Paths to the Board: Finance Professional

[00:00:00] Intro: Welcome to Minutes by boardcycle, where in each episode we pack the insights from one of Australia's boardroom leaders into just a few minutes.

[00:00:09] Intro: Today, host Richard Conway interviews Mark Johnson, Chair of HCF, Director of Metcash, Aurecon, Goodman and Sydney Airport Corporation, and Councillor at the University of New South Wales about the path from Auditor to Audit Committee Chair and beyond.

[00:00:29] Richard Conway: Welcome to the Minutes podcast. I'm your host, Richard Conway and today my guest on the podcast is Mark Johnson. Mark is the chair of HCF and also chairs the Audit, Risk and Compliance Committee at Goodman and the Audit and Finance Committee at Oricon, amongst other roles.

[00:00:45] Richard Conway: Before his non-executive career, Mark had a successful career in audit and finance advisory at PwC, including as CEO of PwC Australia. Today I'm talking to Mark about the path from auditor to the audit committee and [00:01:00] beyond. Mark, welcome to the podcast.

[00:01:01] Mark Johnson: Great to be with you.

[00:01:03] Richard Conway: To start off with Mark, could you talk us through your career prior to becoming a non-executive director and how you transitioned from that career into your non-executive career?

[00:01:13] Mark Johnson: Yes, sure, Richard, love to. So I started at Coopers & Lybrand and as it then was in professional services straight out of school, and did part of my university degree at night and part time and part full time. And I suppose my ambition when I first started, I wasn't quite sure what accounting and finance was, but I knew that I wanted to live overseas and they had an office in London.

[00:01:37] Mark Johnson: And I set my sights on that at a very young age to go and live and work in London. And so that’s what drove me to start, down that particular career path, I found I had an aptitude for it, I suppose. And before I knew it, I was promoted, completed my professional studies in Australia.

[00:01:54] Mark Johnson: And got on the first plane pretty much as soon as I qualified to go and live, live in [00:02:00] London. In the following years, you know, I worked in Australia, Indonesia on my way to the UK, I had four years in the UK. But whilst I was in the UK, I did special assignments in a range of other countries, Sweden, France, Italy, the US. All from London.

[00:02:16] Mark Johnson: A lot of this work was accounting and audit and finance related. But I also did a lot of M&A work, due diligence and acquisition advice, capital raising. So when I was in Sweden, I was helping a company raise finance in London. I did a lot of work on valuations of assets. A lot of work on litigation support, helping people defend litigation matters through financial analysis.

[00:02:38] Mark Johnson: Did a lot of work on risk and controls and frauds. And so I had a very broad based business experience. It's a contrast to the way professionals develop today where they're specialised very young. I had very broad experience early on. I worked in a wide range of industries. Engineering, consumer goods, financial services, [00:03:00] resources.

[00:03:00] Mark Johnson: And I was working in boardrooms pretty much from the time I started. So I got to see how boards operated. I suppose had an ambition longer term after I finished my, to be a director. So I initially started doing work, serving clients, and then I gradually moved into the management of the firm.

[00:03:16] Mark Johnson: Although I kept client work all the way through my career at Coopers & Lybrand and then PricewaterhouseCoopers. But at a certain point I started becoming part of running the firm and I ran an industry group. I ran a couple of our business units. I was on a range of global committees, and ultimately became the CEO of PWC Australia, having run a number of the businesses here.

[00:03:36] Mark Johnson: I was the deputy chairman for Asia. I was the, was also on the global strategy committee for PWC globally. And so all that business experience gave me pretty broad business experience and a range of sectors. I learned through all those experiences, what good and bad was like, in many ways,]. I learned to look at things from a range of different [00:04:00] perspectives. And I think I learned judgement. And I created networks and got to know people all those things were relevant.

[00:04:05] Mark Johnson: I think when I finally finished my executive career and decided not to run for another term as CEO at PwC. And then for a little while, I thought I was staying at the firm and being the chairman if I was given that opportunity, but then I decided that that wasn't the right thing for me having been the CEO.

[00:04:21] Mark Johnson: And so I just embarked on a career and, I was fortunate enough to pick up some wonderful boards pretty early on. It was a wonderful experience for me. So a lot of the positioning came from just broad based business experience doing lots of different things in lots of different countries.

[00:04:38] Mark Johnson: Not being, bound to one thing, getting a lot of variety, a lot of opportunity, and then learning by osmosis as you saw many great companies doing wonderful things.

[00:04:49] Richard Conway: Yeah, absolutely. And so, Mark, I wanted to ask, how much you think the time you spent in those kind of business management roles at PWC, so as [00:05:00] the CEO of PWC Australia and, business unit roles before then, how important do you think doing those kind of roles specifically was to you securing board positions after that?

[00:05:13] Mark Johnson: Look, I think my technical experience probably, I probably could have got boards with the technical experience I had to go onto audit committees and focus on things, accounting and finance. I think probably when I was being compared to others, the fact that I had also led a business of several 8,000 people and being a CEO and had to deal with all the stresses and strains that come with being a CEO, managing thousands of people, having a strategy, having to execute that strategy, deal with regulators, other stakeholders.

