For the Qantas chair, it’s about “air cover and ground support” — building a good board, picking a CEO you can rely on and knowing when to step in.
Sir Rod Carnegie AC [former CEO and chair of CRA] told me that the one thing you can get fired for is not telling bad news. I remember that discussion well. It’s no good trying to bury bad news, because ultimately you’re dealing with shareholders’ money and they want to be informed.
The important thing is for the organisation to have a process by which you can be challenged. You try to ensure executives put arguments forward and the board challenges them — and you want boards that challenge the CEO and the chair. The chair has to be publicly supportive, but privately frank and challenging. And they have to ensure they’re not trying to make their career as a chair; they must be comfortable in their own skin. Don’t compete for the microphone.
Building the board
You have to refresh your board over time. My objective at Qantas was to get some [members with] airline experience, some IT experience and some with experience dealing with governments. But we didn’t have consumer marketing — I was criticised when we appointed [former advertising executive] Todd Sampson. Overlaying all that, you need people with strong financial skills. And there was a desire to [increase female representation]. We had one woman on the board when I joined and now we have three.
The important thing is for the organisation to have a process by which you can be challenged.
Choosing a CEO
The CEO runs the company and the chair creates the environment for the CEO to get on with it. You’ve got to be the grit in the wheel — when things aren’t going right, you have to be alert to that. You need to talk to shareholders and customers and know what’s going on without interfering with management’s responsibilities — it usually ends in tears.
When times were tough at Qantas I had a few shareholders whispering in my ear and I made it clear to them my biggest fear was that Alan [Joyce, the CEO] would leave and go to another airline. There was quite a campaign against him in parts of the media. My role was communicating with shareholders, giving Alan air cover and ground support. Every now and then, I’d come out and say why Qantas was on the right track.
When you’re looking for a CEO [Joyce was appointed in 2008], you want someone with the intellectual capability and strong numeracy. I interviewed nine potential candidates and Alan was the standout. I was impressed with his manner and leadership capabilities, which he’d demonstrated at Jetstar. There were some tough decisions to be taken at Qantas and Alan was up for it; he was decisive.
Keeping the team on board
I put an emphasis on bringing the team with me. When we grounded the fleet [in 2011], I remember looking around the table and thinking, ‘This won’t go unnoticed. We’d better be ready.’ We had concluded our cost base was out of whack with our competition, internationally and domestically. And we said, ‘We’re not going to tolerate this. We’re going to have to bring things to a head. We’re not getting a realisation [from the unions] that we need to change our cost base.’
It was a bit of a shock to the system and the assumption is that if you do something like this, you’ll go out the back door. The cost was $190 million, but we thought it was absolutely necessary to bring home to people the necessity for getting our costs under control. Since then, we’ve not lost one hour [in strike action]. We’ve got the best NPS [Net Promoter Scores, a customer loyalty metric] we’ve ever had. We have happy employees — although, admittedly, we took 5000 people out of the business — and shareholders.
Alan felt very strongly about this. I spent a lot of time talking to our major shareholders and wanted to make sure that our employees were not being pressured. We did an employee survey and most of their views reflected the community’s — they were sick of hearing about the issue as distinct from being opposed to it.
The customers knew our stance and our NPS has never been higher. I had a bit of a contretemps with a church leader and got criticism, but I got a hell of a lot of support, too.
Already a member?
Login to view this content