GERRY HARVEY AND THE UNRETIRED WORKFORCE - Mercer
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EDITION TWO
STORIES TOLD DIFFERENTLY
GERRY HARVEY AND THE
UNRETIRED WORKFORCE
WORKPLACE CHANGING OF HUMANS
WELLBEING THE GUARD VS MACHINES
How top employers Managing unexpected CEO AI and big data, changing
attract and retain talent departures amid a crisis the nature of investing
06 14
WELCOME TO THIS EDITION OF FIRESIDE
As the year winds down for some, the prospect of legislative change and new
prudential standards will continue to preoccupy the business and finance sector.
Preparations are being made to meet new reporting requirements and deadlines, from
Putting Members’ Interests First and the member outcomes test through to modern
slavery and new remuneration requirements.
Indeed, change is a common theme in this edition of Fireside, highlighted by our cover
story on the growing urgency for organisations to address the next pressing workplace
issue – age diversity. While millennials, gender and cultural diversity have garnered
recent attention, experts agree there’s a need to focus on managing our rapidly ageing
workforce. It’s time to reassess our attitudes to retirement, as exemplified by retail giant
Gerry Harvey, who, like many of his business contemporaries, is showing no signs of
slowing down.
Managing change at the top is the focus of another of our stories, exploring how organisa-
tions should deal with CEO succession in the wake of scandal or an unexpected departure.
Lastly, thank you to all those who provided such positive feedback on our July launch
edition. We hope you enjoy this edition just as much and we look forward to our ongo-
ing partnership with you as we navigate change together.
Jo-Anne Bloch
Head of Industry & Public Sector Funds
Mercer Australia
2 | FIRESIDE
24 26
04 LOOKING FORWARD 24 VALUE IN VIRTUE
CONTENTS
The clock is ticking on three big issues Start-up super funds focusing on values
facing businesses are gaining traction
06 COVER STORY 26 Q&A
Our ageing labour force is shaping Taxi driving proved pivotal for Crescent
the next diversity frontier Wealth creator Talal Yassine
14 WORKPLACE WELLBEING
Two employers reveal what works
in today’s job market
18 HUMANS VS MACHINES
In Edition One of Fireside, the article ‘Artificial
How AI and big data is changing Intelligence powers workforce at Woodside’
the nature of investing contained factual inaccuracies which have
been corrected in the online edition available
20 CEOS IN CRISIS at Mercer.com.au/Fireside. We apologise for
Best practice for boards dealing with the errors, please refer to the website for the
unexpected departures at the top updated version.
COVER IMAGE: Gerry Harvey PHOTO CREDIT: Nic Walker Mercer.com.au/Fireside
FIRESIDE Magazine is published by Mercer (“Publisher”). All rights reserved. Copyright is reserved throughout. While the Publisher has taken all reasonable pre-
cautions and effort to ensure the accuracy of material contained in the magazine at the time of publishing, no responsibility or liability for any loss or damage will
be assumed by the Publisher or its employees.
3
LOOKING
FORWARD
As the year winds down, there will be
little rest for the business and finance
sectors as they prepare for a range of
new legislative and prudential standards
with deadlines in early 2020.
SPOTLIGHT businesses. However, given the
complexity of reporting requirements
ON SLAVERY and the looming deadline for
January 2020 marks a year since statements to be lodged by
the introduction of the Modern December 2020, businesses should
Slavery Act 2018, requiring large be well advanced with assessing
organisations to publish an annual and responding to risks. This is
statement of actions taken to particularly true for super funds,
address modern slavery in their with the added complexity of having
operations and supply chains, and internally and externally-managed
the entities they own or control. global investment portfolios in scope.
The Act signals that Parliament will While the new laws will present
not tolerate Australian businesses organisations with challenges,
benefiting from modern slavery they should be viewed as an
and has drawn a line in the opportunity to demonstrate
sand: organisations can conduct leadership and best practice.
their business activities and Although there are no statutory
invest in domestic and foreign penalties for non-compliance,
markets, but not at any cost. ignoring the laws or applying
them in a disingenuous manner
Despite this, it appears the legislative can result in reputational damage
newness and modern slavery’s and breaches of superannuation
unfortunate invisibility has seen the and other laws, exposing trustees
issue fly under the radar for many and directors to legal action.
4 | FIRESIDE
NEW LAWS SUPER FUNDS
BEARing DOWN ON REPORT
With the Government making noises Changes keep coming for the superannuation
of the imminent implementation of the sector, with funds now subject to an added
Hayne recommendations, it is only a layer of scrutiny after APRA released changes
matter of time until the Banking Executive to its prudential standard (SPS 515) relating to
Accountability Regime (BEAR) is extended strategic planning and member outcomes.
across the full financial services sector.
The changes align the standard with the
The significance of rewriting executive annual outcomes assessment requirement
remuneration frameworks and mapping legislated in April 2019, and raise the bar
executive accountabilities should not for the management of super funds.
be underestimated, and insurance
The requirements go further than the
and super funds should already be
legislated annual outcomes assessment,
planning to ensure compliance.
with APRA outlining how trustees show that
Although BEAR came into effect for banks members’ financial interests are central
last year, they too could be required to operational decisions by conducting
to reset remuneration frameworks an APRA-mandated annual business
to comply with proposed changes performance review. This includes comparing
to APRA’s prudential standards. member outcomes achieved for different
cohorts of members against objective
The proposed adjustments – primarily
internal and external benchmarks. The
capping financial metrics used to measure
results of the annual business performance
variable pay, extending deferral periods
review must be used by trustees to make
out to seven years, and a provision for
improvements to their business operations.
clawbacks of vested remuneration – will
require a sophisticated approach to As of 1 January 2020, trustees must have
compete with other industries to retain and reviewed their strategic objectives and
attract talent, both locally and globally. business plans to meet the requirements
of SPS 515, and have established policies
The ramifications of BEAR are also likely
addressing new criteria relating to
to ripple through investors, particularly
annual business performance reviews,
institutional investors and proxy advisors,
expenditure management, and member
who may prioritise short-term returns
outcome assessments. Trustees will need
over long-term organisational objectives.
to have given careful consideration about
As such, financial institutions should
how their outcomes assessments will be
be developing effective strategies to
designed and monitored, and how the
communicate new executive pay profiles
outcomes achieved – or not achieved –
to minimise the risk that shareholders
should influence their business plan. ■
will vote down remuneration reports.
