Banking on Macquarie

Wednesday, April 1, 2009 - 09:38

In May last year, Nicholas Moore stepped up to lead one of Australia's most spectacular business successes, Macquarie Group. Moore is now setting in place strategies as Macquarie navigates a path through the global financial meltdown. By Jennifer Alexander

As the global financial crisis continues to unfold, it presents Macquarie Group, a provider of banking, financial, advisory and investment services to an international client base, with particular challenges, as well as new opportunities.

Maintaining the organisation's policy of growing its own, Nicholas Moore, appointed CEO in May 2008, has worked for Macquarie for 22 years in a range of leadership roles. Here, Jennifer Alexander asks the Macquarie chief about the business's corporate culture and strategies for growth in hard times.

Briefly describe your role.

As Chief Executive of Macquarie Group, I enjoy the diversity and the challenge of the different businesses we have and the role we can play as a management team supporting the group's many endeavours.

Does your long history with Macquarie help you in current rocky times?

We have a very strong culture of people building businesses within an overall framework. Generally, people at senior level coming in from outside is more the exception than the rule. All of our chief executives have had a long history with Macquarie.

I think we come to this current financial crisis in a better shape, relatively speaking, than most players because we've had very low-risk exposures. Our culture of conservatism is useful at times like this.

How did you manage taking over after Allan Moss's 15-year tenure as CEO?

Importantly, I wasn't an outsider and was coming from a large management role. I was responsible for Macquarie Capital, and that comprised about 60 per cent or so of the group in our cash equity securities business, our advisory business, our funds management businesses and our specialised leasing and lending businesses. I knew what the businesses were and I knew the people in them very well. I'd been on the executive committee for 10 years, so I think it would have been very challenging, although not impossible, of course, for someone to come in from the outside.

Does Macquarie view the CEO position differently to other companies?

We say that within our businesses we should make sure that no one is indispensable, particularly management. Within management, there are a range of people who are able to step up and take over. This way, if I wasn't available when Allan Moss decided to retire there was no shortage of other candidates.

When we need to promote somebody to fill a new role, we will look to the person who has strong support alongside them. If you don't have somebody to take over from you then obviously there's no possibility of you being promoted.

How do you plan to survive the current economic climate?

In terms of managing through tough times, a number of things are important. Number one is to address, business by business, line by line, how these businesses are going to fare and how to support them. The strength of the Macquarie model is that it's not centrally directed. Each of the businesses has management with a real sense of ownership. For the past 14 months, all businesses have been responding pretty much ahead of the overall market.

The second thing is to ensure we are going to benefit from what's going on and increase our market share as competitors disappear or are required to focus on their core business. This gives us an opportunity to develop the best products and improve the quality of the systems and staff.

The third element is the potential to pick up business platforms that can enhance our offering. We have seen this in these sorts of downturns before. In Australia after the 1987 market and property downturn, we picked up three US banks, and more recently, in the early 2000s in Asia, we bought the ING cash equities business after it decided to focus on its core business.

Is putting things in perspective vital?

A problem for a team can appear overwhelming. It's very important, as chief executive, for me to put things in perspective and help the teams put what they're doing in perspective. Most problems in business can be solved. One of the important cultural tenets of Macquarie is that if people have a problem we require them to share it immediately.

So it's not a sin to have a problem, but a sin not to share it?

Absolutely! It is an absolute requirement that if there is a problem, you have to tell your manager about it and that manager has to tell the rest of the organisation. The way Macquarie has set up its risk frameworks means there should be no problem that could threaten the organisation. However, we want to know what the problem is so we can deal with it.

Did you see yourself at the beginning of your career being a chief executive?

Not at all. At Macquarie, we have a very strong culture of building businesses, finding opportunities, and developing them. There is not a culture of saying, "I see what the boss does and I want to do it".

We don't have a military structure where you have X number of lieutenants, colonels and majors, up to the general, with people aspiring to step up in rank.

People aspire to grow their businesses, so we're not title-driven, but business-driven. You do not hear people here saying, "I wish I was this or that".

Is there any seminal learning experience you care to share?

One of the things we have learnt over the years is to have a huge respect for successful businesses. You hear many people say of unsuccessful businesses, "If only we'd got our sales right, or our manufacturing, or our suppliers, or our finance right, it would be successful". Often, you find it wasn't sales that was the problem, but a lot of something elses. Having everything working well in a business together is really an amazing balancing act that the people have been able to create. And it is not accidental.

If I came into Macquarie is there something unexpected I would find?

Most people who know Macquarie will say that Macquarie people tend to be very generous and supportive of each other. Investment banking is sometimes portrayed as a dog-eat-dog environment, but it is far from that within Macquarie. It is actually a very soft environment. Our people fully appreciate how difficult developing these businesses really is.

One of the odd things I noticed when I joined Macquarie was that if something goes well, if you had a success, then credit was genuinely given broadly. We don't have a rock-star culture in the organisation, it's about the team.