Merry Christmas & a Happy New Year!

I’ll be taking a break from the blog for the next month and will be publishing the first post in 2012 on Monday 23 January.

May you, your families and friends have a blessed Christmas a wonderful New Year!

See you next year.

All my best,

James E

The master of networking (part 3 of 3)

Here is the final installment of the series of a chap who is arguably Australia’s most connected individual.

So what is David Gonski doing today?

Board memberships

Non Executive Director and Member of Remuneration Committee
Non-executive Director of Westfield Management Limited and Member of Remuneration Committee
Chairman and Chairman of Advisory Board
Chairman
Chairman
Chairman of the Board and Member of Remuneration Committee
Director
1985-Present
Non-Executive Director, Member of Audit & Compliance Committee, Member of Nomination Committee and Member of Remuneration Committee
1985-Present
Non Executive Director of Westfield Management Ltd, Member of Audit & Compliance Committee, Member of Remuneration Committee and Member of Nomination Committee
1997-Present
Chairman of the Board, Chairman of Nominations Committee, Chairman of Related Party Committee, Member of Compensation Committee, Member of Audit & Risk Committee and Member of Compliance & Social Responsibility Committee
2002-2007
Former Independent Non-Executive Director
2002-2007
Former Non-Executive Director
2003-Present
Former Non Executive Director, Chairman of Audit Committee and Member of Nominating Committee
2006-Present
Independent Director, Member of Board Audit Committee and Member of Board Compensation & Industrial Relations Committee
2007-Present
Chairman and Chairman of Nomination & Remuneration Committee

Not-for-profit board involvement
  • Chancellor, University of New South Wales, from 2005.David Gonski is the first person to hold the position of Chancellor at UNSW who is also an alumnus of the University.
  • Chair, National e-Health Transition Authority (NEHTA)
  • Chair, Sydney Theatre Company, from February 2010
  • Ambassador, Australian Indigenous Education Foundation (www.aief.com.au)

Previous positions held include:

There is no doubt about it David Gonski is one busy and connected chap!
See you next time.
James E

The master of networking (part 2 of 3)

We continue the background story of David Gonski …

Santow was Gonski’s first mentor, inviting him to become a summer clerk at law firm Freehills, where Santow was a senior partner. Gonski became a solicitor at Freehills in 1977 and a partner at only 25.

Married to a South African, Kim Santow was a powerful figure in the South African networks of Australia in the 1980s, a time when highly qualified Jewish South African lawyers were populating major Australian law firms, most notably Freehills.

This influence of the South African legal community, once dubbed “the Springbucks”, has now spread into the wider business community, giving Gonski another network of support.

At Freehills, Gonski worked on mergers and acquisitions, advising such companies as Westfield Holdings, a client he brought to the firm along with Santow. Gonski became a Westfield director in 1985.

Media connections followed; he became friendly at Freehills with Richard Longes, who was advising Kerry Stokes on his media interests while Gonski himself was advising Kerry Packer on the privatisation of his Consolidated Press.

But for Gonski, the law was not enough. As Santow has noted, he enjoyed the financial side of law transactions more than the legal side, and quit Freehills in 1986 to establish, with Longes, the investment bank Wentworth Associates – the name inspired by the street where Gonski then lived, in Point Piper.

Westfield Holdings’ chairman Frank Lowy has said it was Gonski’s idea in 1986 to form a new capital-raising and investment vehicle, Westfield Capital Corporation, and Gonski became its managing director. WCC had stakes in ACI, Coles Myer, Bridge Oil and Northern Star, owner of the Ten Network.

Ten proved to be a disaster, leading to the wipe-out of WCC that lost $303 million in 1988-89. WCC’s foray into TV was damaging for Lowy’s reputation. He admitted it was the biggest mistake in Westfield’s 30-year history.

Since the bad old Ten days, Gonski has never been far from the top men in the media, among them Rupert Murdoch and Conrad Black, who asked him to advise the Tourang consortium when it bid for John Fairfax Holdings in 1991. Two years later, he became a director of Fairfax.

