Magazine article

When Brian Schwartz AM FAICD was CEO of Ernst & Young in the 1990s, he realised something wasn’t quite right. The firm was employing 50 per cent males and 50 per cent females at the graduate level, but by the time they rose through the ranks to become a partner, only 2 or 3 per cent were females.

“It was clear that something wasn’t right, but this was in the late 90s,” says Schwartz. “I thought about it and I realised that my two daughters were fast approaching the stage where they would be in the workforce and I knew one thing for certain – they were a lot cleverer than me and they weren’t necessarily going to get the same opportunities that I had.”

This realisation set Schwartz on a path that ultimately led him to try to redress the gender balance in Australia’s executive suites and boardrooms. He is currently working on a project at the Australian Institute of Company Directors (AICD) examining the type of gender equality reporting organisations should conduct.

Schwartz is the chairman of the Scentre Group and deputy chairman of Westfield Corporation, a former chairman of Insurance Australia Group Limited and former deputy chairman of Football Federation Australia.

A qualified accountant, Schwartz emigrated from his native South Africa with his wife and two young daughters in the late 1970s. He joined what later became EY and while he hadn’t planned on remaining an accountant, he stayed at the firm for 26 years.

“Career long-term planning was never my strong suit,” Schwartz says. “Essentially, things happened because I was in the right place at the right time. I worked hard, kept challenging myself and found new opportunities arose.”

In the late 90s he gathered the EY partners and “spoke from the heart” about gender equity. But it had little impact: “emotion doesn’t generally grab accountants,” he says.

“We thought about it some more and came to the realisation that it was costing the firm some $300,000 to recruit a new graduate and take them to the level of manager or senior manager in the firm, and then they left,” he says. “The accountants understood that it wasn’t a terribly good investment decision.”

By the time Schwartz left EY in 2004, some 12 per cent of partners were female, which he says was “better, but far from magnificent”.

Women on boards

Schwartz has now turned his focus to female representation around Australia’s boardroom tables. The number of women on boards has risen from about 9 per cent a few years ago to around 22 per cent today, but Schwartz says that’s still not enough.

“Every time the new numbers come out, we cheer and say: ‘Wow. Aren’t we doing well?’ My answer is, we’re not. Why we should think that 22 per cent of all directors being female is fantastic, when 50 per cent of the population is female, is beyond me,” he says.

He has put his talk into practice at Scentre Group, where 15 months ago there were no female directors after the shopping centre group restructured. Today there are three – former banker and lawyer Carolyn Kay FAICD, Twitter executive Aliza Knox GAICD and former Random House Australia and New Zealand managing director Margaret Seale FAICD.

“It wasn’t terribly difficult to find outstanding and relevant directors. It’s not as if any of those directors are there because they’re female. They’re all there because they were really good at what they did. So, I don’t buy the argument that the pool is not necessarily big or strong enough,” he says.

Schwartz isn’t sure what the answer is to increasing female representation on boards, whether it is for senior directors to continue pushing hard or “something radical” like quotas of females for a period of time.

He acknowledges that quotas are a very controversial idea. “Every time I raise it, I get the same raised eyebrows. But, in fact, when I raise it in smaller circles, I almost never get raised eyebrows – people seem braver in smaller circles,” he says.

“I get the sense that people are coming to the realisation that, if we keep doing what we’ve always done, we’ll grow to 23 per cent next year and to 24 per cent the year after then we’ll come back down to 23 per cent,” he adds.

Schwartz and other directors (four men and three women) are working on an AICD project to examine the way companies report on their gender representation. He says that reporting requirements are too vague and companies can meet reporting standards without actually revealing what its targets are.

Leadership, accountability and transparent reporting of the facts, along with growing the female pool at executive level, will all help get more women in the boardroom, he says.

