Leading Through Change

Developing a powerful corporate culture is crucial for senior managers. How do you lead an organisation through change while plotting a course for the future? Derek Parker looks at two leaders who have, in different ways, tackled the issue... and won. Kerry Sanderson CEO, Fremantle Ports "The most important thing in leading an organisation like this is to establish a culture of continuous improvement and ongoing learning," says Kerry Sanderson, CEO of Fremantle Ports, a Western Australian (WA) government trading enterprise, which has, under her leadership, notched up a series of impressive achievements. Riding the resources boom, Fremantle Ports is responsible for $18 billion of cargo each year. Managing that sort of complexity is a daunting task, especially since the enterprise itself is fairly small - only about 250 people. In the 1980s, Fremantle Ports had a reputation as a bottleneck, but now it is widely seen as a trade facilitator. "When I took up the CEO position in 1991, things were pretty bad, especially on the financial side," says Sanderson. "In some ways, that was an advantage for a new leader with a reform agenda, because everyone realised that something had to be done. But even there, a lot of the thinking was: Okay, do what you have to do to fix things up, then we can go back to business as usual. The message our management team had to get out was that there was no more 'business as usual'. In a dynamic industry, change has to be an ongoing process, and that point had to be accepted by everyone." Sanderson says that the reform agenda is a team effort and has had the support of successive WA governments. "The strategy has been to set targets, agree on them with government, and work systematically towards them," she says. "The relevant ministers have been willing to provide general support and to step back and let us get on with the task of getting there." The objectives and the means of achieving them were reached after an inclusive approach involving lengthy discussions with employees, senior managers and other stakeholders. The cultural change of the organisation was underpinned by a set of values, also developed through a consultative process. "Our operational focus has been on efficiency and quality," Sanderson notes. "It's been a necessary emphasis, given that since 1991 container trade for the port has grown fourfold. We developed a set of metrics, looking at issues such as ship delays and cargo handling productivity. This has been crucial; you need good measures if you are to manage effectively. We used the Australian Business Excellence Framework as a guide, and that helped us at every step along the way. Fremantle Ports has achieved Award level within this framework - one of only five organisations in WA to do so." Sanderson believes her academic training, first as a mathematician and then as an economist - she spent several years as Director of Treasury's Economic and Financial Policy Division - has helped her understand the complex logistics of the port's operations, although she also points to the AIM courses she has undertaken as a means of expanding and consolidating her managerial expertise. "You have to be willing to consider new ideas, and to look at the bigger picture," she says. "That is good for the organisation, but I think that it's also important for development at the personal level." Sanderson is currently Vice President of the Association of Australian Ports and Marine Authorities, a member of the Australian Logistics Council, and a Fellow of the Australian Institute of Management. She recently accepted an appointment to the board of Austrade, and last year she became the inaugural inductee to the national Shipping and Transport Industry Hall of Fame. One of the achievements of which Sanderson is most proud appears in the annual survey of Fremantle Ports' customers. For each of the past three years, the survey has shown a satisfaction level of 96 per cent. A comparable survey of the broader community around the port has also shown good levels of community support for the working port. "These are very pleasing results, but there are still many things that need to be done," she says. "At the moment, we are working with our larger customers on 'value chain analysis', to help us understand the costs and benefits of particular actions by the port. At the same time, we are looking at ways to improve the infrastructure that supports our facilities. For example, we are acting as the project manager for the construction of a new rail loop for the port, which will lead to significant efficiency gains. It's another aspect, I think, of seeing reform as a continuing process." Angus Raine General Manager for NSW/ACT, Raine & Horne Group "The key to running a franchise network, especially one in the real estate industry, is realising that you're not really the boss," says Angus Raine, General Manager for New South Wales and the Australian Capital Territory for the Raine & Horne property group. "In fact, we select franchisees for being energetic and intelligent, so trying to run them by command and control methods is simply counterproductive. But you can act as a mentor, an adviser, and a coach, and that way you can get a lot done." Raine takes the process of consultation seriously, pointing to a recent road trip - 6000 kilometres by coach, in three weeks, taking in the rural and remote areas of his state - by the management team to roll out the group's new marketing strategy to its many franchisees. "It was a significant commitment of our resources, but in the end well worth the effort, and there were important aspects of building the corporate culture as well," he says. "We are trying to build a culture like a family, as well as the message that individual effort and achievement will be rewarded. In fact, our franchisees are often people who were topnotch salespeople [for] our competitors, but were looking for the chance to start their own operation. We give them that opportunity, as well as an appropriate level of support. "There have been cases where you can tell that someone is suitable for the group just by walking down the street with them in their community. When they know half the people in town, and they are obviously respected by those people, you know that they are the right choice." Raine believes that his own extensive experience as a real estate agent, both in Raine & Horne and in several other major real estate companies, provides an important advantage in communicating with franchisees. Prior to his current position, he was a director of Raine & Horne, but found that he preferred a "hands-on" role. He notes that the company, now 123 years old, was founded by his great-grandfather; his father, Max, is chairman of the group and plays an active role. But the well-known surname has not always been an asset within the organisation. "Australians have a dislike of anything that seems like nepotism," he says. "Respect has to be earned by runs on the board. I would like to think that I've done that, with 14 years as a successful agent. Actually, I wouldn't want it any other way." As a manager, he points to the value of the AIM Diploma of Franchising course, which supplemented his earlier degree in real estate valuation. In running a franchise network, he emphasises the importance of training (see "Beware franchise friction" on page 12). "Aside from an extensive course when a franchisee signs on with us, we have developed some innovative methods for ongoing training," he says. "We provide a lot of information online, especially on changes in regulation and other related technical material. We have also produced a set of videos, but we have found that one of the most effective methods for personal development training is audio CDs. This is because real estate agents spend a lot of time driving between appointments, and CDs mean that that time can be used productively." Training is continually reviewed and modified to take account of broad economic changes that impact on the real estate sector. "A boom requires a different type of marketing strategy to the slowing economy that we are seeing now," says Raine. "At the same time, there are new challenges, such as the rise of the internet as a means of selling real estate. Our response to that is to determine how we can best use the technology ourselves but tie it in with our personal marketing skills. After all, real estate is a contact sport." Raine relates this to the group's long-term goal of further expansion of its overseas operations, especially in Asian markets such as Hong Kong and Macau. "Australia is a world leader in real estate marketing, and is recognised as such," he says. "For Raine & Horne it means using all the skills and expertise that we have in a strategic way as part of our future direction."