Management: 10 breakthrough decisions of 2011

From the Centro directors ruling, to the return of Mark McInnes and the Qantas grounding, we look back at this year's seminal management decisions.

It’s never an easy year to be a manager.

However, while it’s unlikely many people expected to get to the end of December 2011 seamlessly and painlessly, there would be even fewer who expected the year to be as volatile as it was.

The challenges for business leaders this year were varied, and the playing field was not so much uneven as fluid. Managers who started the year thinking it would be a straightforward 365-metre dash would have soon found hurdles to jump, political footballs to juggle, rulebooks changing mid-race and shifting goalposts where they were aiming.

Looking back at the year, there were scores of important developments, but to demonstrate just how much changed, and in the spirit of stoking holiday debate, here’s the Business Spectator countdown of management moments that mattered this year.

10. Pacific Brands’ lawsuit

Under the radar this year flew a business spat that perhaps deserved a little more attention. In June, a former manager of Pacific Brands’ Berlei brand, Sally Berkeley, launched legal action against the group for unfair dismissal and workplace bullying. Allegations trickled into the press about assaults and harassment.

Ordinarily this would be an interesting case to watch for managers and executives who may have to deal with these situations themselves one day, but it has particular resonance since Pacific Brands CEO Sue Morphet is one of the relatively few women to head a major public company in Australia and the brand is positioned as a champion of workplace inclusion and positive employment practices. As a lesson on making sure what your company says lines up with what your company does, it’s a valuable one.

9. Centro directors’ ruling

In one swift court ruling in June, Justice John Middleton made it clear the bar had been raised for Australian directors. Finding that eight Centro directors and executives had breached their duty of care in allowing erroneous financial statements, Justice Middleton also fined the former CEO $30,000 and disqualified the former CFO from management for two years.

While some argued the majority got off easily, the ruling made one thing explicitly clear: There is no legal hiding place for directors behind the advice of consultants or financial advisors. Every director is expected to pay reasonable attention to what goes through their board, and possess a basic level of financial literacy.

8. Olympic Dam approved

The green light for BHP Billiton’s $30 billion expansion is, of course, important if you work for BHP or an anti-uranium lobby. But it’s about more than that. The project – along with the extensive investment in expanding infrastructure BHP and Rio Tinto are making in the Pilbara – is an emphatic stamp on the business landscape that resources is king.

The sector making money in Australia right now is mining. The sector making investments, attracting investment and generally talking about investment is mining. The sector making jobs in Australia is mining. Olympic Dam, with its potential for up to a trillion dollars – yes, trillion – in lifetime value, is the equivalent of the mighty cattle and sheep stations established in the early history of Australia. Olympic Dam is the future history of Australia.

7. ANZ decouples its rates cycle

A recent development, but an important one, is the decision by ANZ Banking Group to announce its rates movements on the second Friday of the month, essentially separated from the first-Tuesday cash rate decisions of the Reserve Bank of Australia. It’s a bold move, which – if actually held to – will likely push the other major banks into a similar pattern, taking monetary policy into the hands of public business.

For every manager looking at debt and funding, this is another confirmation of a longer-term trend toward the banks bringing rates closer in line with global cost fluctuations.

6. Gerry Harvey relaunches online

As the past week has recorded the slaughter of retail stocks on the ASX, led by poor earnings forecasts from JB Hi-Fi and Billabong, the conversation turns once again to retail’s greatest enemy and possible saviour – the internet. After all, you can still buy a book from Borders’ online store almost a year after REDGroup collapsed.

The most defining moment for online retail this year came, however, from the loudest voice in the landscape. Gerry Harvey, who spent Christmas 2010 fighting against the same use of globalisation and bargain-hunting which electronics retailers had profited off for years, decided to stop fearing the sharks and jump in for a swim and take them on. Time, and annual reports, will tell how successful this strategy is, but it’s a defining moment for the state of troubled retailers.