5
HOLD THE
GOLD WATCH
For the past decade, businesses have been
preoccupied with attracting millennials. Many are
suddenly left with a knowledge gap that can only
be filled by experienced workers past the traditional
age of retirement, writes Alison McClelland.
W hen MIT researcher David DeLong
wrote that NASA no longer had
the knowledge to send a person to the
boomers prepare to exit the building,
taking with them decades of “corporate
memory” that has helped to drive
moon, it should have been a wake-up productivity and build the bottom line.
call to CEOs and HR executives that the
“I think we have reached the tipping
working world was marching towards
point,” Salt said. “The mid-point of the
a veritable intellectual property cliff.
baby boom has passed, so you have
But more than a decade on, experts the weight of the generation on the
agree that corporations still have other side of the mountain, and the
a long way to go when it comes to back half pulls across very quickly.
future-proofing their business by
“There needs to be a whole program
capitalising on arguably their biggest
about knowledge transfer.”
asset – their ageing workers.
While millennials had long been the
Social demographer Bernard Salt
“bright shiny toy” for recruiters, Salt said
believes the next five years will prove
businesses had been lax in managing
crucial for businesses as a glut of baby
the other end of the age spectrum.
6 | FIRESIDE
SALT IS THE “POSTER
BOY” FOR “REIMAGINING”
A CAREER LATER IN LIFE,
STARTING HIS OWN
CONSULTANCY BUSINESS
TWO YEARS AGO
7
Photo credit: Robert Pearce.
Gerry Harvey and Harvey Norman CEO, Katie Page during the Harvey Norman Annual General Meeting, November 2004.
A 2018 survey of Australian HR Institute pressing or more important. No one mention attitudes – to better reflect
(AHRI) members appears to confirm the has really articulated it and put it cultural and demographic shifts
apparent disregard, with just eight per together in a narrative and given them that will see experienced workers
cent of organisations providing managers a pathway going forward,” Salt said. looking to extend career longevity.
with intergenerational management
As health and life expectancy “I think the market is ready to hear
training, and less than half having a
increase - 82.5 years currently a story around redefining what we
retirement-transition plan. And with just
and rising to 96 by 2055 – and used to call retirement, but what
a quarter of those surveyed capturing
the reality of economic pressures we now call the ‘lifestyle’ stage
corporate knowledge from exiting older
bite, the conventional school-work- of the life cycle,” Salt said.
workers, it was not surprising that 63 per
retirement model holds less appeal.
cent indicated such departures had led “Even the word ‘retire’ or ‘older
to a loss of key skills and knowledge. Salt said businesses should be open worker’ needs to be rethought. It’s not
to updating traditional employment retirement - it’s more lifestyle and being
“I think there are any number of
models and practices – not to fulfilled by this stage of your career.
issues that (businesses) see as more
8 | FIRESIDE
“I think that we will see, particularly
in knowledge workers and C-suiters,
is conjured by society directed at
baby boomers. Some of it is true… but “EVEN THE
that people will continue on in a
consultant capacity or as contractor
you can’t fairly use the odd example
to label an entire generation.”
WORD ‘RETIRE’ OR
or coach or director. Certainly in
While workplaces had made great ‘OLDER WORKER’
NEEDS TO BE
knowledge work, you are at the peak
strides in addressing gender and
of your knowledge and contacts and
ethnic diversity, Salt said age
influence, so why wouldn’t you want to
leverage that while there is demand?”
diversity should move to the top RETHOUGHT. IT’S
Salt is the “poster boy” for “reimagining”
of businesses’ checklists, starting
with reframing the language used NOT RETIREMENT
a career later in life, starting his own
consultancy business two years ago
to describe employee cohorts.
- IT’S MORE
after stepping down as a partner at
KPMG, which encourages partners to
“Why is it ‘younger worker’ or ‘older
worker’? Why is that relevant? You LIFESTYLE AND
retire between 58 to 60 years of age.
are a worker and should be measured
by the fact you are a contributor.”
BEING FULFILLED
“I’m 62 and working more or less as
Retail entrepreneur Gerry Harvey BY THIS STAGE OF
YOUR CAREER.”
hard as I was when 32 … I have no
is one of Australia’s highest profile
intention of not working although
examples of putting the theory into
I probably should slow down. But
practice. As chairman of Harvey Norman
if you are a knowledge worker
as I am, there is no reason why
Holdings, the 80-year-old has no plans Bernard Salt
to hand over the reins anytime soon.
you can’t continue to work.”
“My ambition is to be 90 and doing
Ageism might be one reason. The
everything I’m doing now,” Harvey said.
majority of complaints under the Age
“I lead the life of a 40-, 50-, 60-year-old.
Discrimination Act last year related
The only time I know I’m 80 is when I
to employment, and 27 per cent of
look in the mirror. So for me to retire at
Australian workers aged 50 years and quite a few over 70, (just) as
66 would have been bloody ridiculous.”
and over have experienced age long as they are performing on the
discrimination, according to a 2015 Not that he doesn’t have doubts sales floor. The 70-year-old can do
Australian Human Rights Commission sometimes: “I constantly ask myself just as good a job as the 30-year-
survey, with 33 per cent giving up as to whether I’ve lost it a bit. To old, and in many cases better, so
looking for work as a result. everyone around me, I say that if you we have no age discrimination.”
ever think I have lost it a bit, you tell
The 2018 AHRI survey appears to Harvey said the diversity of his 20,000
me. But I find I can hold my own in any
confirm the bias, with more than 68 per staff (14,000 based in Australia)
conversation as well as I ever could and
cent of respondents admitting they were reflected his unspoken inclusive attitude
haven’t dropped back on knowledge
reluctant to employ workers over the rather than any strategic work plan.
that I had when I was 30, 40 or 50.”
age of 50, with one in five respondents
“There is no age or colour or sex
citing a lack of technological skills Harvey said the continued work success
or religion conversation. It’s purely,
required as an obstacle to recruitment. and stamina of peers such as Rupert
can you do the job? It has never
Murdoch (88), Frank Lowy (89) and real-
“There are a lot of preconceptions been about your age and everyone
estate billionaire Harry Triguboff (86)
around older people not being as on in this joint knows that, so we don’t
was proof that age was just a number.
top of things,” Salt said. “They don’t have to tackle anything,” he said.
know what Pinterest is, or they don’t For Harvey, it’s always been
“I’ve had my best salesman at 19 years
know how to send an SMS, they can’t about ability not age.
of age and my best salesman at 79
attach documents, that they are always
“If you are doing a really good job, years of age – it makes zero difference.
asking their grandkids to do technical
no one wants you to retire,” he said. It’s all about the energy and enthusiasm
stuff. There is a whole narrative that
“We have plenty of people over 60 and the ability to communicate.”
