Boardroom Confidential with Paul Zahra

BENNETT MASON

Hello and welcome to Boardroom Confidential, a podcast from the Australian Institute of Company Directors. I'm Bennett Mason and thanks very much for joining us. In each episode, we have candid conversations with some of Australia's top directors, leaders and experts delving into their background and discussing many of the key issues that boards are grappling with. Our guest today is an experienced executive, director and company advisor, Paul Zahra. He's a former chief executive of both David Jones and the Australian Retailers Association. Paul also had an extensive board career and was the founding chair of LGBTQIA+ education charity The Pinnacle Foundation. Paul, thanks so much for joining us.

PAUL ZAHRA

Pleasure.

BENNETT MASON

I wanted to start today by talking about a recent AFR where you were interviewed and you highlighted that there's only a handful of openly gay directors in ASX listed companies. Why is the number so low, and why do you think visibility at that level, at ASX boards, is so important?

PAUL ZAHRA

It is a concerning number. When I first started, I was firstly appointed David Jones in 2010, there were no openly gay, visible, CEOs. And that was concerning for me. It did drive a bit of anxiety because you feel quite exposed as a leader where you look around and there's no one you can actually necessarily align yourself with or to have some level of mentorship. So, it's an issue back in 2010. But to 2025 when you've got now we're saying six, it's poor change management here that’s got us to where we're at. So, my concern is that there are so many LGBTQ people that have even lost the aspiration to get to board roles, but most importantly, they just don't see themselves on the board level because they there's just no visibility of LGBTQA+ people. So, visibility becomes really important to create a pipeline. Why do we need that pipeline? Because diversity needs to go beyond gender. So, it needs to include all forms of diversity, diversity in all its forms to make sure that we pick up on all the other, whether that's people living with disability, LGBTI people, people with a cultural differences. If you get that true diversity, we have the real power in a board and in that leadership from the inclusivity perspective.

BENNETT MASON

You mentioned the pipeline a moment ago. Where does the blockage in the pipeline occur?

PAUL ZAHRA

I think, as I explained, I think because the blockage happens when you get to executive level, I think there's just such a lack of visibility that the aspiration is not there to go beyond because you can't be what you can't see. It's that old adage that, in fact, if there's no one there that you can see that role is attainable, or “I can do that because he or she's doing that, or they are doing that,” that's where we lose that aspiration. And people think “Why should I bother?” if they can't see it in the marketplace, then they think, “Well, why would I bother, to even to aspire for it?”

BENNETT MASON

Why do you personally believe it's important to be a role model and to give that visibility?

PAUL ZAHRA

I think, LGBTQ people particularly, I think for two reasons, actually. From a broad point of view, boards have demonstrated gender equality has been terrific. It's a massive tick. But those are those boards that can demonstrate diversity in all its forms, that's where you get true diversity and true inclusive leadership, because diversity, having a diverse board drives better inclusion. Better inclusion drives innovation and derisks situations. So, the broader you can be, the better. What LGBTQ people I think bring, even though it's a small cohort for me to assess on, I think it's the ability to adapt, the resilience piece, the ability to advocate for yourself because you're constantly having to come out. People talk about coming out. It doesn't happen once. It happens every day. Advocating for yourself, advocating for others becomes really important. So that becomes really useful skills, when you think of dealing with government, crisis management, etc. So, I think having a diverse board obviously brings all those skills together. And that's where I think LGBTQ people particularly can start.

BENNETT MASON

Paul, you said a moment ago that visibility is really important. There might be some senior leaders, board members, executives, who are openly gay but don't want to be visible. Maybe they just want to be a director. They just want to be an executive. What would you say to those people about the importance of visibility?

PAUL ZAHRA

Look, I’d encourage those individuals, and I know many of them, to reconsider their position because I think if they truly want to give back to the community particularly, but to give back for their achievements, the best way they can give back is by being visible so that their legacy comes down to actually how they handle themselves whilst doing those senior roles. And the visibility becomes really important because there's six people that are prepared to be open and visible that puts a lot of responsibility on those six individuals. And it takes, and the advocacy, it takes a lot of effort and time. We'd like to see that broadened beyond those six individuals. And that's really the main theme here is that visibility, the opportunity to have an impact on other people's careers, their lives and possibly save lives. That's the most important thing for me.

BENNETT MASON

What barriers do LGBTQ+ leaders still face in being appointed to boards or senior executive roles?

