Boardroom Confidential with David Gallop

BENNETT MASON

Hello and welcome to Boardroom Conversations, a podcast from the Australian Institute of Company Directors. My name is Bennett Mason. Thanks very much for joining us. In each episode, we have a candid conversation with some of Australia's top directors, leaders and experts delving into their backgrounds and discussing many of the key issues that boards are grappling with. I'm pleased to say our guest this time is David Gallop.

He's known to many as the former CEO of both the NRL and the Football Federation of Australia. David is now an accomplished company director as well. He's the chair of Venues New South Wales and Step One Clothing, plus a board member with Tabcorp and Cricket New South Wales. David, thanks so much for joining us.

DAVID GALLOP

Thanks, Bennett.

BENNETT MASON

So, let's start with those roles at the NRL and FFA. What did those jobs at top sporting organisations teach you about leadership and also about governance.

DAVID GALLOP

, very highly scrutinised roles, particularly the NRL is a daily feast for the media. So, making sure that you think through your decisions carefully. Sometimes you'll need to act quickly, sometimes you'll have more time. But the pressure is on in the world of the NRL. I was fortunate to have a great group of people as my senior team, I think in both organisations. Very loyal, very hard-working, one of the things about sport is you're not making widgets every day. You're doing something that you’re probably passionate about. And that means a lot to a lot of people. So, I think in that respect, you learn quickly on the job and leadership is about empowering your people and making sure that you've got good rules and processes in place to follow. A strategic base to your decision making is important as well.

BENNETT MASON

Sporting organisations are certainly high profile. There's a lot of scrutiny. Do you think boards in the sporting sector differ from boards in other sectors, whether they be listed companies, private companies or non-for-profits?

DAVID GALLOP

Can do., the big advantage of sport is probably that the people that come onto your board are passionate about the sport and want to be involved. The downside of that can be that, even well-intentioned, they are occasionally in moments when board members probably overstepped the mark in sport and get too involved in the day to day.

, like any board appropriate oversight and supervision is very important. But at the other end of the spectrum, if you like, you don't need management and board tripping over each other. And that can happen easily in sport is my experience.

BENNETT MASON

How do you respond to that as the chief executive, when you have these extremely passionate board members who might be possibly just stepping over the line a little bit?

DAVID GALLOP

 It’s about communication, making sure there are regular forums where matters can be raised and challenged, but that that can't be something that becomes part of the day-to-day operating rhythm. I can certainly give examples of times when I've had board members who have overstepped the mark, even on a well-intentioned basis. Sometimes, but maybe not as well. At one stage I had a new chairman who told me he didn't want to do any media, didn't want to be the spokesperson for the organisation. The next Sunday, he'd done a double-page interview in one of the Sunday papers. So, these things do come along as challenges in sport.

BENNETT MASON

You had this long career as a chief executive. How did you know it was time to stop doing that and move on to something else, to maybe look at a board career?

DAVID GALLOP

Yeah, I think nearly 20 years as the CEO of two big, sporting organisations, the realisation probably came that another big executive role in sport may not be around the corner. So, my own feeling of energy, but also from the fact that these jobs are quite rare. So, stepping into the board world was a logical step for me at that stage after nearly 20 years as a chief executive. I think board members who've had operational and chief executive experience bring a lot to the boardroom.

BENNETT MASON

Some former chief executives can find it a bit of a challenge making that transition. Almost, a different mindset they need to take on. Did you feel that at all?

DAVID GALLOP

Yeah, I think you do. When you're used to running a team of people and problem solving together every day. It does take a bit of time to get used to the fact that you haven't got your hands on the wheel on a daily basis. You’re coming in to be a board member and to listen at the board table and make a contribution. That does take some getting used to.

BENNETT MASON

Do you think about leadership itself in a different way now, now that you've moved from chief executive to board member or chair?

DAVID GALLOP

I definitely think I see both sides of the board table, if you like, with pretty clear vision. I probably, because I did spend 20 years as the CEO of organisations, I do probably come in being careful not to overstep the mark. Being careful to not become a chore for management. Make sure that they're getting value out of your contribution and that the organisation is getting value. Accepting, of course, that liability sits with directors and appropriate supervision and oversight is important. But I probably come in having been a chief executive for a long time and particularly in sport, I probably come to the boardroom careful that I'm there to help, occasionally challenge management but not be overbearing doing.

BENNETT MASON

It's helpful having at least a few former chief executives in the boardroom.

00:06:57:09 - 00:07:20:01

DAVID GALLOP

Yeah, I do. I think operational experience is important not only for the day to day, rhythm of organisations, but in the moments when there is a challenging situation, a crisis, if you like, those that have managed crises and been leaders during tough times can add a lot to boardrooms.

