Lift Your Game: Why Reviving Wage Growth Requires Supply-Side Measures Including Economic Liberalisation

The collapse to the supply-side of Australia’s economy has been caused by two decades of public policy recalcitrance, exemplified by Australia’s high corporate tax rate, rigid industrial relations system, and growing red tape burden. Australia’s economy is in its 28th year of consecutive economic growth, the longest run of unbroken growth on record. This impressive sounding statistic, however, means little to the average person, family, or business not feeling much better off than a decade ago. This is because most of the aggregate economic growth in Australia is driven by rapid population growth underpinned by mass migration.

In the decade since the Global Financial Crises (GFC) of 2008-09, approximately 60 per cent of Australia’s economic growth has been the result of population growth. Just 40 per cent has been driven by productivity growth or changes to the labour force participation rate. This is the inverse of the period between the Keating recession of the early 1990s and the GFC of 2008-09.

This fact is revealed by anaemic growth in output per capita, which divides the total amount of economic output across the population. Output per capita has declined throughout the previous three quarters for the first time in four decades. Output per capita is admittedly only a partial measure of living standards. It doesn’t control for the myriad of other factors which affect people’s day-to-day lives. Nonetheless, it is a superior measure of aggregate GDP as it at least accounts for the effect of population growth. Growing the economy by adding more people doesn’t make the average person better off.

The underlying weakness of the Australian economy has preoccupied members of the economic establishment, epitomised by the Reserve Bank of Australia (RBA) and its Governor Philip Lowe. The official cash rate was fixed at 1.5 per cent since August 2016, until on June 4 this year the RBA reduced the rate to 1.25 per cent, and then again in July to 1.0 per cent. The last time the cash rate was increased was in November of 2010, when the rate moved 25 basis points from 4.5 to 4.75 per cent where it remained until late 2011. Since then the cash rate has progressively decreased to its current record low.

The latest cut occurred despite widespread belief the next move would be up. Each month product and service comparison website Finder provides data on the proportion of selected experts who expect the next RBA move to be a rate rise. The experts include Alan Oster of NAB, Shane Oliver with AMP, Bill Evans of Westpac. As recently as December 2018, 78 per cent of these “experts” expected the next RBA move to be a rate rise. In September 2018 that figure was 88 per cent. At an event hosted by Bloomberg in Sydney in December 2018, assistant governor Christopher Kent said “We have said that it’s likely the next move is up”. Also in December of 2018, Governor Lowe said “the next-move-is-up scenarios were more likely than the next-move-is-down scenarios”.

The softening of the economy has baffled the economic elites. Going back to the early 2010s, the standard narrative was the tapering off to the mining-investment boom would require the economy to restructure away from mining-led growth to growth in other sectors. Interest rates would decrease, the exchange rate would depreciate, and real wages growth would slow to facilitate the transition of resources out of mining toward non-mining sectors. While the change to relative prices has taken place, the expected transition has been far slower. Interest rates have been declining since November 2011. The exchange rate has depreciated 30 per cent from its 2011 high. Growth to real wages has been stagnant for three years. Yet business investment is just 11.8 per cent of GDP, which is lower than during the Whitlam years.

Declining investment in the mining sector has not been offset by a corresponding increase to investment in non-mining sectors. Mining investment as a percentage of GDP has declined from nine per cent in 2013, to three per cent today, while non-mining business has barely increased from nine per cent to a fraction under 10 per cent. Low rates of business investment are a key cause of slow productivity growth, which in turn is holding down wages growth. According to a recent report by the Productivity Commission, labour productivity growth in 2017-18 was just 0.4 per cent, which is well below the long-run average of 2.2 per cent annual growth since the mid-1970s.

Sector-specific challenges in the mining industry and resources sector, declining business investment, and moribund productivity growth are the consequences of close to two decades without substantial economic reform. There are three key areas in which this falls: the corporate tax rate, a rigid industrial relations system, and red tape.

Corporate Tax

Australia currently has a two-tiered corporate tax system, with a different rate applying to “small” and “medium and large” businesses. Businesses with a turnover of $50 million or more are subject to a 27.5 per cent rate of tax on their profits, which will drop to 25 per cent by 2021-22. All other businesses are subject to a 30 per cent tax rate. There are a number of deficiencies with this system. The 30 per cent rate is one of the highest in the developed world. For example, the current rate in the US is 21 per cent, in Singapore is 17 per cent, and in the UK it is set to drop to 17 per cent from 2020. This disparity reduces Australia’s attractiveness as an investment destination.

Further, the two-tiered corporate tax system reduces the incentive for business expansion and growth. All “progressive” taxes, whether of personal income or business profits, discourage growth, expansion, and aspiration because a larger percentage of income is confiscated as more is earned. However, the current structure of the business tax system is especially pernicious as it is not based on marginal revenue or profits, like the income tax system. Under the income tax system, when an individual moves into a higher tax bracket it is only the portion of income which falls into that higher tax bracket which attracts a higher tax rate, rather than the totality of an individuals’ earned income. Hence, average personal tax rates are always lower than personal marginal tax rates. But the current business tax structure doesn’t operate this way. When a business crosses the $50 million annual revenue threshold, its entire profits become subject to a higher tax rate. The system is so perverse that a company with revenue of $49 million would have higher after-tax profits than a company with $50 million revenue, if both companies had the same pre-tax profit.

The government should reduce the current top-tier of the corporate tax rate from 30 to at least 20 per cent, in line with key competitor nations. If the government isn’t willing to reduce the top rate of 30 per cent, it should at least make the tax schedule marginal rather than a step increase. That is, the 30 per cent rate should only apply to the portion of profit above 30 per cent, as with income tax.

Industrial Relations

Australia’s industrial relations system is among the most inflexible in the developed word. Each year the World Economic Forum’s Global Competitiveness Report ranks the economic competitiveness of 140 nations using 98 indicators such as macroeconomic stability, infrastructure quality, and labour market efficiency. Rankings are derived from a combination of statistical analysis and survey data. The 2018 report shows Australia ranked 110th of our 140 nations for hiring and firing practices, and 105th in the word for flexibility in wage determination. This means it is difficult and costly for employers to recruit suitable staff and for employees to find work.

IPA supply graph_The Australian_Business_Executive

This is reflected in labour market figures. While the headline unemployment rate of 5.2 per cent is relatively healthy, there are pockets of weakness. For example, some 750,000 Australians currently are in receipt of the disability support person, close to 350,000 Australians are in long-term unemployment, half of whom have been out of work and looking for work for more than a year, and some 400,000 young Australians are underemployed, meaning they are unable to work the number of hours they would prefer. Added to this, 265,000 young Australians are unemployed, giving a youth unemployment rate of 11.8 per cent. High minimum wages, penalty rates, and other add-on costs to employers are increasingly making employing young and low or unskilled Australians an unattractive prospect.

If the Morrison government is unwilling to engage with fundamental reform of the Fair Work Act, there are specific measures they could pursue to improve outcomes at the margins. These include making Individual Flexibility Agreements more widespread, replacing the better-off-overall test with a no disadvantage test, removing the “conveniently belongs” provisions from the Fair Work Act (which allows unions to monopolise workers within a given industry), reinstate an exemption from unfair dismissal laws for businesses up to 50 employees, and introduce variable minimum wage and penalty rates for states based on economic conditions.

Red tape

The final and most crucial pillar of economic reform is to reduce red tape. Surveys and analysis consistently show red tape and overregulation are two of the biggest impediments to business investment, job creation, and economic growth in Australia. The 22nd Annual Global CEO Survey released by Price Waterhouse Coopers in 2019 found overregulation was the equal biggest threat to the ease of doing business, alongside policy uncertainty. By contrast, climate change was the 13th biggest threat, behind factors such as exchange rate volatility and cyber threats.

Similarly, 48 per cent of business leaders said that regulation, in terms of its cumulative impact and constant change, was the most significant barrier facing Australian business success today, especially small and medium sized ones, according to a survey published by Westpac in 2018. This was far higher than the second highest response, which was “businesses taxes are too high” at 14 per cent. Notably, climate change did not rate a mention, although 2 per cent responded “other”.

The responses to the surveys are supported by quantitative analysis of the red tape burden. Research by the Institute of Public Affairs estimated the economic costs of red tape in Australia is at least in the order of $176 billion per annum , which is equivalent to 10 per cent of GDP. This is more than Australians pay in income tax, the GST, or business taxes. But this estimate captures more than just financial costs. It measures forgone human potential: all of the businesses which are never started, the jobs never created, and the pay rises which never materialised because of red tape.

Red tape, in other words, is disempowering. It prevents Australian workers, businesses, families, and community organisations from applying their skills and talents to achieve a goal of their own design. People flourish in environments which allow, and support them, in achieving their potential. Red tape prevents this by taking power, authority, and choice away from Australians and giving it to politicians, bureaucrats, lobbyists, and consultants. Two sectoral examples demonstrate the pernicious effects of red tape on business investment and economic growth: the finance and resource sectors.

As alluded to earlier, monetary policy has been highly accommodative since 2011. So why does monetary policy appear less effective in stimulating economic activity than in the past? To consider this, it is important to remember that the key conduit through which changes to the cash rate are expected to influence the broader economy is through the financial sector. Traditionally, a lower cash rate would be associated with an expansion of economy activity, and vice-versa. The key transmission mechanism is via the effect the cash rate has on other interest rates in the economy. The cash rate is the market interest rate for overnight loans between financial institutions. As such, according to the RBA, “the cash rate serves as a benchmark for interest rates at which funds can be lent or borrowed in financial markets, including for different sources of bank funding, such as wholesale debt and deposits”. A lower cash rate reduces the cost of bank funding, which in turn can be passed on to borrowers through lower interest rates. Lower interest rates flow on to more economic activity, such as higher investment and spending. Accommodative monetary policy will only work its way through the economy if financial institutions behave accordingly. However, the major banks have been less willing to pass on interest rate cuts than in the past. The range of factors for this include the costs of international financing, risk aversion, and general economic conditions. But it is also partly a function of government regulation and red tape. Just the last three years alone has seen the Banking Executive Accountability Regime (BEAR), the imposition of the bank tax, $150 million extra to APRA, and the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry.

On top of these recent incursions sits a morass of further regulation, including macroprudential standards which dictate capital and liquidity requirements administered by APRA, corporate governance regulation administered by ASIC, competition and consumer regulations administered by the ACCC, as well as laws which have a general application. Is it any wonder financial institutions are becoming more risk averse? Next, consider the resources sector. Declining investment and economic activity in the mining sector is partly, and perhaps in large part, due to changing global economic conditions beyond the influence of the domestic market or policy making in Australia. Nonetheless, public policy has made the decline sharper and faster. Some examples illustrate the point.

The Roy Hill iron ore mine in the Pilbara region of northern Western Australia required more than 4,000 licences, approvals, and permits for the pre-construction phase alone. While the Adani Carmichael Coal project in the Galilee Basin of Central Queensland took nearly a decade to achieve final approval, faced more than 10 legal challenges, and prepared a 22,000-page Environmental Impact Statement. Only the substantial swing against Labor in Queensland in the 2019 Federal Election convinced policymakers that further outstanding impediments to the project should be removed so as to allow the mine to proceed. And then there is Section 487 of the Environment Protection and Biodiversity Conservation Act (EPBC 1999), which extends special legal privileges to green groups to challenge federal environmental project approvals. Research by the Institute of Public Affairs found that from 2000 (when the EPBC Act was introduced) to 2016, proponents of major projects have spent approximately 7,500 cumulative days held up in legal challenges as a result of section 487.

On top of this are a range of policies which discourage economic development in the resources sector, including Renewable Energy Targets at both the Commonwealth and state level in Victoria, South Australia (until 2017), Queensland, and Tasmania, the Paris Climate Agreement, the prohibition on the development of a nuclear power facility in Australia, and state-based limitations on the development of onshore and offshore gas. The total effect of these policies is a resources sector which is far smaller than would otherwise be the case.

The cumulative effect of a high corporate tax rate, a rigid industrial relations system, and a large and growing red tape burden is a collapse of the supply-side of the Australian economy. Australia’s economic potential— the ability of businesses, workers, and civil society to generate growth and prosperity— has been diminished by two decades of public policy failures of commission and omission. The imposition of new policy, such as higher income taxes, introduction of the Fair Work Act, and signing the Paris Climate Agreement, has met close to two decades of policy inaction in the areas of reducing red tape, reducing the corporate tax rate, and liberalising Australia’s industrial relations system to produce stagnant per capita income growth. Only by expanding the supply-side of the economy through a program of economic liberalisation will the Morrison government be able to lift Australia out of its per capita income recession.

Daniel Wild is the Director of Research for the Institute of Public Affairs (IPA). Find out more about the IPA by visiting www.ipa.org.au.

Destination Quebec City: Canada’s Eastern Wonder

Situated deep in the heart of French Canada, Québec City is one of the oldest European settlements in North America. The city is the capital of Québec, the second most populous of the thirteen provinces and territories that make up Canada. It is also the second largest city in the province after Montreal, and the eleventh largest in the country.

The economy in Québec City is going through something of a boom, with the city currently experiencing its lowest unemployment rate in decades. Such a thriving economy helps create exciting opportunities for businesses, key industries and entrepreneurship. The city’s prosperity helps contribute to a diversified economy throughout the province.

Québec City is strategically located in Eastern North America, making it an excellent location for business events and conferences. Nearby Jean Lesage International Airport, the eleventh-busiest in the country, is a world-class facility meeting the very highest industry standards, and providing an excellent experience for passengers.

Conveniently located in Old Québec, the Québec City Convention Centre is central in driving the city’s economic activity, welcoming over 200,000 national and international visitors for conferences and events each year. In 2006, the International Association of Congress Centres named it the Best Convention Centre in the World.

When visiting the city, Old Québec is the perfect place to kick off the trip. A UNESCO World Heritage site, this walled city on the banks of the Saint Lawrence river is filled with quaint, winding streets, towering fortresses and lavish castles, as well as a selection of charming cafés and antique shops.

The Magical place of the Auberge Saint-Antoine during the winter. The city has a certain coziness and a romantic connection with the past that is so cogent in a 400-year-old city.

Historic attractions such as the Citadel make the area a fascinating place to spend a few hours. The largest British-built fortress in North America, the Citadel took thirty years to construct and has been active since 1850. Equally impressive is the breathtaking Notre-Dame Basilica, one of the oldest cathedrals in North America and a favourite of visitors to the city.