PAUL ZAHRA

I have some stats there because I looked at the Diversity Council of Australia and they say 74% of LGBTQ plus people consider being out at work important. So, 74%, yet only 32%, are out to the people they work with. So, it's a real concerning trend. I think the fact is that the biggest barriers are unconscious bias when it comes to LGBTQ people. I think for most, I think it's a skill for chairs to be able to manage a diverse board. That skill is still being developed. I think what happens in the LGBTQA space is that often chairs don't know how to deal with it. They're too scared. It's a political minefield when we deal with a diverse board. So particularly in this space, my space, chairs are worried about things like getting pronouns mixed up, all the complexity in dealing with those letters. Not even be able to say the letters. So, I think the barriers that exist often start with the chair and then they emanate amongst all the board. I think when it comes to dealing with a diverse board, I remember my time on an ASX board where the first two minutes were taken discussing the football. Now that for me, that sounds like a very simple conversation, but for somebody that wasn't a football. I say two minutes, it's more like ten minutes. That excluded me immediately. So that has an impact on, if you can't think about being inclusive in a board meeting, then what happens is you impact people's level of psychological safety, also their mental health. So, you've got to think through beyond that. And I think what LGBTI people bring is a sense of actually thinking about having that sense of empathy, I think, and that sense of inclusion, because they've been they used to being excluded.

BENNETT MASON

You mentioned that some chairs out there might be struggling with diverse boards. Either, composing a board that's of diverse backgrounds or if they have a board with diversity already, they might be unsure about some things. Part of that is, as you said, “the letters” or using the right pronouns, but it's much more than that. What advice do you have for those chairs who maybe are finding it a bit challenging dealing with a diverse board?

PAUL ZAHRA

I think it is a skill set. It can be attained. I think, chairs that are nervous about saying the wrong thing, I think they should not be so nervous. I think the most important thing is if they do make a mistake, that they apologise and explain it’s part of their learning. I think that's the simplest way for them to be able to build confidence as a chair. I think the best chairs are diverse chairs because they understand it immediately. And that's where we seem to be really still struggling is getting diversity -- the diversity at the board levels happening at the gender equity perspective, but not necessary at the chair level. So, we’re still seeing a lot of systemic stereotypical chairs that are actually a function of the system at the time. And that's where the change needs to happen. They can obviously get coaches if they want to take it really seriously, that can assist them with those different cohorts and how do they manage through it. But mostly it's just about being humble and forgiving if they get it wrong.

BENNETT MASON

We've seen progress when it comes to gender equality with boards. There's still a lot more work to be done. But the numbers have steadily increased for women on ASX 200 and 300 boards. We haven't necessarily seen the same progress with other types of diversity, other backgrounds. What lessons do you think we can take from the progress we have made on gender equality that can be applied to other types of diversity?

PAUL ZAHRA

I guess the simple response to that is what doesn't get measured, doesn't get managed. And I think the difference in the gender equality space is it started to get measured. And it became a standard to aspire to, but also to achieve. The practicalities of that is particularly for most boards that are very numerical, having those particular, whether its quotas, targets or having it of strategic importance makes all the difference. When I think about, specifically in the LGBTQ space, out of all the different diversity pillars, if you've got that particular space right, you've solved for all because it's the greatest litmus test. It's the only diversity pillar that still has a social taboo associated with it. So, if you're able to achieve that level of inclusivity at the LGBTQ space, you've really opened up. It becomes an absolute gem particularly from an innovation point of view. So, when I look at the greatest companies’ innovation, whether that's Google or Meta or what have you, it's it is very welcoming to the LGBTQ. Apple's another good example. And they've got very visible role models, not only in management but on the board.

BENNETT MASON

What does an inclusive board look like? And importantly, how do you think chairs and other directors can help to create that culture of inclusion from day one?