9
Harvey said he was more than
happy to profit from a competitor’s
less-enlightened attitude.
“Say one of our opposition got rid of
a 75-year-old and they came in and
applied for a job here and they
were the best salesperson at that
place - I couldn’t put him or her on
quick enough. They might have got
rid of them because of age, but I
certainly wouldn’t. I can sell off the
floor as well as anyone, and I’m 80.”
Harvey, who rises at 6am and still goes
into the office every day – apart from
weekends, when he is working across
his other businesses – said ingrained
business and community attitudes to
retirement would take time to change,
but he was happy to lead by example.
“It’s a culture that has developed
over a very long period of time –
that you work and then you retire.
And if you want to, that’s fine, but
you shouldn’t have to,” he said.
Mercer Retirement Innovation
Leader Will Burkitt believes more
organisations should follow Harvey’s
lead and embrace an often ignored, Mercer Retirement Innovation Leader, Will Burkitt.
or misperceived, talent pool.
“Someone with 40 years’ working
experience has enormous insights and
skills that they bring to the workplace
that can be leveraged in ways that Intergenerational Report, almost “Our society as a whole needs to be
may be different in the future, perhaps a quarter of the population will be much more aware of the opportunities
in terms of new roles and through aged over 65 years by 2055, with and challenges. It is time to have
mentoring-type roles, as well as the tax burden according to the the debate and shift our approach.”
customer service-type roles, which workforce dependency ratio falling It is increasingly happening, even
suit the experienced workforce and from 7.3 in 1975 to 4.5 today to just 2.7 though it appears that employers
suit the skills they have,” Burkitt said. workers for every retiree by 2055. are not doing anything about it.
If cultural attitudes failed to shift “When you relate that to government “Countries such as the US, UK and
employment trends, Burkitt said (revenue), sustainability of government parts of Europe are much further
an economic “train wreck” could budgets for social security and advanced in terms of thinking about
compel businesses to find value spending is looking very weak,” it and debating it, however, there
in retaining and recruiting workers Burkitt said. “Sheer necessity is is still a long way to go. I wouldn’t
once considered past their prime. going to shift cultural attitudes. The say that there is any country that
demographic megatrend is immoveable has really nailed this yet.”
According to Treasury’s 2015
– it’s a train wreck coming.
10 | FIRESIDE“PEOPLE SHOULD BE
ABLE TO RELY ON
THE RULES AROUND
SUPERANNUATION
NOT CHANGING.”
“IT HAS NEVER BEEN
ABOUT YOUR AGE AND
EVERYONE IN THIS
Photo credit: Louise Kennerley.
JOINT KNOWS THAT,
SO WE DON’T HAVE TO
TACKLE ANYTHING.”
Gerry Harvey
11NOTABLE
SENIORS GETTING
THE JOB DONE
ITA BUTTROSE, AC OBE, 77,
ABC chair
SIR DAVID ATTENBOROUGH, 93,
broadcaster and naturalist
RUPERT MURDOCH, 88,
News Corp executive chair and
Fox Corporation co-chair
SIR KENNETH HAYNE, 74,
QC and former Royal
Photo credit: Stefan Postles.
Commissioner
MAGGIE BEER, 74,
Food icon and founder of the
Maggie Beer Foundation
“IT IS ILLEGAL TO It’s a point backed up by Mercer’s
Next Stage – Are You Age-
Burkitt said such a lack of strategic
workforce planning was widespread
DISCRIMINATE, BUT Ready? report analysing “future-
fit” approaches to longevity in
and unsurprising, with businesses
often more focused on recruiting
QUITE EASY TO the workplace. The report warns young workers and meeting gender
PUT INTO PRACTICE that many businesses continue and ethnic diversity quotas.
to overlook the potential of their
“Ageism is the last frontier of the
WITHOUT VISIBLY experienced workers to bring a
competitive advantage, and instead
inclusion and diversity challenge. For
BREAKING THE LAW.” continue to cling to outdated
ideas and employment models.
all organisations, gender diversity
has been front and centre for a while,
and there’s been improvement,
Will Burkitt
12 | FIRESIDEalthough we still have a fair way
to go. But very few, probably less
to age and preconceived
attributes and attitudes. FIVE WAYS TO
than one per cent of employers,
are thinking about ageism and
While the rise of workplace flexibility
– working from home, early or late
OPTIMISE YOUR
how to properly support an
ageing workforce,” he said.
starts and flexi-days – is often EXPERIENCED
WORKFORCE
positioned as catering to demanding
While the Age Discrimination Act millennials, it is just as relevant
(2004) prevented organisations and important to experienced
from hiring and firing based on workers, according to Burkitt.
1
age, Burkitt said there were still
“People in their 60s are Collect and analyse
too many instances of age bias –
sometimes taking career breaks, your age-profile data to
both conscious and unconscious.
to the extent of going travelling, explore demographic
“Often you find if there is a round and then coming back to work. and skill pinch points.
of redundancies there may be So older workers are really
an oversized portion of workers looking for many of the same types
2
who are older. Line managers of policies and workplace practices
and leaders aren’t necessarily that young workers are looking Understand what
targeting these workers but for for – flexibility, carer’s leave, impact your retirement
various reasons that’s often how career breaks – but are plan design has on the
it plays out, and not necessarily looking for them for different trajectory of retirement
for the right reasons – not based reasons,” Burkitt said. readiness and labour flow.
on skills and experience, more
While Burkitt said health issues
3
based on the assumption that they
were cited as a greater priority
are approaching the perceived
among the older work cohort, Initiate conversations
retirement age, regardless of
employers should not draw the with employees
whether that individual intends
conclusion that productivity was about how they might
to retire or not, which is wrong.
negatively impacted by age. work differently.
