Election 2016: Only Skin Deep? Business and its image

Patrick Durkin
Ben Potter
Jul 7 2016
AFR BOSS
Business is reeling from their lack of traction in the election campaign. But it should have been obvious before this that they were under siege.
Corporate scandals and a focus on short-term profits and big pay cheques have hurt the reputation of business. From the subprime mortgage crisis and interest rate-rigging scandals to Volkswagen’s emissions fraud, tax lurks and corruption, too many business folk have made it too easy for politicians like US Democratic presidential hopeful Bernie Sanders and Labor leader Bill Shorten to beat up on them.
Locally, the same movie has played out.
Dodgy financial planners, the CommInsure expose and rate-rigging scandals have tainted banks. Exploited workers at 7-Eleven have exposed shabby practice. Profit padding has snared Target. And bribery allegations have engulfed Tabcorp, the Reserve Bank of Australia’s note printing arm and the former Leighton Holdings.
The Turnbull government has resisted Labor’s call for a royal commission into the banks. But bad business karma gave the government little scope to tackle unpopular moves like hiking the GST, changing workplace relations and cutting spending. Company tax cuts for all but the smallest firms are stalled.
“At the moment we are in an election environment where the heat is turned up and the serve gets returned even harder,” AiGropup chief Innes Willox says.
Wolf of Wall Street syndrome
Geoff Allen, the co-founder of the Business Council of Australia and Allen Consulting, says the GFC and movies like The Wolf of Wall Street and The Big Short have compounded business’s poor image .
“Prior to the 1970s business was seen as nation building and business leaders heroic … but as community activism rose the general public started to perceive big business as the enemy,” Allen says. “It all sort of lends itself to popular culture, business is negatively stereotyped as destroying the forests and ripping off the public and that permeates into culture.
“The business story is also very complex and it doesn’t lend itself easily to positive slogans as much as negative ones: big business is too powerful, it is profit seeking, the tens of millions it contributes to the community is largely ignored.”
If anyone can cut through the haze it’s Geoff Denman, co-architect of the “Kevin07” campaign that propelled Labor’s Kevin Rudd into The Lodge and the anti-mining tax assault.
Speak up
Denman says business needs to better engage with the public to resist dubious calls like Labor’s royal commission into the banks.
“The problem for business is if you don’t speak out, you risk creating a vacuum that others will fill. In business that leaves activist groups and unions to create the public narrative.
“It goes back to the fact that businesses don’t want to engage because they are worried about starting something they can’t control. But ultimately it works against them because they want to achieve reform and want voters prepared to accept their arguments,” Denman says.
Tesla chief executive Elon Musk has won acclaim for his company by striving to make climate-friendly electric cars mainstream. Supplied
“It is difficult because these lobbyists don’t play by the same rules – you won’t see the BCA climbing up the Opera House and hanging out a flag. But at the end of the day you have to engage with the votes and win their hearts and minds or at least know they understand where you are coming from.”
Denman says business needs to better sell the outcome of reform via public debate and social media.
“A good example is corporate tax; you have to always link it with outcomes and make a credible connection with jobs. It shouldn’t be a debate about wealthy people lining their pockets, but how many jobs this is going to create,” Denman says.

Business takes stock
The BCA has taken stock. After losing the debate with small business over beefing up competition laws and taking flak from Liberal powerbroker Michael Kroger over the failed campaign to raise the GST, the peak business group installed a new media advisor and replaced some key staff. It launched a social media campaign and a website for “Real Tax Reform”, and put CEO Jennifer Westacott on TV and on the op-ed pages of the tabloids to argue its case.
“As the countdown begins in earnest for the 2016 Rio Olympic Games, public debate is intensifying about how Australia’s athletes will fare on the world stage,” Westacott wrote in the Daily Telegraph in May.
“As a nation of unabashed sports lovers, this is serious stuff. But at a time of intense global change, shouldn’t we take Australia’s economic competitiveness just as seriously?”
The Australian Bankers’ Association – criticised for its slow response to Labor’s royal commission call – considered a mining tax style ad campaign but held its counsel.
“Business does not want to be painted as totally self-interested but if business doesn’t speak up and make the argument then nobody else is going to do it, so you have to try and find the right balance,” Willox says.
Slogans alone won’t do
But Geoff Allen says slogans and engagement alone can’t fix the problem and business needs fundamental changes – including to executive pay.
“There is frequently a misalignment between the aspirations of senior people in the company and the incentive systems employed. Some companies are moving away from narrow financial rewards for on-time and on-budget to broader rewards for having good relationships with stakeholders and having a positive impact on the reputation of the business,” Allen says.
New model
Mark Kramer founded the concept of “shared value” with Harvard colleague Professor Michael Porter. He says business needs to fundamentally change to win back public trust.
“I think business has brought a lot of it’s problems on itself with their focus on short-termism,” Kramer says.
He says firms will be seen differently if they really do have a big impact on important social issues.
“If you look at a company like Tesla, that’s a company which is innovating by creating shared value and are immensely successful.
“If Volkswagen wants to succeed they have to get beyond trying to protect the old business models by disguising their emissions and adopt a new business model which says we can compete and succeed by having more environmentally friendly cars.”