PAUL ZAHRA

Really good question. I've come up with my top five and I don't want to miss any of them. So, I guess the first thing for me when it comes to chairs, because it does start with the chair. And that's around setting expectations early, having clear communication about values and expected behaviour. And I think the values become really important because the values of a company need to be documented, they need to be demonstrated, and they need to be part of the management and the board. And often they sit in line with management, and not the board. And I think if you've got those documented values, everybody's clear on them, being able to test them out. That becomes your guiding light when it comes to dealing with problems and also opportunity when it comes to things particular around social impact. But opportunity you may want to invest in. Having an intentional effort to build that diverse board. So, chairs that say, “We're doing this not because of the risk, but because of the opportunity.” I think that's the big difference for me. Managing discussions, obviously, from a facilitation point of view that brings opportunity for every voice to be heard. So that is hard as a chair because often the chairs have formed a view, but they’re leaders amongst equals and they're not the boss, so the best chairs speak last. They've heard from everybody else and they actually somehow bring that together and see where there’s alignment and misalignment. I think regular check ins to make sure that your ongoing assessment of the board dynamics and culture, so you can get people's views. And the final thing for me, when it comes to inclusive leadership, it's leading by example. So, the chair's behaviour sets the standard and tone of the board and the company, to be frank.

BENNETT MASON

A lot of directors, many board members, even at for-profit entities, want to use their board seat, use their position not just to drive financial returns, but also help lead social impact, inclusion. What advice do you have for directors on balancing those two things? You want to drive that social impact. But at the same time, you've got duties to the organisation, you want to ensure that there are solid financial returns too. How do you balance those?

PAUL ZAHRA

Look, I think there's been a lot of conversation around where the business should even get involved in social impact, if you take the for-profit sector. And that's a really interesting conversation. I think great companies don't just look at profiteering. They also look at how they can have an impact on the communities that they serve. It comes back to having those documented values because if you've got a documented set of values and the social impact cause you’re reviewing actually aligns with those values. That's where you can truly make a difference. So, I use an example. When I was running David Jones, marriage equality was actually, being touted in the early stages. And I remember getting a call from the AFR to say, “We have not been able to get any one from the ASX, any CEO, to make comment publicly around marriage equality.” And I thought about it and I thought, “Well, leave it with me. Let me think about it.” I had to weight it up. So, we're a public company. What do I say? What reflects my personal values versus the company's values? And I rang and spoke to a young gay accountant in our accounting and posed the question to him. And he said to me that, in fact, the importance of it was that we’re accepting of everybody when it comes to retail. We don't judge any customer that comes through the door, if they're paying customers, we treat them all equally. Equally, it was important from a staff point of view, as a gay person. Now, I was openly gay but not visible at this point. And that's why visibility becomes really, really important. That in fact, from an employee point of view, there's a lot of LGBTQ people in fashion, particularly gay men in the fashion industry. So, it was important for me to be seen, from a leadership point of view, having an impact. One of our values was around diversity, about diversity of not only thought, but also across the board. So, it was an easy conversation for me to have to ring back the AFR and say, “I'm going to do this.” Now what was interesting on my very first board meeting back, the board were not that generally happy about me commenting because it I was the first to do this. Now history tells me I did the right thing. At the time it was questionable. I think as long as it aligns to your values that you have that sense of conviction. There was a couple of hate mail that was sent through, but for every piece of hate mail, it would have won 10 customers. That was the way I looked at it. So, it was important. Sometimes you've got to put your head above the parapet on the things that are really important. And that was for me. And I'm pleased to see, obviously marriage equality was something that was a great success and really proud to be part of it.

BENNETT MASON

Marriage equality was something obviously very important to you and something very important to David Jones as an organisation. And its stakeholders. Stakeholder groups, homogenous. Within the stakeholder groups, there will be different feelings, different opinions, different priorities. How can boards and senior management really get a sense of how their stakeholders feel about a particular issue?

PAUL ZAHRA

I think consultations. If you've got the time to consult widely, it's the best way to go. I mean, I coming out of the Australian Retailers Association, I really learnt the skill of stakeholder engagement because as a member organisation, when you’ve got a member asking you to do something, to advocate for something that you don't necessarily believe in, trying to find that happy balance, because if you piss them off, they just withdraw membership. So, we had some major retailers as part of the membership. So, you've got to be able to manage. There's IQ, there’s EQ and then there's this political PQ, this political savviness to manage through those stakeholders and understand how you get a win-win situation. So, in my previous role in advocating for retailers through the ARA, having to go across all the different levels of, you can imagine through Covid, it was complex because we're dealing with federal, state and local. And each state was doing vastly different things when it comes to even deciding what “essential retail” meant. So, consulting is the best way to go if you have time to do it. If you don't, you can narrow the consultation down from a time point of view. But get to key people, or the people you think are probably not going to agree with the position, to give you the counterargument, at least put your position forward. You're never going to get everybody to agree, but at least if you get the majority to align, you put yourself in a really good place in moving forward with comfort.