“It is illegal to discriminate, but
In fact, according to the Next Stage
4
quite easy to put into practice
report, age-diverse workforces
without visibly breaking the law.”
contribute value through less Examine and tackle how
Burkitt argues that more legislative turnover and increase productivity ageism might manifest
change is needed, reshaping of colleagues through knowledge in your organisation,
workplace attitudes by addressing sharing and mentoring. analysing pay, bonuses,
the very definition of “older worker”. performance, promotion
“The maturing population is a
and recruitment
“For example, a mature-age real positive for our society and
statistics through a lens
employee is defined as 50 no longer should seniors in our
focused on ageing.
years and over, and that’s what society be seen as a challenge or
decisions and influencing future negative, but rather an opportunity
5
direction has been based on to or a positive in terms of what they
date, and that has to change.” contribute and how they interact Implement an effective
with our society,” Burkitt said. flexible-working strategy.
Burkitt said businesses would
achieve better outcomes by “And the fact that more people
looking at their workforce’s shared are working longer – in just the
attributes and aspirations rather same way as younger people – is Source: Mercer’s Next Stage
than categorising according fantastic for everyone.” ■ – Are You Age-Ready?
13WELLNESS T o stand out in today’s job market,
businesses are becoming more
innovative with their employee benefits,
offering everything from date-night
AT WORK
sponsorship, breast milk shipping
and pet bereavement allowances.
The competition is on to differentiate
and, according to Mercer Market Insights
and Survey Data business leader Chi
Tran, the approach may have some merit.
Businesses looking to engage millennials In a 2017 study on global talent
trends, Tran found that Australian
and retain top talent are becoming workers prioritise their health more
than wealth or their career.
more creative with their employee “This isn’t unique to Australia,” she
benefits, but what are people looking said. “Workers from most countries
put their health before career
for when choosing an employer? development or remuneration.
14 | FIRESIDE“EMPLOYEES THRIVE IN AN INCLUSIVE,
FLEXIBLE WORK ENVIRONMENT THAT
OFFERS A STRONG SENSE OF PURPOSE.”
Chi Tran
Corporate wellbeing initiatives have of an increasingly diverse workforce
traditionally been designed to serve as and diminish its return on investment.
a stop-gap between personal wellbeing
Finding what works for any
and chronic illness. Still, Tran believes
organisation is a challenge. Still, for
Australia’s most successful organisations
one of Australia’s leading life insurance
now use their wellbeing policies to
specialists, TAL, understanding the
attract and retain their employees.
needs of their people has helped
“Employees thrive in an inclusive, attract and retain its workforce.
flexible work environment that
“Involving our people in the development
offers a strong sense of purpose.
of our health and wellbeing programmes
“They are more likely to choose a has been key,” said Ceri Ittensohn, Chief
workplace that makes a positive People and Culture Officer at TAL.
social impact, provides valuable
In 2017 the TAL employee health and
learning opportunities and focuses
wellbeing committee was established
on their health and wellbeing.
to drive the decision-making behind
Ceri Ittensohn, TAL’s Chief “It’s a competitive market for talent, its physical, financial and mental health
People and Culture Officer. so organisations are focusing initiatives. TAL employees volunteer
on their benefits as a way to to support the committee by forming
stand out from the crowd. working groups across each pillar.
“This has changed how Australians Using an internal communications
choose their employers. It’s no platform, Workplace, and regular
“But that year, relative to other
longer just about pay,” Tran said. check-ins with employees, the
countries, the proportion of Australian
committee also drives awareness of
workers was at its highest, and The 2019 Mercer Global Talent Trends
its health and wellbeing initiatives
it’s remained high ever since.” study found Australians are just as likely
and creates a space for dialogue.
to choose an employer who focuses
Tran reflects on Australia’s physically
on their health and wellbeing as they “Last year we offered each employee
active culture, ranked one of the world’s
are to find a job with a fair salary. a free health check with a registered
healthiest by Bloomberg’s Global
nurse to assess their nutrition, fitness
Health Index, but suggests changing Casual observers don’t need to
levels, risk of chronic illness and mental
attitudes toward personal wellbeing look far to see this trend in action.
health, providing us with a baseline
have influenced the workforce. Organisations large and small have
from which we could understand
adopted everything from the trivial
“The media has helped to put a people’s needs,” Ittensohn said.
ping-pong table to more significant
spotlight on how workplaces affect
reforms such as flexible work options. Health information and data such as
people’s mental and physical wellbeing,
safety hazards, staff insurance and
especially issues related to work-life But what works for a start-up populated
return to work plans are also reviewed to
balance, flexibility and parental leave. with millennials in their 20s may not apply
monitor the wellbeing of employees. This
to a multinational with a median age of
“Australians expect a more open information is used to support decision-
35. If decisions on corporate wellness
discussion with their employer making by the committee in conjunction
are made without employee consultation,
and a workplace that reflects with enterprise-wide programs delivered
organisations may rule out the needs
their values,” Tran said. by the people and culture team.
15BEYOND BLUE REPORTS
THAT AUSTRALIA LOSES
$12.8 BILLION EACH YEAR FROM
LOST PRODUCTIVITY DUE TO
MENTAL HEALTH CONDITIONS.
Recognising the need to provide their team and had the confidence to
more holistic support, an upgrade to intervene because of the training.
the employee assistance program
“Taking a holistic approach to
soon followed. Expanding on its
wellbeing for our people and
professional counselling services,
prioritising mental, physical and
new programmes covering nutrition,
financial health has contributed to
legal and financial advice were also
a work environment people want
introduced to ensure employees
to be part of,” Ittensohn said.
and their families felt supported.
L’Oréal Australia has taken personal
The service is free, confidential and
wellbeing one step further by
delivered on-site at some office
introducing a wellbeing objective into
locations or over the phone.
its employee performance review.
“Rather than just provide counselling
At the start of each evaluation cycle,
support for when times are “When the wellbeing objective
employees at L’Oréal Australia
tough, the service is designed was announced in 2016, I thought
propose a wellbeing objective which
to help people stay well. it was a great opportunity to
the company agrees to support.