With those kinds of connections, one thing was missing: the glossy outside interests that Gonski labels, in financier speak, “the not-for-profits”.

These boards appear to have a revolving-door policy of mates. In 1991, when Gonski retired from the St Vincent’s Hospital board, for example, he was replaced by Kim Santow. Five years ago, Gonski replaced Frank Lowy as chairman of trustees of the Art Gallery of NSW, where Santow had also been a trustee.

His “not for profits” began in 1987, when Gonski became chairman of Film Australia, a natural progression from his Freehills’ days when he advised Joe Skrzynski, the former chief executive of the Australian Film Commission. Six years ago, Gonski conducted a review into Commonwealth assistance to the Australian film industry and came into the orbit of the Australia Council in 1999, when he became a member of the Federal Government’s inquiry into the major arts organisations of Australia – the Nugent Review. It was chaired by Dr Helen Nugent, formerly chairwoman of the Australia Council’s Major Organisations Fund and now deputy chairwoman of the Australia Council.

A year ago, the partners of Wentworth Associates – Gonski, Longes and Levy – sold their business to the South African financial services group, Investec, but Gonski says he is staying on indefinitely with the boutique firm as chairman. He has, however, just quit as chairman of another much larger investment bank, Morgan Stanley, but remained a consultant.

Tune into part 3 on Wednesday to read about DG is up to these days.

All my best,

James

The master of networking (part 1 of 3)

Taking a bit of a detour from our core topic I’d like to explore an area that all professional advisers need to be better at doing – networking.

I personally don’t like the term networking. I much prefer something like “building and investing in relationships.”

There is a chap who is a master of building & investing in relationships. Chances are you have heard his name but don’t know much about him. Here is an article that was originally published by The Age newspaper way back in April 2002. It tells the back story of perhaps Australia’s most connected individual, David Gonski.

David Gonski is the “can-do” man of Australia. Want a new director for your board? Gonski can do. Want a new chairman for your arts foundation? Gonski can do. Like the late Lord Goodman of London, and Felix Rohatyn of New York, Gonski is seen as the universal fixer, a lawyer who has made an art form of being almost invisible and yet everywhere, mates with all sides.

Of course, the new chairman of the Australia Council did not get to the centre of his web of influence by accident. Gonski has worked at it from his days at Sydney Grammar School.

His ride to the top has not been accident free, however. He suffered a serious business blow running Frank Lowy’s Westfield Capital Corporation in the 1980s, having to reinvent himself as a hotshot corporate consultant after the company lost millions investing in the Ten Network.

Gonski, 48, speaks financier jargon. He says his new job as chairman of the arts funding body, the Australia Council is “do-able”, a phrase that first emerged from the mouths of junk bond dealers in California in the late 1980s.

For Gonski, it’s also “do-able” to be the chairman of investment advisory firm, Investec Wentworth, and Coca- Cola Amatil; to be a director of John Fairfax Holdings, Westfield Holdings, and the ANZ Banking Group; to be chairman of the National Institute of Dramatic Art; and president of the board of trustees of the Art Gallery of NSW. And to take on the Australia Council job that proved too much for his predecessor.

A search of his name in the database of the Australian Securities & Investments Commission reveals 29 pages of companies of which he is, or has been, a director or shareholder.

The Gonski circuit of influence began with his well-connected parents, Polish neurosurgeon Dr Alexander Gonski, and South African Helene Blume, a relationship counsellor who is still in practice and has written a book on grandparenting. With his siblings, Lisa, and twin brothers, Steve and Peter, David Gonski migrated from Cape Town to Australia with his parents in 1961, when he was seven.

David Gonski is married to a doctor, Boston-born dermatologist Orli Wargon. His brother, Peter, is also a doctor, specialising in aged care.