Perhaps the best way to get started exploring the city is to take part in a walking tour with Tours Voir Québec, a dynamic and attentive tour company that has been welcoming tourists from across the world since 2004. Choose from a variety of fascinating tours including the Grand Tour, the Food Tour, and a river cruise around the city.

A visit to French Canada just wouldn’t be the same without experiencing the region’s love for ice hockey. The Québec Remparts team plays in the Quebec Major Junior Hockey League and can be watched at the impressive Videotron Centre near the city’s Lairet area, the seventh-largest indoor arena in Canada.

Equally important to sample is the region’s cuisine. If you go to Québec and don’t experience the uniquely French Canadian dish of poutine (fries, gravy and cheese), then you’ve certainly missed a trick. In Québec City, the traditional dish is tourtière, a meat pie best experienced at Aux Anciens Canadiens, a restaurant specialising in old-fashioned Quebecois cuisine.

Our accommodation provider of choice when staying in Québec City is Auberge Saint-Antoine, providing farm-to-fork dining and luxury accommodation in the heart of historic Old Québec. Find out more at www.saint-antoine.com.

How Google Scores Your Website and Why Your Business Needs Good Domain Authority

WEB-FEATURED-Featured image-Senka_Pupacic_Top_10_SEO

In keeping with the dynamics of technological advances, Google is continually updating their criteria for ranking websites in the user’s search results. In 2010, page rank authority was the dominant factor used to determine the order of which sites would be displayed. Fast forward to 2014, and the search engine giant had made some significant changes to its website ranking signals.

Before their 2014 update, a brilliantly designed website with perfectly implemented on-page search engine optimisation (SEO) would have dramatically increased the chances of a high ranking. However, Google began to tweak their criteria, meaning that off-page SEO became a critical factor when ranking pages. Consequently, page rank became less important while domain authority stepped up as the primary rank determiner.

Through a series of multiple scoring criteria with advanced algorithms, domain authority is how Google automatically determines the score of a website. All websites begin with a score of zero when new, and then effectively work their way up over time. The maximum score of one hundred out of one hundred is very difficult to attain. Anything between thirty to one hundred is considered good.

As the name suggests, domain authority takes into account how authoritative your website and its content is compared to that of similar websites. Google will consider the relevance and quality of your content before displaying it to its users. Therefore, if your website offers extremely high-quality content relevant to your business’ niche, your site will be boosted up the ranks towards page one as Google gradually continues to increase your website score. On the other hand, if your website design and content is inadequate or irrelevant, your site continues to be reduced and slip down the page rank.

Google uses highly sophisticated algorithms to calculate your website score. There are over two hundred and forty factors that influence a website’s authority, such as the root domain and the number of inbound links a site has. An example of a website with high a high website score is Wikipedia, due to its popularity and reference-based model. The incredibly high number of inbound links contributes significantly to its high score with Google. Conversely, newer websites that have no – or even very few – inbound links to have a domain authority score of one out of a hundred.

To ensure its users are provided with the very best content, Google’s domain authority scale works on a logarithmic basis. This means that the higher a website’s authority score is, the more difficult it will be for that score to improve. For example, increasing your score from seventy-five to eighty-five would be more of a challenge, than increasing from twenty-five to thirty-five.

The bad news is that it’s not all plain sailing when your website has attained a high domain authority score, as your score can also decrease – even if any of your high-quality backlinks are not lost.

Although Google has over two hundred and forty criteria to determine a website’s authority – and therefore, it is ranking in search results – domain authority can be described as four main factors:

  1. Prestige – both of the website itself and its authors
  2. Quality of website design, function, presentation, and content
  3. The centrality of the website and the information it provides
  4.  Topic competitiveness and relevancy

Depending on the ranking body, the influence each of these factors has when determining domain authority can vary tremendously. A website’s prestige, along with that of its authors play a significant role when its domain authority is being calculated. Additionally, all aspects of the quality of a website such as its design, function, ease of navigation, and content contribute to a website’s score. The competitiveness of a particular topic a website is based on, as well as the quality of in-and-outbound links, and the relevancy of the content also helps to determine a website’s domain authority.

During the website scoring process, search engines such as Google rely on specific algorithms and automated analysis to help determine how relevant each of these factors are to each website being ranked for a particular search term. As it would be incredibly ineffective to rely on human reasoning to judge domain authority, these algorithms must be continually developed to ensure the highest-quality information is being presented for each search term to the user, in the most logical order.

However, how can you, as a business owner, improve the score of your website?

It’s simple; one action would be to publish high-quality content relevant to your target audience regularly.
By doing so, you will increase user engagement of your website, which invariably leads to organic backlinks to your site from other industry-relevant websites – all of which positively affects your domain authority.
Here are some sure-fire ways to help increase your website’s domain authority:

Earn high-quality backlinks

The more high-quality inbound links from high authority websites you can earn, the more authoritative your website becomes. This can be achieved by regularly publishing fresh, insightful and industry-specific content, then asking relevant, pre-established websites to link to your content.

Eliminate Poor, Toxic, and Broken Links

It would help if you made a habit of exploring your link profile to search for backlinks that are of poor or toxic quality, as these can harm your domain authority. Not only that, but broken links or links from your site to poor or low-authority websites will have a negative impact – so be sure to remove these as well.

Increase Your Website Loading Speed

Web users are impatient – you could have the highest quality content on the web, but if it takes too long to load, your potential audience will go elsewhere. This is your bounce rate, and the more it happens, the more it will negatively affect your domain authority.

Use Social Media to Promote Your Content

Websites are about people, and therefore, social media signals are important when trying to increase your domain authority score. The more eyes you have on your content – through self-promotion on social media – the higher your content is likely to rank. This can be achieved by using your social media channels to post a link to each fresh piece of content you publish and occasionally adding a new twist to older publications.

Embrace Domain Authority as a Long-Term Commitment

Attaining high domain authority will not happen overnight – much like anything else worthwhile; it takes time to develop. However, by continually monitoring the health of your link profile, publishing a variety of high-quality, relevant content, and earning backlinks from authoritative websites, your domain authority score will begin to grow steadily. When this happens, your website will organically rise with greater visibility on Google’s search engine, reaching out to your future clients.

Senka Pupacic is the founder of Top 10 SEO: www.top10insydney.com.au.

I’ve just been appointed to the board, what now?

Co-founder & CEO of Future Directors Institute Paul Smith

At the Future Directors Institute, we help next generation leaders overcome the challenges and obstacles of becoming influential non-executive board directors. This most often starts with the finding (and securing) of their ideal first position, whether that’s on a company board, nonprofit, school, start-up etc.

Assuming you have overcome the most significant challenge, having enough time, we’ve often found that once you achieve this initial goal, there are many new challenges to deal with. It’s also worth noting that time continues to be a challenge, but if you’ve found the time to secure a board role you probably have the time for all the meetings, preparation and other duties of a director.

Based on the experiences of hundreds of younger directors, I’ve compiled the most common challenges new directors are most likely to encounter, as well as how to best overcome them in order to make the transition from board amateur to board influencer.

Figuring out exactly which skills you’ll need

One of the most common questions we find new directors asking is “What kind of skills will I actually need?” This stems from the common belief that before you can join a board, you must have already maximized your skill development. This simply isn’t true.

You don’t need to be at your professional peak to be a great board director. In fact, many effective directors are at the beginning of their career. The likes of Parrys Raines and Holly Ransom are still in their 20s and are both already influential board members. As a new director, you aren’t always required to have an extensive list of skills and specialist achievements. Often, all you need is an open mind, the right level of experience, an eagerness to learn and that all important, unique perspective.

Of course, it is helpful to have a clear idea of the type of technical skills you’ll need. It’s not entirely necessary however, to begin working on them right away. You can build these skills throughout your board career, once you have a more profound understanding of the company’s structure as well as the roles and responsibilities of its board directors.

For example, the most common skills-based question we get is about finance knowledge: “Can I become a board director if I cannot fully understand financial statements?” Again, it depends on the type of organization and what they need from you. While it is your responsibility to be able to govern to the best of your abilities without relying solely on other directors’ skills, the reality is that you cannot know everything—you just need to know enough. You might not need this knowledge immediately, but your aim should be to acquire it quickly.

Whenever you develop the necessary skills, your network and connections will be critical. Make sure to surround yourself with many mentors, perhaps a coach, and others who can assist you in expanding your skills. Enlist their help to get a solid understanding of the structure of the organization, the roles and responsibilities of the directors on the board, and the specific duties you will have to undertake.

Better still, get trained up beforehand.

Finding your voice and becoming influential

It can be uncomfortable when you feel that you lack presence and influence because you’re the newbie in a situation. It’s understandable if you feel apprehension and nervousness when you join a board. Indeed, these feelings can continue deep into a board career. You are not alone, though, and the most confident-sounding person can be hiding a mess of nerves and ‘speaking-up anxiety’.

Fortunately, there are really simple and effective ways of overcoming these feelings. First, remember that you belong there. It sounds stupidly simple, because it is. You have been accepted onto the board, and that gives you an equal voice with everyone in the room regardless of tenure.

Next, be as prepared as possible. This includes getting to know your fellow directors before your first meeting and continuing to build those relationships. You’ll find that your first board meeting will feel a lot less nerve-racking than it might otherwise because you’ve already met a few (if not all) of your colleagues.

NB: If the board is effective and professionally run, it will have a comprehensive onboarding and orientation process that will get you up to speed quickly. If it doesn’t, ensure that you help create one based on your experiences.

The more you know your audience, the more influential and helpful you can be, on both an individual and an organizational level. To learn about your audience on a larger scale, reach out to key company stakeholders such as management, major donors/investors, suppliers, and important customers. You should ensure that doing so doesn’t break any protocols, so check with the chair first.

Depending on the company’s culture, the board and chair may or may not encourage that sort of transparency and integration. If you encounter resistance, it might help to remind the chair that the more you speak to and understand the different stakeholders, the better you can serve and govern them in your board role.

Adjusting your expectations

As a leader holding both executive and non-executive positions simultaneously, you’ll have to get used to switching hats, and often quickly on the same day. If you have been well-trained in the differences between management and governance then this will be a little easier.

It can be hard for even the most practiced to move from being involved at a granular, hierarchal and operational level to providing guidance and oversight at a collective board level. You’ll potentially want to get into the trees when you must keep your view on the forest. The best way is to understand how best to transition.

Allow time to get yourself mentally prepared. Some of our program graduates have a cheat sheet of reminders to ensure they go into a board meeting with their governance hat on. Whatever you need to do, just being aware of which hat you are wearing is a step closer to being a truly effective director.

The other part of expectations management relates to resources. We often see those who have only ever worked for large companies struggling with the lack of operational resources in say the nonprofit that they are a board director for. It’s also the same in reverse and I’ve seen a few joining company boards overwhelmed with what is possible and at their disposal.

When to talk and when to listen

Even after you’ve overcome the first three challenges, it’s important to know when your input is (and is not) needed. This is not about having the confidence to speak up in the first place. It’s about speaking only when you have real value to add.

Knowing when to speak can come from your preparation. Read the necessary papers and conduct all research beforehand so you know what will be discussed. Understand your own point of view and why you have that point of view. With this preparation, you will be able to join in with the proper relevancy and knowledge.

Not only will prior preparation enable you to mix well with your fellow directors, it’ll also get your ideas heard faster and to better effect. Demonstrating that you’re well informed on the topics you’re speaking about will encourage your colleagues to listen to you and respect your opinions. You can further extend your influence by talking to directors outside of board meetings too. Establish yourself as an authority in whatever areas you’re passionate about, and people will pay attention.

However, no board is going to appreciate the input of someone who is clearly talking just to be heard or who is repeating what’s already been discussed by others. So pick your battles, do your research beforehand, and really think about the value of what you’re trying to say. If you are invited to contribute but don’t have anything new to say, just say so. You’ll earn more respect for moving things along and not wasting precious time.

If you’re struggling with knowing how to approach your new position, it can help to consider the board as a family. You have to work on building relationships and trust, getting to know them, and even dealing with any potential dysfunction (because some families are like that!). Remember that you have been recruited because they have seen something in you. If your confidence falters, remind yourself that you have a right to be there, no matter whether you’ve been with them for five minutes or five years.

The most important thing is to be consistent and patient. Take one step at a time and you will find your stride. Work on building a great support network of mentors and teachers around you, and lean on these people for opinions and advice when you’re feeling lost. No one has achieved success alone—all of the most successful people have had supporters around them the whole time.

So, in summary:

  • You deserve to be there. They appointed you.
  • Say it as you see it. Why hold back?
  • However, don’t speak unless you have something valuable to add. It’s ok to say; “I have nothing new to add”. You’ll potentially increase your influence if you only speak when you have value to add.
  • Practice being courageous and confident. Take acting classes or practice with your independent board mentors!
  • Be prepared, draw together different issues, and arrive with questions.
  • Manage your expectations and your different executive v non-executive hats.
  • Try testing your ideas in subcommittees or with individual directors.
  • Keep developing your skills in key areas and become known as a trusted source of well-thought out opinion.
  • Learn how to interact with different types of people and get the most out of the relationships. Remember, the board is just a group of humans.

Paul Smith is an author, and founder & CEO of the Future Directors Institute, www.futuredirectors.com.

Introducing higher standards to raise the bar and build trust with real estate buyers and sellers

With both the Federal and NSW State elections now out of the way and an interest rate cut from the Reserve Bank of Australia under our belt, the signs are that the declines in the property market in NSW are now bottoming out and the threat of political uncertainty has been replaced with a sense of business as usual.

According to CoreLogic, Sydney values had declined at their slowest rate at the end of May – drifting just -0.5 per cent lower for the month. Annually, Sydney has seen a -10.7 per cent fall in property values, but this had reduced to just -2.0 percent for the three months to end May.

What this means is that the freefall the market seemed to be in is now pulling out of the nose-dive. The median value of a dwelling in Sydney is now $776,135, and while this is considerably lower than previously, it is still significantly higher than the rest of the country.

With the median value more than $300,000 higher than property in most other state capitals, it would be fair to assume that the legislation governing property transactions was also a stand-out. Sadly, this is not the case.
Education standards for real estate agents are woefully inadequate in NSW. Prior to 2002, to gain a real estate licence you had to go to TAFE for three years and demonstrate industry experience. However, under a regime of industry ‘improvements’, NSW Fair Trading now makes it possible to gain the qualification required for a Certificate of Registration in less than a week.
This has created a pool of real estate agents who are grossly under prepared – not just for the general challenges of selling what is, for most of us, our most valuable asset both financially and emotionally – but especially in a market that in itself is trickier to deal with.