“Through these broader initiatives, step outside my comfort zone
The wellbeing objective is granular in and try something different.
we’re aiming to change the
its delivery yet simple in its approach.
conversation around personal “I knew I wanted an outlet to ensure
By allowing people to include
wellbeing at TAL,” Ittensohn said. I was prioritising exercise between
personal wellbeing in the terms of their
In a submission to the Productivity performance, L’Oréal Australia has created my busy work schedule, so I found a
Commission Inquiry into Mental a culture of accountability and trust. dance class and signed up. Two years
Health, Beyond Blue reports that later, I’m now an instructor. It’s fantastic
“Each member of our team has a that I could start this process through
Australia loses $12.8 billion each
different personal situation and wants a company initiative.” Kiskiras said.
year from lost productivity due
to balance it with their profession,”
to mental health conditions - with Some of L’Oréal’s employee benefits
said Jacob Bonk, HR Director at
employers bearing the brunt. include half-day Fridays over summer,
L’Oréal Australia and New Zealand.
a superannuation top-up scheme in
More than 90 per cent of team leaders
“So what we’re focused on is making which L’Oréal matches contributions
at TAL have completed mental health
sure we provide a wide range of benefits made by eligible staff, product
training which helps them support
to suit as many people as possible.” allowances and income protection.
employees with mental health conditions
and removes risks from the workplace. For L’Oréal Australia’s Senior Product “We understand the idea of
Manager, Niki Kiskiras, the wellbeing employee benefits has evolved. It’s
“One of our people leaders identified
objective was an opportunity to very different to what it was even
an emerging mental health issue in
prioritise her physical health. five to 10 years ago,” Bonk said.
16 | FIRESIDESIX UNIQUE
EMPLOYEE
BENEFITS
1
BOTOX LEAVE and
other grooming leave
– so employees don’t
have to fake sick leave.
(Fox Kalomaski)
2
E-BOOK ALLOWANCE
to help employees stay on
top of their reading.
(Twillo)
3
Mars Petcare offers employees 10 hours of ‘pawternity’ leave when an employee BREAST MILK
gets a new pet, followed by the chance to bring the pet to work. SHIPPING for travelling
mothers to keep
newborns fed.
(IBM and Accenture)
One of L’Oréal Australia’s major areas “There are also options for staff who
of focus over the last five years has require a more formal arrangement
4
been its flexible work policy which, such as part-time work, job sharing
according to the Workplace Gender or a compressed workweek.” PET INSURANCE
Equality Agency, is a significant and bereavement leave
When it comes to employee for pet owners.
driver of women in leadership.
wellbeing, executives have a raft of
(Mars Petcare and Mars)
In early 2019, L’Oréal Australia received ideas to choose from. However, as
the Employer of Choice for Gender L’Oréal Australia has shown, building
5
Equality citation, which recognises a great work environment is about
gender equality in the workplace. more than the benefits on offer. ADOPTION
“We have prioritised a culture that “L’Oréal Australia aims to be a place
ASSISTANCE
and holiday parties.
enables employees to work with where all of its employees can
(Go Daddy)
their managers to balance their work thrive. The benefits we offer are only
and personal lives while playing an part of the strategy,” Bonk said.
6
active role in the workplace culture.
Exciting benefits may drive SPOUSES receive
“We encourage all our staff to think short-term engagement but, as 50 per cent of an
about the work they must do and the some of Australia’s most sought employee’s salary every
most appropriate location to do it. Our after workplaces have found, year for 10 years in the
employees can now make their own supporting employees through event of a death.
choices on how, when and where all aspects of their lives help (Google)
their work is done,” Bonk said. attract and retain top talent. ■
FI R E SI D E | 17
17INVESTING IN THE
DIGITAL AGE
As part of his new book, Investment Wisdom for the Digital Age,
Dr Harry Liem examines how artificial intelligence (AI) and unprecedented
amounts of big data will change the nature of investing.
A n abundance of data exists that
investors had never had before nor
had in such huge quantities. And such
history where we could see investment
breakthroughs. The key question is, will
all this new data and technology help
similar data. Thus, so far, the main appli-
cations have been among the short term
and more high-frequency traders.
data could lead to new or faster revela- make us better investors?
For long-term investing, there are big
tions about the future of economies and
Superior investment returns can come questions at the moment that are not
asset prices. The technological race is on
from having access to better data, better easily solved by artificial intelligence. For
to use that data, as hedge funds are now
execution speed or better decision example, we are facing an environment
launching their own satellites to gather
making. It has always been a challenge with very low interest rates where people
proprietary data such as the amount of
for investors to distinguish the signal from are questioning the effectiveness of cen-
truck movement from factories. Others
the noise – to discern important informa- tral bank policy and the corresponding
are developing natural language algo-
tion. With the advent of the Digital Age, impact on asset prices. Such questions
rithms to capture the real-time sentiment
that challenge has only intensified. are not easily answered by robots, but
of users on social media by reading the
require a deep understanding of
tone of the words used or creating body The data presented to us can be over-
economic systems and financial markets.
language processing algorithms that whelming. We are bombarded by news
analyse CEO/CFO signals from quarterly through official and social media sources, The hardest thing for the long-term
meeting videos. There is a lot of new we encounter clickbait every second investor is to ensure they stay focused
data available that we didn’t have before online, and there is an abundance of fake on their long-term objectives and avoid
and the amount is growing rapidly. news to contend with. distractions with the abundance of news
and data available. Without a deep
At the same time, we now have the At the moment, the jury is still out about
understanding of the markets, it is easy
processing power to crunch such large whether all this additional data can create
for investors to “data mine” and find
information sets, as well as ever-improv- superior long-run investment returns. For
relationships in data that are not there.
ing computer algorithms – artificial intelli- example, you could find a data set that
gence and machine learning techniques offers unique insights, but any investment The investment management industry
– to see patterns that may not have been advantage this offers could be quickly itself is on the brink of disruption. Large
visible before. Thus, we are at a point in competed away once others obtain resources will be needed to invest in
18 | FIRESIDEnew technologies, deal with increased algorithm complexity. The key question wealth, using fundamental analysis,
regulation and compliance cost and to is whether computers are becoming rather than trading on the latest
continue to make a difference. Deep “aware” and according to the experts I information craze.