David Gonski was a champion debater at the Sydney power network-ers’ school, Sydney Grammar, where he is now a trustee. Instead of the usual next step for a Grammar boy – that is, the University of Sydney – Gonski chose the new law faculty at the University of New South Wales. His former colleague, Justice Kim Santow of the NSW Supreme Court, once told me: “He was one of the first of the UNSW law/commerce graduates. They were quite a different breed in training from those who came from Sydney University. They were numerate, understood balance sheets, had a capacity to apply the law in a commercial context. People in those law classes were asked ‘what if . . .?’ “

See you next post for part 2 of the David Gonski story.

All my best,

James E

Technical expertise – just how important is it?

A while ago I met with the CFO of a $150m+ agribusiness and asked him the question …

How important is technical expertise in an accountant?

It’s extremely important.  What you’re paying for is their level of expertise and so they need to be able to give you that right level of expertise for that particular assignment that you’re engaging them in.  It’s the crux of it all.  They need to have the right skill sets to be suited to the particular work assignment at hand.  You don’t want a generalist normally; you want someone who can come in, do the specific assignment that you want them to do, deliver it in the most efficient, effective manner, and then be out again, because that is what you are paying for.

Do clients expect a certain level of expertise and skill when they engage a Big Four accounting firm?

Absolutely, yes.  With one of the larger firms, you do go in with an automatic assumption that they’re very well prepared.  That’s always been my experience.  I’ve never had any difficulties with that.  The issue more is in the level of staffing that they put on a particular engagement, and whether you get the junior who you end up training on the job, or whether you get someone who’s actually pitched at the right level that you need.  If you get the junior you find that they’re having to rework things as they go back to the partner and change things. So often with a larger firm it’s not the quality at the partner level, it’s the quality of the staff that are put onto the assignment and whether their skillset and experience is at the right level.

Enough said.

See you next time,

James E.

Learning by failing

Let’s get philosophical for a moment. Accountants, like most intelligent and capable professionals from time to time, make mistakes and fail. There is nothing wrong with failure.

The other day I was reading a great post from the Harvard Business Review blog titled “Why I Hire People Who Fail” written by Jeff Stibel, the CEO of Dun & Bradstreet in the US. The full article can be found http://blogs.hbr.org/cs/2011/12/why_i_hire_people_who_fail.html

A few weeks ago, I wrote about avoiding social media failures. I briefly mentioned our company’s “Failure Wall” and was surprised by the number of comments and questions I received about it. What’s the purpose? How does it work? And what other kinds of things do you do in that crazy office of yours?

The failure wall was part of our efforts to create a company culture where employees can take risks without fear of reprisal. As NPR’s Here and Nowreported earlier this year, we started by collecting inspirational quotes about failure. Among my favorites:

  • “Success is going from failure to failure without loss of enthusiasm.” – Winston Churchill
  • “I have not failed, I’ve just found ten thousand ways that won’t work.” – Thomas Edison
  • “Mistakes are part of the dues one pays for a full life.” – Sophia Loren

One random Thursday night, I returned to our corporate headquarters afterhours with a bottle of wine and a box of acrylic paints. My assistant and I used stencils to paint about three dozen such quotes onto a large white wall in our break room. As first time stencilers, this project itself seemed destined to end up a byline on the (slightly gloppy) failure wall until we gratefully accepted some much-needed painting assistance from my wife.

After we finished painting around 1:00AM, we fastened a dozen Sharpies to the wall alongside these simple instructions: (1) describe a time when you failed, (2) state what you learned, and (3) sign your name. To set the tone, I listed three of my own most memorable (and humbling) failures.

In the beginning, the wall was met with surprise, curiosity and a bit of trepidation. We didn’t ask anyone to contribute and we didn’t tell people why it was there, but the wall quickly filled up. Some of the entries are life lessons: “After 7 years of practicing, I quit playing violin in high school to fit in. Lesson learned — who cares what other people think.” Some are financial mishaps: “I thought buying Yahoo at $485 a share was a good idea.” Many are self-deprecating: “My successful failure is working in online marketing when I came to LA to work in showbiz.” Some are more than a little amusing: “I thought it was spelled ‘fale.'”

