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Leading From the Chair

Tuesday, May 1, 2007 - 11:38

David Gonski AO, leading corporate chairman, director, university chancellor and philanthropist, talks with Jennifer Alexander about the chairman's role and the things that matter to him in business and society.

The Sydney Morning Herald once described David Gonski as Australia's can-do man: among many other positions, he is currently Chairman of Coca-Cola Amatil Limited and Investec Bank (Australia) Limited, as well as Chancellor of the University of New South Wales. Although never a chief executive, Gonski's talent as a universal fixer has earned him success and admiration in the corporate world, while his personal interests now see him devoting more time to putting back into our communities. Here, Gonski talks about the qualities of an effective chairman, working with the CEO, philanthropy and the need for passion.

Q: What is the role of the chairman? What qualities are required to be effective?

A: While this is not necessarily everyone's view, I have a very strong view that a chairman has to be a consensual leader. If you are a leader that just puts your own views and pushes them through, I don't think you're a good chairman. That may be a good CEO, it may be a good businessman or woman, but it doesn't mean that you're a very good chairman. I believe a chairman is someone who has to allow the right information to get to the board, the right level of consensual discussion, and be clever and strong enough to bring it together.

Q: How do you learn to be a chairman?

A: I think there are certain things that you're either born with or you're not. Our society creates the belief that you are the best director if you're the chairman. We've got to break that. The best businessperson or best contributor may not necessarily be the best chairman because the chairman's role is this consensual one. Of course, they may be, too. A good chairman is someone who is able to listen, to summarise what's going on, to tease out what people are thinking, to note nuances. These are things you can't teach people. They either have them or they don't.

As to what you can learn: I think as you get older sitting around board tables, your wish to have a solo role wanes and you learn more about team management, involvement and participation. As a chairman you can also learn what makes your board operate well, who are the people who you have to listen to and who are those who will keep talking anyway. It's also very important to learn that as chairman you're not necessarily the kingpin.

Q: So you are talking about the qualities sought in a leadership role?

A: You are a leader but you're a different type of leader. For the CEO, I want somebody who's got a clear idea of where they want to go. A leader of a board is a bit like an orchestra conductor. Basically he's there to lead people to a crescendo; he has to bring that whole orchestra to where it wants to go, not necessarily where he wants it to go.

Q: What makes for good and bad relationships between a chairman and CEO?

A: This relationship is schizophrenic. On the one hand, a chairman is there to assist, advise and help the CEO to succeed. On the other, the chairman is there to monitor and police what the CEO does. It's actually very hard for the two to be very good friends, but they can be close acquaintances. It is important that they're not vying to be the most important person. In my view, the chairman must understand that the CEO is the person who runs the company. The chairman is there to make sure that that person stays and does the right thing, and that the orchestra, the rest of the board, works with them.

Q: If a CEO believes there is a problem in their relationship, what can the chief do?

A: In my experience, often when a CEO is not happy [with the relationship] the last person they tell is the chairman. This is fundamentally wrong. If a CEO is worried, the first person they should talk to is the chairman. If the CEO feels the chairman is doing the CEO's job, he should tell him, talk about it, see if they can work it out, or find an arrangement that everybody's happy with. Unless the chairman and CEO sort it out it will never be sorted out. Frankly, one of them might have to go. I've seen great wealth dissipated in companies because the chairman and the CEO don't get on.

Q: What is your view on the issue of assessing and measuring the performance of boards?

A: I'll start by saying I think it's an excellent thing that boards test their performance. The question is how you do it. I'm not in favour of bringing in outsiders unless World War III is occurring around the board table. In my experience, like a kindergarten, kids react best when there are visitors in the room and then go back to doing exactly what they were doing before. I think the board has to be responsible for themselves, but I think it's a wonderful thing for a chairman to meet once a year, one on one, with each of the directors.

Q: What do you think corporate social responsibility is?

A: To me, corporate social responsibility is the link between the corporation and its communities. Its communities include its employees, shareholders, high-up managers and consumers. Communities surround business, and business is foolish not to engage with its community. I see Michael Porter says it can be very profitable for a corporation to have corporate social responsibility, and the fact is, it is. I'm amazed at how many corporates in their advertising base their pride in what they do.

I know that with Generation Y the best way to attract and retain them as employees is to be corporately involved in society. They want to be proud of what they're doing, and not just for the social status or just getting paid: so you can get better staff, better sales, you promote your company better, and you get pride. So you can actually rationalise corporate social responsibility.

Q: You've described something more complex than corporations giving donations.

A: I don't favour donations by corporates.

Q: Obviously, you have views on this?