BENNETT MASON

We talked a bit about David Jones. You were speaking then about the ARA. I want to ask about another role that you've had, and that's as the founder and former chair of the Pinnacle Foundation. Tell us what the Pinnacle Foundation does and why did you want to found it?

PAUL ZAHRA

The Pinnacle Foundation came up as an opportunity because it was started by local Sydney people. I was looking for - I was actually still working at David Jones at the time - but a way of actually, my mindset changed. I think it happens when you get to a certain age, you start to think about your legacy. You also start to think about how you give back. I also was given great advice around NFPs about only doing things that you really feel very strongly about, because otherwise you resent giving your time and it is ultimately giving time. There's no compensation involved. The Pinnacle Foundation warmed my heart because I was one of those people that didn't get a university degree, but was very successful, and I was very grateful for that. So, I felt that it was an opportunity for me to give back to a wider group, to my community, to a wider group. But equally, it comes back to that visibility. We have a shortage of visibility in the LGBTQ space because most people haven't had that sense of investment in their own personal development plans or their own leadership. So, it was a way of actually breaking the cycle. I think that's the way I saw it. So, as a founding chair, it was hard work having to develop a constitution, live and work with that Constitution to come back and correct the Constitution, dealing with diverse, you can imagine, although we get lumbered together, there are diversity amongst diversity amongst the LGBTQA+ community. And getting everyone's outcome was a real challenge. So again, consultation, understanding the detractors. How do you work with those people to get to the outcome? On top of all that, we have the geographical diversity to make sure we got from a funding point of view, we were tapping into high net wealthy individuals. So, it was a lot of hard work. I'm really proud of the work that's there. When I started, we were dealing with about ten scholars, investing in scholarships. I probably should have said this on the onset, but the Pinnacle Foundation invests in disadvantaged LGBTQ people, in scholarships and mentoring. It's hand in hand, and the scholars actually value the scholarships, but also the mentoring. They're aligned with a more senior person that can mentor them through. So, getting the funding, trying to actually meet with people, getting money, that sort of stuff, and then actually putting good governance principles in place. Coming out of ASX company, that's all I knew anyway. So, it was run as a tight ship. It has now gone on to have a significant endowment fund. And pleasingly, Andrew Staite the CEO is doing such an amazing job. We're up to about 100 scholars annually, so it's a great program.

BENNETT MASON

We talked about Pinnacle in the early days. It was a lot of hard work. You put in a lot of your blood, sweat and tears, possibly quite literally. Was it hard to walk away?

PAUL ZAHRA

It was but I had a couple of reasons why I needed to do it because then Covid hit and I accepted this role at the ARA just before Covid hit. I thought it would be an ambassadorial role. My predecessor was mostly out and about meeting people. I thought I can do that. Covid hit and it was a very different role because it meant a seven day a week operation, because government, particularly Victoria, were making most of their announcements on Covid on a Sunday. So, I had to be available, and it was hard slog for two years. I didn't have the capacity to do two roles. Equally, I was heading towards a potentially a third term. And I felt from a governance point of view, it was time to bring in a new chair. So, I did the right thing, but I'm grateful that it's gone on to do bigger and better things. But it comes back to a capacity piece.

BENNETT MASON

You've had roles across a number of different sectors. NFPs like Pinnacle, private equity, obviously ASX companies as well. What do you think good governance looks like across those settings, and where does it start to go wrong?

