Feel the burn: AustralianSuper CEO applies a blowtorch to encourage progress
Opinion + AnalysisBusiness + Leadership
BY The Ethics Centre 1 JAN 2018
It would be nice to think business is stamping out bad behaviour because it is the right thing to do. But that rarely is the case.
The growing pressure from regulators and the community mean employers have little choice but to clean up their acts, says Ian Silk, the CEO of Australia’s biggest industry superannuation fund.
He’s no stranger to a bit of pressure, adept at applying the “blowtorch” to hasten positive change. With $125 billion in assets, AustralianSuper was an activist shareholder in voting against the remuneration report of the Commonwealth Bank of Australia last year.
“The more controversial the issue, the more vociferous are the people who have strong views either way and, sometimes, you are in the middle of it and you have to make a judgement as to which way you will go.”
Previously, Silk had spoken out about the need for bonuses to be awarded for exceptional results, not just for performing the required tasks and, in the case of CBA, was arguing for more rigour around the bonus process.
The fund has also pledged to vote against the appointment of male non-executive directors where there are no women on the boards.
In an interview with The Ethics Centre, Silk says AustralianSuper’s high profile brings an obligation to speak out on “certain issues”.
“The more controversial the issue, the more vociferous are the people who have strong views either way and, sometimes, you are in the middle of it and you have to make a judgement as to which way you will go”, he says.
Ethics in business is a hot topic, particularly in the financial services sector.
“[It is], in a very large measure, a response to the egregious behaviour that is now so well publicised and readily-known by the public”, says Silk.
“Everybody knows unethical behaviour when they see it and I think there is a move back to appropriate norms. I think there is a recognition that much of the bad behaviour in the financial services sector is wrong.”
Silk says it is difficult to discern if this revitalised interest in ethics is deeply-felt, or whether it is a protective measure to avoid getting caught and penalised
“But I think there is a slow improvement in behaviour, much of it regulator and government led, but much of it community-led, consumer-led, some industry associations take a strong position on it.”
In terms of standards in his own organisation, Silk says he had been confident that the culture and behaviours at AustralianSuper would stand up to scrutiny. This is partly because, as a member-organisation, its sole purpose is to act in the interest of members and this provides a de facto ethical framework, he says.
However, earlier this year, he decided to get a second opinion. The Ethics Centre was engaged to undertake a “culture audit” to test whether the fund’s policies, procedures and practices were aligned with its purpose, values and principles.
“In my darkest moments, I just wondered if we had all drunk the Kool-Aid”, he says.
The results were gratifyingly positive and were affirmation that AustralianSuper and its 550 staff are on the right track, says Silk, who has led the fund since it was founded in 2006.
However, The Ethics Centre also found some areas for improvement, including a culture that could be “conflict averse”.
“We weren’t as robust as we might be. There was a tendency to avoid conflict in certain parts of the organisation, so we could introduce a bit more aggression into the organisation – aggression in a positive sense”, he says.
“People who are rude to others are counselled and abusive language or behaviour is not tolerated and could be regarded as a sacking offence.”
“Those areas where improvement opportunities were identified, we have consciously thought that we want to do something about that, we want to lift the standard in the organisation … so we have an action plan, we have done all the things that you might do with a business plan, we have identified all the particular areas, we have assigned responsibility to people, we are going to check in periodically to make sure progress has occurred.
“We haven’t just used it as a soft survey.”
It is too early to see much in terms of a change in culture since The Ethics Centre report was completed, but Silk says some progress has been noticed, such as more robust questioning in meetings.
“We are getting better outcomes as a result”, he says.
Silk’s commitment to respectful behaviours is well known. According to a recent report in the Australian Financial Review, every recruit to the organisation gets a one-and-a-half hour briefing from Silk on the fund’s four values.
People who are rude to others are counselled and abusive language or behaviour is not tolerated and could be regarded as a sacking offence.
The Ethics Alliance sat down for a further conversation with Ian. He shared his insights on the importance of discussing ethics with your network, why organisations always need to work toward good ends, and why leaders can’t just talk the talk. They need to walk the walk.
This article was originally written for The Ethics Alliance. Find out more about this corporate membership program. Already a member? Log in to the membership portal for more content and tools here.
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