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Banks learn the Qantas way to build trust

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Banks learn the Qantas way to build trust

Old 16th Oct 2018, 21:15
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Banks learn the Qantas way to build trust

Take Valium and have a local ambulance on speed dial before you attempt to read Janet Albrechtsen's piece in The Australian today. You have been warned:


Banks learn the Qantas way to build trust.

“We were on our own.” The words from Qantas pilot Richard de Crespigny eight years ago are a worthy reminder of leadership. When an engine on QF32 from Singapore to Sydney exploded four minutes after takeoff, propelling shrap*nel through the aircraft, 21 of 22 systems failed. The first disaster of its kind for the new A380 with Rolls-Royce engines, there was no rule book for what to do next. After two hours in the air developing their plan, the pilot and crew of QF32 landed the aircraft back at Changi airport with 139m of the 4km runway to spare. The 440 passengers and 29 crew walked safely to the terminal.

The new Qantas chief executive was on his own, too. No rule book or corporate governance guidelines told him how to respond. Alan Joyce, who will notch up eight years in the job next month, recounted the story of QF32 at the first Business Council of Australia Summit in Sydney last week. The event, closed to the media to encourage frank debate, featured Joyce at the final and most important session for the day: How Do We Recover Trust? Given that large swathes of corporate Australia, from energy companies and telcos to banks and financial institutions, are discredited today, the session might have been called: Why Trust Matters. But more on that in a moment.

Joyce told a gathering of more than 200 chairmen, directors, chief executives and corporate executives that how Qantas handled QF32 in November 2010 “was an exercise in maintaining and protecting the trust we had built up over 98 years”.
Three other Qantas planes were due to take off within three minutes. “We made the call to ground all aircraft, not knowing when we would be back in the air.” Joyce said there was only one option: “We were open and transparent. We told it as we saw it. We had an unsafe aircraft. We were grounding the fleet to save the lives of our customers. We were the only airline that did it.”


At daily press conferences, Qantas explained every detail discovered or event that occurred in real time. Joyce recalled the clash with Rolls-Royce: “I had a very big argument with the head of Rolls-Royce, who said we were making the situation worse by talking every day, telling people what we knew.” Joyce stood firm. He also invited the ABC’s Four Corners to report on the near-disaster. “I don’t think there is a company here that has invited Four Corners in,” Joyce said last week. “We said we had nothing to hide, you have access to our pilots, our cabin crew, all our engineers.

“What got me, and still does, is with every decision we made, there was no thought of profitability, only concern for our customers. No 1 for us … is that protecting and building trust means the customer came first.”

Once upon a time this would have been a trite remark. Today it is a radical rediscovery of first principles. Earlier that afternoon during a discussion about corporate governance, a few leaders at the BCA summit insisted that building social capital was a critical corporate goal. Fair enough, I said, but when it comes to building social capital, start with looking after your customer. That kind of capital builds more trust than climbing aboard social bandwagons.

In his interim report, financial services royal commissioner Kenneth Hayne set down a killer list of ideas for banks and financial institutions to rebuild trust: obey the law; do not mislead or deceive; be fair; provide services that are fit for purpose; deliver services with reasonable care and skill; when acting for another, act in the best interests of that other.

Trust matters for another reason, too. The Morrison government plans to fast-track a 25 per cent tax rate for companies with a turnover less than $50 million a year. Last week, Labor agreed. Bill Shorten teased us with personal income tax cuts, too. Note the silence about tax cuts for Australia’s big companies. It is off the agenda. Worse, there is growing sentiment at senior levels of the government that hearing from business leaders is not helpful to reform prospects any more. The reason is simple: if voters don’t trust big companies to do the right thing by them as customers, it’s only natural for voters to treat what corporate leaders say about tax cuts or industrial relations reform as more self-interest from the big end of town.

