The once proud and honoured Qantas brand has been damaged, and while the damage may be rectified, the Qantas Airways Board and senior executives need to tread carefully and with clear purpose. It was bad enough that the former Chief Executive Officer, Alan Joyce AC, left under the ever-darkening clouds of scandals involving lost baggage, phantom flights, high airfares, and illegal staff sackings. I would argue that the decision by Qantas to appoint Vanessa Hudson as CEO is now fatally flawed and may result in the airline struggling to regain the confidence of the Australian travelling public.
Bumping up a senior executive to the CEO role is only a good policy when there is no change required within the organisation, and when things are going along ‘swimmingly’. Alas, neither is the case here. Ms Hudson cannot claim ignorance of the problems and failures of the past few years, because to do so would indicate incompetence in her CFO and senior executive roles. She was right there in the inner sanctum. She also cannot claim knowledge of these issues, as this would make her either complicit in the decision-making, or ineffective in influencing change as a senior executive. Furthermore, the Qantas Board, who appointed her as CEO, is now so discredited that any decision and appointments should be nullified.
Does this mean she cannot resurrect the Qantas brand? Not at all. However, the task for anyone in her position would seem insurmountable. Following years of constant and growing criticism a deft hand will be required. An approach that ‘smacks’ of rhetoric will not work, and the Australian public has become more skilful in identifying tokenism in the wake of numerous State and Federal government’s hyperbole. Her recent media appearance was straight out of the management 101 textbook. The whole event seemed fake and manufactured and may not be sufficient to reassure Australians that the culture of Qantas will change, or that she is the right person to bring about the change necessary.
I know how difficult this process can be. I was recruited to the role of CEO to bring about change in an organisation that had recorded substantial losses for consecutive years and had an extremely poor internal culture. The organisation relied on its reputation for survival and that was not going to work. There was competition from within the organisation for the CEO position and it took enormous bravery and resilience for the Board Chair and the Board itself to support my appointment. I am aware that, as is often the case, inside the boardroom the decision to appoint me was not unanimous. Fortunately, it was unified publicly and as a member organisation that was vitally important. Rarely do the people whom an organisation serves understand what is going on behind the scenes.
Once in the role, the true decay became evident and one of my first tasks was to evaluate the organisational structure, and in particular the senior management team. This necessitated the removal of senior personnel, and a complete restructure of the organisation including the creation of new positions. Even then the culture was not instantly repaired, and I became aware of embedded issues such as largesse, a sense of entitlement, power struggles, and unacceptable practices bordering on criminality. Further change was required. Further changes were made.
Had it not been for the determination of the Board to appoint an external person, rather than make the easy decision to appoint from within, I have no doubt the rancid culture would have continued. I confidently say that with knowledge of matters I cannot and should not disclose.
Qantas seems to have forgotten the legacy that comes with their brand. My position as CEO was quite different to that of the Qantas role as I did not have shareholders to contend with. I did however have a large membership base, and that can be just as challenging when you come from outside the vocational area of a membership organisation. The Qantas shareholders would have been very happy with the profits and dividends over many years. The customers were not so pleased and this resulted in shareholders being hurt financially.
Keeping shareholders and customers equally satisfied requires a deft hand. Shareholders care about profits and the reputation of the company. And rightfully so. Customers are more concerned with reliability, safety, service, and pricing. It seems that over time, Qantas focused too much on profits to the detriment of the customer. That can be the only explanation for the position Qantas finds itself in today. Ms Hudson has said so herself in her stage-managed apology to travellers.
There is a balancing act that Qantas seems to have forgotten. Undoubtedly profits are good news for shareholders. However, the loss of reputation, and the resultant loss of patronage (read income), means that the only way to maintain profits is to cut costs. This can be done transparently with sound communication, or it can be done by tinkering around the fringes of sound corporate practice. How does an organisation forget that if your clients (travellers) are happy and confident, the revenue flows? That was the history of Qantas that the organisation seems to have forgotten.
