24/03/2020
As one of Australia’s biggest employers with operations across several sectors, Wesfarmers has a major role to play in Australia's response to the unfolding COVID-19 crisis. CEDA Chief Executive, Melinda Cilento, spoke with Wesfarmers Chief Executive Officer, Rob Scott, about how Wesfarmers is addressing the challenges the crisis presents. Their conversation touched on the government’s economic policy response, the importance of protecting the mental well-being of employees, and how the lessons Rob learned from managing Wesfarmers through the Christchurch earthquakes apply now.
First of all, how are you and how is life in Western Australia?
RS: Well on one level WA is a long way from other places but we are certainly affected by the crisis. Our business in Wesfarmers is not just a national business, it operates in a number of countries in Asia as well as New Zealand.
It has been a very busy time and like everyone I am facing a lot of personal uncertainties relating to family and friends and so forth but also dealing with a very significant response across our businesses
MC: I think that’s what everyone is grappling with at the moment. I have just had my daughter return from interstate from university. We are all trying to keep people safe.
RS: Yes and that’s certainly the focus at a personal and a business level. At the core this is a health crisis and all of our attention needs to be focused on reducing and slowing the rate of infections. That is certainly what everyone should be doing at a public level but also the focus that a lot of businesses are taking.
It is a health crisis, and the government has put in place quite significant health responses, but what is your view on the government’s fiscal stimulus response and how significant do you think it is?
RS: Frankly I think the government has done a very good job responding to what is an evolving and escalating situation. The fact that we have had two very significant announcements, or three if you count the Reserve Bank announcement, shows that the government is prepared to act fast and decisively, which is a positive.
The stimulus has rightly been focused towards those that are most affected, either at an individual household level or at a small business level, and I think the efforts to assist those individuals that are out of work or have lost work as a result of the crisis, and small businesses to provide them support to get through the interruptions to their trading and the cash flow challenges, are the right initiatives. But I think this will continue to unfold and more fiscal responses will be required.
MC: I think that’s right and I think that’s the frame of mind that the government is in at the moment as well.
As a major employer – Wesfarmers employs tens of thousands of people – how have you as a CEO been shaping up Wesfarmers’s response?
RS: Well you are right, we have over 110,000 team members across the group and when you think about our businesses, we have a very diverse range of roles from corporate roles, industrial businesses, we have many employees engaged in retail stores across Australia and New Zealand.
As I touched on earlier, our first and primary focus is on the health and safety of our team so we have initiated a number of changes to reduce the risks. We have adopted the government protocols around self-isolation if there are concerns about being infected; social distancing; and where we can we have encouraged working from home and a lot of roles are doing that at the moment.
Within our stores we have undertaken a number of initiatives to materially reduce the risk to our team members and also our customers through additional cleaning and shutting down some areas that are prone to the gathering of individuals, such as the cafes or playgrounds in Bunnings.
We are also looking at more innovative ways we can continue businesses, given that our businesses provide many essential products and services to the community, while reducing the risk. That goes to some of the work we are doing on the online side and some innovative initiatives, such as curb side collection for customers at Bunnings.
MC: One of your board members who also happens to be my Chairman at CEDA, Diane Smith-Gander, was telling me about all the work that you’ve done with curb side pickup at Bunnings to allow people to order online and collect in a really easy and safe way. I think that’s a fantastic example of how adaptive businesses are being at the moment.
RS: Yes, the reality is that individuals and businesses need to adapt, we need to take responsibility to reduce the spread of the virus. I think what we are seeing in the community at the moment is some real innovation in business.
That’s so important because I must admit I am really concerned about some of the unintended consequences if we simply shut down everything. If I think about our businesses, we provide a lot of critical products and services to government agencies; health organisations; critical manufacturing businesses; and many trades people that rely on our products to deal with repairs and maintenance on a daily basis.
We do need to be innovative to try to work out ways in which we can continue to keep business operating and keep society functioning through this difficult time.
MC: I don’t mean to be as flippant as this will sound but if push comes to shove, I think that I would put Bunnings ahead of bottle shops as essential services.
RS: (laughs) Well I’m glad to hear you say that and we think so too. I think what you’ve seen and what we’ve seen with businesses being more innovative shows that there are ways in which we can materially reduce the health risks but keep operating. What we’ve heard from the Prime Minister and what we are all focused on is how do we play the long game here? How do we prepare ourselves for months of having to tackle this, potentially six months or more of having to change our very way of life to reduce the risk? It’s just simply not possible to shut down many essential products and services for that period of time.
MC: I think that’s a point very well made.
You spoke about this earlier in regard to working from home, I am just wondering if you might talk about how you’ve changed the rhythm of your decision making and engagement with your own leadership team?
RS: Well it has been interesting. We have done a number of rehearsals around our crisis management response and we have taken a lot of learnings from that but gee we are getting some practice at the moment. There are crisis and business continuity meetings happening multiple times a day.
The first thing, on the fortunate side, there are many ways in which we can leverage technology to connect people in disparate locations and to be far more productive and efficient and connecting virtual teams. We are really leveraging technology in a big way. A big thanks to our IT team that have been working around the clock to facilitate that.
In times like this there is no substitute for communication. Communication is important in Wesfarmers within our divisions, across our corporate team and importantly across divisions. We are having many crisis response meetings where we are not only focused on what is the response in Bunnings or in Kmart or in Officeworks, but what can we learn from each other and what are some of the policy responses where we should take a more collective approach?