As the peak industry body for real estate agents in NSW, REINSW represents more than 2000 real estate agencies and more than 20,000 individual members. Property services is a $107 billion industry annually in NSW, making property bigger than the mining industry ($21 billion), the retail industry ($22.8 billion) and tourism industry ($38.1 billion) combined.

Our members are integral in the majority of the 220,000 plus residential transactions that occur across the state every year. And real estate agents in NSW work with nearly two million landlords and tenants every month.

We passionately believe the real estate industry needs to improve and move away from old stereotypes about agents to create new performance expectations of genuine accountability, transparency and good governance. We want to raise the bar and work with Government at the highest levels to solve the challenges of housing across NSW.

This is why we are currently seeking a Commissioner for Property Services to manage the regulation of the industry in NSW, moving the industry out of NSW Fair Trading.

As an institute with more than 100 years’ experience in the industry, it is our observation that property buyers, sellers and the industry as a whole are being short-changed by the current structure of governance for property in NSW. The legacy has been increasing affordability issues, unnecessary risks for property consumers and the erosion of education standards for an industry that demands a high level of skill and trust.

Real estate practice is not easy. Real estate agents manage high value transactions of significant complexity that occur infrequently for most property owners. Our homes are the most valuable and psychologically important assets many of us own. Such a transaction requires an experienced and dedicated specialist.

Sydneysiders invest nine years of their income into a typical dwelling, need to save for 12 years for a deposit and service the loan with 48 per cent of their income according to CoreLogic. Governance that treats property transactions the same as any other high street purchase – like a haircut or purchasing a toaster – while ignoring fundamental issues of value, complexity and trust is both inappropriate and inherently risky.
A Commissioner for Property Services would overcome the silos that exist across government departments, which play a significant role in the red tape and expense that makes up housing and planning in NSW. A Commissioner would create regulatory consistency and deliver both improved standards of real estate service and higher levels of consumer protection.
In addition to a new property services commissioner, REINSW is working to introduce higher and additional standards of training that raise the bar and build trust with buyers and sellers.

To this end we are seeking to increase entry level education and experience requirements to become an agent and add the requirement to engage in quality on-going professional development training in a way that is monitored and regulated under State legislation.

We are also working on a Pathway to Professionalism program, creating an additional qualification that meets the strict standards of externally recognised professionalism, as a way for dedicated agents to prove their merit, and for consumers to easily distinguish excellence.

The word “profession” means different things to different people. But at its core, it’s an indicator of trust and expertise.

In the same way that travellers can choose between different standards and levels of service when booking a holiday – either a camping option, a middle of the road option or a five star luxury service – we believe property sellers should be able to decide on an appropriate service based on a combination of skill, complexity and price.

The Professional Standards Council (PSC) is the independent statutory body responsible for promoting professional standards and we are working to establish a scheme that will be accredited through the council.

They use the 5 E’s to define the elements that are necessary to qualify as a profession: ethics, education, experience, examination and entity. On our pathway to professionalism, we’ll need to demonstrate that we not only meet but exceed the required standard in each of these areas.

But REINSW believes we need to add another E to our journey – evolution. If real estate agents are to be recognised as professionals, then along with the 5 E’s we must also embrace the reality that our industry must evolve. If we don’t collectively embrace a mindset of evolution, we simply won’t be in a position to commit to the work required to elevate ourselves to a recognised professional standard.

The Pathways to Professionalism journey is a long one, and once implemented, will extend to other states through our association with the Real Estate Institute of Australia.

Our goal is to change hearts and minds – both our own and those of consumers.

The irony is that this all sounds like a blast from the past. It harks back to an era when our education standards were much higher, and ethics actually stood for something. But it’s undeniable that our industry has suffered greatly over the years due to the constant lowering of education standards and a lack of oversight, including weak disciplinary and enforcement powers.

It’s time for real estate to go back to the future and change.

Tim McKibbin is the CEO of the Real Estate Institute of NSW, www.reinsw.com.au.

Stop talking. Start teaching

Neale Daniher is addressing the young Melbourne Football Club players prior to the Queen’s Birthday game against Collingwood a couple of years ago. It is a big game for the improving Demons against their most traditional of rivals. The promise of an 80,000 plus crowd at their home ground, the magnificent MCG.

The man addressing them is very familiar to everyone in the room. He was the Demon’s coach from a decade earlier, and while few of the young Demons played under him, he is for those few precious minutes, again their coach and mentor.

Everyone in the room understands that their old coach is dying. He has Motor Neurone Disease (MND) and has known of his fate for a number of years.

And Neale’s response to his personal tragedy?

Firstly, give his disease a name, “The Beast”, and secondly, dedicates his life to building a not-for-profit, FightMND that has raised millions of dollars to fight it.

But for Neale Daniher, this moment is not about him, or his insidious disease, or even his charity. It is about the young men in the room. Simply, every opportunity to speak is an opportunity to teach.

It is a great lesson for leaders…

“Stop talking. Start teaching.”

As he speaks to the Melbourne players, he is asked the question, “Neale, knowing that you are dying, why aren’t you working through your life’s bucket-list? Living in Tuscany, going to the world’s great sporting events…?”

Neale pauses, and while his disease has clearly impacted his speech, in his very familiar Ungarie rural drawl made famous by the four Daniher brothers who got to play in the AFL, he says…

“Because son, when it is all said and done, more is said than done.”

Our words tell others what we think, but our actions tell them what we believe.

Neale well and truly understands that to find a cure for MND is to play a long game, and Neale doesn’t have a long time. Neale’s relentless efforts to slay “The Beast” are for the benefit of those who will receive the same heartbreaking news he and his family received a few years ago.

No one in the room is left with any doubt what Neale believes.

He is a teacher.

Jarryd Roughead, champion Hawthorn player and captain was dropped from the senior team for the first time a few weeks ago. From a performance perspective, he responded by kicking five goals, but an act that just happened to be captured on video was far more significant.

In the field of battle, in the middle of the MCG, Jarryd is seen taking time to coach his young Bulldogs opponent, Reuben William. I have never seen this before in 35 years of involvement in the AFL. It is a wonderful moment.

Jarryd Roughead has had quite the football journey, four Premierships and the captaincy of his great club, but also a career put on hold by his courageous fight with cancer. He has achieved so much as a player, but it seems his best is yet to come.

He is a teacher.

When leaders undertake the programs we offer at designCEO, the question isn’t “What did I learn today?”, it is “What can I teach tomorrow?”.

Challenge yourself to answer this same question when you finish a podcast that captured your attention, the book that just made sense, or the wise conversation with someone whose views you respect.

Take the time to write a few notes, collect those important first thoughts, the memorable quote, the compelling argument, the insightful take.

Then build deliberate time away into your routine, remove yourself from the busyness of your day-to-day, to curate your thoughts by aligning the new thinking against your personal experiences and current beliefs.

Have they shifted, changed your view, or added greater depth and meaning to your understanding, be it your broader view of leadership, or a more specific, perhaps tactical approach to your leadership challenge?

Finally, ask yourself “Can I teach it?”.

This question will force you to go even deeper, test your assumptions, seek feedback, as well as encourage important conversations with trusted colleagues, acknowledging their wisdom, and adding even greater depth to your understanding.

This process requires humility, courage and generosity. The vulnerability of not knowing, the bravery to acknowledge this, and then magnanimity to share your learning.

In elite sport, and in my experience, it is the curious and courageous learner-teacher that separates the great coaches/teachers.

Hall of Fame coach Allan Jeans is my favourite example, and his influence on generations of football people is evidence of his remarkable leadership legacy.

The reason for this is simple. For Allan Jeans, identity was fundamental, and he educated and coached based on ensuring you had an understanding of where you have come from, where your place is now, and providing a clear understanding of where you were heading.

The basis from which he built this was trust, and Allan was the type of person who trusted easily, and trusted freely.

Whilst he had a somewhat intimidating veneer, his warmth and wisdom quickly become apparent, as he did what he could to help you find who you are, what you want to be, and what you want to stand for.

And for many young people finding their way in this most distracted of environments, identity can be elusive. It needs to be taught.

You quickly learn however, to benefit from the Allan’s wisened methodology meant leaving your ego at the door, opening yourself up knowing that your confidences were safe, and you would be emboldened by his preparedness to reciprocate your openness.

While Allan’s booming coach’s voice was legendary, his silences were even more profound.

“I was born with big ears, so I figured I might as well use them”, he would say, and listen he would. He also had a unique way of creating the space required for you to work it out for yourself – surely the best form of teaching.

“Success needs no explanation, failure accepts no alibis”, he would say, knowing fully that building resilience means you have to learn from your disappointments. That’s how you find out who you are.

As a personal reflection, my greatest regret as a leader was not spending more time teaching. There were too many times I allowed myself to get lost in far less meaningful aspects of the role, the busyness, the stuff that really doesn’t matter.

With leadership, if you understand what really matters, you get to appreciate what seems to matter.

Teaching really matters.

Cameron Schwab has been the CEO of AFL football clubs Richmond, Melbourne and Fremantle. He is a leadership mentor, and Founder & CEO of designCEO. Find out more about designCEO by visiting www.designceo.com.au.

Trust issues? It might be time to embrace the power of PR

Trust is an elusive thing. Faith in an organisation can be lost at the drop of a hat, a badly-written statement can turn into a full-blown crisis within seconds, and a single tweet can cause a business’s share price to come crashing down.

Business leaders must look to long-term trust-building methods to build a strong foundation that can withstand such a volatile environment. And what better place to turn than the media outlets and platforms that have spent years, if not decades, building their audience’s trust?

Don’t just take my word for it: according to research by BBC StoryWorks, 45% of Australians believe that if they see a brand on a trusted platform they will also trust the brand, while 40% believe a brand is positively or negatively affected by the platforms it appears on. It’s difficult to overstate the power of appearing on credible platforms, and the positive impact it has on your brand’s own trust levels.

In short, PR allows you to show off the best aspects of your business, without directly shouting about it from the horse’s mouth. It implies a level of confidence: that a journalist, publication or influencer chose to support or seek out the advice of your business. In doing so, you’re automatically able to position yourself ahead of the pack.

Trust by association

If your business is mentioned in a respected media outlet that targets your ideal clients, those clients will come to associate your brand with all the positive attributes of that outlet. Earned media, rather than paid advertising, implies that the brand is trusted by the journalist and the outlet they work for. An independent third party saying good things about your business will always be more credible than saying the same things about yourself.

Take this article, for example. You’re reading a piece, written by me, in a highly-regarded publication for executives. By appearing in this publication, you will associate my brand with the prestige and high-level thinking of The Australian Business Executive. I am offering advice and guidance that shows I truly understand the industry I work in. I’m showing, without telling.

Be careful though, as it can work in reverse too. Imagine reading a think piece from a high-level executive in a cheap tabloid newspaper. Would you take that executive seriously, or would you begin to associate all the negative aspects of that publication with the author? A PR professional will have a good idea of which publications to target, and will be able to recommend the best outlet for your particular story. They will also be able to help you avoid any unwanted negative media coverage.

The power of stories

Humans are curious creatures. We only trust someone once we get to know them. We’re interested in what people do, and how they do it. We like to get to know people: their interests, personality, and sense of humour. This is something the media intrinsically understands, and publishes its content accordingly.

Businesses, however, sometimes struggle to remove the mask and show the human face of their organisation. Who is your CEO? What are their interests? Why should we trust them? The story behind the business – the ‘why’ – is far more compelling than technical information, business offers or sales messages. Many businesses believe facts and figures are the best way to communicate their trustworthiness, but the truth is, without a human face telling a great story, trust is hard to win.

Public relations can help tell those stories. Many business leaders are so focused on building their own business, they don’t notice the great stories they have sitting under their noses. They default to cliches and platitudes, because it’s easier telling the truths of their business. It might be easier, but cliches simply won’t cut it in the world of public relations.

Instead, try and find opportunities to share stories that involve human interest or pull on the heartstrings. These don’t necessarily have to focus on the founder or CEO: look for other people in your business or your customer base who can bring its story to life.

Getting comfortable with failure

Honest, open communication is the perfect way for a business to build trust. Part of that transparency means getting comfortable with talking about failure, no matter how difficult it might be. Failure is not shameful, in fact, the world’s most innovative and successful people have a string of missteps behind them. Think of Steve Jobs, who was fired from the company he created in 1985. Or JK Rowling, who was rejected 12 times before she sold Harry Potter to a publisher. If they were able to take their failures, learn from them, and share them with others; so should you and your business.

If an executive can prove they’re not afraid to tackle hard questions, the confidence it exudes is unparalleled. Confidence, openness and honesty are all keys that unlock the path towards trust, so it’s important to get comfortable with sharing. A PR practitioner can offer your business the opportunity to answer those questions more often, on platforms with bigger and more engaged audiences.

Journalists have an in-built understanding of the importance of failure in storytelling, so don’t expect comfortable, fluffy questions. If you can accept this and learn to plan ahead for the inevitable hard-hitting interview, your communications efforts will run a lot more smoothly.

Ultimately, PR helps a business and its leaders be heard above the noise, on platforms that audiences trust. By sharing the stage with other respected voices, businesses are able to turn a simple piece of communication into a long-lasting stamp of authority. All it takes is keeping your eyes and ears open for those genuine, truthful stories that are sitting within your organisation, waiting to be shared.

And while earned media takes more time and specialist knowledge than simply paying for an ad, the results are always worth the effort. In our age of fickle consumer confidence, a reliable way to build trust is priceless.

Phoebe Netto is the founder of Pure Public Relations, a PR firm for SMEs and not-for-profits, www.purepublicrelations.com.au.

The infiltration of progressive politics within corporate social responsibility

CSR – Corporate Social Responsibility – refers to the idea that to earn a ‘social license’ to operate, corporations must fulfil a range of social obligations beyond their traditional profit-making role. This involves considering the social impacts of company activities on the interests of non-shareholder stakeholders in the community

The key message – or rather warning – of my book, Corporate Virtue Signalling: How To Stop Big Business From Meddling in Politics, is that CSR is in danger of becoming a rubric to justify political meddling by companies in social debates that have little if any connection to the true business of business.

Within the corporate landscape there an influential and strategically-placed CSR ‘industry’ pushing companies to do more and more CSR.

The CSR professionals who occupy HR, people and culture, and corporate affairs divisions, and who operate inside the major consultancy firms, have an activist mindset.

Their ultimate ambition is to subvert the role of companies into political players campaigning for ‘systemic change’ behind ‘progressive’ social, environmental, and economic causes under the banner of CSR.

