman was one of facilitation, in addition to strategy, succession and influencing the culture of the organisation. This facilitation encompassed many stakeholders including, but not limited to, the board, management, the people in the organisation, and shareholders.
Schwartz said he believed he could do that and describes his style as chairman as âcollegiateâ.
âI listen a lot. There is so much knowledge around the table that the challenge of the chairman is to get it all out and then facilitate the board to make a decision.â
He is proud that the boards he chairs almost always reach a decision by consensus. In fact, he canât recall any decisions having to go to a vote, although he says it may have happened once or twice.
He left the IAG board this year after 12 years, in line with IAGâs policy of keeping directors for about a decade.
âFor me, not just on boards, but in most things I do, I think that 10 years is generally the right period of time. You give all youâve got, then you can have new people coming in with different ideas and you can move on to different challenges,â he says.
While he was at Investec he received a call asking if heâd like to join the Brambles board and shortly thereafter the Westfield board. âAgain, Iâd love to say that each one of them was magnificently planned and executed but they werenât,â Schwartz says.
Schwartzâs association with Westfield dates back about a quarter of a century to when he was providing services to the company at EY, and worked with Frank Lowy AC FAICD and his sons Steven, Peter and David. Years later he received a call from Frank, saying that then prime minister John Howard had asked Frank to chair the Football Federation of Australia and he wanted Schwartz as his deputy.
âI think it would be fair to say that peopleâs immediate reaction to that is, if Frank asks you to do it, you do it, and thatâs probably true as well, but the reason I said yes without hesitation was, despite being a South African and despite growing up in the Orange Free State which is a rugby-playing province, Iâd only ever played soccer at school and my son had only ever played soccer and now my grandson only ever plays soccer,â Schwartz says.
It was this association that led him to the Westfield board. He took over the chairmanâs role at Scentre Group earlier this year following the retirement of Frank Lowy after 55 years with the company. Schwartz told the companyâs AGM in May that it felt like coming off the subs bench to replace soccer great Pele.
âWhen you walk around Westfield today, you can still feel the heritage, the 55 years, the legacy that he left behind, but you also can feel a sense that, while we will never forget the legacy, [Scentre Group CEO] Peter Allen MAICD and the team are now taking us to the next step of that journey,â Schwartz says.
Westfield split
That next step was outlined in the Westfield Group restructure and merger proposal of April 2014, which resulted in the split of Westfield into an international arm â which retains the name Westfield â and an Australian arm, Scentre Group, which owns 40 shopping centres in Australia and New Zealand.
Along with the local shopping centres, Scentre Group retained capabilities including property management, leasing, design, development, construction, marketing and funds management.
âScentre Groupâs operating strategy will be to create and own leading retail destinations across Australia and New Zealand by integrating food, fashion, leisure and entertainment and using digital technology to better connect retailers with consumers,â the company said in the 2014 document.
âScentre Group will intensively manage its shopping centres, with a particular emphasis on delivering an optimal mix of retailers, maximising the sales productivity of retailers at each shopping centre and providing superior experiences to consumers. These experiences range from parking, shopping centre ambience and retailer mix to food, leisure and entertainment precincts and digital connectivity.â
Shares in Scentre Group and Westfield have performed strongly since the 2014 split. âWith Scentre Group your investment is in Australia and New Zealand as opposed to a broader global entity and that focus is what I think the market is responding to,â Schwartz says.
Lowyâs Westfield Corporation office is in the building next to Schwartzâs and Schwartz says he isnât averse to popping in to seek the 85 year-old founderâs advice. âWhy would I not want to use that 55 years of experience?â he says. âHeâs a wonderful long-term thinker and planner.â
Schwartz says that being on site and walking the corridors is part of the way that the chairman can understand and influence the organisationâs culture.
He has a weekly meeting with CEO Peter Allen - the pair confirm the meetings a year in advance. âThe meeting with the CEO enables ideas to be raised sooner rather than later,â Schwartz says. âWe may talk about the football on the weekend but itâs just keeping that connection and understanding whatâs going on around the company and giving him the opportunity to chat about anything.â
Schwartz says his professional services background has been a help in his non-executive director career, because it gave him a very broad base â he worked as an auditor, then in entrepreneurial services, corporate finance and ultimately management.
âWhen you move to a non-executive role, the risk is you want to continue to be management,â he says. âThatâs a challenge for new directors but I didnât find it particularly hard. I found it interesting. I found that I could ask the questions and get answers and move on rather than have to delve into the detail.â
The role of the board in setting company strategy has changed, says Schwartz. Itâs no longer a once-a-year exercise where the board ticks off the management strategy. The world is changing too fast to leave it that long.
In June he and three new board members visited three of the companyâs shopping centres in Victoria, talking to the management about each centreâs individual strategy and walking the floors of the centres, so they could get a better understanding of the business.
Schwartz says every board he has been involved with in recent years has at least one digital specialist. At IAG it was Alison Deans GAICD, the former chief executive of eBay Australia, at Scentre Group it is Aliza Knox and at Westfield it is Don Kingsborough, a former PayPal executive in the US.
âThe makeup of the board has to reflect the strategy and the customer base of the company,â Schwartz says. âIn the digital space, itâs a recognition that we need to keep understanding the ever-changing impact of data on our customers and our retailers.â
Long-term view
Like many other directors, Schwartz says that balancing the long-term view of the company against the short-term focus of many investors, analysts and fund managers is a challenge. He says boards canât ignore either side of the equation and should always listen to the views of investors.
Even then, it doesnât always turn out precisely as planned. He recalls that at IAG the company broke its Asian expansion plans into six âbite-sized chunksâ that could be more easily digested by the market, although investors still objected to its plans to expand in China and the share price shot up after the company abandoned the plan.
âStrategy is the boardâs responsibility and there will be occasions where they wonât agree with the investors and the investors will then make a call as to whether that works for them or not,â says Schwartz.
Outside of work, Schwartz devotes time to his family and to sport â including watching his grandchildren play sport. âIâd love to say that Iâm really good at leaving work behind â Iâm not. So, a lot of my time is spent reading and learning, but I do spend a lot of time with my kids â three kids and six grandkids,â he says.
He is also the chair of a private charitable foundation and is involved with the Observership Program, which facilitates the involvement of young, talented people on non-profit boards. One observer is currently involved with the Moriah Foundation board of which Schwartz is chairman.
âHopefully, at the end, the observers are in a better position to give their time to not-for-profit (NFP) boards. Many of them go on, once theyâve served their apprenticeship for a year, to be offered a directorship in the NFP,â Schwartz says.
This leaves just one final question for Schwartz â does the Australia of today present more opportunities for his daughters than it did when he was at EY two decades ago? One of his daughters is a full-time mother who worked in funds management and strategy until her the first of her two children was born. Schwartz says she has had âall the opportunities she ever wantedâ and was lucky enough to be able to choose to be a full-time parent.
His other daughter, who also has two children, is a senior lecturer at the University of New South Wales (UNSW) in criminal law and indigenous justice issues. UNSW Law does a good job in accommodating parents who are full-time academics like her, Schwartz says.
âI think my daughters have grown up with a sense that theyâre equal to anybody else out there and good enough to get those opportunities and then they make choices based on those facts rather than a sense that they can only do X or Y,â he says. âTheyâve never felt constrained at all about what is possible.â
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