BENNETT MASON

You mentioned that word crises a moment ago. I'll take you back a little bit to your roles Running the NRL and Football Australia. When there's a crisis with a big company, even a massive ASX company, it might make a few headlines, it might be in the business pages. Like you said, the NRL is a different beast entirely.

When you have a crisis in the NRL, look at me on the front page for days, back page for weeks. You dealt with a lot of crises. How did that help prepare you for the boardroom, do you think?

DAVID GALLOP

I like the cliché, try to be the calmest person in the room. So if you've had experience at crises, then you tend to come from that position of, okay, if our processes are right, if we have done what we need to do to withstand any kind of legal challenge or making a big mistake in process, then we can quietly step through what we're going to do and how we going to respond and communicate with stakeholders carefully. Not every decision is going to be popular with everybody. But I think if you come into these situations fully prepared and with good processes behind you, you're a good chance of getting them right. I like to think over my time through those sorts of crises, we made the right decisions. Occasionally you agonise about that because you know it's going to impact on a lot of people. But I think by and large we made good decisions in those years.

BENNETT MASON

A lot of board members, a lot of directors haven't gone through these high-profile crises, certainly haven't gone through crises that have gotten a lot of media attention. What's your advice to board members who do go through a crisis and suddenly the press is all over them? What tips would you give them?

DAVID GALLOP

I think to trust your processes, trust your judgement. Occasionally you will need to make quick decisions. Other times you'll have time to step more carefully through. But I think it's important to know that you're not going to have everybody on side about everything. But if you weigh up things carefully and you make good judgement, most people are going to come along with you on the journey.

BENNETT MASON

Let's go back to your board career now. You’ve had a number of positions. You've been in a number of sectors. Do you think different industries or different sectors require a different approach from the board? Or the consistencies across them?

DAVID GALLOP

there's obviously common themes around providing good oversight and good supervision and making sure you mitigate the risk areas as much as possible. At the same time, the most effective board-management relationships are going to be ones where there's good demarcation. Everyone knows their role. I certainly learnt a lot from having Frank Lowy as his chairman when I first came into football, the Football Federation. Frank was, is still a very busy man. He didn't want to be involved in operational day-to-day issues, but he wanted to know what was going on. And I think the sense of the demarcation between board and management was, was, by and large, very good.

BENNETT MASON

You're now a chair yourself. You had, I guess, someone like Frank Lowy, as a great example to look to. But how do you interpret the chair role? What do you think makes for a really successful chair?

DAVID GALLOP

 I think it can vary from organisation to organisation. Sometimes you have a relatively young management team or a founder who is going to have his own perspective on taking the company forward. Compare that to a company or an organisation like Venues, New South Wales, which manages huge infrastructure owned by the government, answerable to the government. These need different approaches and different skills. But listening is a great start. So, to use another Frank Lowy remark, Frank used to say: “You don't learn anything while you're talking.” So, becoming a good listener, and making sure that the rest of your board get an opportunity to speak, and get their view out. I'm very conscious of that in the boards that I chair.

BENNETT MASON

You've now been on both sides of the chair-CEO dynamic, and we know that relationship can be crucial for an organisation's success. What are your insights into how that how to make that chair CEO relationship really flourish?

DAVID GALLOP

The old adage that there's only room in town for one sheriff. So, if both people are trying to run the place on a day-to-day basis, you're probably going to have a train crash at some point. I think good chairmen know that they are there to support challenge. But ultimately the day-to-day of the of the organisation and the running of the senior team has to be left to the CEO. That that will give you the most effective governance. I think.

BENNETT MASON

As we said, you’re now a successful and established chair. Part of being chair is resolving disagreements and arguments, for want of a better word, around the board table. What's your approach to that?

DAVID GALLOP

I think communication, not only formally in the boardroom, but making sure that your fellow directors can pick the phone up to you outside of board meetings and then providing them with an opportunity to speak up on what they want to speak up on. I think sessions without the management team can be effective as long as they're not overused. Because you don't want to create an environment where the CEO and the management team are almost terrified to know that the board is in the room, talking about them. But I think those private sessions, if managed appropriately, can be important. Communication is the key and no surprises. So, you want to know that before you have a board meeting of any organisation, the CEO has told you what's on the agenda, how he or she's planning to approach an issue, and you have no surprise on the actual day.

BENNETT MASON

A lot of organisations, especially sporting organisations, have a representative model of governance where you have, if it's a national federation, you might have people from different states. What are some of the challenges that come from that model?

DAVID GALLOP

That's a great question. I think a balance of so-called independent directors, as well as those who are stakeholders and intimately involved in the game is really important. I think from time to time, some Australian sports have overdone the independence model and lost track of what is happening, for example, in the states or at the grassroots. I'm a big believer that you have to have both. And some sports have gone too far down independent models. You therefore are not really having debate in the boardroom because the people you would be debating with are not in there. That leads to debate happening in the media, outside the boardroom and ineffective decision making. I like to see boards which have a balance of both.