pockets are required to stay ahead of interviewed for my book, we are not
The investment industry has always been
the curve. In theory, it also means that there yet. Investment markets are a
in a state of evolution. The increase in
anyone with deep pockets can be a complex matter due to the ever-evolving
available data and processing power,
player as well. We might also see in- nature of participants. It is not a game
as well as the constant search for new
vestors from other fields: owners of big of chess, and evil robots taking over the
return sources in the low-yield environ-
data (a Google or Amazon, for example) game of investing remains the domain of
ment, has increased the speed of that
could find ways to exploit their informa- science fiction.
evolution as we enter the Digital Age. ■
tional or technological advantage for an
Machine learning has the potential to dis-
investment advantage. For the remain-
rupt, especially for shorter-term investors,
ing players, because of all this new
where there are large amounts of data
technology, the complexity of active
and effects that are not easily described
management will increase, while fees
using simpler models. For longer-term in-
and the cost of investing will continue to
vestors, the impact may be less, although
come down significantly for those who
the techniques could still be useful for
can no longer prove their skill.
risk-mitigating, stress testing and scenar-
Successful investment professionals io analysis.
learn from the past and have an insa- By Dr Harry Liem
But ultimately, it is important to cut
tiable curiosity. Today’s rapid develop- Director of Strategic Research and
through some of the short-term noise and
ments in technology are by no means Head of Capital Markets for Mercer
hype surrounding these new AI
new but represent a confluence of in the Pacific Region, and author of
techniques and focus on the right long-
long-running technological evolutions Investment Wisdom for the Digital
term objectives. We foresee a trend back
in storage space, processing power and Age, released December 2019.
towards creating genuine, long-term
19CHANGING
CEO IN A
TIME OF
CRISIS
HOW PREPARED ARE YOU?
Succession planning
is a line item on every
W hen retailer David Jones’ CEO
Mark McInnes resigned in disgrace
following months of media scrutiny over
and our internal succession planning
has enabled us to appoint an internal
candidate.”
board agenda. When a sexual harassment complaint by a
25-year-old staffer, it would seem the
It was an appointment that would only
a company is hit by board was caught off guard. The issue
last three and a half years, followed by a
revolving door of CEOs at a time when
a crisis that causes blew up as a daily ‘he said, she said’
debate out of seemingly nowhere, and it
the retailer was struggling financially.
a CEO to leave quickly became apparent that McInnes And in today’s results-driven world with
couldn’t remain at the helm. increasing scrutiny on executives, the
unexpectedly, looking David Jones situation isn’t an isolated
The board chose to appoint long-term
for a replacement David Jones executive Paul Zahara to
case.
can prove difficult, fill the role, with Chair Robert Savage
announcing to the ASX his delight that
According to global recruitment firm
Spencer Stuart’s report on CEO tran-
writes Lahra Carey. “… the depth of our management team sitions, 22 per cent of CEOs resigned
20 | FIRESIDE“WHEN A WELL-LOVED CEO RETIRES,
THERE WILL BE A PERIOD OF TIME
THAT A SUCCESSOR WILL BE
GROOMED FOR THE ROLE ... BUT
WHERE A PERSON LEAVES UNDER A
CLOUD, THERE HAS TO BE CHANGE
ACROSS THE BUSINESS.”
Gareth Jones
Gareth Jones of Mercer Evolve is regu- direction is needed. And according to
larly called upon by organisations deal- Jones, the new leader requires
ing with executive succession. He says exceptional stakeholder skills to take on
he isn’t surprised by the findings with that job and do it well.
sudden and unexpected CEO depar-
“Change-makers need to have a thick
tures usually creating their own unique
skin, as well as a pragmatic, driven
set of challenges.
approach to business. They must
“When a well-loved CEO retires, there possess leadership qualities that make
will be a period of time that a successor people want to follow them as well as
will be groomed for the role. So when empower the leadership team,” he said.
the CEO changes in these circumstanc-
A report by the National Association
es, there probably won’t be dramatic
of Corporate Directors published
changes. But where a person leaves
under pressure in 2018 (according to earlier this year examined the issue of
under a cloud, there has to be change
company reports) — compared with 15 CEO succession planning. It found
across the business,” Jones said.
per cent in 2017 — and 5 per cent left that more boards are making
for health reasons. Further, 73 per cent Not all CEO changeovers are the same. emergency plans in case of a sudden
of the new CEOs were promoted from Sometimes they emerge swiftly and with CEO departure.
within the company. little warning, and others bubble away
According to the report, two years ago,
as a watching brief for the board.
The same research also examined 59 per cent of public company directors
whether the former CEO’s reason for Either way, board-endorsed succes- reported that they had identified an indi-
leaving influenced the likelihood that a sion plans may have to be rethought vidual who would serve as interim CEO
board would select an internal or exter- depending on the circumstances of the in case of an emergency. This year, that
nal successor. CEO’s departure. number rose 15 percentage points to
74 per cent. It’s a clear nod to the value
Spencer Stuart found that when a CEO Ultimately, it’s up to the board to make
of being prepared.
resigned under pressure, his or her re- the call as to whether the new leader
placement was much more likely to have is able to continue steering the course But what happens when there is no such
been hired from outside the organisation. the board has set or whether a different appropriate successor identified?
21“THERE’S A HUGE This is exactly the situation NAB was
faced with following the Royal Commis-
Scotland since 2013 and led the
organisation through significant
AMOUNT OF sion into Misconduct in the Banking, change and recovery.”
PRESSURE FROM
Superannuation and Financial Services
“There are two types of CEOs,” Jones
Industry. After months of public scruti-
said.
DAY ONE. NEW ny and negative publicity for the bank
during the royal commission hearings, “They all want challenges, and they
CEOS IN THIS NAB took the lion’s share of Commis- all prioritise keeping the business
POSITION NEED sioner Hayne’s wrath in his final report. successful and on track. But there’s
a certain type who loves to take on a
PEOPLE THEY Shortly after the report was released,
Chief Executive Andrew Thorburn and
particularly difficult challenge. Anyone
CAN TRUST AND Chairman Ken Henry resigned, and the
taking on the banks now must thrive
in that environment. They see it as a
TO BE ABLE TO
search for a new leader began.
great opportunity to put their stamp on
“It’s not easy to find those CEOs. It’s their career.”
