The evidence-based pathway to becoming an Australian corporate leader

The pathways to success for Australia’s top 50 ASX-listed CEOs have been revealed for the first time, in the most detailed examination of who our corporate leaders are, and how the community ranks their performance.

University choice, country of birth, average age, international experience, undergraduate degree, social media use and whether the CEOs were promoted from within, or appointed from outside, have all been examined to identify the secrets to their prosperity.

These pathways have then been compared with what customers expect from their corporate leaders.

The Apollo Communications Australian Top 50 CEO Report has found that multiculturalism works, with almost half of Australia’s most powerful corporate leaders born overseas, compared with fewer than one in 20 in the United States.

Notable highlights

• QANTAS CEO Alan Joyce is rated by the community as Australia’s best CEO, followed by BHP’s Andrew Mackenzie, Coles’ Steven Cain and Fortescue Metals Group’s Elizabeth Gaines.
• Australia’s ‘forgotten demographic’, Generation X, has quietly taken over the running of the country from the last of the Baby Boomers in the last 12 months, with the average age of our corporate leaders now 54, confirming the torch has passed to a new generation of leaders.
• The University of NSW has emerged as the country’s ‘Power University’, educating more corporate leaders than any other, beating out the established ‘sandstone’ institutions, and global icons like Harvard, Oxford, Yale and Stanford.

Apollo Communications CEO, Adam Connolly, said the purpose of the study was to provide an annual snapshot of the corporate leadership characteristics of the top 50 ASX-listed companies, and to gauge whether these same features are aligned – or misaligned – with the expectations and values of the average Australian.

“The number one trait that customers and shareholders want to see in our CEOs is ethical and trustworthy behaviour, rather than traditional measures of performance like company profitability,” Mr Connolly said.

“Only 13 per cent of Australians believe our CEOs are trustworthy, helping explain why 60 per cent believe CEOs should be subject to more regulation.

“Fundamentally, there appears to be a disconnect between what the community expects from our CEOs and what the public perceives they are doing.

“In short, our top corporate leaders have a trust problem.

“Our corporate leaders need to understand they have to become the Chief Ethics Officer (CEO) of their organisations if they want to succeed in the future.”

“Loyalty also pays, with two-thirds of Australia’s top 50 CEOs promoted internally, rather than being appointed from outside.”

Key findings on CEO characteristics

• High schools remain a viable pathway – Six of our Top 50 CEOs only have a high school qualification. They include Peter Harmer (IAG), Trevor Croker (Aristocrat Leisure), Stuart Irving (Computershare), Gregory Goodman (Goodman Group) and Peter Allen (Scentre Group) and Bob Johnston (GPT Group). This suggests that while tertiary education is important, solid work experience in itself remains a viable option to the top.
• Power age – Generation X now runs corporate Australia, having quietly taken over from the Baby Boomer generation in the last 12 months. The average ‘Power Age’ of our top 50 CEOs is 54 years old (born in 1965), compared with 58 in the United States. The youngest is Coles’ Steven Cain at 40, and the oldest is Sonic Healthcare’s Dr Colin Goldschmidt at 64. Four of our top 50 CEOs are aged 54: Shayne Elliott (ANZ Bank), Andrew Penn (Telstra), Scott Charlton (Transurban) and Brad Banducci (Woolworths). This creeping generational power transfer is also evident in the political world where every Head of Government in Australia is now a member of Generation X. The torch has certainly passed to a new generation of Australians.
• Multiculturalism works – Foreign-born CEOs include Italy’s Francesco de Ferrari (AMP), New Zealand’s Shayne Elliott (ANZ), Vietnam’s Jack Truong (James Hardie), India’s Sandeep Biswas (Newcrest Mining), Columbia’s Alberto Calderon (Orica), and South Africa’s Brad Banducci (Woolworths).
• Loyalty pays with two-thirds of Australia’s top 50 CEOs being internal appointments, proving that Board directors prefer to appoint someone they already know than run the risk of failure with an outsider.
• Australia’s power University is the University of NSW, which educated more top CEOs than any other at under-graduate level, while Macquarie University is the most favoured choice for post-graduate study. UNSW graduates include Brett Redman (AGL), Andrew Harding (Aurizon), Matt Comyn (CBA), Shemara Wikramanayake (Macquarie) and Craig McNally (Ramsay Health Care).
• The corporate power degree is Science which was the joint most popular pathway for Australia’s top CEOs, along with Commerce, followed by No degree, Law, Economics, Engineering, Arts, Other, Business, Medicine and then Psychology.
• Social media remains a scary concept for many CEOs, with 34 per cent having no presence on LinkedIn, Twitter or Facebook, despite it being a popular communications choice for many of their customers.

Key findings (community expectations):

• Ethics – The number one characteristic Australians rate CEOs on is their ethics and trustworthiness. This outweighs traditional measures of performance, including company profitability and the subsequent returns to investors.
• Accountability  – more than half (56 per cent) of all consumers believe the CEO and his/her management team should ultimately be accountable for the leadership of an organisation, compared to 44 per cent who believe it should be the Board of Directors. However, when a company has a crisis, the Australian community is unforgiving. A clear 63 per cent of Australians believe both the Chair and CEO should resign, with 15 per cent believing the sword should fall on the CEO only, and eight per cent believing it should fall on the Chair.
• Regulation – Corporate Australia’s trust problem may help explain why a significant 60 per cent of Australians believe CEOs should be subject to more regulation in their jobs, with only five per cent of consumers believing our corporate leaders are ‘very accountable’.
• Tenure – Almost half of all Australians believe the current tenure of Australian CEOs is ‘about right’ with 23 per cent believing it is ‘too short’ and 13 per cent believing it is ‘too long’.
• Social activism – Australians don’t rate social activism as an important priority for corporate Australia, ranking it 8 out of 10 in CEO priorities.
• Trust – A quarter of all Australians (24 per cent) don’t trust their corporate leaders to do the right thing, with only 13 per cent labelling them trustworthy. A clear majority of 63 per cent don’t know what to think of the morality of our corporate CEOs. This points to a crisis of trust between our corporate leaders and their customers.
• Visbility – Anonymity appears to be one of the greatest challenges for our corporate leaders. While Qantas CEO Alan Joyce is regarded as the best corporate leader in the Top 50, followed by BHP’s Andrew Mackenzie, Coles’ Steven Cain and Fortescue Metals Group’s Elizabeth Gaines, most corporate leaders are outranked by “Haven’t heard of any of them” or “None of the above”. This poses questions about whether our corporate CEOs need to be more effective communicators if they wish to rebuild trust with their customers and others they need to reach.
• Leadership – Nevertheless, all is not completely lost, with 41 per cent saying that, generally speaking, CEOs of Australian corporations exhibit good leadership qualities. A further third believe they don’t and 28 per cent don’t know.
• Gender – More than 72 per cent of adult Australians think that gender is irrelevant when it comes to making a ‘better CEO’, while 15 per cent believe women make better leaders than men and 13 per cent believing men do.

“Australians also don’t want their corporate leaders to be social activists, ranking it 8 out of 10 in CEO priorities, suggesting they want companies to ‘stick to their knitting’, rather than being distracted by social causes,” Mr Connolly said.

“Universities with a practical commercial orientation are taking over as the training grounds for Australia’s corporate leaders from traditional ‘sandstone’ institutions.”