BENNETT MASON

Part of what you're talking about there is, I guess, stakeholder management, which is a crucial part of being a director. Now, sporting organisations are a great example of that. You've got fans sponsors, the players, you might have state federations, the venues, government. What have you learned about stakeholder management in your executive career and your board career?

DAVID GALLOP

Not always easy. I think in sport it means a lot to a lot of people. So, you need to be thinking about that diverse group, what they want to see. As simple as sort of knowing on one side of the page, okay, who's going to support this decision? And on the other side of the page, who's not going to. And how are we going to communicate with both groups? That sounds simplistic, but I think it's the key to managing the juggling that can happen in these situations.

BENNETT MASON

Stakeholder management is now one of the skills that a director needs to have. The skills matrix, whether formally or informally, that directors need has developed over the last ten, 15, 20 years. What do you see as some of the key skills that directors need today?

DAVID GALLOP

I think an ability to know your subject matter, but also to be open to learning about the parts of the business that might not be your expertise. This is the balance of a diverse board, is that you have different perspectives and different levels of skill, managing all of that. And knowing how to channel it in the right way is not always easy, but I think it's the secret to success for a lot of organisations.

BENNETT MASON

Culture is a word that gets used a lot for sporting organisations, but also at companies. It can be a little more straightforward to know the culture of the organisation when you're the chief executive, you're there every day. You're talking to people. That's not the case when you're a board member. So how do you, as a director or chair, get a sense of the organisation's culture?

DAVID GALLOP

I think the chief executives and his senior team are going to be critical to this. I once had a football coach tell me that he literally walked around the football club with his finger in the air, taking a gauge of the culture on an hourly basis. And he said it could shift depending on wins, losses, mood, fan reaction, injuries. The sort of general up and down of footy clubs. A good culture, I think, in sport, the wins are exciting, the losses are disappointing. But there's a smoothing out of that. People love working there. There's energy. And if you can get that, then you start to develop a culture where you'll attract good people, retain good people and do good work.

BENNETT MASON

I want to get back to your board career. For a lot of directors, it's a portfolio career. That's the case for you as well. How have you put your portfolio together? Have there been certain things you've looked for?

DAVID GALLOP

Yeah, of course, sport is something that I knew, and I thought I could add value in. And then sometimes just a door opens through a connection or a network, and you think: “Yeah, I think I can add value to that company. I like what they're doing. I like their product.” Step One is an example for me. I was there as we went public and always thought the product was a great product. Created by young, energetic founder. So, yeah, I think it's sometimes a mixture of accident and design, mainly design for me. I've been fortunate that I've been able to use my experience as a sports administrator to add value to organisations which by and large touch on sport.

BENNETT MASON

You mentioned that you were the chair of Step One. As I went through that listing process. What is the role of the chair in that journey?

DAVID GALLOP

That's a complicated exercise. And that was new for me. So, you've got a range of advisers. You're ticking a lot of very strict, legal requirements. Being an ex-lawyer, probably helped me in that regard. A good example is, the way the regulators run this kind of thing is important, and board members need to be on top of regulatory matters.

BENNETT MASON

Again, sticking with your board career, is there a particular challenge that you're really proud that you overcame in the boardroom? Is there an issue that you and the team wrestled with?

DAVID GALLOP

I guess as organisations, my period in rugby league as a CEO saw a resurgence of the game. In the 2000s we were very strict about wanting to create a competition where the fans of every team thought their team was a legitimate chance of winning on the weekend. So strict enforcement of the salary cap, engaging with communities, creating what was called season ticket holders became members. We got people back at games in their jerseys. And the game sort of got back to a place where people loved it. So, that was a mixture of management and board decisions. I think in football, the growth of the Matildas, obviously. We recognised that we had a great team, but we were playing in front of sometimes pretty empty stadiums. We started to get better opposition coming to the country. We got state government support and suddenly we were selling out games, decided to bid for a Women's World Cup. And we all saw that in 2023, an incredible tournament. So, I'm really proud of what was achieved in women's football There. In the time I've been on the Tabcorp board, we've seen a lot of fundamental change to the business, in a very challenging and competitive market, which used to be a monopoly. So, I'm proud of the way we've gone about trying to get back to a position of getting good market share.

BENNETT MASON

You sit on several committees, including at Tabcorp, where you're the chair of the People and Rem committee. How do you ensure that committees genuinely add value to the board?

DAVID GALLOP

I think preparation. So, talking to the executive, who will look after people in rem, constantly about what they're focusing on. And then making sure that when you do have a committee meeting, there's good focus. You're not dealing with issues that should just be left to management. Remuneration is obviously a tricky issue for big public companies. Shareholders generally are supportive of rewarding performance. But it can't be only about financial performance. It has to be about how the company is tracking reputationally. So, a whole range of non-financial measures, I think, are important when you're looking at Rem, and giving shareholders confidence that the structures are right and incentivising management for success.

