- Managing Me
- Big Ideas
- Managing People
For Elizabeth Proust AO, life on the board of troubled funds management company, Perpetual, is not easy just now.
Perpetual, which has $22.6 billion under management, posted net profits of $26.7 million in August, down from $62 million the previous year. Its new CEO, Geoff Lloyd, appointed in February, has sacked 87 staff since July, and has committed to shedding another 300 jobs in the next few years.
Proust says: “We are going through a significant transformation of the business. The board’s role is not to do it. It is something the senior management have to do, with the board questioning and probing.”
The board, fully engaged in the changes being wrought, and holding extra meetings to deal with the company's crisis in the lead-up to Lloyd’s appointment, has suffered a pay cut: 42% for the chairman and 25% for all its non-executive directors. Proust explains: “We have slipped out of ASX100 – we are about 135, last time I looked. The benchmarks that applied in the top 100 no longer apply. It is no good saying we are working harder; we have to ask, what are the objective benchmarks? So we asked PwC, which is our remuneration advisor. They came back and said, these ones. That led to the decision.
“The irony is we are working harder than ever before. But look at what has happened to shareholders: the price is down, the dividends are down. There has to be some sharing of the pain.”
Proust is well qualified to handle the enormous changes that are now being undertaken at Perpetual to rebuild its business and returns to shareholders.
She’s seen organisations overhauled before. Early in her career, Proust became a government advisor and then chief-of-staff for the then-premier, John Cain, when Labor regained government in 1982 after 27 years in exile. “The public service was in need of significant reform. There wasn’t a senior woman anywhere in the place, except Rowena Armstrong, who was chief parliamentary counsel. Moribund is not too strong a word to use.”
Cain and his ministers made big changes. “What I was able to observe was John bringing in the next generation of people to lead departments. I was with Jeff Kennett when he did it in the ’90s in a very different way, but John was at the vanguard of very significant public service reform in Victoria.”
Years later, in her last executive role as chief executive of the ANZ’s finance business, Esanda, Proust was the change agent. “We had to have some very significant change. It was way before the GFC, but the whole competitive landscape was changing, and the old ways of doing business had to go. GE had come in ... and there were others offering the car loans that were Esanda’s bread and butter. Our technology was outdated.
“For me, the balance was about how to balance our new strategic direction and how to we get there, with the need for business as usual.”
Proust reaches into those experiences to ask the right questions, and provides the right support, as Lloyd wrestles the fund manager into a new shape. “Whilst Geoff and his team are the ones going through it, and it is a different business and different challenges, I can remember what support is needed. It is the ability to have the conversation with someone. Not saying I am going to do A, B and C, but testing something, allowing the board to test ideas with you and offer their experience.”
The path to the board
Proust’s first passion was politics – she worked free in John Cain’s office when he was in opposition – but her first job was in business in BP Australia’s government affairs division. “The business community, and not just BP, was becoming more professional in its dealings with government,” Proust recalls. “My role at BP was a symbol of that: they realised seeing the chaps at the club wasn’t going to cut it anymore.”
Proust was among a generation of clever graduates who learned the art of leadership at two of the nation’s big companies, BP Australia and Shell Petroleum (now operated primarily from overseas).
BP released Proust on secondment to work for Cain for two years, realising how valuable her experience at the heart of government would be.
There was a degree of luck in Proust’s ascendency in the public service. Plenty of her peers worked pro bono for Labor representatives who became nothing more than backbenchers. Cain happened to be her local member. She met him through her husband, a barrister, and worked in his office while studying for an arts degree and then a law degree.
While in the public service, she was the only person with any private sector experience and became the go-to contact for business, providing her with extraordinary contacts and insights into the viewpoint of big businesses.
This early opportunity set Proust on a very unusual course for business leaders – a course that moved between public and private leadership roles. “It happens in America, there is a lot more mobility and interest in other sectors. In Australia, people tend to join the political process and stay there or join the private sector and stay there.”
Proust is the chairman of the Bank of Melbourne, and Nestle Australia, and a non-executive director at Sinclair Knight Merz, Perpetual, Insurance Manufacturers Australian, and the Sports Australia Hall of Fame.
A woman in the vanguard
Proust names her mother as a big influence. Her mother was denied the opportunity to finish school because she was destined only for motherhood and marriage. Proust was the eldest of nine children. Her mother was determined that her daughters would not suffer the same inequity. “She had a burning ambition for her daughters, rather than her sons, that we would be educated,” says Proust. “It was more important to her that we were doing our homework, reading and studying, than child-rearing or domestic tasks.”