The influence of the ‘industry’ on business thought and practice at the highest levels has been clearly evident in the direction business has headed this year.

BHP and Rio Tinto have become the first companies to support indigenous Constitutional Recognition. A group of leading company directors have also formed a new pressure group to encourage business to take the lead on the Republic.

These developments underline the serious implications for the role of public companies and for Australian business in general: if the proponents of CSR get their way, the kind of political involvement by business that we saw in the same sex marriage debate, will prove to be just the tip of the political meddling by companies.

CSR is therefore threatening to fundamentally politicise the role of companies, and politicise their brands and reputations.

The significant transformation of the role of business – which would see shareholders money routinely used to engage in open political activism – and the risks that this entails for companies, are not sufficiently considered in the debate about CSR in business circles, mainly because the debate is dominated by those who are part of the ‘industry’.

However, the solution to these problems does not lie is taking a simplistic approach that generates more heat than light, as adopted in much critical commentary that has accused companies of being taken over by politically correct ‘corporate lefties’.

There is a legitimate business case for some CSR activities, given the realities and complexities of the modern business and cultural environment in which companies operate.

CSR is legitimate when it involves, as a matter of good commercial judgement, managing social risks and stakeholder interests for the sake of the best interests of shareholders and the long-term financial wellbeing of companies.

However, the legitimate ‘business case’ for CSR also draws attention to where CSR crosses the line into inappropriate politicking – which is the point at which the activists seek a license to play politics with shareholders money on issues that have little, if any, relevance to shareholders interests.

If the influence of the ‘industry’ on the CSR direction of business is to be curbed, corporate leaders must become more aware of the ‘business risks’ of CSR with respect to politicising company brands and reputations.

The reputational and branding arguments for CSR must be turned around to make the case against CSR by making an obvious – but rarely stated – point.

Corporate involvement in divisive social questions on which there is no community consensus among shareholders, stakeholders, employees and customers, can have negative brand consequences for companies that acquire reputations for being ‘being political’, particularly at a time of growing social, cultural and political polarisation in society.

But even if awareness of the downside of CSR fosters increases, what precisely can corporate leaders who want to take a more hard headed business based approach actually do to counter the well-established doctrines, structures and momentum of the CSR industry that is institutionalised across business?

The solution is to introduce into the language and practice of corporate governance a new clarifying principle to overtly qualify existing CSR philosophies – the Community Pluralism Principle – which would read:

It is important for modern corporations to consider their impact on all genuine stakeholders in the best interests of shareholders. It is also important that engagement on social issues cannot be perceived to distract from company’s core business mission, duties, and accountabilities, nor negatively affect its brand and reputation in the market of opinion in a political sense. It is a matter for boards of directors and other corporate decision-makers to manage these risks by ensuring that companies respect and reflect the pluralism of Australian society and remain open to the views and values of all employees, customers, shareholders and stakeholders across the community.

The ‘pluralism principle’ expressly flags the need and importance for companies to manage the business risks of politicisation and rule out any involvement in ‘systemic change’.

If it was inserted to ASX’s Corporate Governance Principles this new requirement for companies to respect the pluralism — the different views and values — of the community would hold company directors and other decision-makers accountable for ensuring CSR doesn’t escalate into political meddling.

The pluralism principle would greatly assist those working in companies who might wish to push back against the CSR trend, and in the inevitable internal management struggle over the CSR direction of the company.

A counter institutional framework and set of ground rules like the pluralism principle to explain decision making around CSR means that those who want to push back won’t have to fight on the merits of particular issues – with all the professional and social risks of being seen as un-‘progressive’.

Instead, they would be able to refer to the need to ensure companies remain non-political as a general principle, and to therefore ensure companies avoid getting involved with an issue that is ‘political’ – with political being a boo word – in order to uphold its requirements as per the pluralism principle.

Dr Jeremy Sammut is a Senior Research Fellow at The Centre for Independent Studies. Corporate Virtue Signalling: How To Stop Big Business From Meddling in Politics is published by Connor Court and available now, www.connorcourtpublishing.com.au.

William Buck: Saving companies in financial distress

William Buck is a leading firm of Chartered Accountants and advisors with offices across Australia and New Zealand. The firm’s Business Recovery Services team is a well-established middle market practice with experience assisting companies in times of financial distress to achieve the best outcome for all stakeholders.

Michael Brereton is a director of William Buck’s business recovery team. He is a leading corporate restructuring advisor and insolvency practitioner with significant experience assisting companies that are underperforming, facing financial distress, or in need of financial restructure. The recovery team focuses on the middle market, in particular owner-managed businesses, enterprises and mid-market ASX-listed companies. As part of a special report on the crucial service of business turnaround and recovery solutions, The Australian Business Executive spoke with Mr Brereton about how engaging a restructuring advisor can significantly improve the chances of a business in financial distress being able to continue operating.

Protecting directors and companies

“A restructuring advisor is typically a qualified professional advisor,” Mr Brereton says, “appointed when a company is facing financial distress, or is likely to be facing financial distress in the near future if action is not taken in the short-term to fix the issues being faced.”

There are a number of roles that a restructuring advisor can take, dependent on the circumstances being faced by the company. The recent introduction of new government safe harbour legislation helps protect directors of companies that are facing financial distress.

“Before the new legislation was introduced, directors of a financially distressed company who were attempting to rescue the company had to contend with our previously draconian insolvency trading laws, which placed directors at personal risk for any debts being incurred by the company.”

The new laws have allowed restructuring advisors to assist such directors to claim protection against being personally liable for a company’s debts, allowing the process to run more smoothly and be less financially damaging for directors.

“Another role that a restructuring advisor can undertake is to assist a company dealing with banks and secured creditors,” Mr Brereton adds. “[They] can also play a major role in assisting management of a company to develop one or more restructuring plans to save the company and avoid insolvency proceedings.”

An advisor can also assist a company in negotiating new arrangements with third-party suppliers and creditors, allowing additional time and funding for the development and implementation of a restructuring plan, as well as assisting with the raising of equity and debt.

“Restructuring advisors have significant expertise and experience in managing a multitude of issues which arise for any company facing financial distress. Existing management frequently do not have the necessary experience or the capacity to deal with the additional workload which arises in these situations.”

The result of this lack of experience is that management is often doing little more than putting out fires, finding that it does not have the capability to rectify all issues and ensure that the company is able to survive long-term.

In many cases, an advisor will work in conjunction with the management team and other specialists such as legal advisors, media, forensic, IT, and even cyber advisors, as well as industry specialists.

“The restructuring advisor’s role is to assist the company to achieve the best results and to maximize the chances of the company continuing as a going concern, protecting value for the company, for stakeholders, and most importantly retaining jobs for the employees.”

Act before it’s too late

In times of financial distress, Mr Brereton recommends that all stakeholders should consider engaging a restructuring advisor, whether it be the CEO, Board of Directors, CFO, senior management, or even lenders, creditors and shareholders.

“We’re frequently brought in by financiers or secured creditors, and even suppliers, to distressed companies,” he explains, “all of whom can benefit from advice that can be provided to them in how to deal with the company, and how to maximise their position.”

An increasingly common occurrence is a company’s management bringing in an advisor with the tacit approval of its bank, which can take comfort from the fact that management is being professionally and independently advised on the best course of action.

A general misconception of restructuring means many people believe that when an advisor is engaged it is for the sole purpose of chopping up or liquidating a business, when in reality the process can open up a number of other options for an ailing company.

“The range of options expanded dramatically over the course of the last year, when the government introduced the new safe harbour legislation. Provided directors meet certain minimum requirements, [they] are able to obtain the benefit of the safe harbour protections.”

An important part of the new legislation is the requirement for a qualified restructuring advisor to be appointed to assist the company in formulating a plan deemed to be likely to lead to a better outcome for creditors than would be attained through liquidation.

“In most cases that’s reasonably easy for a restructuring advisor to work on and to put in place all the safeguards. In addition, [they] will work with the management and the company to implement the plan.”

First and foremost, directors are concerned with saving the company. In that respect, the additional support and expertise provided by advisors in terms of balance sheet restructuring, cash flow management, raising capital, dealing with banks and secured creditors, and much more, can be invaluable to a company.

“Unfortunately, it’s far too common that we see a scenario where management and the board really are in denial,” Mr Brereton says, “and don’t reach out for assistance from a properly qualified restructuring advisor until it’s too late.”

A successful restructure will invariably take a significant amount of time and funding to complete, meaning companies that leave the decision to call in a professional until the last minute risk missing the chance to turnaround its fortunes.

“If you compare this to the US, which has a reputation of a strong business rescue culture, and is regarded as very entrepreneurial – if you actually look at the US bankruptcy law, Chapter 11, while it’s held as the benchmark for restructuring, it’s actually a very cumbersome, very expensive process, which requires a lot of upfront funding and a lot of time.”

All of which means that companies will need sufficient time and funding to put a restructure in place. Waiting until insolvency becomes evident is usually too late for anything effective to be done.

“Management need to act as soon as they get an indication that the business is facing some degree of financial distress,” Mr Brereton says. “If they reach out early enough, they give themselves the best chance of actually saving the business.”

Selecting the right advisor

The process of restructuring is not something that most healthy and solvent businesses will be familiar with. Because of this, it can be a particularly confusing process for management to choose the right advisor to have the greatest impact.

“Any business looking to appoint a restructuring advisor needs to make sure the advisor has a broad base of turnaround, restructuring and insolvency experience. I would recommend that the board look at any of the ARITA professional members.”

Members of ARITA are required to take a rigorous post-qualification course, and all have a broad experience of finance, accounting and law, meaning members are held in very high regard in the industry.

“Restructuring advisors become a trusted advisor to the company and management, and the board needs to have confidence that the advisor has the appropriate expertise and experience to assist them in troubling times.”

William Buck has an experienced team focused on the middle-market with a strong track-record in assisting companies in financial distress. The firm’s work helping these companies is usually conducted out of the public eye and kept confidential.

One of William Buck’s recent projects arose from an approach for the recovery team to take the role of safe harbour advisor to the directors of a retail company struggling to stay afloat in the nation’s current retail climate.

“The business was faced with sharply declining revenue. Management had not foreseen the changes to the business and were struggling to react in time. While management had been desperately trying to stem the declining revenues, and were looking for alternative growth areas, they weren’t meeting with much success at that point in time.”

William Buck’s initial role was purely as a safe harbour advisor, but this quickly expanded to assisting the CFO in engaging with the bank, which clearly had a very different point of view about the business’ prospects than the company did.

“We found we were almost acting as translator between the company and the bank, and while the bank thought they’d clearly signalled to the company that they had some serious questions on the viability of the business, and was looking at exit strategies, management of the company were looking at how do they grow out of the current predicament.”

Eventually William Buck was able to work with the company and bank to put a restructuring plan in place, part of which involved developing a cash-flow model which set out the basis for the turnaround of the business.

“On the back of that,” Mr Brereton says, “we were then able to assist the company to negotiate a twelve-month forbearance agreement, subject to a number of conditions, one of which was that the company raised capital.”

With William Buck’s assistance, the company was able to raise capital, which was used to partially pay down the bank, with the balance helping sure up the solvency of the company and provide for future growth. The company then had a solid base to continue operating.

“[This] was a great result, in the sense that the management, the directors, the banks, the shareholders, and most importantly the employees, all got something out of it. While there were some minor redundancies, the vast majority of the company continued operating, value was retained and the business continued operating.”

Mr Brereton concludes that directors of companies facing financial distress should reach out quickly to appoint a properly qualified restructuring advisor such as William Buck, in order to significantly improve the chances of the business being able to continue operating.

Find out more about William Buck by visiting www.williambuck.com.

Coming back from the edge

When a company is in financial distress the difference between recovery and insolvency usually comes down to getting the right advice ASAP.

With falling house prices, tightening credit and slowing export markets, our economy is looking increasingly shaky. As I write this, the OECD is warning the global economy is slowing more quickly than expected. They have sliced Australia’s growth forecast for this year by 0.2 percentage points to 2.7%, and next year to 2.5%.

We have had an enviable run of economic success, with 26 years of uninterrupted GDP growth. But with Brexit, Trump’s trade wars, a slowing Chinese economy, the huge rise in non-performing loans in Asia, and declines in business and consumer confidence, there’s a rising sense that this run may be coming to an end.

And many pundits are concerned the next downturn will be a big one. At a macro-economic level, most developed economies have little capacity to respond to any major downturn. Most central banks have nowhere to go in terms of a stimulatory monetary responses, and most national governments are already carrying far too much debt to attempt further stimulatory spending in a downturn of the type that saved Australia in the GFC.

None of this should cause business leaders to panic. But forewarned is forearmed. Now is a good time to pause and take stock of how your company is performing and how you may get through a future downturn.

14 ways to identify a struggling company

There are well-established warning signs that a company is in financial distress. As business leaders, we should always be checking that we aren’t ticking any of these boxes – or expecting to be ticking them soon:

The following list was established in a 2003 court case that examined an insolvent company. It remains the go-to checklist for signs of insolvency or serious financial distress:

  1. continuing losses
  2. liquidity ratio below one i.e. more debt than liquid assets
  3. overdue Commonwealth and State taxes
  4. poor relationship with present bank including inability to borrow further funds
  5. no access to alternative finance
  6. inability to raise further equity capital
  7. suppliers placing the company on cash on delivery (COD) terms, or otherwise demanding special payments before resuming supply
  8. creditors unpaid outside trading terms
  9. issuing post-dated cheques
  10. dishonoured cheques (and now, the more contemporary measure of dishonoured EFT payments)
  11. special arrangements with selected creditors
  12. solicitors’ letters, summonses, judgments, or warrants issued against the company
  13. payments to creditors of rounded sums, which are not reconcilable to specific invoices
  14. inability to produce timely and accurate financial information to display the company’s trading performance and financial position and make reliable forecasts.

If your company meets one or more of these criteria you must take action quickly. Sadly, many companies fail because the owners put their heads in the sand and deny or diminish the distress the business is heading into.

Are you insolvent?

If your company is showing signs of financial distress, it’s crucial to determine if it’s insolvent. Insolvency is defined as the point when you can’t pay your debts as and when they fall due. If you suspect you are insolvent, you need professional advice from a properly qualified Registered Liquidator or a specialist insolvency lawyer.

Registered Liquidators are highly trained insolvency experts who are closely regulated by ASIC. They will usually offer a free initial consultation to gauge your current situation and help you to determine if you are likely to be insolvent and map out a plan for you.

