Holly Kramer, Non-Executive Director on the Boards of Woolworths and Fonterra Group, and Pro Chancellor at Western Sydney University, sat down with the Ethics Centre’s Simon Longstaff to chat about the future of business sustainability.

Holly Kramer believes that responsible management has grown in significance exponentially over the last five to ten years. She suggests the old Milton Friedman view of shareholder primacy is a thing of the past, and shareholders are now holding businesses to account and demanding they do the right thing for society.

“There’s a spectrum of different approaches to business stewardship,” she says. “There are those people who don’t understand the way the world has shifted in its attitudes toward corporate responsibility at all. There are those who do understand and “do the right thing” because they know that’s what’s expected of them, and then there are those who do the right thing because it’s simply the right thing to do.”

In the past, business decisions were generally made through the lens of profitability, and the time frame was – at most – a three year view; whereas today, management and boards must take into account the impact of their decisions on multiple stakeholders over longer time horizons, which can sometimes make those decisions seem more challenging.

“Companies are trying to change their metrics of performance. In many companies I’m involved with, you’re measured on financial and non-financial measures; and there is consideration of not just what you’ve achieved but how you’ve gone about it. They’re sometimes called “softer” skills or metrics, but I don’t agree with that characterisation. Acting sustainably requires a broader skill set and tough decisions. A new generation of business leaders are coming through, and they believe it’s important for businesses to be sustainable on every dimension – including diverse and inclusive workplaces, climate friendly practices, meaningful community engagement and leading with purpose.”

“At the end of the day, it’s critical that you hire the right people, people who understand that the decisions they make have a broader impact than just the bottom line. That’s what’s going to make the biggest difference for your business in the long run.”

 

Audio: Listen to Holly Kramer chat about reconciling doing the right thing with remaining profitable.

Holly Kramer on her career challenges.

“When I was in the telecommunications industry, there was a lot of money to be made from complexity. There were multitudes of calling plans; customers usually struggled to figure out what was the right solution for them. Customers told us that they wanted simplicity. Yet every time we looked at how to make them more simple, we couldn’t make the business case stack up. And so there were often internal struggles within the organisation. We were told: ‘look, if you do this, it will be an NPV negative business case, so we just can’t do it’.

“And while we battled with one another internally, ultimately what happened was that the competitors got there first, gave customers what they wanted and we lost market share as a result. I’ve always believed that when, on first glance, the numbers may not stack up, ultimately either competitors or customers will have the final say.”

Holly Kramer on responding to consumers.

Holly Kramer got her start in marketing, and she leveraged that skill when she started running an affordable fashion brand, so she was well aware that for a business to be successful it must reflect changing consumer needs. “Our starting point was to try and understand our customers as well as we could. Lots of research, lots of personal interaction. We learned early on, for example, that the industry’s idealised version of clothing models – young, skinny, and not diverse – didn’t resonate at all with our customers. They wanted to see the clothes look good on people that looked like them. And to feel good about themselves without the industry defining beauty for them.”

The problem with fashion supply chains.

Simon: “The fashion industry is now having to deal with the question of supply chains. There’s the modern slavery legislation, there’s a consciousness about environmental, social, a range of different issues, but I’m particularly thinking at the moment in the fashion industry where people were selling things like a $1 t-shirt – I really don’t know how anyone can think it’s possible to produce something for so low a price without it having adverse effects for the labour standards in the countries where they’re produced. And I think you encountered some of this during the time you were in the industry?”

Holly: “I was in the fashion industry … when the Rana Plaza tragedy happened in Bangladesh, which focused a lot of the world’s attention on human rights and ethics in the supply chain. However, I was working for a business in Australia that was owned by a parent company in another country. They were from a disadvantaged part of the world that had different standards for what was acceptable practice.  And I remember getting challenged about our sourcing decisions because they (the parent company) simply had different standards and priorities than we did.  But we had to do what we thought was right and also be consistent with community standards in Australia, where it was important to ensure fair employment practices were maintained in the companies who supplied us.

“The other issue was that a lot of the companies, to mitigate their reputational risk, just pulled their business out of Bangladesh. The problem with that is that you put jobs at risk in countries where the employees are most vulnerable. We had to ensure that our business was commercially viable, but also that we were doing the right thing by the countries we were sourcing from. It’s important to remember that there are no simple solutions. Companies need to consider the outcomes from a number of different angles.”

 

Audio: Listen to Holly chat about grappling with the ethics of fashion supply chains.

On accounting for diversity.

Over her decades working in the business sector, Kramer has seen boardrooms grapple with the idea of diversity and representation. “Gender is just one proxy for diversity,” she says. “It’s a starting point and it’s easy to measure.”

Kramer believes true diversity lies in having an array of people contributing ideas and solutions and having an environment where different ideas are welcomed. “It’s definitely important, but I don’t necessarily see gender as the most important starting point for diversity. I find it is usually cognitive diversity. Introverts and extroverts. People who like data and people who use intuition. Risk takers and those who are more risk averse. She says she’s always looking for new people who think differently to her because it makes good business sense. Gender is important, and thankfully business has made a lot of progress in that space, but Kramer feels there needs to be ethnic diversity, socioeconomic diversity, as well as generational diversity, which is just as important to achieve.

Holly’s advice for emerging leaders:

  • Doing the right thing is good business
  • Approach challenges with a long-term lens
  • Put yourself in the position of your customers

AUDIO: Listen to the full podcast with Holly Kramer here>>

Holly Kramer is a Non-Executive Director on the Boards of Woolworths and Fonterra Group, and she is Pro Chancellor of Western Sydney University. Formerly, she was Deputy Chair of Australia Post and Chief Executive Officer of Best & Less. She has more than 25 years’ experience in general management, marketing and sales including roles at the Telstra, Pacific Brands and Ford Motor Company.

This episode was made possible with the support of the Australian Graduate School of Management, in the School of Business, at the University of New South Wales. Find out more about other conversations in the Leading with Purpose podcast.

Get more articles and podcasts like this by signing up to our Professional Ethics Quarterly newsletter here.