5. Two-strike laws pass

Amendments to executive pay legislation passed without any great fanfare this year, but it was only a matter of time before they made a splash. The first round of AGMs after the laws took effect in July and August has seen minority protest votes against multi-million dollar bonuses become genuinely newsworthy.

And in 12 months' time, when the first board spills are triggered by a second ‘strike’, things will really heat up. No one can be sure who will be the first highly-paid director or executive to face the chop because of a riled-up bloc of shareholders, but there will be one. And more after that.

After a year in which Occupy protests against corporate wealth swept the world, and Time magazine named ‘the protester’ as its person of the year, laws to change the power relationship between boards, remuneration committees and shareholders are a grenade to throw into the mix.

4. Steve Jobs dies

If you haven’t read an article this year on why Steve Jobs was an important figure for entrepreneurs, CEOs, businesspeople or, frankly, everyone, then I envy you.

He’s everywhere, an even brighter business star in death than in life, during which he was truly a blinding supernova. For Apple, it's a management breakthrough which forces major change on the company, and tests their succession planning. His death, and his life’s importance to the global economy, is perhaps best summed up by the satirical obituary headline which ran in American newspaper The Onion: "Last American who knew what the f—k he was doing dies”.

3. MRRT passes

While the government passed a lot of legislation with relevance to business and managers this year, it is the passage of what is simply referred to as ‘the mining tax’ (‘as if there’s just one!’ joke the miners, crying into their lobster) which contains the greatest implications and most salutary lessons.

On the bad-for-business left hand, it is one of the most wide-ranging attempts by the federal government at spreading the wealth, a deliberate intrusion into Australia’s most successful industry for the benefit of the rest who have become – whether through ineptitude, bad luck or poor timing – uncompetitive and needy. And worse, it’s all made possible by a deal brokered with the Greens.

Except then there’s the good-for-business right hand, in which it represents one of the greatest victories and defences of business from such an intrusion in Australian history. Despite arguing consistently that a profit tax was more logical than a royalty system, the miners have won federal rebates for the ever-increasing royalties state governments charge them while the Gillard-Rudd changeover led to the rates proposed in the original RSPT being watered down to a shadow of what was originally proposed. The MRRT which the resources industry ended up with – all made possible by a deal brokered with BHP, Rio and Xstrata – is an achievement of lobbying and government negotiation every manager should admire.

2. Mark McInnes returns

With the confident deflection of inevitable ethics questions from journalists in his first media conference call at Just Group, Mark McInnes returned to a chief executive role and completed a redemption few expected in its totality and speed.

Given a lifeline by Melbourne icon Solomon Lew, the return of McInnes – who left David Jones under the cloud of a very public sexual harassment case – contains a lot for managers to think about, but perhaps the best message to take away from the saga is this: Never write anyone off. For all the worst faults of politicians, businesspeople and, in general, human beings, they will fight back with a mixture of hard work and help from surprising places almost every time. Since you never know who will fall when, and who will be restored to favour, the McInnes lesson is pertinent.

1. Qantas grounding

There was never any doubt this was the management moment of the year. The ripples through government, business and the unions stemming from that Saturday morning in October will continue for years.

It seems unnecessary to rehash what happened, but with the resolution of the engineers’ dispute this week, some of the effects for management are becoming clearer.

It appears that most of the unions involved will win the job security protections they sought for at least the next three years, while Qantas will remain free to expand into Asia and base aircraft offshore. That’s a partial victory for unions, but the larger intrusions into the traditional role of management seem to have been avoided. Then there’s the elevation of Bill Shorten to the Workplace Relations ministry and the pending review of the Fair Work Act, as well as the precedent set by the Fair Work tribunal on its ability to act in the national economy’s interest. And the very public reignition of industrial relations policy as a key point of distinction between the Liberal and Labor parties.

In every way, the guts and commitment of Alan Joyce to cause global chaos doing what he believed was essential is a defining moment in Australian business.

Let’s hope the defining moments of 2012 are a little less divisive.

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