And if you’re not insolvent, here’s the good news: Registered Liquidators and also happen to be some of the very best business restructuring and turnaround advisers in the market. You’re already talking to the right people who can help you.

Beware of false promises

When your company is in financial distress, it’s important to choose your adviser very carefully. Because nowadays there are many unscrupulous and unqualified ‘pre-insolvency’ advisers spruiking their services on the internet.

It can be difficult to discern between unregulated, unqualified advisers and reputable, legitimate advisers, because pre-insolvency advisers utilise slick advertising and websites that make them appear to be legitimate and trustworthy.

They will often claim to remove the worry of your financial situation and help you avoid legal duties you may owe. But taking their advice may make your situation worse and put you on the wrong side of the law.

The best way to avoid bad advice is to deal with only a Registered Liquidator or a lawyer with additional insolvency law qualifications, and preferably those who are Australian Restructuring Insolvency and Turnaround Association (ARITA) Professional Members.

ARITA Professional Members are fully qualified in the intricacies of Australia’s complex insolvency laws. Because they’re also experts in restructuring and turning around businesses of all sizes, they can help you understand your financial position, your options and help you set a path forward.

New company turnaround laws

There’s some good news if your company is in distress. Last year, after many years of advocacy by ARITA, the government introduced new ‘safe harbour’ legislation.

The new laws are designed to help protect company directors of businesses who attempt to do the right thing and turn their company around lawfully, even if they are technically insolvent.

There are important steps, which are legal prerequisites, you must take to protect yourself as well as giving your company the best chance to get back to profitability:

  • Get your financial records in order

You can’t get the protection of a safe harbour unless you’ve got your books and records in order. This is vital because unless you know where your money is coming from or going to, you can’t really have a plan to solve the problems your business is facing. It’s also vital to understand where your debts may be and how much you really owe, including tax debts, and this is important in understanding if your business is actually viable or insolvent.

  • You must get expert help

The law requires that you get advice from an appropriately qualified adviser. While the law, unhelpfully, doesn’t define who that is, the most qualified advisers are always going to be ARITA Professional Members. The sooner you seek expert advice, the more options you are likely to have.

You will need to pay for this professional advice and, at a time where money may be hard to come by, this may be challenging. But your investment in good turnaround advice – or professional advice about your options if you are actually insolvent – can save you money in the long run. It’s vitally important that you don’t go to dodgy pre-insolvency advisers that promise things that seem too good to be true. Unfortunately, there’s a lot of that type of advice out there.

  • You must properly inform yourself of your company’s financial position

So, you’ve got your financial records up to date, you’ve taken advice from a qualified adviser and now you must make a decision about where to from here. The law now says you’ve got to decide if what you’re about to do will ‘reasonably likely to lead to a better outcome for the company and the company’s creditors than if it had entered into voluntary administration or liquidation’. And that’s where the advice from a properly qualified professional is vital.

  • Develop and implement a restructuring plan for the company

So, your adviser has told you there’s good options to get the company back to profitability. Great news. But the law – and common sense – says you must have a properly documented restructuring plan for your company. It’s important that it’s documented, not just for you to be able to check off that you are following the plan, but also if the turnaround doesn’t work, this gives a future liquidator comfort that the steps you took, even if they failed, had merit and the right intent and it will help make sure you are protected.

A restructuring plan doesn’t need to be long or complex. As long as it has clear and sensible steps to getting your business back to financial health and, importantly, as long as you follow that plan.

Differences for SMEs & large businesses

The law doesn’t distinguish the treatment of financial distress between different sizes of businesses. While we think that’s a real problem, it’s unlikely to change any time soon.

In a practical sense, the main difference is the size of your response to how you handle distress. Engaging a restructuring or insolvency professional doesn’t need to be onerously expensive if you’re an SME. Indeed, the majority of insolvency and turnaround professionals work in small firms themselves.

If you’re an executive or a director of a larger firm, you will likely need a larger, and likely industry specialist, team to work on your turnaround. So, you’ll need to pick a firm that has the resources to cover that.

There are good options to helping you through financial distress. But expert advice is key. And for your own safety, make sure you don’t go to some of the dodgy advisers who may offer their service through Google advertising. Often their only qualification is that they’ve been bankrupt before.

John Winter is the Chief Executive Officer of the Australian Restructuring Insolvency & Turnaround Association. Find out more about ARITA by visiting www.arita.com.au.

Culture is strategy and strategy is culture

In what is now a well-known piece of testimony given to the 2018 Hayne Royal Commission, a then senior executive, Matt Comyn, reported proposing to his then CEO, Ian Narev, that he wanted to do the right thing by the bank’s customers by abolishing a range of lucrative junk insurance products.

The response from the CEO received at the time was to “temper your sense of justice”. Comyn reportedly added that he did not take that flawed advice to the board because he believed the board shared the same view: that financial results mattered and that customers were expendable in achieving them.

Three years earlier the same bank had put a remuneration report to its annual general meeting which consisted of executive bonuses paid on the basis of meeting a number of non-financial key performance indicators that included good governance practices and customer satisfaction targets. A number of institutional shareholders objected, complaining that bonuses should not be paid on the basis of meeting ‘soft performance targets’ and that only financial indicators can be taken seriously.

It’s worth reflecting that even though Ian Narev was ostensibly a powerful chief executive of a prestigious institution, he was part of and captive to the culture of an entity that was bigger than one person, and that entity included the board to which he reported and the shareholders to whom the board reported.

It was therefore a pleasure to hear in March 2019, three years later, the Australian Prudential Regulation Authority chairman, Wayne Byers, state that the formulaic approaches to executive pay, that some investors favour, based on the single metric of shareholder return is “not going to cut it”.

In calling for a remuneration metric based on an even balance of financial and non-financial considerations, the regulator has picked up on Kenneth’s Hayne’s conclusion about the vagaries of human nature.

When Commissioner Hayne concluded that “entities and individuals acted the way they did because they could,” it seems reasonable to infer that he wasn’t simply touching on the fragility of the moral compass that order individual lives; he was also making a judgement about how the group thinking of people within entities is self-generating and requires effective self-checking and correction mechanisms.

In delivering his report to Government, the Commissioner left little doubt that while it might be people who create value in an organisation through their ideas, innovations and dynamism, it is also the people in an organisation who will lose their way if there are no corrective instruments preventing them doing so.

It is those instruments that have the potential to contribute to culture, a word often used as shorthand to describe ‘the way things are done around here’.

While the Hayne Commission has been a sobering experience for the Australian finance sector and business in general, as the head of the HR peak body, I noticed with a degree of curiosity that the executives called to give evidence and reveal the lamentable flaws in their corporate practices, were almost all in charge of operational divisions.

The counsel assisting the Commission, Rowena Orr QC, refrained from calling chief human resource officers to the stand even though they would ostensibly be the executives charged with the ownership of culture.

There may be a number of reasons for HR flying under the Commission’s radar but the one that interests me is the likelihood that the HR function was not taken sufficiently seriously within the entities that appeared at the Commission. By that I mean not only did the counsel assisting believe HR executives did not exercise enough influence to deserve a grilling from her, but that the entities themselves did not believe so either.

The Hayne Commission is not the only time I’ve been struck by the phenomenon of the HR function flying under the radar when it might be expected to be in the firing line. Another was the VW emissions scandal, which if nothing else was a case of a company living comfortably with a people culture in which coyness to speak out about grossly unethical and illegal behaviour was acceptable, and in which remaining mute was the unspoken code that was rewarded.

In resisting the temptation to suggest that business needs to take the HR function more seriously, I would say that a greater number of HR executives and practitioners, many of whom are members of the organisation I lead, need to be more upfront and visible in assuming their role as the owners of culture, and where that is not seen as their role, to take a lead in putting the case to the entity for doing so.

For that eventuality to succeed, HR leaders must be credible professionals in their own right so that the organisation has the confidence to vest the HR function with responsibility for culture in its own interests.

There are organisations which have done just that. They have seen that HR can boost the performance levels of its people which in turn contributes to achievement of its mission and sound financial results by paying appropriate attention to its customers.

A contemporary example of such a company is the entertainment service to which many of us subscribe. I refer to Netflix, which over the past decade has moved from physically shipping DVDs, to mailing content, to streaming movies digitally, to where it is now – a major creator of content, the 2018 Oscar winning movie Roma being a case in point.

In a 2018 Harvard Business Review article, the Fast Company co-founder Bill Taylor put Netflix success down to three things.

The first relates to big data, but not so much to the data itself as the ‘big ideas’ generated by using big data.

The second is a point about disruption. Netflix’s success involved breaking free from the accepted wisdom within the industry of which it was part. The company was not simply interested in how its customers watched but was keen to influence what thy watched, and it replaced an industry focus on demographics with the creation of ‘taste clusters’.

Taylor’s point is that Netflix didn’t just disrupt an industry, it also disrupted itself in the service of its mission. A company that ships DVDs is not the same company that makes content.

The third point goes to Netflix’s philosophy, described as ‘culture is strategy and strategy is culture’. Taylor sees Reed Hastings, the CEO of Netflix, as a leader who thinks just as rigorously about people and culture as he does about digital streaming and content.

Culture for Reed is about values, and he believes that values written down are less indicative of culture than “the real values of a firm which are shown by who gets rewarded or let go”.

And going to the question of who gets rewarded, he says they are people “who say what they think, when it’s in the best interest of Netfix, even if saying it is uncomfortable”. They are willing to be critical of the status quo and make tough decisions without agonising.

Netflix doesn’t make artificial distinctions between financial and not-financial metrics. They are the same thing. If the company can service its customers within the bounds of its mission better than its competitors, it will be successful. And it has at the expense of Blockbuster, which no longer trades.

So we are talking about a serious success story with Netflix, and on all three of Taylor’s success measures, people are central.

Only people can generate big ideas.

Only people can decide that in order to disrupt an industry it’s necessary to disrupt yourself, and then do it.

And only people can decide to adopt a philosophy about the interconnected centrality of culture and strategy, and make it work.

If Netflix is a stellar success story founded on a people culture, the aftermath of the Hayne Royal Commission is a crisis presented to the finance sector with culture at its core, and survival of 2019 annual general meetings without incurring a second strike on executive remuneration.

When Winston Churchill wanted to set up a United Nations at the end of World War II, he reminded world leaders that they should “never let a good crisis go to waste”.

For the HR profession in Australia, there has never been a better time than now to assist the banks in dealing with a culture crisis. Since 2015 the Australian HR Institute has set a high certification bar on professional HR standards and practice. We now require eligible practitioners to undertake a set number of exacting internationally benchmarked postgraduate units, as well as minimum years of service, and mandated continuing professional development.

In a profession which has previously set no bar to entry, this is a significant initiative that recognises the demands that businesses are now making on the skills, knowledge and behaviours required of an HR professional working as a partner to the business. HR certified practitioners can and will take ownership of driving economic performance while at the same time exercising the influence and courage where necessary to ensure the people and the entity remain ethically and legally focused on achieving its mission.

Lyn Goodear FAHRI GAICD is the CEO of the Australian HR Institute, www.ahri.com.au.

Why blog? Six reasons why every website owner needs one.

WEB-FEATURED-Featured image-Senka_Pupacic_Top_10_SEO

Every business needs a website and I remember the days in early 2000 – 2005 clients saying to me they don’t need a website. How the view of websites has changed so much since then.

I have found that up until 2014, all I needed to do was create a brilliant website for my client. This website would be filled with fresh and unique content on the subject, and organic search engine optimisation SEO applied to the site. Within a few months, they would be on page one for most of the keywords.

Since February 2014, Google has changed the game and so much more work is now involved to gain a high score for your website. Fresh and unique content is still significant. Now, we supply Google with this via blogs.

Outbound marketing vs. inbound marketing

Outbound marketing is essentially the use of traditional advertising methods such as flyers, email marketing, and cold calling to reach potential customers. This wide-net method tends to be rather costly and ineffective due to the lack of targeting and usually offers a relatively low ROI.

While outbound marketing focuses on reaching out to potential customers, inbound marketing methods are aimed at attracting prospective customers who are already seeking a product or service like yours. By providing value by offering useful and helpful content at every stage of your prospects buying journey, they are much more likely to purchase from you.

However, what is the most effective inbound method to include in your marketing strategy? The answer is surprisingly simple yet highly effective: launch a blog (short for ‘web log’) on your company’s website and regularly publish useful and relevant content.

With this in mind, here are six reasons why every company needs a blog on their website.

1. A blog can increase traffic to your site

If your primary marketing strategy focuses on outbound methods, you most likely only attract a low number of qualified leads per month. Chances are, your website doesn’t receive much traffic from search engines – and this is where a large proportion of your potential customers will be coming from.

As most business websites are just a few pages long, they are unlikely to be found when people are idly browsing the internet. However, by publishing articles that cover trending topics, provide solutions to both common and specific problems, and offer a unique perspective on important issues, your web presence will be significantly expanded.

This will result in more web pages for search engines to index your website and include it in web searches. Therefore, when your potential customers type a query into Google, the chances of them finding the useful content – and in turn, your website – increases exponentially. Simple? Yes. Effective? Most definitely

2. A great blog can encourage purchasing behaviour

Research has found that B2B companies with a regularly updated blog have an 88% higher monthly lead generation than those without a blog. To discover exactly how this happens, we need to understand how buyers make their purchasing decisions.

The purchasing journey begins with research – usually through online reviews and company blogs. This information helps buyers to decide if they will buy, and if so, which company they will buy from. A helpful and informative blog can help to build trust with buyers, which often leads to higher sales.

3. Blogging can help with your company’s social media marketing

As your current and potential customers regularly use their favourite social media platforms such as Facebook, Twitter, Instagram and LinkedIn, these are the ideal places to be sharing your latest blog posts.

Social media serves as an incredible marketing tool for keeping your business in front of your customers – as long as your content is relevant and engaging.

4. A blog can improve your social media engagement

A regularly updated blog provides fresh content for your audience on social media, which leads to more traffic to your website, more qualified leads, and more sales.

5. Blogging helps to improve your website’s SEO

A blog can help tremendously towards your SEO efforts, as search engines rank websites with fresh, quality content higher than those that don’t. The more original and diverse content you publish – such as videos, images, and relevant keywords – the more opportunities you provide search engines to find you. Other website owners will be more likely to backlink to your site, which is another excellent way to improve your SEO.

6. An exciting blog can support your email marketing strategy

If you have a company blog that is kept fresh with interesting, useful, and informative content, your email subscribers will look forward to seeing your emails in their inbox – rather than clicking the unsubscribe button. A blog that provides valuable information is a great way to keep existing and potential customers interested in your business, which in turn leads to more sales.

