A week in the life of AFR Weekend’s Rooster

1474553460964In the rare absence of the AFR Weekend’s other back page column, The (flamboyant) Adventures of Joe Aston, here is a typical working week in the life of your humble Rooster.

This meandering trip through the lift wells and open floor plans of Sydney’s CBD is fuelled by mineral water and multiple flat white coffees and not champagne. Yes, life in the AFR chook yard is boring compared to Aston’s Adventure island with its fertile oasis called Rockpool Bar & Grill.

The Chook’s first CEO interview is with Ian Silk from the $100 billion industry fund, AustraliaSuper. During a phone chat, Silk sends a chilling warning that while the big super funds are getting bigger in Australia’s $1.2 trillion super sector the smaller funds are shrinking at a rapid rate.

Almost half of all super funds have net outflows. Even worse, one fifth of super funds have both negative cash flows and declining asset values.

That will ultimately spell disaster for the members trapped in these funds but don’t expect an end to the cultural issues (job saving strategies) that have stopped necessary super fund mergers from happening.

The next interview slot is a double bunger – the group CEO of PPS Insurance in South Africa, Mike Jackson and the CEO of the Australian arm Michael Pillemer.

The success of this enterprise is a reminder that profit sharing between life insurance policyholders is not only mutually beneficial but in high demand among professionals seeking bespoke coverage.

Of course, Australia once had several of the world’s largest mutual life companies, AMP Society and National Mutual Life. But AMP and NML were demutualised after a commission driven sales war flogging capital guaranteed insurance products that left them both with a mismatch of assets and liabilities.

Those wanting to see the legacy of the immense wealth and power of mutual life companies can look inside the marble lined walls of the old City Mutual Life Assurance Building in Sydney – otherwise known as Aston’s second home, Rockpool Bar & Grill.

Working lunch

A brisk working lunch at the Mint on Macquarie St with Rob Whitfield, who is NSW Treasury Secretary and former head of institutional banking at Westpac, provides a chance to catch up on Premier Mike Baird’s adoption of business principles in managing the public finances of NSW.

Whitfield has a staff of 550 in Treasury but his influence will soon by far wider when he joins the Public Service Commission Advisory Board which oversees 440,000 public servants.

Whitfield has big ideas about how to improve the management of the $73 billion NSW budget while improving services to taxpayers.

Tuesday’s highlight or should that be lowlight, was a conversation with Joe Hayes, from McGrathNicol, following the release of his administrator’s report into the collapse of electronics group Dick Smith. The Hayes analysis has the makings of a corporate finance thriller including a very messy ending with blood everywhere. The Hayes report to creditors owed $260 million is appropriately coloured black.

The abiding lesson from this collapse is not necessarily to avoid companies with Porsche 911-driving CEOs. It is to take notice of the short sellers and steer clear of strategies based on growth for growth’s sake.

Wednesday kicks off with an exclusive briefing from James Griffin at KPMG on the top 20 Twitter power list of Australian business leaders. Well done, to Telstra CEO Andy Penn, who is not hiding from the company’s chronic fixed line network problems.

It is a short walk across a foot bridge from KPMG’s new office in Barangaroo Tower 3 to Westpac’s HQ for coffee in the corner office of chief executive Brian Hartzer. It is fitting that Hartzer’s desk is overlooked by a striking painting from Arthur Boyd’s series on Ned Kelly, who robbed a Westpac (then Bank of NSW) branch in Jerilderie in 1879.

In the middle of Hartzer’s office is a white board with his detailed plans for making the bank “one of the world’s great service companies”. A key part of that strategy is implementing the service credo of the Ritz Carlton luxury hotels group.

Hartzer brought in specialists from the Ritz Carlton to teach senior managers at Westpac how to implement “the principles of empowerment and emotional connection to people and customers that underpin service leadership“.

One way this works is that bureaucratic rules are abandoned if two managers agree to do the right thing by a customer. It saves referring the decision upstairs for endorsement by a superior.

Turnaround situation

Friday’s working day starts with a background chat with Flexigroup chief executive and former rising star at Commonwealth Bank of Australia, Symon Brewis-Weston. He is in the middle of a difficult turnaround situation at a company that was once a market darling. He says at the moment he is making sure staff celebrate small victories.

Finally, there is a phone catch up with Jon Sutton, chief executive of Bank of Queensland who recently took his board of directors on a week long trip to Silicon Valley. They visited fintech start-ups, venture capitalists and established tech giants.

Sutton says the trip could result in BoQ partnering with a fintech that specialises in customer identification but he refuses to name the company for competitive reasons. He reckons the trip could shape BoQ’s future strategy.

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July 15, 2016
Australian Financial Review