PAUL ZAHRA

They all have different drivers and also a different mindset. So, if you're a diverse board member and that's where I want to be. As in, not diversity in my sexuality, but diversity from a portfolio point of view. I think they have different drivers, and I've worked across all of them. So, as an ASX company, it's all about good governance, compliance, shareholder being prime. And having that public scrutiny and protecting reputation becomes so, so, so important because there's such a narrow view, microscopic view on public companies to do the right things. And it's a complex world, ASX, but if it's governed well, those companies are a joy to work for all the right reasons, because they tick every box. In private equity, it is very much performance driven, often less about good governance, shorter time frame horizons. And very much a hands-on involvement. So, what I loved about private equity is you’re sort in the middle of the directorship and in an executive role. So great from a transition point of view. And you're valued in being hands-on, if you like to be hands-on. And I did enjoy that.  And mostly I've found in private equity, my experience is they’re often loaded by not governance experts but more investors and financial analysts. So, I think the challenge for anyone in private equity as a CEO specifically, but at director level, is that you've got to be able to balance the financial outcomes that need to be achieved. But equally, the people side of it, which is really important. And you have to give even greater effort, depending on which private equity firm you're working for. Not for profits, very mission driven. Less about the P&L, less about governance. So, what I bring is, and I'm doing that currently in a role as a director at Wayside Chapel in King's Cross. Bringing that P&L, that balance sheet mindset becomes really important from the board. So, it's even more important to question everything. There's a lot of love and joy in the mission driven side of things but that has to be balanced with sustainability around financials to be able to do what you're doing. I think the biggest thing about not for profits is that they’re resource constraints. So, if you join a not for profit as a board member, in a smaller NFP, often you are doing it, as it happened to me at Pinnacle, it's supposed to be part time, it became almost a full-time job until I got everything up and going. As time progressed that changed. But the resource constraints really force you to have to prioritise things about how you spend your time and de-risk where you can. Start-ups, again, I worked with Start-ups. It's not my area, my sweet spot. I think there's a definitely an agility piece around Start-ups versus governance. Very much about the founder, very much about growth focus at all costs, less about whether you make money in those early stages.

And that can be disorientating for someone who comes out of a very ASX or corporate, which was for me. And that's a different skill set altogether because most of the board meetings evolve around managing cash flow and understanding how do you repurpose debt where you need to. I think the common failures for me is, have been either over compliance without substance or the lack of diversity and group think. So, in some of the Start-ups particularly there were predominantly this groupthink because everybody’s supporting the founder, and nobody likes to question the founder because all of a sudden that can actually be detrimental to the organisation, but also to your position. So that's why I think diversity in a portfolio is such a great thing to have, because you get all these different experiences.

BENNETT MASON

I wanted to focus on your time at David Jones now, and the retail sector more broadly.  You've spent a lot of your life working in retail, and you were the chief executive there at DJs. You were there at a time of tremendous change and transformation. Suddenly online shopping exploded. David Jones is a traditional retailer, or it was then. It's a longstanding company in Australia. It's a real institution. And yet you took it through this period of enormous transformation. Can you talk about that process and what were some of the lessons coming out of it?

PAUL ZAHRA

Look, it was an interesting time because, it was definitely lessons about leading in a crisis during that period. Because when I started in the role, there was all these macro issues to deal with. And there was the Australian dollar hit $1.10 above parity to the US dollar. So that drove a lot of shopping overseas. We had all the international retailers coming in H&M, Uniqlo, Zara at the same time. We had a code of ethics re-training with people, given the given the last change in CEO. And I think it was then, for me, there was this lack of digital investment. So, we had to really come up with a new strategy which was investing heavily in digital and reducing our physical footprint. Now, that's very hard to do in a department store model because leases go up for 20 to 25 years. So, there's a waiting time in some of this, and the transformation required and the investment required. So, I was very lucky the board supported for me to invest. We spent about $100 million just in technology improvements, launching an online store, launching click and collect, putting a new system for staff rostering so the rostering of staff would hit or align with the customer traffic. Putting traffic counters in every store to measure conversion, new point of sale system that had been there for some time. So, it was a very high octane, intense period. Remaining focussed becomes really important, but it's hard to sometimes win all hearts and minds when you've got this crisis going on outside of it. Internally, there's a thousand things that need to be done. What I managed to do is get the board to invest in the strategy, which we did. And from that, then managing all the key stakeholders, media, investors along the path to understand the future strategic vision, what the brand could be. Now what that resulted in, which I didn't see coming necessarily, was an acquisition by Woolworths South Africa at the time. Now, I supported it because I felt it was the best interests of shareholders. I also was protective of David Jones, the brand. So, it was a very hard thing to do, but ultimately, from a shareholder point of view, it was important that that we maximise the outcome for shareholders. And that's what we did.

BENNETT MASON

How did you keep that transformation strategy on track, and what was the role of the board there?

PAUL ZAHRA

I think the board put a lot of trust in me. That was really helpful. There was not a lot of retail knowledge at the board level. That didn't worry me so much because I was looking for the other skill sets, to be honest, to supplement my efforts. Creating strong project plans, critical path timelines, keeping people informed. This is the part, I think, that you need those strong communication skills to make sure that you've got everybody on board. Now, the biggest area to manage was the media. To be honest, it was less about the board and the shareholders. It was mainly the media side of it because the media often would take a consumer-led story and blow it out of proportion. And that became really hard, when everybody was working so hard. So, part of it is about being calm in a crisis and being able to just like, work your way through. It's always hard to execute a strategy when you're in crisis. It's easy to execute a strategy when you're not in crisis, you could be super focussed. So, trying to juggle both was a challenge. But we did it.

