When communities are at risk

A conversation between Good Business' Michael Walsh and John Ingram.

GB: I would like to thank you for agreeing to speak with us, John, and with the readership of "Good business". I know you serve on a number of boards, but I believe your career was principally developed at the Crane Group. Is that correct?

JI: Yes. I spent 34 years at the Crane Group in various general management roles and, of course, the last 14 years as the Chief Executive and Managing Director. Crane is a diversified industrial, specialising in manufacturing and distributing building products. It employs over 5,000 people in Australia and New Zealand and turns over in excess of $2 billion.

In the last fourteen years, it has transformed from a family controlled public company, with a market capitalisation of $30 million to something just under $500 million at present.

I'm actually a certified public accountant but have spent most of my life in general management.

GB: Have you anything particular that you would like to say about your experience of the ethical dimension of doing business?

Foundations for good governance

JI: I firmly believe that the ethics and values of a company are integral parts of the foundations for an organisation to operate and grow successfully.

The challenge is to make sure that the platform is communicated down through the organisation.

In Crane's case, it was a company 15 years ago with under a thousand people and its dominant culture was one of being very paternal and concerned for its employees. This culture was created by the Crane family. To ensure that we continued this culture, we established a code of conduct that established the foundations for a common platform for all our people to share as they work and make decisions each day. Those foundations were:

• Respect
• Value for shareholders
• Strong ethics
• Care for community and the environment
• Respect the customer
• High performance ethos

We endeavoured to build our culture and actions around these foundations.

Governance has received a lot of publicity over the past few years. The great majority of companies have always had strong governance within their organisations but the public perception, due to a minority of companies, does not reflect this fact. As a result, our society is becoming very prescriptive with respect to governance issues.

GB: That's right. That seems to be a problem with all the new legislation being brought in because some companies have failed. Would that be accurate?

Legislation is no substitute for good culture

JI: Yes, because of a minority. Guidelines and legislation are becoming very prescriptive and require more process and detail to be applied. Companies then have to apply more resources and time to comply. There is the possibility that we will overdo it and incur costs for no further benefit.

GB: That is right, and they suffer despite the fact that they probably have not done anything wrong.

JI: Yes. It is like a pendulum. It probably was too open and lacked sufficient formality. However, the pendulum has clearly swung too far to the other side and we are at risk of becoming too prescriptive for no more benefit because the actions of an organisation will not be driven by a culture where the values are embedded within it.

Conflicts of interest

GB: There are situations where management or boards bump into conflicts of interests; between workers and shareholders, for example. How does the decent businessman try to resolve those issues?

JI: The restructure of a business with the closure of certain activities is probably the best example.

Globalisation forces companies to operate under more dynamic forces that change very quickly. If a company, because of external factors, can no longer compete viably under its current business model, it must re-engineer itself. In most cases, this requires the closure of certain operations with substantial loss of employment. However, the decision has to be made for the good of all stakeholders. You are not being fair to the community or other stakeholders if you do not manage these problems properly.

GB: That's right, otherwise the whole company just collapses.

JI: Yes, that is correct. This is probably the hardest conflict to manage. You are making decisions that are going to affect the lives of people who have been part of the team that has built the company. Now, due to no fault on their part, they are going to suffer. Whilst companies endeavour to assist them in this transition, it is always difficult.

GB: That's right, yes. That must be a very hard decision to make.

JI: Yes. The restructuring of secondary industry in Australia, since the early 70's has been an ongoing process ever since. Over this period, employment in the manufacturing industry has gone from 30% of the workforce to 12% today. Globalisation and free trade have been the major drivers of these changes.

I personally believe that Australia has moved forward too quickly compared with other countries of much greater size. Many countries have used non-tariff barriers and subsidies to protect their industries to allow for transition. In this respect, we have tended to be purer than the driven snow! One cannot argue against the direction: no-one is an island that can remain separated from these forces of globalisation.

However, it does bring with it very difficult issues of restructure and change.

GB: Yes. What about your life since leaving the Crane Group?

JI: After 34 years with a company that I have loved and been passionate about, it is a big break. But I believed it was time and I have found the transition fairly easy. I am fortunate in that I am still fairly occupied as the chairman of Wattyl and Nick Scali. I am also non executive director of Rinker and of the United Group as well as completing my term as National President of the Australian Industry Group, the largest employer organisation in Australia. I am also the director of the Victor Chang Cardiac Research Institute, a role I very much enjoy.

GB: So you are not exactly resting on your laurels!

JI: Well, it's enough to keep me off the streets and out of my wife's hair! But I am really enjoying the new challenges and the flexibility which allows me to spend more time with my grandchildren, something I was not able to do as much as I would have liked with my own children.