Joyce is a rarity in corporate Australia. He walks the talk on building and maintaining trust with customers. His lesson last week was simple: build up a reservoir of trust if you want credibility. While most companies won’t confront a disaster such as QF32, Joyce said, “you have to do exactly the same for the smaller issues, the same principles apply”. The alternative is death by a thousand cuts. Hello, Australian banks and insurance companies.

Just after the QF32 crisis, Qantas recorded trust levels among customers of 90 per cent. Today, it’s 97 per cent, the highest it has been. With those levels of trust, Joyce has spoken credibly on myriad issues from social policy such as same-sex marriage to tax cuts, free trade and the need for industrial relations reform. In May Joyce argued that excluding tax cuts for big companies such as Qantas would hurt small business.

“We buy six million bottles of Australian wine each year,” he said, pointing out that when big companies profit, so do small businesses. He spoke about $220m in bonuses to staff on top of a 3 per cent wage rise. “Everybody benefits when good companies do well,” Joyce said.

The latest Qantas advert, Stand up for the Spirit of Australia, could be a case study in Joyce’s leadership. The Qantas boss has standing on social issues because he fights the economic ones, too. By contrast, most corporate leaders in Australia prefer talking about social issues rather than ones that directly hit their bottom line. Their impact equals a slap from a week-old lettuce. This is not just weak; it is a dereliction of their duty to fight their shareholders’ corner.

Some in the conference room complained that when they do speak about economic issues, it is buried by a media more interested in reporting on corporate leaders talking about social issues. Fair comment, I said, but here’s how to grab a headline: if every corporate leader in the room resolved to speak up on why corporate tax cuts matter to all Australians, from small businesses to customers, to shareholders, the media would notice. If business leaders do so from a position of authority, having built up a reservoir of trust, Australians would take notice. When that happens, there might be an appetite for reform.

What Joyce lacks is critical mass. The Australian Financial Review’s recent list of the most powerful people, measuring power overtly and covertly, featured politicians, union leaders, bureaucrats, a regulator, a radio host, even a high court judge. Not a single Australian business leader rated in the top 10. Business leaders featured only in a list of business leaders, where there was no competition from others. Given that dwindling influence, corporate leaders need to step up. Or else step down from their positions so someone else can step up.
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Old 16th Oct 2018, 21:45
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Jeez, I don’t feel like breakfast now.

It’s like a print version of Fox News!
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Old 16th Oct 2018, 23:00
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Put some extra sick bags on board, what a crock of sh#t. He’s mainling the coolaid.
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Old 16th Oct 2018, 23:07
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Can you overdose on Coolaid?
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Old 16th Oct 2018, 23:20
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"First the alibi, and thus followed the perfect crime."
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Old 16th Oct 2018, 23:31
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What got me, and still does, is with every decision we made, there was no thought of profitability, only concern for our customers. No 1 for us … is that protecting and building trust means the customer came first.”
which is why I grounded the entire fleet in 2011.
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Old 16th Oct 2018, 23:49
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I guess someone has just secured herself an upgrade to First on her next RTW jolly
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Old 17th Oct 2018, 07:59
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“We were open and transparent. We told it as we saw it.
Self delusion is a troubling affliction Mr Joyce.
Perhaps transparency would help.

How about, instead of puff pieces paid for by continued advertising spend in the dying print media, you allow Lucinda Holdforth to publish her book?

You know the one Mr Joyce, you rushed to court to gag her when all she wanted to do was detail the decision you told us you made, all by yourself on a Saturday afternoon in October 2011.
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Old 17th Oct 2018, 08:31
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Terminal *COUGH* decline.
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Old 17th Oct 2018, 09:35
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Chairman’s Lounge membership under review?