Pastures new

Schwartz left EY aged 51 because he had moved into an international role and found the constant travel to London and New York wearing. He called on his friend David Gonski AC FAICD for advice about what to do next. Gonski persuaded Schwartz that he should become CEO of the local arm of Investec Bank, which he chaired. He also joined the board of insurance company IAG soon after. He became chair of IAG in 2009.

When then IAG chairman James Strong approached him about taking on the top job, he felt that he didn’t have sufficient expertise in insurance to lead a major publically-listed insurer. After considerable debate Strong told him that he believed the role of the chairman was one of facilitation, in addition to strategy, succession and influencing the culture of the organisation. This facilitation encompassed many stakeholders including, but not limited to, the board, management, the people in the organisation, and shareholders.

Schwartz said he believed he could do that and describes his style as chairman as “collegiate”.

“I listen a lot. There is so much knowledge around the table that the challenge of the chairman is to get it all out and then facilitate the board to make a decision.”

He is proud that the boards he chairs almost always reach a decision by consensus. In fact, he can’t recall any decisions having to go to a vote, although he says it may have happened once or twice.

He left the IAG board this year after 12 years, in line with IAG’s policy of keeping directors for about a decade.

“For me, not just on boards, but in most things I do, I think that 10 years is generally the right period of time. You give all you’ve got, then you can have new people coming in with different ideas and you can move on to different challenges,” he says.

While he was at Investec he received a call asking if he’d like to join the Brambles board and shortly thereafter the Westfield board. “Again, I’d love to say that each one of them was magnificently planned and executed but they weren’t,” Schwartz says.

Schwartz’s association with Westfield dates back about a quarter of a century to when he was providing services to the company at EY, and worked with Frank Lowy AC FAICD and his sons Steven, Peter and David. Years later he received a call from Frank, saying that then prime minister John Howard had asked Frank to chair the Football Federation of Australia and he wanted Schwartz as his deputy.

“I think it would be fair to say that people’s immediate reaction to that is, if Frank asks you to do it, you do it, and that’s probably true as well, but the reason I said yes without hesitation was, despite being a South African and despite growing up in the Orange Free State which is a rugby-playing province, I’d only ever played soccer at school and my son had only ever played soccer and now my grandson only ever plays soccer,” Schwartz says.

It was this association that led him to the Westfield board. He took over the chairman’s role at Scentre Group earlier this year following the retirement of Frank Lowy after 55 years with the company. Schwartz told the company’s AGM in May that it felt like coming off the subs bench to replace soccer great Pele.

“When you walk around Westfield today, you can still feel the heritage, the 55 years, the legacy that he left behind, but you also can feel a sense that, while we will never forget the legacy, [Scentre Group CEO] Peter Allen MAICD and the team are now taking us to the next step of that journey,” Schwartz says.

Westfield split

That next step was outlined in the Westfield Group restructure and merger proposal of April 2014, which resulted in the split of Westfield into an international arm – which retains the name Westfield – and an Australian arm, Scentre Group, which owns 40 shopping centres in Australia and New Zealand.

Along with the local shopping centres, Scentre Group retained capabilities including property management, leasing, design, development, construction, marketing and funds management.

“Scentre Group’s operating strategy will be to create and own leading retail destinations across Australia and New Zealand by integrating food, fashion, leisure and entertainment and using digital technology to better connect retailers with consumers,” the company said in the 2014 document.

“Scentre Group will intensively manage its shopping centres, with a particular emphasis on delivering an optimal mix of retailers, maximising the sales productivity of retailers at each shopping centre and providing superior experiences to consumers. These experiences range from parking, shopping centre ambience and retailer mix to food, leisure and entertainment precincts and digital connectivity.”

Shares in Scentre Group and Westfield have performed strongly since the 2014 split. “With Scentre Group your investment is in Australia and New Zealand as opposed to a broader global entity and that focus is what I think the market is responding to,” Schwartz says.