BENNETT MASON

Do you have a general principle or philosophy on how you balance that executive pay with accountability and long-term value creation?

DAVID GALLOP

Yeah, I think shareholder value and lifting the share price, or maintaining it, if it's already in a good place, that's obviously critical. But it can't be the only measure. I think the reputational aspects, the cultural aspects of how people regard the company are very important as well. So, on that committee, we try to balance the two.

BENNETT MASON

David, you've now been around plenty of board tables as a chief executive and as a board member. What do you think are some of the most difficult board decisions you've had to deal with? And how did you, as an individual director and you as a team, as a board, get through it?

DAVID GALLOP

I think I've dealt with a lot of tricky issues over the years. A big role of the board is to choose the right CEO. And it's very satisfying, I think, when you make good decisions on people and you see them do well. Conversely, situations where things haven't worked out and you need to change a CEO or senior person can be difficult. But I think no one likes being in those sorts of situations. But ultimately those decisions need to be made and good communication, a good sense of collegiality around the board is important when you come to those to those points.

BENNETT MASON

CEO succession can be tricky, but we know it's one of the board's most important responsibilities. What are some red flags that a board should be looking for, and maybe it's time to move on the chief executive?

DAVID GALLOP

Poor performance, poor buy-in by the senior team. I think a sense that you want to see a senior team who really like their leader and want to work hard for him and have energy for him. So, if you start to see that, that's a danger sign. I think this stuff is sort of intuitively in your head when you watch somebody and you can see whether they've got a loyal team around them, or whether somebody might be just faking their loyalty. Your bullshit meter has to be on all the time, and you have to know when it's going off.

BENNETT MASON

Even the best CEOs have to leave eventually. How can the board best ensure a smooth transition from the departing CEO to the new person?

DAVID GALLOP

Yeah, I think trading people well and respecting the contribution that they made is absolutely critical. It's critical for what the message sends to those that are staying, the senior team. And it says a lot about an organisation, how you let somebody go. Unless there are circumstances where there's been misconduct. That's a different matter. But Frank Lowy actually, used to say: “It's important how we say goodbye to people.” And I've always had that in my head.

BENNETT MASON

Is succession planning something that you and your boards are thinking about all the time?

DAVID GALLOP

Yeah, I think it's become a big part of organisational success, is to know that you've got a diverse pipeline, and one where you’ll be able to see people's progression well. If you can plan that out, not only in the CEO role but in the other senior roles, then you're setting yourself up for success. Not always easy, but I think having a diverse team and particularly a good gender balance is important. But you need to be watching the pipeline below your senior team to know that you have women coming through who can fill the senior women's roles. And I think most companies are getting better or better at that. When I started at Football Australia, my management team had one woman out of about seven. By the time I left, we were 50/50. So, I'm proud of that. Good women who we were able to promote on to the senior team.

BENNETT MASON

David, you were talking then about promoting women to senior leadership at the Football Federation of Australia. There was a big change in that organisation. How did you do it?

DAVID GALLOP

I think keeping an eye on the level below the senior team and looking for women who are performing well and ambitious for the next step in their career. That will set you up for, inevitably someone will leave to take another job or have a family issue that they need to leave.

DAVID GALLOP

And if you're looking below the senior team level all the time, then you're a chance of giving somebody that opportunity to step up.

BENNETT MASON

And do you think other organisations could look at that example?

DAVID GALLOP

I think pipelines are important. So, a lot of board focus is often on just the senior team. But getting an opportunity to meet those who, perhaps at a GM level in a big organisation, and getting to know them as well. That's part of where boards need to get to if they got to successfully, keep the management team fresh.

BENNETT MASON

Back to CEO succession. Are there certain traits that you look for when assessing potential CEO successes?

DAVID GALLOP

I think energy is always a big thing. You want to see somebody who you think is going to provide real inspiration, someone who people are going to like working for, who's going to be smart, and careful in their decision making. These things, again, are a bit intuitive, but you'll know it when you see it. And I think that that comes from experience.

BENNETT MASON

Do you have a view on internal versus external CEO candidates or are you agnostic? Do you just want the best person for the job?

DAVID GALLOP

I think agnostic, although I think if there is an option for internal, it's a good message to the rest of the organisation. It says that we're watching you and we will advance you if you perform well. On other occasions, there's need for a completely new, fresh set of eyes that can come in with a different perspective. So, I don't think it's always one or the other, but I definitely would like to think over my career, I've often looked to the internal candidate.

BENNETT MASON

David, you've been very generous with your time, and we've covered a lot of ground. So, thank you for joining us here on the podcast.

DAVID GALLOP

I really enjoyed it.

BENNETT MASON

Thanks David.