The final point I would make – and it is early days, so I think there is a lot more to play out here – I do worry about some of the health and well-being implications of an extended downturn and an extended period of isolation. I think it’s important that we face into those issues. I think mental health, personal health and well being is going to become a bigger issue and we are already turning our mind to what we can do to help our team, not just across the business but at a personal level, through what is going to be a really difficult time.
MC: Yes I have to say it was something I grappled with when deciding how we would work at CEDA, because we have got some younger team members and the idea of isolating them for such an extended period of time – I don’t think anyone makes that decision lightly.
RS: Absolutely. And I am sure you have noticed the same thing, I have teenage kids and watching the way that their lives have been turned upside down in the last few weeks – all the activities have stopped, limited interaction with friends, the number of attendees at school slowly decreasing, the number of special events in their lives be they parties of sporting events being cancelled – and that is just one subset of the broader community.
So, we do need to really face into these issues, be there for each other and help each other through this difficult time.
MC: I couldn’t agree more Rob. My daughter has just come back from the ANU, she has spent a couple of years spreading her wings as an independent person and now she has completely lost that connection to her friends and her social life so it will be a real adjustment.
Rob, you and I both worked together when Wesfarmers Insurance was dealing with its response to the Christchurch earthquakes. I have to say I have been thinking a little bit about that. It is obviously a very different type of crisis to what we have got now but also some similarities in terms of the massive social and economic dislocation and an initial period of uncertainty, initially because of aftershocks but also just because of the uncertainty of whether people could move back into their houses or even access their houses. I wondered if you’ve given any thought to that and if there are lessons from your perspective, having been the CEO that managed that response, that we might draw on for today?
RS: I think that is a really good analogy. The Christchurch earthquakes in terms of the impact it had on the local community and the prolonged nature of the crisis, because it wasn’t just one earthquake it was multiple, with thousands of aftershocks. There were many complex issues that needed to be worked through with the support of government and the support of businesses, local councils and the community.
One learning for me is firstly the importance of working together in a collaborative way across government and industry alongside regulators and the community. Communicating effectively and listening and deeply understanding what the pressure points are and doing whatever you can to work together. What is clear is you can’t solve these problems in a silo, you have to work together.
Touching on a point we were just talking about, health and wellbeing, these processes and certainly the New Zealand earthquake response was brutal and never ending. For the team members who were on the front line and the people who were personally affected it, was really tough.
So personally, as a big employer, being very mindful of the toll on your teams that are having to deal with this day to day and having an appreciation for what your customers and clients are facing is really important.
I think from memory the cost of the New Zealand earthquake was in the order of 20 per cent of national GDP which shows how significant it was.
I think the final lesson is just remembering that we will eventually get through it, we will come out the other side, so you always have to have your eye on the end of the tunnel. You need that sense of optimism that things will get better and we will get through it. I think some of those learnings apply to what we are going through at the moment.
MC: Yes, I was reflecting too about the comments you made before about mental health that living in such a period of uncertainty really takes its toll. Making sure that as an employer and as friends and colleagues you are alert to that and try to be there to offer support and let people know that these are tough and unusual times and that not everyone is always expected to be perfect.
RS: Yes, that’s right and recognising that everyone responds in different ways to a crisis situation. I must admit I have noticed in just the last couple of weeks the way in which some people across our business have stepped up has just been quite phenomenal. I have also learned that there are a number of individuals that have been going through some really difficult times on a personal level and you need to be aware of that and support them through that.
So, you are absolutely right, we need to be there for each other. We also need to realise that the only way we are going to get through this is as a team; leveraging each other’s best capabilities is what will make a difference.
To take you in a completely different direction Rob: for those people who don’t know, you are a former Olympian, a silver medallist from Sydney, how are you feeling for the athletes who are in limbo having dedicated so much of their lives trying to get to Tokyo?
RS: Well it is an incredibly difficult time. Just in the last couple of days the news of a likely postponement of the Olympic Games for potentially a year has been devastating for many athletes, coaches and support teams who have just put the most amazing effort into the preparation.
I used to tell the story of the morning of our Olympic final in 1996. We had a bomb scare at our building at four o’clock in the morning and we had to evacuate. Fortunately, I grabbed all the gear I needed to take to the rowing course. That was my story of dealing with adversity and uncertainty, but I tell you, what the current crop of athletes are having to deal with is a whole unique and new set of circumstances.
I think they would be the first to acknowledge that the Olympics is not the most important thing in the world. The safety of people is more important. But for a lot of these young people it is one of the most important things in their world. We in Rowing Australia are trying to provide a lot of support to our team.
The great thing about athletes is the way they rise to the occasion and triumph over adversity. Already I have seen our Australian team think about how they can turn this into a situation where they can come out the other end stronger.
So, it’s a tough time and I hope we will be there to celebrate their performance in 2021.
MC: Likewise, Rob. Thank you so much for taking the time to have a chat with me today. I know you have lots on your plate, but I really appreciate it. We have had a lot of really positive feedback from our many members who appreciate the varied insights we have been able to provide so thank you so much for being a supporter of CEDA.
RS: Thank you for the opportunity.
Listen to the discussion on CEDA's Podcast