20/01/2011 - 00:00

Tide turning but WA directors swimming against current

20/01/2011 - 00:00

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THE landscape has changed for Western Australians who want to be on the boards of national companies, according to some of the state’s leading directors.

Tide turning but WA directors swimming   against current

THE landscape has changed for Western Australians who want to be on the boards of national companies, according to some of the state’s leading directors.

They say the rise of the state’s minerals sector has attracted the attention of big corporates to opportunities in WA, and highlighted how little they understand what is happening here.

But would-be national directors still need the executive credentials, which are harder to attain in WA.

Even though Australian Institute of Company Directors’ records show that 158 Perth-based individuals represent a healthy 13 per cent of ASX200’s 1,211 directors, this is heavily skewed to the rising number of WA mining companies that sit in that index. When it comes to big national boards, WA residents are harder to find around the board table.

“I think there are quite a few opportunities,” said Gene Tilbrook, a former finance director at Wesfarmers who now sits on several corporate boards, all based outside the state.

“They (big companies) are looking for some sort of national representation which includes Western Australians.”

Former Westpac and McKinsey executive Diane Smith-Gander also notes this change.

“My experience is there is quite a lot of pull from organisations that want to understand what is happening here,” Ms Smith-Gander said.

“Relationships are so important and they (national companies) feel they have to have a way of having relationships here and one way is to have a director based here.”

Former banker and long-term non-executive director Tony Howarth has also noticed the trend.

“I think a lot of us get phone calls from people we know from over east who want people over here,” Mr Howarth said.

Australian Institute of Company Directors WA president Steven Cole, a lawyer by background, believes some of the WA Inc past still plays a role.

“Some of the behaviour of our politicians recently gives another opportunity to rekindle some of those thoughts and the sly comments,” Mr Cole said.

“I don’t think that is helpful, but we have to get on with it.”

Neil Hamilton, another long-term non-executive director, has noticed a significant change from the 1990s when WA Inc resulted in WA business people being pariahs.

“There is no doubt that the Bond-Connell damage was severe,” Mr Hamilton said.

But he believes improvements in the status of local financial services companies, such as brokers, and the strength of the local economy means WA has to be on the radar of national companies despite this past.

“They are missing out if they don’t have eyes and ears in the west,” Mr Hamilton said.

While this rise in demand to have someone on the ground in WA was clearly noticed by most who attended the WA Business News forum, there were some concerns about the governance side of this.

Some of the directors flagged concerns with the differentiating between being a board member and being a WA-based representative.

Marketing expert Michael Smith is one who has encountered this issue directly.

“Sometimes you need to be careful about what they are recruiting for,” Mr Smith said.

“I just declined an offer from a fairly sizeable national company because they wanted a representative rather than just a director. I think there is more than enough to do as a director.

“They saw my role as introducing and networking but I think you should get an executive to do that.”

Mr Howarth said one of the reasons WA was under-represented on big national boards was the lack of executive experience in large industrial companies.

“We have had some good professional services businesses here but lots of boards like to have someone who has been in senior executive positions, CFO or CEO, and we have not had the number of large, public companies to generate those people out of,” he said.

“Gene [Tilbrook] is a good example of that, as finance director of Wesfarmers.”

Mr Tilbrook’s former boss at Wesfarmers, Michael Chaney, is another classic example. Mr Chaney, who was not able to attend the luncheon due to prior commitments, now chairs both two of the nation’s biggest companies – Woodside Petroleum and National Australia Bank – as well as investment house Gresham Partners.

He is also on the boards of several community sector organisations. Mr Tilbrook’s predecessor as financial director, Eric Fraunschiel is also on the Woodside board as well as being a director of WorleyParsons and the Australian and New Zealand subsidiaries of the Rabobank Group.

Interestingly, Wesfarmers chief Perth rival in terms of size, Woodside, has also been a source of director talent for national company boards. Former Woodside acting CEO Keith Spence is one example, being chairman-elect at Brisbane-based Geodynamics.

Another prominent example is former Woodside CEO John Akehurst, who sits on the boards of interstate companies such as Origin Energy, CSL and Securency.

But Woodside’s latest key executive players are unlikely to follow suit. Most recent CFO Mark Chatterji is returning to the US and retiring CEO Don Voelte is expected to do the same when he stands down later this year.

Step below these two major companies – Wesfarmers and Woodside – and it’s harder to find similar flows from executive roles to national directorship positions.

Some at the forum drew attention to the different structure of WA’s economy, with a heavy emphasis on resources, especially through junior players, and a lack of locally headquartered industrial companies.

Recent history had sharpened that extreme, although the rise of big mining companies and key foreign-based resources divisions here did provide another source of top executive talent from which future WA-based directors might evolve.

Mr Smith noted that the structure of the local economy had changed significantly in the past few decades, with the prominent executive capacity of the once-important state manager role much diminished.

“A lot of organisations have moved their (reporting) lines to be functional rather than regional,” Mr Smith said.

“They end up sending their fourth or fifth best executive to ‘run’ WA. The executive group running the local appendage of a business based in Sydney is at significant disadvantage to one based say in Brisbane due to proximity.

“As a director that is a real issue.”

 

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