BENNETT MASON

That wasn't the last crisis you dealt with. You later became a chief executive at the ARA, the Retailers Association. And you were there during Covid, which was an extraordinary time for all sectors, but of course, retail as well. Do you think your crisis management time at David Jones helped prepare you for Covid and ARA?

PAUL ZAHRA

Definitely. I feel like my career, particularly the last couple of decades, has been in crisis management. But I think that's the same for many companies now that are going through transformations. And we're constantly being disrupted. And it's not just the retail industry. I think it's across all industries. I'm group chair of Mentor List and have people in that group, CEOs and aspiring CEOs that all come from all different walks of life, and they're all in the middle of transformation program. So, if you're not being disrupted by digital, you’re disrupted by supply chains, you could be disrupted by the newness of AI. So, there's always something. So, it's a skill in transformation, being adaptable. I mean, I ‘d add another intelligence, which is the AQ, Ability, I think, is the skill set of the future where people can adapt to the ever-changing complexity. What I learned through all of it, to be really honest, is when you say that change coming, you've got to actually become -- I think when I reflect on my time at David Jones, and even the ARA to a certain extent, there's a lot of protectionism when things go wrong.  And people go into protecting why things can't happen. Rather than seeing the disruption as being a risk, they've got to see it as an opportunity. And I think when online shopping came at David Jones, the management at the time, they saw it as a risk, rather an opportunity. And the opportunity was great. In the ARA case, I went from having the problems, the world problems of a department store - and remembering that David Jones’ issues weren’t just local, departments stores around the world, are under complete stress and duress. In the ARA example, I went to having all the industry issues. So, I quickly had to learn what was driving each of the retailers, whether it be hardware or supermarkets or discretionary retail. And I was seeing what actually was important to them. My method of operation is just to put the hard yards in and be available and be visible. And to put in the work. It comes at a personal cost. At the time at the ARA, for the first, I'd say two and a half years of the five, I literally had to work seven days because of government. In the other two and a half, I had to be available seven days. So, the impact that has on being TV ready, every day, as you can appreciate, that comes with time and effort and preparation. Because I might get a call and it might be a port delay in Melbourne to do with the supply chain issue. Get your head across all these issues to be able to talk to it. So, constant being on is a skill, and being able to communicate effectively, to stick with key points.

BENNETT MASON

That's got to be exhausting, right? Being on all the time? Covid is hopefully the last pandemic that we face, but it won't be the last crisis or major challenge. What do you think were some of the lessons from Covid and dealing with Covid that senior management and boards should take away?

PAUL ZAHRA

I think the most important thing for me is having a crisis management plan that's really clear. It can often be just on one page. Understanding the contacts you need to manage in a crisis, who the key stakeholders are and what's the process to manage through that crisis? I've too often found when we we're dealing with an issue, it might be a crisis of some sort, and nobody has the contact number to a particular minister or to do with any other key personnel. That in itself is just a simple thing that just loses a lot of time. When I dealt with the horrific issues that happened at Westfield Bondi Junction, fortunately, we’d developed our crisis plan. So, it was very quick, and we were able to communicate via WhatsApp message to the key internal team. This happened on a Saturday, we were able to move very swiftly to a media release, to communication, to be able to front and manage the situation there from an industry point of view, dealing with retailers, etc. So having a good crisis management plan is really the key.

BENNETT MASON

I'll ask you one final question on retail, specifically because you've worked in this sector for a long time. Retail has gone through enormous change. Where do you see the sector going next, whether it's bricks and mortar, online, whatever?

PAUL ZAHRA

I think the future for retail, I think AI is going to have a huge impact. But I see it as the opportunity rather than the risk. AI is a silver bullet for the retailers because it has the opportunity to reduce costs and increase revenue. When I say that, increased revenue from giving better service, factual information to customers, which is consistent - versus an individual, frontline people maybe putting their take on something. And from a cost point of view, there's lots of costs that can come out of a retail business which will improve profitability. So, I think AI is the biggest thing for retailers to be focusing on. Again, like most businesses. There's been lots of retailers in the last six months that have gone into administration, Mosaic Brands being one of them. That's a significant company. And I think the best companies are going to be those that focus on sustainability and focus on their sustainability credentials and actually promote those.

