As the GFC has taken hold, a lot of attention has understandably been paid to ‘hard’ measures of corporate performance, such as profits at risk and cash flow. Yet SAS Australia and New Zealand Managing Director Gordon Clubb believes the role of a company’s culture will also be decisive.
ceoforum.com.au: What role do you see your culture as playing in helping your company get through the GFC?
Gordon Clubb: We’ve always seen the culture of the company as a fundamental platform for long-term success. If you look at the IT industry, for instance, it has gone through a major consolidation in recent years, and many of our previous competitors have been acquired. It is possible the same thing could have happened to us if it was not for the distinctive culture we have both globally and locally.
A big influence on our local transformation was Jim Collin’s book From Good to Great. Basically, we took a framework, customised it to our local needs, and took that to our people. We did make it very clear that we as senior managers could not create a culture as such: we could provide tools, frameworks and resources, but the culture could only be created by all of us within the company. That transformation is still continuing, but we now have a very sound foundation to our culture and we think it has put us in a very solid competitive position to meet the GFC challenges.
ceoforum.com.au: What do you see as the most important values in the culture that will be needed to meet the challenges of the GFC?
GC: Trust is extremely important, as is openness in communication. I have a policy, for instance, that between 12 and 2 every day I am in the office, any employee can come in and discuss any issue with me. At our recent yearly kick-off called SAS Live, we had all our employees from across our branches in Australia and New Zealand come into Sydney for a week of team building initiatives and communicating our plans for the year ahead. It is because of the GFC that we decided that now more so than before we needed to invest in our people and the emphasis has to be on clear strategy setting and dialogue. At this event, we conducted a panel session which generated an engaging discussion in an open forum. From the rest of this kick-off week we gathered over 280 questions which my team of directors, senior managers and I needed to follow up on and we have done so by providing answers which have been openly published on our intranet.
Confidence, too, is vital: people need to understand exactly what their role is, how it impacts on others, and why it is important to the success of the company. Creating a sense of confidence in the company is particularly important in the context of the GFC, as people in all sorts of companies may be feeling unsure about their long-term future, and even doubting whether their companies will survive without being acquired.
Another important value is clarity about strategy. One thing we believe is that relying purely on top-down communication to get out key messages isn’t that effective: the further down the organisation you go, the less likely it is you will get the original message correctly! That is why we also do a lot of bottom-up communication as well, in that we make sure we pay a lot of attention to what our people are seeing from their vantage points in the organisation.
ceoforum.com.au: The issue of confidence is an interesting one. While there is, no doubt, a lot of unproductive worrying, it seems also true that there is, in fact, more uncertainty out there. How do you address the real concerns without creating more unnecessary worry?
GC: It is true that these are challenging times, but I believe that, as leaders, we have to do more than simply ‘manage by numbers’. Anyone, for instance, can look at declining revenues and cut costs in a fairly simple-minded way. However, there is the fundamental task of senior managers, which is to build a robust organisation that can take advantage of the inevitable opportunities that will emerge once the downturn ends. We try to keep the focus on what we can learn from the current environment, and how we can position the company to ensure we reap the benefits later on. That is not to say there will not be some strategic cost reduction – there will be – but that needs to be carefully considered and most likely reinvested in a more appropriate manner.
ceoforum.com.au: Can you talk a bit more about the ‘bottom-up’ communication you do within the company?
GC: We have a concept called Team SAS, where we originally went to all our employees and asked them what they thought about the business, and what they felt we needed to do to move the organisation forward. There were all sorts of ideas that came out of that, so we set up a smaller group of people called the Team SAS Advisory Board, made up of staff from different levels and departments within the business.
This group would then discuss a selection of ideas with senior managers, who, depending on the particular idea, may take it as-is and implement, ask for the idea to be worked on a bit more, or reject the idea. One change, for instance, that Team SAS was instrumental in introducing to the business was that the employees defined what they felt were the most important behaviours for all employees to demonstrate, and this has been built into our appraisal programs.
Team SAS has been a highly successful way of energising people in the business, and a way of generating and harnessing the passion of our employees. There has been the widespread participation of employees across our business, and I believe that has been central to the success of the program.
ceoforum.com.au: Has the GFC changed in any way how the Team SAS concept operates in the company?
GC: One change is that there is probably more responsibility now on senior management to communicate some of the constraints as a business we now face in the current environment, whereas this was not the case before to the same degree.
At the same time, we also are communicating the message that we are continuing to invest in the business: for instance, we have committed to build a multi-million dollar education centre this year. We are also stressing that we are continuing to focus on the customer, continuing to invest in the development and retention of our people, and that these are really the leading indicators of our business. We can’t control the course of the GFC, but we can continue to develop the capabilities of the company to position us for the upturn when it comes.
ceoforum.com.au: Can you expand a bit more on the concept of strategic cost cutting you mentioned earlier?
GC: A lot of cost cutting seems to be reactive, e.g. cut staff here, reduce marketing spend, or outsource something offshore. A better approach is to reduce costs strategically, which really requires you to ask and answer some fundamental questions about your business. Which customer segments are growing? In our business, for instance, areas like sustainability and risk may be growing as opportunities, so we need to make sure we resource those opportunities accordingly. Which customer segments are no longer profitable to serve? We may find, for instance, that to pursue some opportunities we need to move resources from other less profitable parts of the business, so we need to be alert to those opportunities. We are also continuing to invest in our brand, as we need to do if we want to capture all these opportunities.
If you look at what has happened in our business, we actually increased our headcount by 10% in 2008. Earlier this year our global CEO made a public commitment that SAS will not reduce headcount despite the GFC. That is a big call, and it goes a long way to building the sort of confidence that we feel is so essential as a cultural value.
ceoforum.com.au: What values do you think will be particularly important as the GFC continues to unfold?
GC: Having a flexible approach to business is essential, as is maintaining urgency and enthusiasm. We can’t just accept lower performance: yes, times are tough, but that may mean we need to change the way we work, rather than doing what we’ve done in the past..The companies that can take that message to heart will be well-placed to survive and prosper.