The third group that is often overlooked in these decisions are the grass-roots employees. In my case, I could feel the collective breath-holding within the organisation as I started as the unknown CEO with a clear agenda for change. How pleasing it was to finally see the vast majority of my staff begin to breathe again and grow in confidence when positive changes were made. They felt secure and valued, and their work environment improved. But that took months not weeks, if not years. On each occasion that a person is moved on, the remainder of the staff wonder if they are next, waiting for the second shoe to drop. They worry about their futures, and it takes a team-effort from the senior management to reassure them.
The announcement of a proposed $20M+ ‘golden handshake’ for Alan Joyce must have rankled the Qantas workers; it certainly did not go unnoticed by the travelling public. To put it in context, the original proposed payout to Mr Joyce amounts to more than four times what the average worker would hope to earn in an entire lifetime of work. These large numbers are thrown around by the media and rarely scrutinised. I doubt the average member of the public does the calculation as to what that sort of money means in comparison to their income; they just know it is a lot. The federal government certainly would not quibble about that payment, as they would be likely to receive nearly half of it in tax. The shareholders would have compared the proposed payout figure to the billions of dollars in profit Qantas has made year upon year and probably considered it was acceptable. It is known now that the Qantas Board is re-considering its position on the payout. Maybe too little, too late. Think about it. More than four times what an average Australian work will earn in their entire lifetime.
So, getting back to Ms Hudson. Can she turn things around? There is no doubt that she could, however I question whether her position is now tenable given the level of scrutiny she will face. The culture and business model will need to change substantially and quickly. This is a culture in which Ms Hudson held a senior position for decades; a culture in which she was entrenched. How often do we hear organisations and governments say they will conduct a review and change things, AFTER the proverbial hits the fan? It is the responsibility of boards and senior executives (and governments) to regularly monitor their environment and make changes BEFORE they need to go public and make apologies and promises. All too often they fail.
There are a number of hurdles for Ms Hudson to clear in her first year. She seems to be following the ‘The First 100 Days’ formula and no doubt the public relations expense column in the Qantas Airways accounts will need more space. Then there is the nearly 20% fall in the Qantas share price over the past six months (the largest hit of 14% coming in the last month). There is also the matter of the 1,700 workers illegally sacked with a potential payout of hundreds of millions of dollars.
What does she have going in her favour? First and foremost, the people of Australia want Qantas to be successful and they want their pride in the airline restored. Australians identify with the ‘flying kangaroo’ brand. As glib as it may sound Australians were proud of the reference to Qantas in the movie Rain Man. This is an organisation that people will support, if, and only if, their faith can be restored.
Ms Hudson has inherited a basket-case and may yet be another female to tumble over the ‘glass cliff’ following an appointment during a crisis when the risk of failure is at its highest. Chairman Richard Goyder does not seem to be in sync with Ms Hudson with his own media statement focusing more on justifying his decisions rather than standing with Ms Hudson and accepting the failures. This does not bode well for Ms Hudson. Arguably both their positions are on shaky grounds. As I write this the Qantas pilots are calling for Mr Goyder to stand down. This pressure can only increase.
While the current board and Chair remain, it is unlikely that Ms Hudson will be publicly removed. That is not to say the backroom chatter will stop at board level, particularly if the shareholders get their words heard at the November AGM. She may very well fall on her own sword, albeit with a subtle shove and an undisclosed incentive. Unfortunately for her, the general public do not see her appointment as change; they see it as more of the same.
The task of restoring faith in our national airline, in rebuilding trust with workers and customers alike, in maintaining positive outcomes for shareholders, and in repairing the brand will be a challenge regardless of who undertakes it. It is hard to see how this change can be brought about without a substantial restructure of the company, a regenerated board, and the willingness to get rid of some of those who were the closest to Mr Joyce and supported his actions. Ms Hudson was one of those people.
Gil King GAICD GradDipCrim BA PolStu DipBlgSurv is a former CEO and Victoria Police Detective, www.linkedin.com/in/gil-king-03698b21.