Vlogging – what is it, and how is it shaping digital media?

Between 2012 and 2016, online video viewers increased by 87% from 372,000,000 to nearly 700,000,000, while viewing time has risen from 26 minutes a day to almost an hour. These incredible increases are mainly due to the popularity of mobile internet browsing, which has overtaken desktop viewing.

Online video is rapidly becoming the media of choice for web users due to its low engagement requirements. A certain type of video proving to be popular with audiences – Vlogs. A vlog, or ‘video log’ is a type of video where ‘vloggers’ share self-recorded videos of their lives.

As these six reasons show, having a blog on your company website and adopting a strategic approach to your blogging efforts can lead to higher website traffic, which results in more qualified leads and an increase in sales. It certainly takes some effort and consistency, but your business bank account will thank you for it.

Senka Pupacic is the founder of Top 10 SEO: www.top10insydney.com.au.

Destination New Orleans: Experience Southern hospitality

A former French colony, New Orleans, often referred to as ‘The Big Easy’, is a truly unique city, not just in the United States but across the world. With a proud cross-cultural and multilingual tradition, this one-of-a-kind city situated alongside the great Mississippi river is a growing tourist destination, welcoming close to 18 million visitors in 2017.

Marketing itself as a state of opportunity, Louisiana offers a business environment built for success, combining an extensive collection of competitive advantages, including customised workforce training, low business operating costs, and robust infrastructure. As a major port, New Orleans is considered an economic and commercial hub for the Gulf Coast region.

Founded in 2004, the New Orleans Chamber of Commerce helps members build mutually beneficial partnerships within the city, and currently boasts around 1,300 members. This focus on business has helped Louisiana rank among the top ten business climates in the nation across three independent sources.

The recently revamped New Orleans Ernest N. Morial Convention Center plays a major role in the success of the city’s business events. The centre is the sixth largest convention facility in the United States, boasting over a million square feet of exhibit space, and regularly ranks in the country’s top ten facilities holding the most annual conventions and tradeshows.

In New Orleans, both business and culture are abounding. Steeped in a proud musical tradition, there is never a night in New Orleans where one can’t see the finest jazz and blues musicians lighting up a stage, along with a host of other performances that give a real flavour of the city’s historic music and arts scene.

If one is lucky enough to visit the city in carnival season, then the Mardi Gras celebrations across New Orleans are less of a ‘must see’ and more of a ‘cannot miss’. For two weeks in February/ March, the city is transformed into a cornucopia of celebration, hosting parades, balls and many more vibrant community events that get the streets dancing and singing.

New Orleans has earned a reputation as one of the world’s most culturally rich destinations
New Orleans has earned a reputation as one of the world’s most culturally rich destinations

Those visiting outside carnival season are still in for a treat. The French Quarter is the city’s historic heart, famous for its vibrant, around-the-clock nightlife, and colourful buildings resplendent with cast-iron balconies. The centre of activity is famous Bourbon Street, packed with such crowd-pleasers as jazz clubs, Cajun restaurants and rowdy cocktail bars.

Head down to the Toulouse Street Wharf and one can see the city differently by taking a ride on New Orleans’ only steamboat, the Steamboat Natchez. This two-hour cruise from the heart of the French Quarter will take you around the beautiful crescent of the lower Mississippi River, with food, cocktails and wine available on board to help you float in style.

A short walk further south, in the CBD, is the National WWII Museum. Designated by the U.S. Congress as the nation’s official National WWII Museum in 2003, it offers a range of fascinating special exhibits and events, as well as museum tours across its six-acre campus, interactive features, oral histories, and personal vignettes.

A visit to Louisiana wouldn’t be complete without exploring the New Orleans plantations, which provide insight into some of America’s most interesting and tragic stories. The history of slavery in the state, and the nation, is not always comfortable to learn about, but these tours give a fascinating glimpse into both the opulence and exploitation of plantation life.

New Orleans has earned a reputation as one of the world’s most culturally rich destinations, and the sense of excitement and joy that permeates this great city is infectious.

Stay Alfred New Orleans

Our accommodation provider of choice when staying in New Orleans is Stay Alfred, offering short or long-term stays right in the downtown core. Find out more at www.stayalfred.com.

 

Destination San Francisco: Golden Gate City

The jewel in the crown of the San Francisco Bay Area on America’s west coast, San Francisco has a reputation for progressive living and technological innovation, and was the highest ranked American city for liveability in 2018. To those living in the area, San Francisco is normally referred to as ‘The City’.

The cultural, commercial and financial centre of Northern California, San Francisco is the thirteenth-most populous city in the US, and the fourth-most populous in California. Nearby San Francisco International Airport offers non-stop flights to more than 39 international cities on 33 international carriers, averaging over 55 million passengers per year.

Two of the Bay Area’s major cities, San Francisco and San Jose, have the strongest economies in the US. In 2017, the Bay Area alone generated a GDP of $748m, with an annual growth rate nearly double that of the entire nation. If the Bay Area were a country, it would be in the top 20 largest economies in the world.

Much of the region’s prosperity is generated by its proximity to Silicon Valley, the epicentre of the tech world, which has become one of the biggest contributors to the national economy in the past few decades. A host of tech giants call San Francisco home, including Twitter, Pinterest, Dropbox and Reddit.

The city’s tourism industry is another of its key strengths. In 2016, San Francisco welcomed around 25.1 million visitors to the city, helping to generate over $9.5 billion for the city’s economy. In addition to being a favourite for international visitors, the city remains in the top ten US cities for domestic vacations.

San Francisco is the cultural, commercial and financial centre of Northern California
San Francisco is the cultural, commercial and financial centre of Northern California

There is plenty to do and see around the city. Those who are already a little familiar with the area will be keen to visit the Golden Gate Bridge, a spectacular sight that can be viewed from a variety of awe-inspiring spots. Those wishing to get a little closer can walk or bike across the bridge, or even take a guided tour.

While in close proximity to the Bay, the next stop is likely to be the former island prison at Alcatraz, the top tourist attraction in San Francisco, and just a short ferry ride from Fisherman’s Wharf. Make sure your trip is organised beforehand, as there is just one ferry company, Alcatraz Cruises, which takes people to and from the island.

In the city’s Financial District, the 48-story futurist building known as the Transamerica Pyramid is the second-tallest skyscraper in the San Francisco skyline. When completed in 1972, the Pyramid was the eighth-tallest building in the world. Stop in to the tower’s visitor centre for live-feed views from the top, and to explore the history of the Pyramid.

Those interested in the city’s role in the 1960s counterculture movement will be keen to visit the Haight-Ashbury area, just east of the Golden Gate Park. Head down Haight Street to soak up the hippie vibe and sample a mix of vintage clothing boutiques, record shops, bookstores, dive bars and casual, eclectic restaurants.

A few blocks north is the famous historical landmark of the Painted Ladies, an iconic row of Victorian homes well-known for appearances on movies, TV shows and postcards. Further north again, near Pier 39, is the city’s Chinatown area, the oldest community of its kind in North America.

Best known for year-round fog, cable cars and Victorian houses, San Francisco is one of the United States’ most unique and iconic cities.

Stay Alfred San Francisco

Our accommodation provider of choice when staying in San Francisco is Zeus, offering a home of your own for business travel. Find out more by visiting www.zeusliving.com.

Destination Dallas: Everything’s bigger in Texas

There’s a well-known saying in the United States regarding the nation’s second largest state, declaring that ‘everything is bigger in Texas.’ Located in the huge Dallas–Fort Worth metroplex, the city of Dallas is the most populous city in the fourth-largest metropolitan area in the country. It’s fair to say that big is what Dallas does best.

The city’s location in the middle of the United States makes it ideally placed for travel to and from other US cities, coast to coast, as well as offering significant global appeal, with nearby Dallas Fort-Worth being one of only a dozen or so airports in the world offering service to over 200 international locations.

Over the years, the region has hosted headquarters and major company operations from a diverse range of firms, with household names such as ExxonMobil, American Airlines, Toyota, and Dr Pepper all calling the region home. The Dallas Fort-Worth area boasts 22 Fortune 500 company headquarters and 42 headquarters from Fortune 1000 companies.

Global business is welcomed in Dallas. Situated in the heart of downtown, the Kay Bailey Hutchison Convention Center Dallas is one of the nation’s largest convention centres, with over a million people passing through its doors each year to attend major national and international conventions, meetings, concerts, and much more.

In nearby Fort Worth, north of the CBD, are the historic Fort Worth Stockyards. These 98-acres of land contain a former livestock market and celebrate the area’s long tradition as part of the cattle industry. The Stockyards are now used primarily for shopping and entertainment, promoting the image of Fort Worth as America’s Cowtown.

Dallas Fort-Worth is one of only a dozen or so airports in the world offering service to over 200 international locations
Dallas Fort-Worth is one of only a dozen or so airports in the world offering service to over 200 international locations

When visiting Dallas, you won’t to miss out on sampling the region’s famous cuisine. The taste for great BBQ permeates the city, with restaurants such as the Lockhart Smokehouse on West Davis Street offering an authentic Texan BBQ experience. Equally sought after are the city’s unique Tex-Mex dishes, which can be sampled at Herrera’s Cafe on Sylvan Ave.

Heading into the Dallas Arts District will quickly quench any thirst for the city’s artistic culture. The Dallas Museum of Art, the Nasher Sculpture Garden and the Morton H. Meyerson Symphony Center are all located here, in an area offering music, performances, exhibits and tours, along with a wide selection of dining and shopping venues.

As far as sports are concerned, Dallas doesn’t disappoint. Home of the world famous Dallas Cowboys, the AT&T stadium in Arlington is the fourth largest in the NFL, offering an exciting matchday experience. If soccer is your thing, then MLS team Dallas FC is located in nearby Frisco, at the Toyota Stadium.

Dallas is most famous for the mystery surrounding the assassination of President John F. Kennedy in 1963. In downtown Dealey Plaza, the Sixth Floor Museum is extremely popular, hosting special exhibits that explore the impact of this historic event. Whether or not you believe in the conspiracy theories, the museum is a fascinating place to spend an hour or two.

Before leaving Dallas, you simply must take a closer look at its incredible skyline. The historic Reunion Tower is one of the city’s most recognisable landmarks, and its 470-foot-high GeO-Deck offers 360-degree panoramic views that will take your breath away. With a selection of dining, cocktails and private parties also on offer, the view is just the start.

Whether you are staying for a day, or a week, or even a month, Dallas promises to provide you with plenty of big experiences.

Stay Alfred - Dallas

Our accommodation provider of choice when staying in Dallas is Stay Alfred, offering short or long-term stays right in the downtown core. Find out more at www.stayalfred.com.

Destination Chicago: Winter in the Windy City

As the third most populous city in the United States, Chicago is an international hub for finance, culture, commerce, industry, technology, telecommunications, and transportation. Known around the world as The Windy City, Chicago is located on the shores of Lake Michigan, one of the area’s five Great Lakes.

Chicago’s O’Hare airport is one of the busiest in the world, offering non-stop flights to 218 destinations in North and South America, Europe, Africa, Asia and Oceania. The Windy City is also known as the railroad capital of the US, with more than 1,300 trains carrying freight and passengers going in and out of the city each day.

Chicago boasts one of the world’s largest and most diversified economies, and is a key national player in a variety of sectors. Employing in excess of four million people, and generating an annual Gross Regional Product of over $609 billion, the city is home to more than 400 major corporate headquarters, 36 of which are in the Fortune 500.

The city’s McCormick Place Convention Center on the shores of Lake Michigan is the biggest of its kind in the United States. Comprised of four state-of-the-art buildings, the centre offers 2.6 million square feet of exhibit halls, as well as two four-star hotels, the Hyatt Regency McCormick Place and the Marriott Marquis Chicago.

In 2012, the city’s Mayor launched a new tourism organisation called Choose Chicago, with the aim of restructuring all tourism sales and marketing activities under a single agency with clear objectives. In 2018, Chicago tourism saw an all-time high of over 57 million visitors, making it second only to New York City as the most-visited city in the nation.

Chicago is well known for the architectural boom that rose out of the Great Chicago Fire in 1871, helping usher in the skyscraper era. The city’s Willis Tower, formerly Sears Tower, is the second tallest building in the Western Hemisphere. The tower’s skydeck on the 103rd floor is open to the public, providing spectacular views that span four states.

The Chicago Blackhawks, one of the original six NHL teams, play at Chicago’s United Center

A highlight of any Chicago visit is a boat tour down the river. Wendella boats is Chicago’s original architecture tour, offering a range of distinctive narrated tours, all focused on the city’s rich architectural heritage and history, including a lake and river tour, sunset cruise, and summer fireworks tour.

The range of exciting tours around Chicago doesn’t stop there. Head to East Pearson Street in the city’s Magnificent Mile district and board the Chicago Crime Tours bus to escape into Chicago’s underworld on a crime and mob tour, exploring the lives of criminals such as Al Capone and John Dillinger, and visiting historic landmarks like the Biograph Theatre.

Sports are something of a big deal in Chicago. In the North Side community area of Lakeview is world-famous Wrigley Field, home to the Chicago Cubs and the second oldest baseball park in the Major Leagues. The city also homes the Cubs’ fierce rivals, Chicago White Sox, who play in southern area of Park Boulevard at Guaranteed Rate Field.

Equally important in the city’s sporting calendar is ice hockey, which sees the Chicago Blackhawks, one of the original six NHL teams, play at nearby United Center. The arena is also home to basketball team Chicago Bulls, which enjoyed a period of sustained success in the 1990s with world-famous players such as Hall of Famer Michael Jordan.

Chicago has long been at the forefront of American economic, cultural and political history, with a standing as one of the most dominant Midwest metropolises.

Stay Alfred

Our accommodation provider of choice when staying in Chicago is Stay Alfred, offering short or long-term stays right in the downtown core. Find out more at www.stayalfred.com.

Charting a course through political and economic headwinds

Companies are now operating in an environment of increased uncertainty on the global, domestic and political stage.  Now, more than ever, companies have to be exceptionally engaged to plot a steady course and manage their political and economic risk.  

As 2019 gathers pace, the outlook is for greater uncertainty as state and federal political leaders grapple with volatile and impatient voters. Understanding these changes and addressing the impacts that they have will be a business imperative over the medium term for many businesses in Australia.

