Keeping it in the family in Cairns

Friday, 01 February 2013


    Fiona Baron talks to father-and-son team and well-known directors from Cairns, George and Ken Chapman, about their views on directorships and what it takes to make a family business work.

    George Chapman AO FAICD is every bit the entrepreneur. Back in the 1960s, at just 23 years old, he launched his own surveying practice. He quickly realised, however, that his home town of Cairns was ripe for development and proceeded to develop his first land subdivision soon after.

    He never looked back. Selling his practice in 1978, Chapman spent the greater part of his career dividing up Cairns, the Gold Coast and Brisbane and can today boast the development of several thousand allotments.

    He has also made his mark as a director. He is best known for his time as chairman of Telecasters North Queensland, Ten Network Holdings, TAB Queensland (now Unitab) and the Cairns Port Authority. Notably, however, he was also a founder of the Cairns Regional Development Bureau (now Tourism Tropical North Queensland) and has sat on the boards of a range of community organisations such as the Trustees of Cancer Council Queensland, the Great Barrier Reef Foundation and the FNQ Youth Assistance Fund.

    Chapman continues as chairman of his family business, the Chapman Group, which includes Skyrail, the owner, builder and operator of the award-winning, environmentally friendly Skyrail Rainforest Cableway.

    It is little wonder that his son, Dr Ken Chapman FAICD, followed in his footsteps, although it did not always look like it would be that way. The younger Chapman began his career as a medical practitioner. It was while he was training to be a plastic surgeon that he switched courses to come on board his father’s new project, the Skyrail Rainforest Cableway. "It was an interim thing," he explains. "I was still studying. But I got rather passionate about it and rather stubborn, and here I am still working on it 20 years later."

    Over the past 20 years, he has also sat on numerous boards, including public and private companies, government entities and community groups.

    The two men now work two offices away from each other, separated by another family member. Company Director caught up with them recently to discuss their time as directors, their views on directorships and what it takes to make a family business work.

    Company Director (CD)What directorship issues do you feel strongly about?

    George Chapman (GC): I believe all the new laws and regulations have resulted in far too much concentration on process rather than outcomes in board meetings. I’m also very much against the introduction of quotas, whether for women or directors with Asian experience [as suggested in the Federal Government’s Asian Century white paper], or any other issue. Lots of large companies would never have any involvement in Asia because of the industry they’re in, so why would they want to have a third of their directors with Asian experience?

    Ken Chapman (KC): There seems to be a view in government circles that all the perceived ills in business can be solved by putting pressure on boards. Every year, the legislative framework is more daunting really, particularly for public companies. The new legislation, and part of that is how it gets applied, is the most concerning: the Phoenix rules, for example, and the Workplace Health and Safety national legislative framework, where directors can be held accountable for things they have very modest control over in many cases. It’s a matter of pushing directors, particularly those of public companies, to be more focused on compliance rather than doing what their real job is, which is growing shareholder value.

    Also, a quota for women at the board level doesn’t do anything to address equal opportunity in the workplace. But it may force you to focus on gender above skills and ability. Governments shouldn’t involve themselves in those sorts of decisions. They are not good at it.

    CD: How have you personally responded to the increasing obligations of being a director?

    GC: I don’t subscribe to the conventional wisdom that boards should limit themselves to choosing the CEO and setting policies and strategies. How can directors know the company is being run in a way that doesn’t expose them to personal risk if they’re not more involved? I certainly believe a good chairman should be regularly in contact with the CEO so the CEO can benefit from the experience of the chairman and so the chairman, on behalf of board, can be assured the risk-management strategies of the board are being carried out. The chairman should also have access to other senior executives, such as the CFO, for the same reason.

    KC: In terms of our private companies, I’ve taken the view that the responsibilities aren’t that new. One way or another, if you’re an executive director of a private company, you’re responsible anyway. So that hasn’t really changed. In terms of public companies, you’re going to be much more choosy about what company you get involved in and you’re going to spend a lot of time thinking about compliance.

    CD: What do you view as your biggest success as a director?

    GC: I think I brought practical business judgement to the boards I’ve been on. Obviously I’m not an accountant or lawyer or anything like that. I learnt whatever skills I have in the school of hard knocks.

    Also, as a chairman I encouraged all directors to participate in the discussion and give their opinions, whether or not it differed from the majority. I’ve often seen a director express a dissenting view and ultimately convince the board to accept his or her view. It was important as a chairman, I thought, although not always possible, to get board members to work together cooperatively to further the interests of the company and the shareholders.

    KC: I like to think I make a contribution to the boards I sit on. I’m not one to be passive. When you’re a non-executive director, it’s a very different situation from when you’re an executive director or manager. Whether you’re the chairman or a director, you don’t do anything individually. You’re part of a team and you are only as good as your team. So I don’t really pat myself on the back for my achievements as a director per se, other than the contribution I make to the team as a whole.

    CD: Where do your views differ from each other?

    GC: I think our views are pretty well aligned. Ken’s probably a bit more conservative than me. I’ve been a bit more willing to take risks as an entrepreneur, I suppose. He would probably lean towards the more formal structure, but on most things our views are the same.

    KC: We’ve managed to work together for a long time so obviously we can’t have too much divergence. I have a different background. I’ve got 10 years in medicine and that gives you a different perspective in life. I think it’s accurate to say I’m a bit more conservative. I’m less keen to risk what we’ve already achieved, so to speak.

    CD: Who mentors who? Has it changed with time?

    GC: I hope Ken’s learned something from me but I’m not sure really. It depends on what he thinks!

    KC: I don’t think I’m a mentor. I’m very fortunate. My father gives me a lot of free rein. It’s more a matter of me asking him for input than him volunteering it nine times out of 10. It’s been really good to have a sounding board, as opposed to a mentor. It’s pretty lonely as a CEO of an organisation, but I haven’t suffered from that loneliness because I have a sounding board. I’ve been far luckier than most.

    CD: What advice would you give to other members of family businesses on how to make it work?

    GC: I don’t believe one size fits all. If a family is one large business, then a corporate board, with perhaps some outside directors or an advisory board, is probably the best structure. But we’re involved in half a dozen completely unrelated ventures so we work on a kind of partnership model. In addition to Ken, I have two daughters who also work in the business, plus a son doing his own investing and developing. They are all shareholders in the group businesses. When opportunities or problems come up, we discuss them and decide what we’re going to do. If we do invest in a project or business, one family member will usually be given responsibility to look after our interest in it. Skyrail does have a board, as do most of our joint ventures.

    Because of our diversity, the partnership model gives us more flexibility than a rigid board structure, but it does need the partners to cooperate and get on with each other. At some stage that may have to become more formal.

    KC: I do think you have to be able to compartmentalise business and family issues. I’ve never found that difficult, but I know it can be. Certainly we’ve had plenty of discussions. It’s never easy but I wouldn’t say we’ve had problems.

    CD: Have you looked at the issue of succession?

    GC: We don’t discuss it much but I think about it a lot and it might have to change in the future. But it’s okay for now.

    KC: I don’t think there’s been any issue in terms of management succession. Indeed, there’s been succession in management ranks. I promoted our Skyrail general manager to managing director a year or so ago and demoted myself. I’m just an ordinary director now instead of a managing director. So we’re very solid in terms of management succession. But it’s a very different issue from ownership.

    CD: Do you think the ownership of the business could be problematic?

    KC: I don’t think it’s going to be problematic. I have three siblings. I would expect at some stage in the future there would be a change in shareholdings.

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