Proust failed to learn much about domesticity as a result, a lack that helped her husband step into the role of sharing domestic duties and the rearing of their daughter. “On our honeymoon, he learned I had no idea how to cook, and no interest in changing that. So if you want to eat and not eat out every night, someone has to do it.
“If my husband hadn’t helped – more than helped – raise our daughter and do domestic tasks, I would not have been able to do what I have been able to do.”
As part of the overhaul of the public service, Proust saw how policy and attitude change the opportunities women have in their careers. She became deputy head of the industry department, under director-general, Hans Eisen. “If only men applied for a leadership job, he would say to the other deputy and me, ‘It can’t be beyond our wit to think of some women who are qualified for this job. Go and find some women and ask them to apply.’ He was making sure there was something like a level playing field.”
Proust’s determination to help women ascend to leadership roles is legendary, and includes membership of organisations such a Women & Leadership Australia, acting as a formal mentor for women in past government programs, and speaking publicly on issues of women and leadership throughout her career.
Transforming from executive leadership to the director’s role
As an executive, Proust had a consultative approach listening to viewpoints, but firm once her decision was made. She was persuasive, and seen as approachable by the junior ranks. And she worked ferociously hard.
“During 2005, my husband retired from the bar after 35 years,” she says. “For a good part of 2005, I would be up at the crack of dawn, thinking, ‘He is still asleep in bed. Why am I doing this?’”
Despite the lack of female role models, Proust had decided during her executive career that she would take board positions when she retired. “I was 55 at the end of 2005, it just seemed the right time: I announced my retirement from ANZ [Esanda].”
Katie Lahey, managing director at Korn/Ferry International and a long-time friend and colleague, put Proust’s name forward for a position on Perpetual’s board to the then chairman, Bob Savage. “He had shown Katie the job description for the role – has been chief executive, financial services experience, preferably lives in Melbourne because they were overweight Sydney – and Katie said you should talk to Elizabeth. I went into recruitment process and was offered the role.”
The difference between the executive and board leadership is profound, says Proust.
“You are there as a member of the team. The chairman is in charge of board meeting and the AGM and interactions with the CEO and shareholders and others, but there isn’t a hierarchy.
“It is a much finer balance between being in the team and having your individual point of view. When a decision is made, even if you have said, I think we should do A and the board goes with B, you agree with B, you don’t undermine the decision – unless you take a drastic step and resign.”
The struggle for any board is getting to know each other. “It is not like a football team because you might only get together every month. It is not like an executive team, because you are not together all the time,” she says.
“It is about how can you actively work together, so you need to develop strong interpersonal relationships to understand where the other person is coming from, to feel comfortable at putting a different point of view, to challenge a viewpoint.”
Regular dinners held before board meetings help provide the social cement, as does a thorough recruitment and induction program, says Proust. Once boards have worked together for a long time, more can be achieved with modern technology such as video conferencing.
What not to do
The worst mistake a leader can make is to let their ego take control. “We went through a stage of the leader as hero. Where if you read their bio somewhere or in the magazines, it would effectively be, ‘I did this all by myself.’
“Certainly in the companies I have worked for, they are there before you arrive, and they will be there long after you leave. Your role is to harness the team. The worst mistakes I have seen is where ego takes over.
“It all ends in tears unless people can learn from that. It is hard to be inspired, no matter how good the brand is and how good a place to work, unless you can identify with the leader. That is almost always your boss, and it is usually the head of the organisation as well. There needs to be some humility in leadership and too often, there is little or none.
“It might be changing. Certainly the GFC has made people change if not how they operate, at least how they present themselves.”
A Collingwood tragic, and still smarting from last Friday’s loss, Proust nevertheless admits she has just finished reading Sydney Swans footballer Michael O'Loughlin biography. “I made sure it was on my iPad, so anyone sitting on the plane would not think I was a Swans supporter. But one of the scandals in this country is its treatment of indigenous people. The standout to me is not Micky O, but his mother, who was determined that she would raise her kids, with all the disadvantage of an indigenous woman in this country, to succeed.
“He repaid her by buying her a van to take the rest of the kids to school, and buying her a house. There are some really deep values there. They are the things I find inspiring.”