THROW THINGS very hard to hire an individual for a
According to Jones, McEwan is being
TO THEM.” turnaround role who hasn’t faced this.
They need to know what they’re walking
billed as the right leader for transfor-
mation – with a steady pair of hands,
Gareth Jones into, and they need to be prepared for
because he’s done this before.
it,” Jones said.
“We have secured a well proven CEO,”
“Many people will talk about having a
Chronican was quoted as saying.
desire to do a role like that, but they
need to have the skills to do it. “RBS has been through many of the
same challenges which NAB now
“They will be facing scrutiny everywhere
faces around culture, trust and
– the team looks to them to provide
reputation.”
leadership, (and) the board needs to see
leadership and ideas to push forward. Although McEwan won’t start in the
And then there’s the public perception chair until December, he has already
of leadership, executive pay and so on. signalled that his priority will be a
This scrutiny creeps into all aspects of focus on changing the culture of the
their life.” bank – a priority Jones says the board
will need to support.
It took five months for NAB to find a
replacement for Thorburn, but they “The board has no choice – they had
finally managed to find an experienced to get somebody, and it’s inevitable
candidate with a strong track record of that things have to change. The board
leading organisations through is bringing McEwan in for his expertise.
significant change. It’s not done a great job with the past
CEO – it will have to listen to McEwan
Upon announcing the appointment of
and take his advice,” Jones said.
Ross McEwan as Group Chief
Executive Officer and Managing Director “Culturally, when a new CEO comes in,
of NAB, Chairman-elect Philip Chronican they will be different to the old CEO.
stressed McEwan’s “deep experience in There will be a big cultural element to
international markets”, as well as the fact the change agenda. Culture is driven
that he had been “CEO of Royal Bank of from the top.”
22 | FIRESIDEThis December, Ross McEwan will take up the role of NAB’s Group Chief Executive Officer and Managing Director.
Jones also speculates that McEwan is
likely to bring in some of his own
“They all have executive coaches and
people they can bounce ideas off – “MANY PEOPLE
trusted team. people who are old hands in this type of WILL TALK ABOUT
HAVING A DESIRE
work and who understand the pressure
“There’s a huge amount of pressure
they are under.”
from day one. New CEOs in this position
need people they can trust and to be Ultimately, protecting and, in some TO DO A ROLE LIKE
able to throw things to them.” cases, revamping the organisation’s
reputation is a team effort between the
THAT, BUT THEY
However, Jones warns that the climate
and the scrutiny mean it can be a very
newly appointed CEO and the board. NEED TO HAVE THE
lonely job with few people to turn to
Being prepared for CEO succession in
an unexpected scenario, as with all best SKILLS TO DO IT.”
inside the organisation to seek advice
practice management strategies, will
from when the pressure feels too great. Gareth Jones
prove to be time well spent. ■
23FINDING
VALUE IN
VIRTUE
START-UP SUPER
FUNDS SPECIALISING
IN VALUES-BASED
INVESTING ARE
GAINING TRACTION.
Some have gone
beyond investing in
C omparisons of superannuation funds
typically rely on investment perfor-
mance and fees to rank and rate funds.
Australian Ethical is now publicly listed,
with $3.42 billion of funds invested in
sustainable sectors such as renewable
Yet, a growing number of Australians seem energy.
environmentally-friendly to be prioritising their values and lifestyle
Many traditional fund managers have
assets to supporting choices when they select their fund.
entered the ethical investing market and
causes such as The trend started more than 30 years offer it either as a standalone offering or
ago when Australian Ethical was within other, more standard, portfolios.
veganism or actively launched as an alternative to the These funds have listened to their
helping members to mainstream funds, who thought nothing
at the time of buying stock in what today
members’ values and acted to keep
them from switching.
progress their careers, are largely considered on-the-nose
But the availability of super products
industries, such as tobacco and coal
writes Olga Galacho. companies.
appealing to all manner of personal
24 | FIRESIDEIN THE WAKE OF THE HAYNE Good Super invests in companies that
demonstrate best-practice policies for
ROYAL COMMISSION, THOUSANDS LGBTQ employees. The fund relies on
OF AUSTRALIANS TOOK MATTERS the Human Rights Campaign Founda-
INTO THEIR OWN HANDS AND tion’s Corporate Equality Index when
selecting which stocks to buy.
ACTIVELY SWITCHED FUNDS. The index, which has been compiled
each year for 17 years, examines
corporate policies on sexual orien-
values – from veganism to “Most traditional funds now have tation and gender identity, domestic
championing LGBTQ rights – is products that cater to environmental, partner benefits, transgender-inclu-
growing fast and managers need to social equity and sustainable or ESG sive benefits, organisational LGBTQ
be ahead of this curve to prevent principles, and can easily convince competency, and public commitment
members voting with their feet. values-based members not to exit to the LGBTQ community.
their fund.”
In the wake of the Hayne Royal Cruelty Free Super won’t invest in
Commission, thousands of Australians He added that start-up funds have not companies associated with animal
took matters into their own hands and been around long enough to have a testing, live animal exports or
actively switched funds. performance record that can be intensive agriculture.
measured against established peers.
Kirby Rappell, executive director of Its humane ethics extend to people,
Lonsec arm SuperRatings, cautions A history of performance, along with and thus, the fund avoids buying into
consumers to have their “eyes wide scale, is the other advantage companies that run detention centres
open” when selecting a niche fund. traditional funds have, putting them in or are heavy polluters.
a stronger position to compete in the
“There is now a fund for almost every Four-year-old Future Super also shirks
super arena on performance and fees
cause,” Rappell said. “But consumers carbon-intensive investments and
while addressing the consumer desire
need to be careful with their proactively seeks out renewables
for values-based investing.
understanding of what super means projects, such as solar farms.
to them and what will be the net So who are these niche funds, and
return once fees are taken out.” what are they offering? Its tight screening has produced two
portfolio options whose projects
He notes that many bigger funds Verve Super, which pitches itself absorb more carbon dioxide than
already offer or are considering to women, launched last year. The they produce. The fund claims to have
offering values-based options. fund’s bells and whistles include free moved $350 million worth of invest-
financial counselling and fee relief for ments out of fossil-fuel-dependent
“On average, a mainstream fund will
families with a new baby. companies.
have $5 billion for diversified
investments, giving them a buffer Under its ‘academy’ banner, it has Niche funds’ success in capturing
against certain risks,” he said. developed a Money and Mindset billions of dollars’ worth of super money
program specifically to help women so far indicates that today’s members
But the start-up funds have consider-
make their finances go further. are less likely to be complacent about
ably less money to spread around.