So, when customers are making a choice between something from Temu which they’re seeing at a much-reduced price without necessarily the regulation and the ethical standards, they’ve got to weigh that up with something where they know the supply chain is being ethical and equally that from a sustainability thing, they're doing the right things. So that's why I see the best retailers performing in that sustainability space and actually talking about it.

BENNETT MASON

You mentioned AI a moment ago, something we like to ask board members and executives is about the balance with AI. On one hand, you want to embrace the opportunities that AI brings, and you want your organisations to pursue innovation. But at the same time, boards have an oversight role, and they have a risk management role. AI comes with a lot of risks as well. So how do you balance those two things? On one hand, you've got the AI and the opportunities, the opportunities that come from AI. But on the other side, there are those risks and concerns.

PAUL ZAHRA

I think from a board point of view, AI should be integrated into the risk register. So, I think understanding where AI is being used and what are the risks and then the mitigations to that risk become really, really important because that's where the good governance comes into play. There's no doubt sitting back and saying we're not going to participate.

Those that AI are going to be the winners. Those that don't, won't be around in the end. I see it as exactly the same as the digital disruption, because during the digital disruption, the naysayers, the slow to respond. David Jones wasn't a naysayer but very slow to respond, were the ones that were left behind.

And those that didn't participate in online were caught up, particularly around Covid, where you couldn't trade unless you had an online store. So that seamless omnichannel experience becomes really, really important. AI is going to be the same thing. If you're not opening up that sense of innovation with your team, doing it in a way that allows you to make qualified decisions about where the opportunities exist first, often the opportunities that exist first are the least risky. As you move down those opportunity lists, then you can work through, as we keep learning more and more about AI, about where you’re prepared to take risks and where you're not. As long as you're operating AI ethically and you're not procuring other people's work, that it's actually genuinely using AI for what its purpose is, ethically, then I think it's a great opportunity.

BENNETT MASON

I want to wrap with a couple questions looking backwards and also looking forwards. Looking back over your career, what achievements are you most proud of?

PAUL ZAHRA

I think the first thing I think, for somebody that started off as a shop assistant at the local Target store to end up being a CEO of an ASX-listed company, the premium department store in the country. That, to me, is a great professional achievement. I think the ARA, I look at from something that was this sleeping opportunity to take it from something that nobody knew much about to something that was actually, not only, strong from an authoritative perspective, it put ARA on the map for parliamentarians. And that was one of the biggest things, because of the investment I put into relationships. And to make sure from an advocacy point of view, through retail, and that's where Covid did help, because that crisis allowed us to be, we're the largest private employer in the country. So, it was important that we had a voice. And I gave retail a voice. Both jobs were the most, I guess, the biggest highlight in my career. But the last role was something that I did beyond department stores, it was for the industry, I feel really, really proud of. And now I'm at a stage where I'm just enjoying giving back and doing work through mentoring and through NFP work and that type of stuff. It gives me joy. So, the next decade for me is just about doing the things that I enjoy doing.

BENNETT MASON

Let's look forward then. Let's talk a bit about the mentoring work you do. You mentor a lot of emerging leaders. What are some of the skills or traits or attributes that you think the next generation of senior executives and board members need to have?

PAUL ZAHRA

Look, it's a really good question, because I think what happens with a lot of mentees, they go in wanting to develop technical skills. And really, good leaders are not necessarily that technically competent. They're very strong. The best leaders have, they've got IQ to a certain extent. IQ skills can be bought in into any environment, whether that's the board or whether that's actually at the executive level. It's the EQ skills that seem to be lacking the most. So, when you talk about things like being empathetic, compassionate, having a curious mind becomes so important to asking good questions. So, making sure that when you go into a meeting, you do less talking and more listening. And that can often come through asking really good questions to get more information. Now, the more information you get, the better decision making you have, the more you de- risk situations. So, it's that that emotional intelligence. Now, the question I don't know how to answer is, I feel some people naturally have strong IQ, others not. So, can you learn EQ? I think you can. It comes with a lot of effort, but it's something that most aspiring leaders don't put the focus on. Actually, it's just that being able to develop those skills more. And that comes through partly the lived experience, but also around making it a focus for their development.

BENNETT MASON

Paul, it's been great talking with you, but we’ll wrap things there. Thanks so much.

PAUL ZAHRA

Cheers.