I’ve said this before but it bears repeating: success by failure is not an oxymoron. When you make a mistake, you’re forced to look back and find out exactly where you went wrong, and formulate a new plan for your next attempt. By contrast, when you succeed, you don’t always know exactly what you did right that made you successful (often, it’s luck).

We don’t just encourage risk taking at our offices: we demand failure. If you’re not failing every now and then, you’re probably not advancing. Mistakes are the predecessors to both innovation and success, so it is important to celebrate mistakes as a central component of any culture. This kind of culture can only be created by example — it won’t work if it’s forced or contrived. A lively culture is nebulous, indefinable, ever-changing. Try to package it in a formal mission statement and you just may suffocate it.

 

See you  next post,

James E

All about Kate (2 of 2)

In the last post you’ll remember reading about Kate – our highly skilled accounting professional who lacked a network and needed to learn how to sell.

As a self-employed headhunter, the way I feed my family is through the network of contacts and relationships I have built and maintained over many years. In the case of Kate she has worked for the same accounting firm for most of her professional career and has only really built a network internal to the firm. If Kate aspires to be a Partner she will need to start building relationships that (sooner or later) will help her attract new businesses or more business from existing clients. So how does Kate get networking? Given the readership of this blog I will assume a few things so we can get to the heart of the matter.

1. Choose your area.You can’t be all things to all people. If your professional interest lies in say, the biotechnology field, then focus on relationships in that arena and around it.

2. Serve that area. Once you have selected the area start serving. By this I mean get involved in all the associations/forums/groups you can that make up your chosen area. Getting involved means not simply joining but doing things for and with others, e.g. give free advice, volunteer help, sit on steering groups/committees, make speeches and the like. Get to be known as someone who helps others – no strings attached.

3. Build a reputation as a “go to” person. Closely linked to the above point is the building of a profile as the person who becomes the hub for activity. Like a hub of a bicycle wheel that connects the spokes be the person that can link others together. Through a simple introduction over a coffee much kudos and creditability can be and is created. You will find that the hub becomes involved in all sorts of interesting situations and conversations that will lead to new opportunities.

4. Be genuine. If you are getting involved and helping others for the sole purpose of getting business and making sales you will fail. People can see a phony a mile away. So don’t be one!

The above points are not just useful for our young friend Kate to think about; they are a good reminder to the seasoned professional services campaigner!

All my best,

James E

All about Kate (1 of 2)

The other day I met a potential candidate on behalf of a client of mine. Lets call her Kate as in Kate Winslet .

Kate was a lovely lady in her early 30′s. Bright, warm and friendly. After the first five minutes of our coffee meeting I felt I had known her for years.

Kate is a senior accountant with a highly technical background and a wonderful skill-set in problem solving and working on complex projects with big end of town clients. In addition, she has a passion and enthusiasm for her work that is contagious. I think it would be safe to say that there would probably be around a couple of hundred professionals with her particular skill-mix in Australia. I’m not joking … she is that good! This coupled with her engaging personality makes for a formidable combination.

At first glance she seems to have all the makings of a first rate professional. But there is something  missing – her ability to network and sell.

To date Kate has focused on honing her technical & professional skills to the detriment of her capability to build effective relationships both within and outside her accounting firm. In fact during our coffee Kate clearly stated that it was only in the last year or so that she had come to realise how vitally important “networking” is.

As I think I’ve said in past posts I hate the word networking.  The word has unfortunately come to represent the attitude and behavior of  “what can I get out of other people.” I don’t want to sound twee about it, but true networking is about meaningful relationships. In Kate’s case she has not spent the time to identify, establish and cultivate relationships in the wider community. For it is these relationships with others that will help her on her way to building new business contacts and deepen her bonds with existing clients.

Kate is not yet a Partner in her firm. If she wants to not only be a Partner, but an effective, one she needs to learn how to build relationships and sell her services. Her passion for the profession is (sadly) not enough.

