In many ways AustralianSuper’s growth story is the story of the industry, according to its chair Don Russell.
It has evolved through multiple mergers to become one of the country’s largest funds with 2.4 million members and more than $200 billion in AUM.
It has an international presence with some 32 staff in London which the organisation is looking to expand to 100 by fiscal year 2024 and within the next couple of years expects to have 80 staff in New York.
But speaking on the theme of engagement at FEAL’s recent national conference, Russell warned that this kind of success brought its own challenges and while the role of chairs and chief executives was subtle with regard to engaging with staff, it was a significant one and one which required constant vigilance.
He said the most important thing for a chair was to not lose sight of the drivers that made the organisation a success in the first place, to be in constant communication with the chief executive and to be very much aware of what was going on in an organisation.
He stressed that leaders cannot sit comfortably in highly successful organisations and assume that all the problems had already been solved.
“My background of having to deal with problems and knowing that under every rock there are five or six, “ he said, “does give you instincts as to the questions to ask when you’re told things are going just fine.”
Subcultures
One of the issues he said you need to be acutely aware of as organisations grow was that of subcultures forming.
If you allow people to form groups within the organisation that then don’t identify with that organisation you’re “building troubles” he warned.
The danger was that they would develop cultures and priorities and ways of doing things which suit a sub component of the organisation more than the organisation itself and he said there was a really powerful and important role for leaders here.
“Keep telling the (organisation’s) ‘story’ all the way, it’s an on-going, never ending task and if you leave it, the organisation will fragment,” he said.
“Constant vigilance and a capacity to not only see what the purpose of the organisation is but also to be able to articulate it to everyone and to do it all the time is the lesson I’ve learned… you cannot let it go, ever.”
He said part of the challenge for AustralianSuper had been to build an approach to investment that was consistent across the business and it would start to become an increasing challenge as the fund built investment teams in London and New York.
“You need to recruit people who are brought up in cultures which are different,” he said. “That’s going to be a particular challenge and that cannot be left to itself. The story has to be built into what everybody does all the time.”
Remuneration
Incentives were another area of engagement Russell identified as being very important in terms of engagement.
He stressed, however, that the incentive structures couldn’t be at odds with what the organisation was trying to achieve.
Breaching the vexing topic of variable pay he said despite the fact he wasn’t “overly excited about it” such remuneration structures had a long history in financial services and AustralianSuper did operate with a variable pay structure on the investment side of the business. He maintained it would be very hard to attract the right people without it.
But he said the organisation had gone to a lot of trouble to structure it in a way where people were rewarded for the success of the organisation rather than the individual.
“In other words, our capacity to deliver for the members,” he said.
“It’s not based around expecting a share of what you contributed from your particular part of the investment team.”
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