National political disquiet

Currently, the Australian electorate, like the business community, is restless, yearning for a return to stability but also change for the future.  This climate has concerns about state and federal governments of any political colour. Voters have recently demonstrated their preparedness to use the ballot box to punish and even change governments, especially where they believe their elected representatives are not meeting expectations. Dissatisfied with the lack of listening to or acting on concerns, the failure to demonstrate competence and the failure to implement their mandate – voters are making their views heard through the ballot box. The rise of micro parties and independents has also provided a vehicle for voters to demonstrate their dissatisfaction. The current Coalition Government was elected in 2013, in part, on the promise of a return to stable government after the tumult of the Rudd and Gillard governments. Voters were assured that “the adults would once again be in charge”.  However, in 2019, leadership changes and repeated public displays of disunity have created increased public dissatisfaction for the government and opinion polling shows public displeasure with the leadership in Canberra. While the Coalition can claim success on implementing its key long-term election commitments on the Economy, Tax Reform, Debt Reduction and National Security, polling would suggest that many voters believe the Government is not listening to their current concerns and they are looking at voting for a change.

Budget challenges

Contributing to the Government’s troubles has been its struggle to find a rhythm in its economic narrative during its two terms. Traditionally, first budgets for new governments can be tough and used to set a solid economic foundation. However, a hostile Senate to many of the Government’s changes stalled some budget reform measures and there were questions about a true mandate for many measures from the Coalition. In addition, the public vented its anger at unpopular measures, the Government not able to effectively bank any of the economic dividends and suffered much from the polling and credibility fallout. As we move into 2019, we have had a total of three Coalition Prime Ministers (Abbott, Turnbull, Morrison) but have also had three different Treasurers with each change (Hockey, Morrison and Frydenberg). These changes meant that the Coalition lost focus and ground in the area of its core Economic narrative and focus. The Government now faces a very difficult task: does it continue driving economic reform, deliver the long-promised surplus or does it pivot to a more popular budget to improve its standing with voters? It is a challenge to achieve all three in an election year. Many commentators are unsure that the electorate will reward the government for its economic management.  A predicted Labor win, will likely see another mini Shorten/Bowen Federal Budget before the end of the year. A new Labor government would then bring in the usual May 2 budget in 2020. This would equate to three Federal Budgets in 14 months. This uncertainty about the overall future economic direction of the country is also impacting business and consumer confidence.

State lessons

It is not just instability at the federal level that is feeding voter discontent and business uncertainty. At a state and territory level, voters have changed a number of governments over the past few years while others have internal challenges and look unstable. Both Victoria and Queensland have had one term governments. In the Northern Territory there have been attempted and sometimes successful leadership coups, frequent ministry reshuffles and members switching political allegiances from one party to another. Tasmania has also faced resignations and instability.

The recent re-election of the Berejiklian Coalition government in NSW does appear to go against this trend. On a first and optimistic glance, the electorate appears to have rewarded a stable and unified administration with a strong policy and economic track record. A deeper look, however, reveals that New South Wales has also overcome a change in Premier, Deputy Premier and Treasurer three times each in the current Coalition government. Despite its success, it has only just won the election and govern.  It will need the support of a number of cross benchers in both the lower house and the upper house to ensure stability over their next term. The sheer volume of micro parties and independents in the new NSW Parliament, mostly at the expense of the National Party, foreshadows challenges ahead.

Mitigating the risk for business

So what does this mean for business? CEOs depend on stability, both within their organisation, the sectors they operate in and the wider economic and political environments in which they operate.  Many are facing difficult challenges of their own and the uncertain political climate is adding to their concerns.

This year at the annual World Economic Forum in Davos Switzerland, PwC’s 2018 Annual Global CEO survey results were released (www.pwc.com/gx/en/ceo-agenda/ceosurvey/2019).  This survey is carried out each year by PwC and gives a useful indicator of CEO thinking around the globe.  The results both on a global level and also on the Australia sub-set are quite interesting, especially looking at the variations and trends year to year.

Concerns on growth: The PwC results the previous year saw a record jump in optimism regarding global growth prospects in 2018, and this exuberance translated across most of the regions. However, this year, there was a sharp adjustment and a big jump in pessimism for 2019, with nearly 30% of all CEOs projecting a decline in global economic growth, up from a small 5% last year. This is a record shift. CEOs also reported a significant decrease in confidence in their own organisations’ revenue prospects over the short (12-month) and medium (three-year) term. If CEOs’ confidence continues to be a leading indicator, which it has previously, global economic growth will likely slowdown in 2019.

Political & policy uncertainty: Across the global survey results there was a consistent theme of bunkering down as CEOs adapt to the government responses to the strong nationalist and populist sentiment across the globe. The threats the CEOs view as most concerning are less existential (e.g. terrorism, climate change) and more related to the ease of doing business in the markets where they operate (e.g. overregulation, policy uncertainty, availability of key skills, trade conflicts etc).

In the 2019 survey business leaders considered that Over-regulation (35%) and Policy Uncertainty (35%) were the greatest threats to business growth prospects.  Also rating highly were Geopolitical uncertainty (30%), Protectionism (30%) and Populism (28%). Issues like Terrorism (13%) and Climate Change (19%) have decreased considerably in the minds of the CEOs.

Not surprising for many is that the Australian CEOs are more concerned than their global counterparts on the same issues especially Protectionism (62%) and Populism (63%). They also consider the main threats to growth in Australia to be: Policy Uncertainty (89%) and Over-reregulation (84%) and Geopolitical uncertainty (73%).  These are differences of more than 30% in some cases.

A number of companies’ have tried to adapt to this tide of change. Back in 2015, PwC’s Annual Global CEO survey highlighted that 85 percent of CEOs agreed that government and regulators have some or a significant influence their business, with only 14 percent saying that they had little or no influence. Unsurprisingly, 67 percent of CEOs said they are making some or major changes to strengthen their engagement with government and regulators.

Mitigating the downturn

Clearly, the current economic and political climate requires a renewed focus, increased communication and stronger engagement. So, with the current political and economic instability in Australia, what should smart businesses be looking to do in 2019 to mitigate their political and policy risks?

1) Firstly, business needs to closely monitor what both state and federal governments are doing, especially with reforms and budget changes. Tracking potential changes is crucial to being able to engage in a timely and pre-emptive manner and mitigate any changes. In turbulent political times, government tends to make decisions in a shorter time frame; early warning and detection systems are critical.

2) Secondly, despite the uncertainty, business should strengthen their direct engagement with the politicians and their advisers, especially around important areas of interest and concern. This should include the cross-bench parities where appropriate. Educating key political leaders on business and the impacts of policy change is the best way to protect policy stability for business.

3) Thirdly, in order to further mitigate risk of sudden political changes, companies should also spend more time with its regulators and the key departments that impact its external environment.  In times of turbulent political leadership, the bureaucracy plays an even more important role. Especially in areas where there is limited consultation with business, the public service can advise elected decision makers of some of the implications and downstream effects of policy change.

4) Finally, and probably most importantly, what is needed internally within businesses is a change in mindset, increased resourcing, and senior leadership focus to ensure success.  To many companies, government is one of their most important shapers of their business environment. They need to be treated as such.  While companies can rely some practical steps through industry associations, chambers of commerce, forward thinking companies also need direct advocacy and engagement on key policy areas or issues.

Now more than ever, business needs to be vigilant and engaged as it charts its course through the current political and economic headwinds.

Nick Campbell is the Chair of the Nexus APAC Group. He has worked across the private sector and government on Strategy and Public Affairs. Find out more by visiting www.nexusapac.com.au

 

The path to a preventative mental health program in the law enforcement environment

The Australian Federal Police Association (AFPA) represents the professional, industrial and social interest of the Australian Federal Police (AFP) and law enforcement employees across a range of agencies.  

As an autonomous sub-branch of the Police Federal of Australia (PFA), the AFPA is the only branch which proudly supports over 4,000 members drawn from police officers and civilian employees.

With a small workforce the AFPA provides a lot of support to its members, especially in the ever-expanding welfare environment.

AFPA President Angela Smith said that the mental and physical welfare of the AFPA members and AFP employees is an ever-increasing role and it’s a role that the AFPA has had to adopt and learn rather quickly.

“Traditionally the role of the AFPA, like most associations or unions, has been in the industrial relations environment, and while still an important aspect of our business, we’ve had to expand our horizons and become involved in the welfare environment.”

“Mental Health issues of employees are becoming a serious issue for management for all police services across Australia, and most likely, across the world. On the surface, there is a lot of talk and campaigning about mental health awareness, but under that, there isn’t an array of programs for members to participate in to receive the support they require from the law enforcement organisations. It seems to be this space that the associations and unions are having to play a role in.”

“A large part of the problem comes down to funding. Police forces and services have limited funding, and when financial pressures descend on the organisations, it’s the corporate areas and usually welfare programs that are first cut to find funding for operational activities.”

“The AFPA really ramped up its role in welfare role over the past two years. Four AFP police officers committed suicide within the workplace over a two-year span, and we were seeing an increase in the number of members approaching the AFPA for assistance in the mental health welfare environment.”

“The AFPA isn’t a huge union and we have limited funding available to us, but with the four workplace suicides and increased reporting we knew that something had to change, and we had to break the cycle.”

“As part of this change, we knew that we needed preventative mental health programs. The AFP had started some of its own initiatives, but we knew that they weren’t as successful as they could be. This was down to a number of factors, but ultimately the biggest thing we learnt was that police officers don’t want to talk to people within in the organisation out of fear of repercussions or outcomes that may hinder their careers.”

“We also found that police officers want to talk to people with experience in the law enforcement environment. Policing is a unique environment, you can’t replicate it and you can’t pretend to have working in it. It really is one of those environments where you have to ‘walk the talk’.”

“With all of this in mind, the AFPA commenced talking with an organisation called OzHelp. OzHelp delivers evidence-based suicide prevention, physical and mental health training and support programs to thousands of people within multiple industries across Australia.”

“We knew that engaging with OzHelp was a big step forward, but ultimately we knew that a program as significant and far reaching as what we wanted to achieve would cost money. The AFPA isn’t a huge associate or union like the CFMEU or CPSU that both easily have over 100,000 members each, we have just over 4,000 members with a limited revenue stream, but we knew that we needed to find the finance to fund the program and start assisting AFP employees and AFPA members.”

“We were lucky that we have a good relationship with the Shadow Minister for Justice Clare O’Neil MP. We were able to pitch the idea for an external mental health program to her and she saw the positives that this would bring to the AFP.”

“It was only a few weeks ago, when Shadow Minister Clare O’Neil MP made the game changing announcement, committing $5 million to a dedicated mental health program to support frontline AFP members if the Australian Labor Party can win Government at the upcoming election.”

“To receive that announcement was fantastic because I know just how much the AFPA members and AFP employees need an independent, outside the organisation, preventative mental health program. People are just holding on, struggling day in and day out and fearful of self-reporting and not seeking help they need. Fingers crossed, we can give them this option in the future.”

“The Australian Labor Party commitment has given us hope that one day, the ‘Aware and Alive’ mental health program, as we have named it, will become a reality.”

“This journey and being involved in a number of mental health welfare issues within my membership has re-enforced to me that your workforce and people really are the backbone of your business, organisation or public service department, and that as a member of management and a workplace leader, we need to look after them.”

“The costs to businesses and organisation when your workforce is injured, physically or mentally is enormous and you probably don’t know the toll until someone falls over. I really am urging the executive and leadership of any businesses or organisation to invest money and time into the mental health of their staff.”

“It’s important to give your workforce options, people aren’t sheep, they are individuals that need preventative, ongoing programs that offer a variety of different pathways. What works for one person may not work for another, and importantly, rebuilding someone’s mental health takes time. You can’t nor should you expect someone to bounce back immediately. Compassion and understand in the workplace are critical to rehabilitation.

Angela Smith is the President of the Australian Federal Police Association (AFPA), www.afpa.org.au.

 

Financial advice – who needs it?

Wouldn’t it be great if you could manage your own money yourself over your entire lifetime? Wouldn’t it be great if you never needed anyone else’s help?

The answer to both of these questions is obviously yes. But the reality is that given the complexity of savings, investments and insurance, you are highly likely to need the help of a professional at some stage, particularly (but not exclusively) when nearing retirement.

Everyone’s financial situation, goals, needs and constraints are different. People also have different levels of financial literacy – some people have a great understanding of financial concepts and can manage their own money very well while others struggle for a variety of reasons, including a lack of time or even lack of interest. Complicating this is the fact that managing money can be complex. Superannuation, for example, is a political football. The rules around how much you can tax-effectively contribute and when and how you can access it frequently change as do the rules around qualifying for social security benefits. These complexities feed consumer confusion, distrust and stress which can profoundly impact lives in different ways. Financial advice from professional financial advisers helps people to navigate these complexities, providing them with solid financial plans, the foundations upon which both individual and family needs can be met.

The Banking Royal Commission

But there’s another problem, and it’s a big one. The Banking Royal Commission (the Royal Commission) has further undermined consumer trust in financial advice. In this way, in our opinion, it has done Australia a grave disservice – because, as already established, people need financial advice in order to navigate the complexities that have been created by successive Governments themselves. The Royal Commission did expose, as you might expect it to from its brief (an investigation into misconduct, not into conduct) some examples of poor financial adviser behaviour and poor outcomes for some financial advice clients. But there are currently around 28,000 financial advisers registered on the ASIC Financial Advice Register and therefore the vast majority were not found wanting by the Royal Commission.

At the height of the Royal Commission, we commissioned research, undertaken by CoreData, which looked into a number of financial advice issues.

What’s the value of advice?

The research, which resulted in our Value of Advice 2018 report, was based on a survey of 946 people, including those who did and those who did not receive financial advice, between 14 August 2018 and 3 October 2018. We asked people who did not seek advice why they didn’t, and the top three answers were:

  • “I can manage my own finances” – Nearly half (46.9 per cent ) don’t seek advice because they feel they can do it themselves
  • “It’s too expensive” – Almost a third (31.1 per cent) thought financial advice is too expensive
  • “I don’t think financial advisers are trustworthy enough” – Just over 1 in 10 (13.5 per cent ) felt they couldn’t trust a financial adviser

However, despite these misgivings, the vast majority of people who did not receive financial advice (71.1 per cent) said they would consider it. This is interesting because it suggests that they may be struggling without it, may realise the complexities of managing their own money could (perhaps as retirement approaches) become beyond them, or they may see, despite their misgivings that there is value in financial advice, or perhaps all three.

The other interesting finding was that people who receive advice reported feeling less stressed about money. In answer to the question: How often do you worry about money?, less than a quarter (23.5 per cent) said ‘at least weekly’ compared to almost half (47.2 per cent) of those without an adviser.