A: I do. I don't think that a corporation giving just for the sake of giving is something that is right for it or society. I always talk of years ago, watching a little man stand up and question a board I was advising on why they'd given money to the boy scouts. His wife was very keen on the girl guides, and he asked why didn't they give money to them? And he was right. I believe in personal philanthropy for absolute giving and we should encourage people to use their dividends for that. But a corporate can give in a way that helps a corporate. For example, if you want to build your name in the country, giving to people in the country, or promoting the local fair or getting involved in the local shire council's doings, this can be good for your name and build trust. If you want to help your staff to be involved why not say "Who do you want to invest with?" If they say they want to help children, well, get them to put money in and match it, [or] establish a foundation that has got your name in it.

Q: Who are the people in business you most respect and why?

A: I have always been very keen on the self-made person. I think that people who have had it tough and who have nevertheless reached the top really amaze me. I have enormous respect for those who don't just seek to make money but have said, "Right, I want to make money but I want to make an impact, too". And I respect the businessperson who embraces younger people.

Q: What sort of things happened to you that you consider seminal in your development?

A: Firstly, when I became a lawyer I was very lucky to be given a master solicitor who was a mentor and continues to be a mentor [to me] today (although he's now the Chancellor of a rival university). Once I went into business, I needed a business leader as my mentor, and I don't mind saying that I chose Frank Lowy. While I have received more formal education, he knows a lot more than I do and probably always will, his mind is always alive, aware and thinking.

Q: What would you like to be remembered for?

A: I think this is a question that as you get into your sixth decade you do ask yourself. I suspect I'll be remembered for my contribution to philanthropy, in helping get changes to the taxation laws for philanthropy, and for assisting in promoting the arts, education and some medical pursuits. If you take the route I did and enter a highly paid, wonderfully egocentric business pursuit, which lifts your mind and bank balance, I think you have to give back a lot and one of the reason for doing so is to be remembered favourably.

Q: Have there been tough situations for you that were important for learning?

A: Oh yes. Plenty. The greatest lesson for me was 20 years ago, after deciding I was an entrepreneur. We made some investments and they were appalling; they stand as scars. However, what was, ironically, the greatest success was that I rebuilt my life afterwards; and I would say to people it's one thing to succeed; it's another thing to fail and then succeed again.

Q: As Chancellor of the University of New South Wales, what do you see as the challenges ahead for the role of chancellor and for universities themselves?

A: That's a very big question. First, the role of chancellor is changing. Over the years, the chancellor's role has been essentially a ceremonial one. Now, in addition, I think the chancellor has new roles. One is to be a chairman, to chair the university council like the chairman of any big company. The second is to help the vice-chancellor, to monitor him or her and to help the university to raise funds. This can be quite controversial. Should a chancellor be raising money mercilessly from donors? The answer is 'yes', within the propriety of the role.

As to universities, we have to do more with the money that we've got and that's hard. We have to get as much as we can to stimulate top research and get the top researchers competing against universities such as Harvard, who have budgets that are so big compared to ours. We have to encourage people to move from lives that are otherwise more remunerative, to university, and back again. It's a complex thing to be [responsible] both as an academic institution and business wise. This is something you have to work on. The university that gets it right will be No.1 in Australia and I want it to be mine.

Q: What does the future hold for you?

A: The first thing is that anybody who thinks they've got to the top of the mountain must be ready to come down the mountain; and if they don't come down voluntarily, they'll fall down. I don't feel that I've climbed very far up the mountain. I just hope a) the opportunities keep coming, b) I have the health to do it, and c) that one continues to be relevant enough.

Q: Is there any other area that you'd like to talk about?

A: I am asked one question all the time, and that is "How does a person like you do as many things as you do?". This is not a stupid question, but it is a question that doesn't understand what I do. I don't run legions of people, and I don't have a diary full of running the makings of a widget factory. I orient my time to do the multiplicity of things. Why do I want to make this point? Because anybody can do it, and if they all do it a bit I think that corporate social responsibility, the donation to our nation, will increase. I'm actually a bit tired of people saying to me "I can't do it because I have a full-time job". That's rubbish. I never miss going to a play when I want because I'm passionate about drama. But if the Tri Nations is on and I miss it, it's not terrible; because it doesn't mean as much to me.

Q: Do you know where your passion came from?

A: Recently, my father died. He was a neurosurgeon. The letters poured in: "He saved my life", "He saved my mother's life", "my sister's life", and so on. This made me think, "What will my son receive as letters?" Will it be that I cut somebody's fees in an underwriting or managed to take over a widget factory? Not the sort of thing I really want my son to read about. I have to contribute so that I make them proud and so that I, frankly, make myself proud.


Profile

David Gonski AO, is a man of many roles. He is Chairman of corporate advisers Investec Wentworth Pty Limited, Chairman of Investec Bank (Australia) Limited, and Chairman of Coca-Cola Amatil Limited. He is also a Director of the ANZ Banking Group, ING Australia, John Fairfax Holdings and Westfield Holdings Limited. Gonski is also President and Chairman of the Australia Council for the Arts, a member of the Board of Trustees of the Art Gallery of New South Wales, on the board of the National Institute of Dramatic Art (NIDA), and on the Board of Trustees of Sydney Grammar School.