Additionally, with each new traditional players’ investment strate-
“It’s not easy being a start-up in the gy. They demand to know what funds
membership, Verve sends a donation
super sector because it is heavily stand for other than making money.
to microfinance organisation Good
regulated, presenting big challenges Time will tell if the approach has
Return, to help women in developing
for under-resourced funds,” longevity, but for now, there’s a lesson
countries access funding for a small
Rappell said. in the value of virtue. ■
business.
25Q&A
TALAL YASSINE OAM
MANAGING DIRECTOR
CRESCENT WEALTH
WHAT DO YOU REMEMBER ABOUT We brought a huge amount of culture with
YOUR BIRTH COUNTRY? us; Lebanese are very hospitable and love
I came to Australia at the age of four, so food., This was strange for our neighbours
there isn’t much of a memory of the trou- at first, but once food was passed over the
bles my country of birth (Lebanon) garden fence we’d made lifelong friends.
was facing.
I sometimes wonder what limits my parents
I do recall, however, growing up with my would’ve had to reach or what they experi-
mother constantly being cautious and fear- enced in order for them to decide to leave
ful of her new “normal”. She was forced to the safety net of their family, their known
adjust to the unknown to offer us stabil- surroundings, environment and people to
ity, hope and normality with absolutely come to the unknown of Australia.
no anchor point. My mother and father
I guess only knowing – hoping – it would
travelled from a village to live in a city
be safer than the civil war situation gave
many thousands of kilometres away, with
them comfort and guided their decision.
no language skills (neither ever went to
There are times I think we take their sacri-
school), financial resources or networks.
fice for granted.
But they made it.
26 | FIRESIDEYOU HAVE A LAW DEGREE AND
DROVE A TAXI AT SOME POINT. “WE HAVE A PROUD TRADITION OF
HOW DID THAT COME ABOUT? LOOKING AFTER ONE ANOTHER,
Like many university students, historically
TRADITIONALLY WE FIND OUR FAMILY
TO RALLY AROUND US AND OFFER THE
and today, I had to support myself and
my family (my parents and brothers and
sisters at the time). So apart from my work SUPPORT NEEDED TO GET BACK UP.”
experience at a local law firm, I drove a
taxi (Number 2275!), worked at a service
station, delivered flowers, painted fences
great chat) and allow time to actually listen communities on the importance of having
and cleaned cars – whatever I needed to
to what is being said (and not said) so a sufficient retirement plan.
do to be able to meet our weekly bills.
that I understand their position and then
In the process of offering the Crescent
On the other hand, our family highly respond accordingly is invaluable, and it’s
Wealth super fund, we are experiencing
valued education. At the time, I was not something that I use on a daily basis.
a higher level of engagement and so
sure 100 per cent why, except that it
The other lesson is in negotiation. I many new members that are not of the
gave you a better job and life. But today,
worked in many jobs for many years, and Islamic faith. Those individuals want to
I think education does much more than
at different hours, there were many times avoid their retirement funds being in-
that; it allows one the opportunity to
where I’d have the rowdy, the self-enti- vested in harmful industries such as the
engage in society to the fullest and to
tled, the stressed or simply checked out. gambling, alcohol, weaponry, interest
provide access to success on many
It forced me to deal with them and their and tobacco industries.
different levels.
unpredictable personalities and under-
I ended up having four degrees, coupled stand their triggers in order to keep them WHAT’S YOUR NEXT LIFE CHALLENGE?
with being an Adjunct Professor at Western calm and avoid potential conflicts. My life challenge is a continuing one.
Sydney University and a Professorial Fel- The challenge is to be a good son, hus-
I can and do translate this to business and band and father.
low at the Australian National University.
boardroom negotiations, as sometimes
one is dealing with the same behaviours. In this world of instant gratification and
WHAT LESSONS DID YOU LEARN
FROM THOSE YEARS BEHIND THE short-term thinking, where life’s chal-
WHEEL WHICH YOU APPLY TO WHAT ARE THE SPECIFIC WEALTH lenges are many (not to mention setting
YOUR BUSINESS LIFE TODAY? MANAGEMENT NEEDS OF THE ISLAMIC up a super fund from scratch), the bonds
Empathy. You meet an array of personal- COMMUNITY THAT INSPIRED YOU of family and the time, effort and energy
TO ESTABLISH CRESCENT WEALTH? that is required is a something I take
ities driving a taxi – the young and naïve,
To retire with dignity. very seriously.
the travellers, the corporates and of
course elders – sometimes just wanting We have a proud tradition of looking I am a father of four children (ages rang-
to chat to someone and at times it really after one another. If you lose your job, ing from 18 to 3) and have seven broth-
forces you to listen to them and try to are elderly, have an illness or disability, ers and sisters. Both my parents are still
understand without any bias what they traditionally we find it’s our family that pretty active, and my wife and I have a
are going through. In the beginning, I rallies around us and offers the support full household. The proactive focus (not
tried to offer advice, but as time went on, needed to get back up. to mention the joy and blessing) on fam-
I realised that some just needed to talk it ily is something I constantly juggle and
The purpose and drive to set up Crescent
out – some happy, some sad issues. try to keep with all that is going on in my
Wealth is to address this issue. Offering a
It wasn’t until later in my business life that retirement fund that aligns with the Islamic work and academic life.
I realised what an asset it was. Having the investment principles is fundamental to But of course, this is my greatest
ability to consciously stop speaking (and increase awareness within the Muslim challenge, joy and achievement. ■
for anyone that knows me, I do love a communities. We want to educate our
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