BCA needs to help give bosses a makeover

JOHN DURIE
July 21, 2016
The Australian
The BCA has a problem because just when business leaders are seen as important drivers of ethical conduct they are also seen as being unethical.
That’s not Opposition Leader Bill Shorten talking but the Governance Institute’s Steve Burrell, who now runs the old Chartered Secretaries Association and was a long-time staffer at the AICD.
Burrell was speaking at the launch of the Institute’s Ethics Index which is an attempt to put a framework around the debate.
In the federal election campaign the BCA ran television advertisements for the first time ever with a theme of “Strong Business, Strong Australia”, but its impact was negligible.
Shorten didn’t campaign against big business tax cuts and bank royal commissions for the fun of it — his research showed the average punter was anti-big business. A Labor staffer described a royal commission as “ridiculously popular” and it’s not just because everyone hates banks — the bank bosses represent big business and the sight of big business boffins under attack is welcome.
The industry may avoid a royal commission but another parliamentary inquiry into the banking and finance sector is a certainty.
Business reputations matter, in part because punters are customers and business needs a social licence to operate and grow, which means community acceptance.
The average top 100 company boss pulls in around $5.6 million a year in realised pay, which is 70 times what the average punter earns at $80,000 a year.
Westpac’s Brian Hartzer picks up short-term bonuses and pay totalling $5.4m a year topped up through the grant of $6m worth of bank shares.
Yet rightly or wrongly the aforementioned don’t rate highly in terms of the most ethical folk in town and are the very people that are expected to set the tone for ethical leadership in the country.
The same goes for politicians who also rate poorly, albeit not as poorly as journalists and real estate agents.
Leadership or lack of it is a big issue around the world, think Brexit and Donald Trump, not just Australia where one in four people voted for someone other than a major party.
Ironically enough company secretaries did rate higher in the ethics survey, which was just as well, given their association created the index.
While some in business look longingly to the success of New Zealand Prime Minister John Key, the fact is business has to get its own house in order and not slide in behind a successful politician, if such a person was available.
BCA boss Jennifer Westacott has gathered her troops in Melbourne this week to work out where they go from here.
Westacott is highly valued for her policy skills but her message is largely delivered to the converted, big business and policy boffins in the state capitals and Canberra.
She is not a great retail politician like, say, a Nick Xenophon.
Delivering messages to the masses is not her skill and it must be said she is not the only one struggling on this score, starting with Prime Minister Malcolm Turnbull.
Later this year the incoming CBA chair Catherine Livingstone will step down as BCA president and who replaces her will in some ways be dictated by just what it’s perceived mission really is.
Maybe the BCA should set standards like ensuring its members actually pay their fair levels of tax, maybe you have to pass the St James Ethics tests to take a seat at the BCA table, or more to the point this is something individual boards of directors need to take firm responsibility for, for the sake of everyone concerned.
The BCA is ladened with service groups like lawyers but needs its constituent companies to show leadership so it’s not perceived as a bad big business lobby group.
Some say the age of mass communication has changed dramatically and social media is now the weapon of choice.
No matter the means of transmission the message for big business is people want it to stop lecturing and start listening.
This is something business is not always very good at, after all most chief executives expect people to kneel at their altar and a managed democracy like Singapore is so much more appealing than one in which the masses actually get an equal say.
Maybe business doesn’t need to care what people think of it. After all, the masses don’t sit around the boardroom.
The reality is business rightly does care about its reputation for the simple reason that this determines whether it is sustainable.
The most successful business campaign in recent times was the mining industry’s attack on the mining tax which centred on two themes — jobs and superannuation.
Everyone’s super was invested in BHP or Rio so whether we knew it or not we were affected, and back in 2010 Australia was emerging from the GFC so financial uncertainty was a big issue.
The industry conducted focus groups and worked out what concerned the punters and acted on it in a brilliant political campaign.
The mining cycle has now turned and the folk running BHP and Rio don’t look as much like masters of the universe as they did back then.
The PwC global mining report this year said the industry last year dropped 37 per cent in market value to $US494 billion, a third of the total five years ago and effectively erasing all the gains during the boom.
The top 40 companies posted net losses of $US27bn.
When people in this and other industries talk about efficiency or innovation the average punter thinks job cuts.
Business has to start from its own company base and restore confidence, then work to restore community appeal through simple consistent, transparent and ­accountable policies which demonstrate its values.