Lowy’s Westfield Corporation office is in the building next to Schwartz’s and Schwartz says he isn’t averse to popping in to seek the 85 year-old founder’s advice. “Why would I not want to use that 55 years of experience?” he says. “He’s a wonderful long-term thinker and planner.”

Schwartz says that being on site and walking the corridors is part of the way that the chairman can understand and influence the organisation’s culture.

He has a weekly meeting with CEO Peter Allen - the pair confirm the meetings a year in advance. “The meeting with the CEO enables ideas to be raised sooner rather than later,” Schwartz says. “We may talk about the football on the weekend but it’s just keeping that connection and understanding what’s going on around the company and giving him the opportunity to chat about anything.”

Schwartz says his professional services background has been a help in his non-executive director career, because it gave him a very broad base – he worked as an auditor, then in entrepreneurial services, corporate finance and ultimately management.

“When you move to a non-executive role, the risk is you want to continue to be management,” he says. “That’s a challenge for new directors but I didn’t find it particularly hard. I found it interesting. I found that I could ask the questions and get answers and move on rather than have to delve into the detail.”

The role of the board in setting company strategy has changed, says Schwartz. It’s no longer a once-a-year exercise where the board ticks off the management strategy. The world is changing too fast to leave it that long.

In June he and three new board members visited three of the company’s shopping centres in Victoria, talking to the management about each centre’s individual strategy and walking the floors of the centres, so they could get a better understanding of the business.

Schwartz says every board he has been involved with in recent years has at least one digital specialist. At IAG it was Alison Deans GAICD, the former chief executive of eBay Australia, at Scentre Group it is Aliza Knox and at Westfield it is Don Kingsborough, a former PayPal executive in the US.

“The makeup of the board has to reflect the strategy and the customer base of the company,” Schwartz says. “In the digital space, it’s a recognition that we need to keep understanding the ever-changing impact of data on our customers and our retailers.”

Long-term view

Like many other directors, Schwartz says that balancing the long-term view of the company against the short-term focus of many investors, analysts and fund managers is a challenge. He says boards can’t ignore either side of the equation and should always listen to the views of investors.

Even then, it doesn’t always turn out precisely as planned. He recalls that at IAG the company broke its Asian expansion plans into six “bite-sized chunks” that could be more easily digested by the market, although investors still objected to its plans to expand in China and the share price shot up after the company abandoned the plan.

“Strategy is the board’s responsibility and there will be occasions where they won’t agree with the investors and the investors will then make a call as to whether that works for them or not,” says Schwartz.

Outside of work, Schwartz devotes time to his family and to sport – including watching his grandchildren play sport. “I’d love to say that I’m really good at leaving work behind – I’m not. So, a lot of my time is spent reading and learning, but I do spend a lot of time with my kids – three kids and six grandkids,” he says.

He is also the chair of a private charitable foundation and is involved with the Observership Program, which facilitates the involvement of young, talented people on non-profit boards. One observer is currently involved with the Moriah Foundation board of which Schwartz is chairman.

“Hopefully, at the end, the observers are in a better position to give their time to not-for-profit (NFP) boards. Many of them go on, once they’ve served their apprenticeship for a year, to be offered a directorship in the NFP,” Schwartz says.

This leaves just one final question for Schwartz – does the Australia of today present more opportunities for his daughters than it did when he was at EY two decades ago? One of his daughters is a full-time mother who worked in funds management and strategy until her the first of her two children was born. Schwartz says she has had “all the opportunities she ever wanted” and was lucky enough to be able to choose to be a full-time parent.

His other daughter, who also has two children, is a senior lecturer at the University of New South Wales (UNSW) in criminal law and indigenous justice issues. UNSW Law does a good job in accommodating parents who are full-time academics like her, Schwartz says.

“I think my daughters have grown up with a sense that they’re equal to anybody else out there and good enough to get those opportunities and then they make choices based on those facts rather than a sense that they can only do X or Y,” he says. “They’ve never felt constrained at all about what is possible.”