The idea that there is a conflict between doing the right thing for customers and making money is a “myth”, according to Westpac chief executive officer Brian Hartzer.
Speaking yesterday at a Committee for Economic Development of Australia business event in Brisbane, Mr Hartzer said making decisions to boost short term profit at the expense of long term customer relationships was “a very short-sighted way to think about doing business”.
He said this was one of the key leadership messages he had taken from reflecting on Westpac’s 200 year history, a milestone celebrated this year.
“It’s a myth that you can’t do the right thing for customers and make money. Running your business for the long term is the right way to maximise value for shareholders,” he said.
“Some of the traders who trade in and out of the stock day in day out won’t like that view, but frankly that’s not who we want buying our stock. We want people who see what we’re trying to do for the long term. And we’re going to run our business in ways that grow that long term value.”
Debby Blakey, chief executive officer of industry superannuation fund, HESTA – which invests $40 billion of its members’ money – agreed that businesses can no longer get away with being out of step with their customers' or investors' expectations.
"We're a responsible investor. We're looking for that trust and authenticity, that alignment of values, and Australian business needs to take note of that. It's not just about bottom line profit. It's absolutely about the long term value. There are a lot of short term views in Australia and we need to change that."
Emma Petherick, a partner at management consultancy McKinsey, told the event that challenges for corporate leaders were becoming more complex as workforces undergo seismic shifts. She pointed to macro forces – including weakening trust in global capitalism, the “hollowing out of the middle class” which is driving income inequality, and an “explosion in transparency”.
When asked about the role of leadership in recent banking scandals, Mr Hartzer conceded that “banks are in a pretty dark place from a reputational standpoint”, albeit not commenting on specific events.
He said this reflected a number of factors, including those brought on by the banks themselves, and that banks across the industry were at various stages of responding. He cited a number of examples where Westpac had changed policies, processes and products to address community concerns, including removing sales incentives for branch staff and personal bankers, and improving the way fees were communicated.
Ms Petherick said a massive change leaders must adapt to was the shift in the structure of how people and companies operated. By 2025, she said 75 percent of workers will be millennial and far more employees will be “gig workers”, or working multiple jobs at various times of a week. Research by management consultant Expert360 was cited, which predicts 40 per cent of professionals will be freelancers by 2025.
Ms Petherick said responding to these big shifts required leadership to be “adaptive” rather than “technical”.
Mr Hartzer agreed and pointed to the need for companies to overhaul career management systems, physical work environments and work practices to create more dynamic environments.
He also highlighted the importance to the new generation of taking a stand on issues that were important to Australia’s prosperity. He said this had been key part of Westpac’s approach throughout history, including the actions taken by the bank to achieve gender equality, tackle climate change and, more recently, in support of marriage equality.
“We appointed Australia’s first female teller, first female branch manager, first female bank CEO. Now, 49.9 per cent of leaders are female across Westpac and, in two months, we expect that to be 50 per cent. That’s an important milestone,” Mr Hartzer said.
“On marriage equality, we’re saying to our people ‘vote’ – but we’re not going to say which way to vote. Westpac has been on the record as being supportive of marriage equality, and I’m personally on the record as being supportive of marriage equality, that it’s the right thing to do. I’m not going to tell people how to vote but I’ll tell them why I’m supportive.”
Reflecting on his greatest leadership insights since taking on the Westpac Group CEO role, Mr Hartzer said he’d become “more confident and courageous about the role of purpose and emotion in how you lead people”.
“When you give people a sense of purpose and show them how what they do makes a difference in the lives of customers, and that they’re doing something really important, it’s remarkable how many people start to get on board.”