The Productivity Commission stalwart says he is optimistic for the future — if business can learn to embrace dissent rather than fear it.
The crisis in trust will get worse, but I’m optimistic good things will emerge if we listen. There’s genuine recognition of governance and stewardship as a different way of doing business, but we’ll have to get over our discomfort with difference. We need different experiences around the table to make decision-making relevant to the community.
When I was on the Productivity Commission Executive Remuneration Inquiry (2009–10), some felt society had no right to question what they were paid. Others absolutely got it; they understood they had a social licence to operate and had to work with broader community expectations. It shocked me how few there were in the second group. The more they said ‘we’re not a club’, the more they were a club.
Most boards have an absolute distrust of people who are different. Overwhelmingly, members are ex-CEOs, or their friends, with similar backgrounds, education and political views. As a result, many boards are not equipped to deal with social issues other than those they’ve experienced. I’ve been a commercial lawyer, involved in the social sector and management in private companies. I’ve lived my adult life straddling business and social issues. You become good at raising questions because of your life experience. In every major crisis, clear voices warned [of danger], but they weren’t listened to.
Disconnect between principle and practice
The Royal Commission into Institutional Responses to Child Sexual Abuse (2013–17) had the opportunity to hear from people who were abused in 4000 institutions. It did in-depth case studies in 120 institutions. It gave us a great insight not only historically, but into private sector companies, abuse by apprentices, churches, schools, sporting and recreation — a broad spectrum.
What stood out was the absolute disconnect between the stated principles and values of organisations and their practices. Many of these organisations stand for justice and fairness yet in practice this was missing, not only at the time of abuse but more significantly when the people came back as adults to seek redress. Government agencies failed to scrutinise them because of that trust and they were able to get away with it. It became a vicious circle. In every one of those institutions there were people raising concerns and trying to do things differently, [but often] they were bullied, moved out and the perpetrators moved into positions of power.
The Royal Commission gave great insights into how organisations became culturally corrupt. Cultural corruption eats at the very fabric and may take years to come out. It makes for bad decisions and is destructive commercially. It’s the same in business.
If you’re not fair dinkum about things, hypocrisy comes to light very quickly with social media and whistleblowers. If you don’t understand the world in which you operate, the world will offer up some nasty surprises.
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