In a learning economy, Australia’s highest paid salarymen are selling their shareholders short

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Australia’s top 10 chief executives all made more than $10 million last year, but worse than being called out for their “culture of entitlement” concerning the huge bonus each enjoys, in an economy in profound transition, none may be leaving his company any better prepared for its future than when he assumed control of it.

Given the extraordinary amounts of money they are paid, one might hope that Australia’s best remunerated chief executives would be incomparably smart in defending the interests of those who would invest in the businesses they run, and in preparing those organisations for a future beyond their own brief tenure.

Our analysis however points to a different finding.

According to the declarations of their most recent annual reports, Australia’s highest paid chief executives are preparing their companies to fare less well in the coming economy than the investors in their companies deserve.

This is the revelation of The Learning Economy’s analysis, conducted by Google search and keyword interrogation of the most recently published shareholder reports for each of these chief executive’s companies.

The critical finding here is that not one of these companies declares it has a learning strategy, which is critical to the interests of investors.

Without a declaration of a binding overarching rationale for how its leaders plan to shape their company’s future competitive collective intellect, by definition, there isn’t a strategy. 

Where there exists no learning strategy, whatever learning is undertaken is likely piecemeal, ad hoc and not joined up.

And, when a commercial organisation’s knowledge is not joined up and developed with a clear direction and method, but it is seen to be in others, companies quickly leak money and value for their shareholders.

Building smarter companies is undoubtedly both in the shareholders’ interest, but also that of the nation, when, as the capacity to learn collectively will distinguish the world’s most valuable companies, we should aim to place Australia among the fastest learning corporate economies in the world.

Achieving this will determine everyone’s gains in both economic well-being and quality of life by leading to the creation of better products and services.

But, despite their enormous pay packets, what is the evidence that these top ten salarymen are making their contribution, when businesses that don’t find purposeful methods of learning to drive their transformations to adapt to the emerging industrial order’s new, digital ways of competing will fail?

In such organisations, training is often mistaken for organisational learning when the latter is about using the collective intellect – all intelligence available to the business  – to prepare it for an age in which no company yet has ever traded.

Against this, as all CEOs’ tenure is temporary, in what state will they leave the companies they front when they move on?

And who picks up the tab for that singular inability, and that of the teams they build, to prepare for the future?

What is it about their enterprise logic that holds them back?

Many businesses continue to operate on management models that are past their prime in adapting to the realities of the learning age’s post-industrial challenges.

These businesses’ underpinning enterprise logic, and that of industrial capitalism, was originally built on structural foundations of bureaucracy and functional hierarchy.

Based on military precedent, the traditional leadership model for business became that of command and control.

Under this model, power resided with the board and chief executive and devolved downwards through the senior executives and their reporting managers.

It filtered down through the hierarchy to the lowest rungs of the organisational structure, with those at the coal-face charged with interacting with the market, with customers, suppliers and rivals, typically being excluded from decision making and strategy setting.

Against this view of the world, in hierarchical organisations, for those armed with it, the need to retain and lock down management control, can present a more powerful need and entrenched mental model than even the requirement that they produce profitable results.

Moreover, the change it is imposed to counter is not just quicker but also unpredictable and discontinuous, as we can see from the incursions made by new and hitherto unimagined business disruptors – Amazon, Google, Facebook, Airbnb, Uber, and so on.

Yet, even against such obvious discontinuities in the progress of industries, in established organisational cultures, in denial of the need to change, standard enterprise logic remains organised to reproduce itself at all costs, with executives aiming to protect their salaried self-interest through hierarchical status and position, and by adopting risk-averse and conservative positions and practices.

Where they exercise it, the primary source of effective resistance to change by managers remains the functional hierarchical structure, even when it may no longer make profit-generating, shareholder value-maximising commercial sense to do so.

The consequence is that structural and cultural inhibition of change persists in many organisations.

It is by adhering to established processes, so often undiscussed and beyond discussion, that even when they proclaim themselves to be changing, organisations defy the need for necessary root and branch adaptation to patent emerging circumstance.

Even when the world itself is transforming dramatically beyond the walls of the business, managerial articulation of change may remain rhetorical only.

In many organisations, such entrenched enterprise logic has become so deeply taken for granted that it is no longer visible.

And thus, when shared mental models of “how the world works” become embedded, and without curiosity being exercised and with orthodoxies remaining unchallenged, neither managers nor workforces are likely to question assumptions they no longer see.

This is even worse for external investors and owners who see even less.

What does a learning strategy look like?

Whatever the organisation, as it is taught in business school, the management of strategy aims to understand and define answers to four fundamental questions.

  • Where are we now?
  • Where do we want or need to go?
  • How will we get there?
  • What must we measure to ensure we stay on track to get there?

A learning strategy is therefore a platform for growing organisational capability and resilience, a means of keeping a company on its declared path to achieve a series of defined goals.

It runs in parallel with initiatives supporting the attainment of those other goals the organisation wishes to achieve in order to deliver the vision for which it was created.

In this respect, integral to any learning strategy is not only the sharing of knowledge within the business but also the generation of new knowledge that is relevant to the emergent contexts in which businesses operate. 

This will require the development of exceptional relational and communicative skills, as knowledge generation is a consequence of dialogue and critical reflexivity. 

It involves a process described as “creatively abrasive” engagement among competent communicators who can “fight for excellence while remaining friends.” 

In workplaces characterised by highly competitive and individualistic imperatives, making oneself vulnerable by conceding imperfection of knowing – an essential aspect of learning for if one knows everything, there is nothing to learn – may be considered an act of career suicide. 

The attainment of incremental and transformative learning targets will be accelerated by the committed engagement of many minds across the ranks of an organisation. 

The value proposition to which many employees in the digital age respond is that of challenge and learning from their job. Yet, this is something too few may be able to experience in workplaces burdened by hierarchical structures and self-preoccupied people positioned as “leaders.” 

Indeed, in the emerging age, many will be attracted to join a business by the reputation it builds for its efforts to learn and to engage those in its workplace to contribute to this purpose.

Even were its components declared, any learning strategy will be competitively defensible, inimitable and unique to the sum of individuals and perspectives engaged.

And this is precisely where investigating and tapping into the widest available range of world views will benefit the strategy makers formulating the business’s direction.

Thanks

As I’ve explained elsewhere before, when writing for professional purposes, there are few writers who can’t benefit from a second reader, and I extend my great thanks for reading and commenting on preceding drafts of this document to my friend, Ken Dovey, whose input and contribution to the above has proved invaluable. 

So, again, having said that, I now have to own any howlers readers may find here, and if you do, I’d be really grateful if you’d be kind enough to let me know if and where you come across them. Thanks.