So how can Kate do this? Tune into the next post!

All my best,

James

Coffee with Matt Damon

Late last week I had a coffee meeting with a new friend of mine. To protect his identity (& the innocent ) lets call him Matt, as in
Matt Damon.

Now Matt is not an accountant, but rather an engineer. Here is just a small section from his bio.

Over a career of over 20 years in systems engineering, Matt has worked in the areas of defence, building automation, industrial control, rail automation and intelligent transport systems.  He has participated at many levels in sophisticated and complex projects involving large scale software development, safety systems, distributed real time technologies as well as mobile and remote area communications.  Matt is a strong business leader having fulfilled business development and senior management roles over the last 10 years plus.    An energetic and focused individual, Matt has extensive management and engineering skills.  He has successfully secured many millions of dollars of business for companies he has worked for, dramatically improved company processes and demonstrated finesse in leading and motivating both engineering and sales staff.  His presentation skills, deep industry experience, people management skills and commercial acumen are well proven.

My experience to date with engineers has largely been that they have brains the size of small planets and as such tend to be too technical & analytical to be interested in the commercial aspects of their organisations and clients.

However, Matt was refreshingly different. He is a super smart, articulate professional interested in his clients and what his organisation is doing to better serve their market, who just happened to be an engineer.

In all my meetings with accountants, (junior & senior) and reading through many hundreds of CVs and capability statements I can count on one hand the number of accounting professionals that can be described similar to Matt the engineer.

As a keen observer of the accounting profession and a consultant trying to help firms and their staff, I would love to hear accountant’s described as energetic, focused, commercial and generating big business for their firms and adding real value to their clients and stakeholders.

That being said, I clearly have not met all accountants in Australia or around the world. Perhaps you are one of the above-described professionals. If so, please let me know!

All my best,

James E.

Updating the accounting practice

The other day I was reading through the website cpatrendlines.com and came across a most interesting article written by Steve Erickson – an accounting firm consultant based in the US. To be honest I’ve never given the area of changing roles within the firm much thought before since my focus is on the client side. However, Steve’s insights got me thinking about how changing roles can help make firms more effective in serving their clients. Enjoy the read below! (source http://cpatrendlines.com/2011/11/21/three-new-staff-positions-you-didnt-know-your-firm-needed/)

I have been giving quite a bit of thought to the cost/price squeeze facing many CPA firms. Salary and benefit costs are at an all time high as a percentage of net revenue and profit margins have been decreasing for a number of years.

This is, in many cases, due to the upward delegation of routine tasks to experienced accountants just because they have scanners and computers on their desks.

Technology is supposed to replace high cost labor, not the reverse. As a result we have many of our best and brightest performing clerical tasks in an inefficient manner. CPA Firm staffing choices can make a significant impact on bottom line and overall firm performance.

Bill Gates once said: “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”

I have come to realize that the CPA profession is operating by the second rule in many instances.

It is time to rethink your staffing models to make sure you have employees with the right skills to perform certain tasks.

Here are a few that come to mind:

1. Data Management Specialist — An employee that prepares and files electronic data for use by the professionals in the firm. This year I have been in firms where $100,000-plus managers are preparing PDF documents. It’s really hard to make money with this cost structure. Hire an expert in electronic documents. Costs will go down and productivity will increase.

2. Email Expediter — An employee who files email into folders for use by the professionals. According to a survey I recently conducted, professional staff are spending in excess of 1 hour per day dealing with email. In a firm with 25 professionals with an average billing rate of $150 this represents almost $1,000,000 in potential lost fees every year. I have no doubt that this position would pay for itself many times over in the span of a year.

3. Technology Coordinator — Hire some folks who really know the software and can become expert in its application. Let your professionals focus on professional matters. I’m not saying to not allow professionals to use software. I’m just saying they shouldn’t have to become software experts to practice public accounting. Just look at all the training costs and lost efficiency simply due to the lack of expertise in software use.

Keep smiling and bye for now,

James E