The debate over Ahmed Fahour tells us a lot about the troubles businesses may face in the years ahead, writes David Walker.
Australia Post CEO Ahmed Fahour is super-smart, articulate, and a role model for Muslims in Australia. He had a track record at BCG, Citibank and NAB even before what has reportedly been a capable job of turning around Australia’s government-owned postal giant, Australia Post.
He’s also leaving the Post gig. He says publically that his job there is done. Other accounts say public anger over his $5.6 million 2016 salary and bonus played a role. As the political pressure rose, Australian Prime Minister Malcolm Turnbull reportedly told the government-owned company’s board to cut Fahour’s pay. Then Fahour walked.
If you’re a corporate CEO or senior executive, you may shake your head at this episode. AFL captains can receive $1 million in a season just for leading 21 other people on a football field; surely a business star like Ahmed Fahour can be paid $5 million for leading 50,000 people, especially if he delivers his organisation $10 million — or $100 million — in value? And what about the likes of Atlassian’s Mike Cannon Brookes and Scott Farquhar, who have scored hundreds of millions each by taking Atlassian to market? Where’s the attacks on the jocks and the nerds?
Fair questions. But as Turnbull knows, large parts of the public don’t care; many doubt that the market for CEOs is really competitive. Sportspeople and tech start-up founders can earn what they like; high-paid corporate CEOs are under the gun.
The signs are that they may stay under the gun, too. The biggest single reason is that for very many people, technological change, globalisation and the aftermath of the global financial crisis have brought wage growth to a halt. Over the past year, many economists have started talking of slow growth as the “new normal”. And that, in turn is changing global politics.
The most famous changes are the UK’s Brexit and Donald Trump’s US presidential win. After those events, parties of the centre-right suspect that large parts of their base dislike many free-market policies. So centre-right support for those policies is now melting in a gooey mess. Turnbull’s phone call to a government board looks restrained when President Trump has been actively threatening Ford and GM over planned foreign car production. This sort of political behaviour can spread.
The Fahour affair may simply preview the stoushes to come between corporate leaders and the rest of society. Corporate leaders have won most such battles over recent decades. They’re not winning right now.
What of Fahour himself? Some ex-CEOs end up mooching around the not-for-profit circuit and taking board roles with businesses they don’t quite understand. Fahour is too young and capable to suffer that fate. There’s already speculation he’ll end up running Amazon Australia when the US e-commerce giant begins its endlessly-anticipated disruption of the Australian grocery market.
What of Australia Post? Good luck to Fahour’s lower-paid successor, because logistics is on the edge of further disruption. Australia Post’s next chapter involves even more automation of mail sorting and mail delivery.
And what of Australia Post’s staff? That coming wave of automation will make a lot more of them redundant in the next decade or so — maybe as much as half. Their prospects for new jobs aren’t great, either. In the developed economies, it’s a great time to be a brilliant corporate leader, but a lousy time to be the sort of low- or medium-skilled worker that populates Post’s facilities. Politically, that’s starting to show.