The board of Qantas has devised a three-year plan of action for their COVID-19 recovery which takes into account not only short-term planning but also the long-term horizon, says Qantas chair Richard Goyder.
“I think, at a board level, we're just going to have to look at a broader range of scenarios,” he said at the event, titled ‘Governance resilience and recovery in an ongoing pandemic world’.
“We need to make important decisions that support the brand and all our stakeholders within that uncertainty.”
On a global level, the challenge will be how we all think about the next one to five years, particularly in light of what is currently occurring in Europe in the US, because planning must be not just for a very steep recovery but also about the consequences of monetary and fiscal policy initiatives, he said.
The long road back for Qantas
Qantas itself went into the crisis with 29,000 staff. Six and a half thousand were made redundant by October, with a further 2,000 baggage handlers made redundant in the last week of October. This year, 15,000 staff have been stood down including some highly skilled pilots. “A whole bunch of them are headed down to Esperance in Western Australia to drive harvesters,” said Goyder. “So their careers have been turned upside down.”
In the future it will be a priority for Qantas to help them return to the airline, he said. “And how they rebuild with us, having had such a dramatic change.”
Goyder also said expectations of listed companies are going to increase within the community and from stakeholders such as investors, who are demanding a greater focus on climate change and other areas of social responsibility such as gender equity and workforce participation. “And as a consequence, I think the risks are increasing as well.”
Directors’ and officers’ insurance is incredibly difficult and expensive to obtain, which further increases risk, he told participants.
However, he added that seasoned directors had proven their worth during the crisis and would continue to do so during recovery. The Qantas directors who had been through the 2013 shutdown and through the SARS crisis got through this year well because they had those “scars”.
Looking after staff and young people is of major importance in the recovery, he said. “There's still a disconnect between what we're trying to do in this country and what the jobs of future are going to be. I think that's probably going to be exacerbated this year and we owe it to kids who are finishing high school to do further study or whatever they are doing to ensure they've got the skills for jobs in future.”
Following is an edited summary of the perspectives shared by Michael Chaney AO and Rebecca McGrath FAICD at the event.
Oz Minerals fights back with innovation
Oz Minerals has put innovation at the core of its recovery plan, according to McGrath.
“At Oz minerals, how we do things, the time they might take, the hurdles that we put up and the way we operationalise our projects, certainly has changed. And I think there is a new amount of agility that will allow us to potentially achieve greater things than we might have previously from the same sorts of projects.”
The board has tried to put an equal footing emphasis on opportunities as well as threats. “And so one of the things that we fully enacted – I think much more significantly in the last six months [to] nine months – is putting more time to these discussions. So the board pack gives us an update on all the key opportunities … risk management is about threats, but it's also about opportunities.”
Health has also been a major focus for the board this year because of its global operations. Whilst most of Oz Minerals’ operations are in South Australia, they also have an operation with hundreds of people in Brazil, which has been strongly affected by COVID-19.
“We've had more than 50 people who have suffered COVID-19. I'm delighted that all of them have recovered,” she told participants at the event.
The board had focused on people, on maintaining liquidity, and on scenarios involving shutdowns and supply chains.
But some staff have made remarkable sacrifices to stay on site. “We've had some amazing contributions by employees who offered to stay on the site when they know that they can leave. Sometimes it's been for four weeks to continue the site operations and offer leadership, which is a tremendous commitment. I know that's had quite profound effects on families.”
Another valuable advance in technology had been for the board to conduct virtual site visits. “That was terrific, because it meant we got to meet with the leadership teams and use the technology that they deployed. They had drones with cameras, so we went down underground in real time with the mining team in South Australia.”
The virtual site visits were an example of the way technology can be used to engage and converse with staff.
“I would encourage those companies with operations that they need to visit to think about how they can use technology like this in an ongoing fashion.”
Investment in culture and purpose has never been more important and Oz Minerals is reaping the benefits of previous investment in these areas. “Our purpose is going beyond what's possible to make lives better, which very much links to the way we do things as well as what we do and what we produce.”
The board has reflected on going beyond what's possible and in the last few months have spurred innovation and creativity that is now allowing it to accelerate strategy. The company has looked at ways it can move faster, and will do that by measuring how it works, the way it works and the methods it uses.
“In the culture area, we have had a lot of barriers and we actually held a number of sessions during the peak of the pandemic amongst employees and with the board to identify those barriers and remove them. And so now we are at a point where we can move very quickly and confidently.”
Wesfarmers invests for the long-term
Michael Chaney AO FAICD, Chair of Wesfarmers, said that when the Victorian lockdown occurred, the company announced it would continue to pay staff for the course of the lockdown. When six weeks became 12 weeks, it had a significant effect on the bottom line, but this was regarded as a long-term investment, he said.
“Similarly, we went out to our community partners, particularly the arts companies,” he said, and gave them extra money to see them through the crisis. “Again, we think that's in the company's interest in terms of corporate social responsibility.”
Another major effect of the crisis was to open the eyes of many leaders to different types of risk, he said. Wesfarmers has this year, for the first time, taken on a group Risk Officer to make sure that the board is across risk for the whole group of operations.
“The one takeaway for me (from the crisis) was that this is about balancing the books and that if you have a healthy balance sheet in the good times, you're more likely to be able to cope with the bad times.”
Governments in Australia have reacted well to the crisis, he added. “Compared to the US, we're a thousand times better off and they are a thousand times worse off in terms of death and infections. And that's not a small thing.”
Recovery and resilience will be explored further at the Australian Governance Summit in March 2021. Register here for the summit.