Maybe Latham was on to something.
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Old 17th Oct 2018, 22:47
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Now that was a cunning piece of journo fiction, remember we pilots are few compared to Mr & Mrs Joe Public out there who this is aimed at, not us we know the real truth, the public are clueless & believe whatever is said when it comes to the Red Rat, if only they knew otherwise! Oh well Joyce is one smart cookie, he knows where the harpoon of fiction will have the most effect!
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Old 17th Oct 2018, 23:06
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the public are clueless & believe whatever is said when it comes to the Red Rat
I think people are more aware of the BS theyre being fed, they just gamble on the 'it won't happen to me' principle. Gamble away people, I'm sure you'll be fine.
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Old 18th Oct 2018, 04:02
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Originally Posted by machtuk View Post
Now that was a cunning piece of journo fiction, remember we pilots are few compared to Mr & Mrs Joe Public out there who this is aimed at, not us we know the real truth, the public are clueless & believe whatever is said when it comes to the Red Rat, if only they knew otherwise! Oh well Joyce is one smart cookie, he knows where the harpoon of fiction will have the most effect!
In defence of journos (well, somebody has to), Janet Albrechtsen is NOT a journo, but a lawyer and board member of the IPA. She seems to be only good at spewing out ultra-right-wing columns for The Oz.
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Old 18th Oct 2018, 20:44
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Interesting distinction ebt. I can understand a journo regurgitating whatever is said to them under the "don't shoot me I'm only the messenger" rule, but a lawyer should be more aware of where the line between reporting the facts and obfuscation lies....shouldn't they?

I wonder how someone with such candid access to the very top echelons of an company would defend knowledge of smoke and mirrors used to disguise an organisations cultural issues while simultaneously receiving gifts from said company. I'm not saying that's the case here but one would want to tread carefully, as they say, if it walks like a duck
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Old 18th Oct 2018, 22:29
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Originally Posted by ebt View Post
In defence of journos (well, somebody has to), Janet Albrechtsen is NOT a journo, but a lawyer and board member of the IPA. She seems to be only good at spewing out ultra-right-wing columns for The Oz.
Absolutely! The IPA otherwise know as the Institute for Paid Advocacy has little transparency with its funding arrangements.

What has been revealed unintentionally through several court cases is that Gina Rinehart is a substantial contributor:

https://www.smh.com.au/business/worl...906-25fpq.html

I still like to read what JA says. The problem is not so much what she is saying but what she isn’t. Sponsors of Janet’s are famous for comments such as this:

"The evidence is inarguable that Australia is becoming too expensive and too uncompetitive to do export-oriented business.

"Africans want to work, and its workers are willing to work for less than $2 per day. Such statistics make me worry for this country's future." Gina Rhinehart ($4 million dollar contributor to the IPA)

Of course there’s a legitimate view to the voice of Capital speaking out in defence of shareholders which we all are to a greater or lesser degree. Having said that, organisations such as Qantas, the big four banks and Hancock prospecting ultimately have only one reason to exist and that is to improve shareholder value. Those that do it well will take a slightly longer term view recognising that the loss of trust is indeed deleterious to said aim but ultimately the aim remains the same whether that be at the expense of jobs, the environment, workers rights or any other social value that we may as a community all benefit from. Until a much brighter light is held up to the broader social context in which these organisations function I will continue to pass over such article as Janet’s with little more that a chuckle.

But good luck to her.
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Old 19th Oct 2018, 01:44
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Originally Posted by gordonfvckingramsay View Post
Interesting distinction ebt. I can understand a journo regurgitating whatever is said to them under the "don't shoot me I'm only the messenger" rule, but a lawyer should be more aware of where the line between reporting the facts and obfuscation lies....shouldn't they?

I wonder how someone with such candid access to the very top echelons of an company would defend knowledge of smoke and mirrors used to disguise an organisations cultural issues while simultaneously receiving gifts from said company. I'm not saying that's the case here but one would want to tread carefully, as they say, if it walks like a duck
My friend, you give way too much credit to the ethics of lawyers!
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Old 19th Oct 2018, 02:30
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My friend, you give way too much credit to the ethics of lawyers!
No argument there mate. Problem is spin for hire can can cover a multitude of ills, why else would you pay for it?

If the worst should occur, the smoke and mirrors spin will have been a contributor and as such the spin doctors will be culpable in reality. Whether that is a legal or “only” ethical responsibility will be down to another bunch of lawyers.
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