Wesfarmers CEO Richard Goyder told a WA Business News Success & Leadership breakfast he’s still having fun in the top job.
Wesfarmers CEO Richard Goyder told a WA Business News Success & Leadership breakfast he’s still having fun in the top job.
FOR a man who holds one of the most powerful corporate positions in Australia, Wesfarmers chief executive Richard Goyder clearly doesn’t take himself too seriously.
Having acknowledged the presence of distinguished guests at the WA Business News Success & Leadership breakfast in Perth last week, including Governor Malcolm McCusker and his wife, Tonya McCusker, Mr Goyder took the opportunity to wish his own wife, Janine, a happy wedding anniversary.
“I’m sure Janine didn’t think 28 years ago that she’d be spending her anniversary with this grey, balding old man at a business breakfast,” Mr Goyder quipped.
While the WA-bom CEO kept the mood light in an expansive conversation with WA Business News news editor Mark Beyer, Mr Goyder also revealed a number of frank insights into running one of the biggest and most diversified companies in the nation.
Transforming Coles
Mr Goyder cemented his place in Australian corporate history books when he spearheaded Wesfarmers’ $19 billion acquisition of the Coles group in 2007, the biggest takeover on record in Australia and a move he says transformed the company.
At the time of the purchase, Coles was hardly in prime condition and worker morale was low.
“The business was completely stuffed,” Mr Goyder said. “Coles was this centralised business, with centralised HR, centralised IT, centralised supply chains.
“People couldn’t make decisions.”
Mr Goyder described the moment he and consultant Archie Norman walked into Coles’ former Tooronga headquarters in Melbourne, a gated fortress nicknamed ‘Battlestar Galactica’, to negotiate the purchase of the business.
“We walked in, the gates shut on you and you walk through this place and no-one looked at us; no-one looked us in the eyes, everyone looked away,” he said.
“It was so depressing.”
Mr Goyder said his first priority was to convince customers that Coles was the better choice in the ongoing battle for supremacy with fellow supermarket giant Woolworths.
“One of the things we said when we took over Coles was that we had to win the price trust from our customers,” he said.
“We were doing something like 6,000 to 8,000 specials a week in Coles at the time we took over the business. The poor store manager on a Monday was therefore changing up to 16,000 price tags around the store and the customer was totally confused.”
Mr Goyder said Coles now had more than 4 million more customers per week than it did at the time of the acquisition.
However, Mr Goyder said he wasn’t sure whether Coles would ever reach the return on capital levels that Wesfarmers historically demanded of its businesses.
“I think it’ll improve a lot. It may not ever reach that level,” he said.
“I’ve got no doubt the Coles transaction has, and will, deliver Wesfarmers shareholders above average, and I would hope well above average, (total shareholder return) over the long haul.”
Coles’ relationship with suppliers remains a difficult issue.
While Mr Goyder claimed local suppliers had benefited from Coles’ recent success, receiving more than $4 billion more a year from the supermarket chain, he admitted the business was occasionally accused of going too far in driving prices down.
Despite its improved market position, Mr Goyder acknowledges there’s still a long way to go when it comes to improving reliability across the more than 700 Coles stores across the nation.
“Jan and I went to a (Coles) supermarket in Perth last Saturday,” he said. “I won’t tell you which one it was but it was pretty bad. I can tell you it won’t be that bad again for a while.”
Early ambitions
While his rural background is atypical of a high-flying chief executive, Mr Goyder said growing up on a farm in Broom ehill and seeing first hand the effects of a devastating drought gave him resilience that would prove valuable throughout his career.
“Our upbringing was fairly challenging,” he said. “Mum and dad never had a lot of financial security. I decided fairly early that I didn’t want the farm.”
He went to boarding school at age 14, where his classmates nicknamed him ‘prim’, in reference to his prime ministerial ambitions.
Although he wryly notes that this particular teenage ambition quickly subsided, he looks back on boarding school as a character-forming experience.
“I think that also had an impact, because you become much more independent,” Mr Goyder told the breakfast forum.
“As I look at our four children at home now; they’d struggle to work out which side of an iron’s hot, I reckon.”
After a number of years working for Tubemakers of Australia, Mr Goyder joined Wesfarmers in 1993 and had already set his sights on running the company in the space of just two years.
“I’ve always been ambitious,” he said.
“In early 1996 I was asked if I wanted to go to Sydney for the Dalgety farmers business and in the process of that the then-finance director Eric Fraunschiel said to me, ‘what do you want to do with your career at Wesfarmers?’ and I think I said then, ‘well, ultimately I’d like (then chief executive) Michael Chaney’s job’”.
By 2002 he had been appointed Wesfarmers finance director, making deputy managing director two years later and then taking over from Mr Chaney in 2005.
Mr Goyder said he had the highest regard for his high-profile predecessor, who served as Wesfarmers chief executive for 13 years, but played a straight bat to the question of whether he aimed to emulate Mr Chaney’s lengthy term in office.
“I’m not one for definitive terms,” he said. “I do think as CEO you’ve got to be careful you don’t outstay your welcome and that you give opportunities to people coming through to move into senior roles as well.”
Mentor
As the head of a company with more than 500,000 shareholders, Mr Goyder is unlikely to ever be short of advice; however, he said he sought guidance from a friend he describes as his mentor - Harvard Business School professor Chris Bartlett - every couple of weeks.
“It’s a great thing because he’s very smart, he’s a great lateral thinker and he doesn’t tell me what I should do. In fact, what he says is ‘all I’m doing is holding up a mirror; you’re usually answering your own questions’,” he said.
“It’s a great, no-risk sounding board for me, which I really enjoy and appreciate. It’s been a great relationship.”
Business climate
Mr Goyder told guests he considered Australia the best place in the world for doing business and wouldn’t want to operate anywhere else.
However, he argued the tone of the national conversation had become too pessimistic and called on business to spend less time seeking government intervention in various issues.
Instead, Mr Goyder said business leaders should embrace the opportunities created by Australia’s strong economic conditions and proximity to Asia.
“We’re an economy that’s had something like 20 consecutive years of growth, we’ve got a highly educated workforce, we’ve got strong employment and low unemployment, we’ve got a Reserve Bank that I think is well run, well governed and has got plenty of firepower,” he said.
“Like it or not, the federal government’s probably going to be pretty much in fiscal balance this year, unlike most governments around the world and we’re at the doorstep of the growth economies of the world. So I’d say the opportunity is all ours to actually do some really good stuff.”