Advice in action

Financial advisers see the value of the work they do every day with their clients in the outcomes they are able to achieve for them. To help others understand this value, CoreData modelled three scenarios which reflect the financial circumstances of everyday Australians, as informed by our research and by Australian Bureau of Statistics (ABD) data. The scenarios were:

  • The Big Check-Up: A couple in their mid to late 50s, approaching retirement
  • Loss of a Partner: A widow in her early 40s, beneficiary of her late husband’s insurance policy
  • Upstarts: A couple in their early 30s, looking to get a head start in securing their financial future

A highly qualified and experienced financial adviser was then asked to provide the kind of ‘financial advice’ that might apply in each of those scenarios. Finally, a paraplanner working with the financial adviser modelled the three sets of scenarios using a financial advice software program to demonstrate likely outcomes, with and without financial advice.

The research and the scenarios demonstrated that there are three key benefits to financial advice – financial, emotional and behavioural – and they all play a vital role in improving financial outcomes and therefore quality of life.

Financial benefits

Financial advice leads to better financial outcomes. In a general sense, this could mean more income in retirement and/or lower interest payments on loans, lower tax bills, enhanced net wealth and the ability to face unexpected life events.

More specifically, in the case of our Big Check-Up couple, our scenario demonstrated that even a couple who were quite late to receive advice could be substantially better off as a result of that advice – potentially having 24 per cent more money in retirement and paying 35 per cent less tax over a lifetime than if they had not received advice.

Emotional benefits

What is less known is the emotional benefits of financial advice. A solid financial foundation provided by a good advice relationship leads to greater peace of mind and greater confidence in terms of being prepared for key life events, such as retirement.

Our research demonstrated the clear and significant emotional benefits emerging from the advice experience. Eight in 10 (82.7 per  cent) of advised clients said they are well or very well prepared for retirement compared to just a third (33 per cent) of people who do not receive advice. Most (79.4 per cent) advised clients also said that the financial advice relationship has given them greater peace of mind.

Our Loss of a Partner scenario demonstrated that our widow would be better off financially if she took advice, in that she would have twice as much money at retirement and 30 per cent more income over a lifetime than if she did not. But she would also have the support of an adviser at a time when she needed it most.

One of the less spoken about roles of advisers is the financial counselling and coaching they do with clients throughout life’s journey, including marriage breakdowns, births, deaths, retirement, redundancy and other significant events.

Behavioural benefits

Financial advice also helps people change their behaviours so that they take better control of their finances. This includes helping them to control their spending, manage debt and maintain good savings habits.

More than half (54.9 per cent) of the people surveyed who have advisers said they now save more as a result and 60 per cent said they are more prepared to handle sudden one-off costs. More than half (50.2 per cent) of these people said they could cover living expenses for six months or longer if they were suddenly unable to work whereas only around a quarter (26.2 per cent) of those who did not have a financial adviser said the same thing.

While the financial results modelled for the Upstarts showed that a young couple could have 27 per cent more wealth at age 61 and a better return on investment if they took financial advice, the behavioural impact on them would likely be just as important. It would help them to take control of their finances early on and adopt longer term structural habits that ultimately lead to better financial outcomes.

All in a day’s work

Still not clear on what financial advisers actually do? Here’s a snapshot.

  • Deliver a comprehensive financial plan tailored to the individual’s circumstances, financial and personal objectives
  • Track client progress towards goals and hold them accountable
  • Adjust financial plans and life insurance arrangements in line with changing needs, goals and lifestyle
  • Help clients improve their financial decision making and behaviours
  • Enhance client financial awareness and literacy
  • Review and adjust the client’s risk profile to ensure asset allocation remains appropriate to changing needs and objectives
  • Review investment asset allocation and performance and bring asset allocation back in line with target asset allocation and strategy
  • Review and update beneficiary nominations and asset ownership structures to ensure a client’s estate intentions are appropriately adhered to
  • Identify other issues such as the need to review wills, powers of attorney, tax planning, aged care

Financial advisers not only develop client specific financial plans that help their clients grow, manage and protect their wealth, they also help clients understand the discipline of maintaining, reviewing and sticking to that plan. And importantly, financial advisers help clients by holding them accountable for their own financial future.

Philip Kewin is CEO of The Association of Financial Advisers (AFA), www.afa.asn.au.

The necessity for your General Counsel to have a “seat at the table”

In early February, the Hayne Royal Commission delivered its report on misconduct within Australia’s financial sector. The Report named corporate boards of directors and senior management as the parties responsible for ethical lapses and business misconduct, and noted the interplay between the two as the crucial weakness point.

To overcome organisational culture failings, the Report stated the board must interrogate management, and senior management must provide the right information to the board to facilitate this accountability.   Though the terms of reference for the Hayne Royal Commission were focused on the Australian financial sector, it’s important to also consider the relevance of the renewed focus on organisational governance and oversight to the broader corporate sector.

A number of the eight recently-released Australian Stock Exchange Corporate Governance Council (ASX CGC) Corporate Governance Principles and Recommendations align with Hayne’s recommendations, including an obligation on companies to instill a culture of acting lawfully, ethically and responsibly; recognise and manage risk; and lay solid foundations for management and oversight.  The Australian Institute of Company Directors also agrees that “Ethical decision making sits at the heart of director practice.  Boards must set the tone that misconduct is dealt with swiftly and visibly”.

When it comes to “senior management,” there are many accountable C-suite parties. Among them are the chief executive officer (CEO), chief financial officer (CFO), and the leader of the corporate law department: the chief legal officer (CLO) or general counsel (GC).

As boards look to ensure compliance and companies look to assure a strong, ethical corporate culture, the CLO or GC has a crucial role. Within the GC position, ethics, compliance, the law, and risk all come together. As such, he or she is uniquely qualified to spot risks before they become true misconduct – helping companies to maintain a strong ethical foundation.

GC as a board ally

In all contexts, lawyers advise clients. For the GC, this client is the company. It’s not one department, it’s not a particular officer or employee, and it’s certainly not the CEO. His or her fiduciary duty is to the company. A director’s mandate is the same. Their duty is to the company alone.

With these interests aligned, the GC is a crucial ally to the board. It is the GC who spots possible ethical quandaries before they happen, who advises the company on compliance, and who can ensure that risk is taken into consideration at every step of the way. In the Hayne Report’s recommended cycle of (1) the board challenging management and (2) management providing the necessary information to the board, we assert that a third step is ensuring the GC has clear, direct access to the CEO and to corporate directors.

Effectiveness in the GC role

To be effective – to spot issues and risks – and then to elevate their importance, the GC needs to be well-positioned. He or she must have the access needed to become aware of any potentially risk-fraught company plans, then have the ability to discuss the risks with key company decision makers.

First, he or she should report to the CEO. This way, there are no intermediaries blocking access to the company’s top leader. This reporting structure also sends the message to all employees and stakeholders that ethics and compliance are important to the company. The GC has the CEO’s ear on these matters.

Surprisingly, in Association of Corporate Counsel (ACC) research on this topic, we’ve tracked that just under eight in 10 companies worldwide use this reporting structure for their CLO. The 2019 ACC CLO Survey, which includes insights from more than 1,600 CLOs in 55 countries, revealed that only 78 percent of GCs enjoy a direct reporting relationship to the CEO. Among respondents from Australia and the Asia Pacific region, this figure drops slightly, to 75 percent. This means that only three out of every four companies follow the governance best practice of having the GC report to the CEO. One in four does not, opening itself up to possible blindsides when it comes to questions of compliance.

Second, the GC needs to have a strong relationship with the board of directors. This ensures alignment in the company’s prioritisation of ethics and compliance. These crucial issues are addressed at board meetings, so ACC also tracks whether the GC or CLO is present at meetings of the board of directors. Just over two-thirds (68 percent) of all GCs who responded to the 2019 ACC CLO Survey state that they regularly attend these meetings of the board of directors at which key ethical and compliance issues will be discussed.

Notably, ACC tracked a correlation between these two indicators of a GC’s effectiveness. A GC or CLO who reports directly to the CEO is much more likely to “almost always” attend board meetings versus those who do not report to the CEO (75 percent versus 46 percent).  In the case of the Hayne Royal Commission, which points out the disconnect between the information the board knows and what the board should know when it comes to risk, it is unwise not to have the GC or CLO present at the board meetings.

We tracked similar figures when measuring how the CLO is viewed by fellow members of the C-suite. While 76 percent of all CLOs who report to the CEO stated that they are “often sought by the executive team for input on business decisions,” only 48 percent who do not report to the CEO answered affirmatively. Similarly, 79 percent of CLOs who report directly to CEOs say they “frequently meet with business leaders to discuss operational issues and risk areas,” compared to 62 percent who do not enjoy a direct reporting line to the CEO. This drop off could very well be the difference between a crisis averted and a crisis exploding.

A “seat at the table”

It certainly makes sense. Those who report to the CEO have more influence within the organisation. A CLO who reports to the CEO will have a “seat at the table” when it comes to executive team debates, boardroom discussions, and other events that shape a company’s strategic direction. With this ability to communicate risk to the CEO, C-level peers, and the board, the CLO also gives these leaders the information they need: a better understanding of how risk will affect the company. This is exactly what the Hayne Report said needs to happen more often. As written in the Report, “the evidence before the Commission showed that too often, boards did not get the right information about emerging non-financial risks … and did not do enough with the information they had to oversee and challenge management’s approach to these risks.”

With a more open dialogue, which is permitted through open access to the CEO, the GC will be able to provide better strategic advice, helping the company to mitigate risk and make strong business decisions that put ethics and compliance first.

Even outside of Australia and beyond the shadow of the Hayne Royal Commission, the need for a “seat at the table” is palpable. In Europe, the Danske Bank money laundering scandal may well have been prevented if the GC had the ability to communicate ethical lapses directly to the CEO. In 2012, Danske Bank’s GC had his reporting line redirected from the CEO to the CFO. In 2014, Danske in-house lawyers urged an internal investigation into whistleblowing investigations. Other senior executives overruled it from happening, so a full investigation never took place. Just a few short years later, the scandal erupted. We will never know what could have been prevented if the bank followed better governance practices. But the thwarted investigations alone demonstrate why putting roadblocks between the GC and the CEO is a bad idea.

The age of the CLO

Because so many business decisions today have legal considerations, most companies realise the importance of a well-positioned chief lawyer and design their corporate reporting structure accordingly. As we’ve seen with recent headlines, the entire health of an organisation depends on strong governance and ethical leadership. But on the other hand, with one in four CLOs in Australia and Asia Pacific stating that they do no report directly to the CEO, the potential for information to “slip through the cracks” is all too real. Without direct reporting lines to the CEO or the board, the risk for miscommunication – or lack of communication – creeps in. CLOs today have gained a stronger ability than ever before to shape the company’s future through contributing their analysis of risk, legal recommendations, and strategic business advice. But without the right governance in place, the law department loses its ability to serve as a crucial ally to the board. With best practices enacted, directors and the GC can ensure the right tone from the top and a proactive approach to matters of ethics and compliance.

Tanya Khan is the Vice President and Managing Director of the Association of Corporate Counsel (ACC), www.acla.acc.com

The CEO Journey: Is it time to capture your legacy?

As a successful CEO, you can look back at your career journey and breathe a sigh of relief knowing that you “made it” – and now what probably matters to you most is staying active, healthy and spending precious time with your closest family and friends.

Throughout your career, you took the path of what I call a “hero’s journey” – reaching the pinnacle position of your career.

You faced down challenges along the way, that at times, seemed insurmountable — with the glimpse of defeat within your sights.

But you didn’t give up.

Through your relentless perseverance, you overcame those challenges, even with criticism from those around you… defeat turned into success, your confidence grew, and so did the development of your
hard-earned wisdom that you continue to carry within you today.

Your story of how you overcame those difficult challenges, through your personal mindset and strategies – is your core innate wisdom and your legacy – that needs to be captured for future generations to come.

Your life partner, your kids, your grandkids, your closest colleagues, many of them have been observers of you throughout your career…. but do they really know and understand, at a deep level, your trials and tribulations, the tough decisions you had to make, the sacrifices you made on their behalf and the inner strength you drew on to reach your coveted and admired position as a successful CEO?

That is a question that you must consider and address, to make sure your story is captured, memorialised and appreciated, so ultimately, your legacy lives beyond you.

What is the true value of capturing your legacy and your story, your defining moments, your struggles and ultimate successes – to pass on to your closest family and inner circle in a tangible and timeless way?

Priceless….

What is the point of reaching the top of the ladder of success, becoming financially affluent and maintaining a healthy lifestyle, but never capturing your legacy in a way that those closest to you, can respect and learn from your own “hero’s journey”.

To those who care about you, you are a hero…but without your legacy captured and presented to them in a timeless and crafted masterpiece, they will never truly appreciate your journey and defining moments that you endured and experienced throughout the life of your career.

At first your own legacy story may not feel worthy of being captured and shared because after all, you may say to yourself; “Who would really care about my story? It seems ordinary to me…”.

You may discover though, that your career journey and story are priceless to those who care about you the most: your life partner, your kids, your grandkids, your closest colleagues and those in your inner circle.


Your CEO journey of how you overcame your career challenges throughout the years is your core innate wisdom and your legacy that you carry quietly within you.

It’s important to recognise the immense value of crafting your legacy story for those who care about you, so they truly appreciate the sacrifices you made along the way.

The CEO Journey™ framework, as you see on this page, was created from my many years of experience working directly with and mentoring CEO’s from all over the world as they reached their coveted positions.

There are certain innate phases that most CEO’s experience in their careers, that can be identified as milestones, before entering the next phase of their career – on their way to the top.

The reason why only a select few make it to the top of their organisations, is because the majority of aspiring CEOs do not have the same level of resilience, courage and self-reflection that you have – often, preventing them from achieving their ultimate goal.

This framework will re-awaken your appreciation of your own journey, and help you to begin to realise your story and legacy has immense value, not only to you, but to those who appreciate you the most.

You deserve a warm-hearted congratulations for making it through The CEO Journey™. Once you recognise and understand the phases of the journey and how they may relate to your personal career story, then you will know you have finally come full circle, ready to fully appreciate and value capturing your own legacy, for yourself and those in your inner circle.

Ari Galper is the Founder & CEO of CEO Legacy Books™, the world’s most sought after craftsman of CEO journey stories, expertly designed into a highly personal and bespoke luxury coffee table book, giving your inner circle of family, friends, colleagues and peers a full an in-depth appreciation of your story. To learn more, visit www.CEOLegacyBooks.com.au.