Graham Bradley’s questions of culture prove to be prescient

Veteran director and former Business Council of Australia president Graham Bradley. Picture: Hollie Adams

In a speech in mid-February this year, veteran director and former Business Council of Australia president Graham Bradley posed four questions for boards in 2020.

Is the desired culture of the business clearly articulated? Are effective measures of culture discussed regularly? Does incentive compensation encourage poor behaviour? And is there a need for more oversight of non-financial risk?

Looking back on a dramatic year for corporate Australia, where nearly a dozen big name companies and other entities including ASIC, Rio Tinto, Nine and QBE have lost their leaders, Bradley’s comments could hardly have been more prescient. Boards should be well aware of the growing cultural expectations from employees, the public and investors.

“It is judgment,” Bradley tells The Australian.

“I think some boards have had a tin ear to this issue; that’s true in Rio Tinto and AMP. By contrast, QBE acted pretty quickly,” he says in reference to the respective leadership exits.

For boards the task at hand, according to Bradley, is to get to know in detail the culture of their organisation, and that might not be easy. “You meet infrequently and only with senior management, unless you are on site visit or go out of your way to meet employees.”

He says boards may now feel the need to engage more widely with employees to really gauge culture. For decades, there has been a focus on safety and boards listen intently as to whether there is a genuine commitment at a workplace level. Bradley argues the same focus is needed on whether board talk about culture reflects reality.

He labels the failures of Westpac, CBA and AMP at the banking royal commission and with Austrac as a complete breakdown of communication that prevented the escalation of reputational issues.

“Those should have been in neon years before they hit the boardroom. I’ve asked for 20 years: do I sleep well at night because I know that bad news travel quickly up to management and board?

“If we feel it is not coming to us quickly, that’s a major cultural concern. It means that people are either burying news or are afraid to speak up or escalate matters, or that management are hiding things from the board — maybe for honourable reasons — I’ve got to fix this before I confess. What you want in a company is that there is no penalty for bringing forward issues.

“We do a lot to protect whistleblowers, but that is in the extreme. You want people to bring forward smaller things.”

Bradley tells The Australian he is still busying himself at board level, joining Tony Shepherd and Lindsay Tanner as independent directors on the Virgin Australia International board.

“I’ve just survived my first voluntary administration, the first time in 25 years,” he says.