[00:05:42] Mark Johnson: I think that just meant that I could put myself in the shoes of the executives at the boards in which I was on, because I might not have done everything that they'd done, but I've done a lot of it as an executive. And then in addition, I could bring this, the technical experience because I had valued companies, I understood what good risk management was and good [00:06:00] control as an advisor, but also as a businessman.

[00:06:03] Mark Johnson: It just meant that, you know, the insights I could bring to the table were pretty broad and pretty focused. I like to use the analogy of a person holding up a coin and one person sees heads and the other person sees tails.

[00:06:15] Mark Johnson: So I think, there's no doubt that when I came on a board, I had to sort of change the lens at which I looked, think things through. I had all the raw knowledge and experience. But now, I might have been looking at something as tails when I looked at it as heads before. And, one of the things I love about being on boards is the different perspectives directors bring where I go, wow, I hadn't thought about that before, but that's a different way of looking at the same issue.

[00:06:39] Mark Johnson: So, whilst, you know, I've been an accountant and I sit on an audit committee meeting as an auditor, and I'd look at, oh my gosh, there's an accounting issue here and there's a risk management issue for us and we need the accounts numbers right. If I'm a director, I'm thinking about those things, but I'm also thinking about, my reputation, the reputation of the [00:07:00] company, the impact on the forecast that we announced to the market.

[00:07:04] Mark Johnson: I'm thinking about, can I pay a dividend? Are there cash implications? Etc. So, I want to comply with all those things and I want to meet the accounting rules. But actually, I'm looking at it through a bigger and broader lens than just perhaps what I was looking at when I was an auditor. And you know, as you're an auditor, you might think, well, I'm the most important person in the room, of course.

[00:07:24] Mark Johnson: Ha, ha, ha. And you learn pretty quickly that directors want to know that things are working well and that systems and controls are important and that the accounts are properly stated. But beyond that, they'll move on to the next topic.

[00:07:35] Richard Conway: Absolutely. And so, Mike, one of the clear advantages that finance professionals have, to bring to the boardroom is that finance is ultimately kind of the lingua franca of business. But what other skills do you think finance professionals are uniquely placed to bring to the boardroom?

[00:07:52] Mark Johnson: Well, I think judgement's an important thing. And I think one of the biggest things that a director has to have is good judgement. And I think, uh, dealing with [00:08:00] finances, I mean, in every business, one needs to innovate, one needs to take risks, et cetera. And so if you've been in that business for a long while, you've learned that you have to make good judgments about, you know, where you spend your money, how much money you spend, how do you measure success and returns? When do you stop something if it's not succeeding? And when do you double down and go further?

[00:08:22] Mark Johnson: So I feel as though a lot of those skills, I mean, those that aren't finance people that say, Oh, geez, that's finance guys. They're pains in the arse sometime, excuse the French, they will not want to support us, they're always challenging things and wanting to see them in financial terms when, frankly, you don't see success straight away, it takes time, it's not all about the dollars. And so you do need to balance that financial lens with some of that other thinking, but that's the beauty of a board where you're bringing different skills together.

[00:08:51] Richard Conway: You talk there about needing to balance some of, I guess, those learned skills that you have as a finance professional. Do you think there's [00:09:00] other kind of habits or practices that finance professionals learned that they might need to unlearn if they wanted to succeed as non-executive directors?

[00:09:09] Mark Johnson: Well, I think the balance between when to take a risk and when not, I mean, finance people sometimes its said are risk averse because they're always looking for a return. And others will say, well, you only succeed if you do take some risk. So I think making sure you've got the judgement call there. right. You do need to call it, and say, well, there's a risk.

[00:09:28] Mark Johnson: This isn't the right thing to spend money on, or we spent enough there, or we don't have the right measures in place here. But equally, every now and again, you've got to know when to say, let this play out a little bit further. Let's see how we're going here. There's some good positive signs, too early to expect to see a return. This is worth backing in terms of the big picture.

[00:09:46] Mark Johnson: So, I do feel as though you've got to have a very good understanding of the business, its opportunities and other things to make sure you're balancing that historical finance rigour with the need to let things play out, let nature [00:10:00] take its course in some cases and to respond to opportunity.

[00:10:05] Richard Conway: Great. And Mark, if you met a finance professional sort of reasonably early in their career, who's interested in building a career that can launch them into non-executive directorship in the future, what would the top couple of pieces of advice that you would give that person be?

[00:10:21] Mark Johnson: I think the ambition is to be a good business person.

[00:10:24] Mark Johnson: I think, you know, obviously start with finance and apply and try and apply those skills appropriately to your business career. But the very best people think a bit more broadly than just finance to be a good businessman. You obviously have to be a good talent manager. You've got to be able to attract and retain talent.

[00:10:41] Mark Johnson: You've got to know how to grow a business to drive, create a strategy. You've got to know how to execute. You've got to know how to project manage. And if I was talking to a finance, young finance professional, I'd say embrace opportunities to do different things as well. When we're looking at succession planning for CEOs and executives in many companies, we're [00:11:00] looking at the breadth of their experience quite often.

[00:11:02] Mark Johnson: And whilst we want them to be grounded, say in finance or in marketing or something else. We also want them to understand the broader agenda. And the best people are able to put all those skills together. And lead a company very successfully, bringing all those skills to bear in a way that creates a competitive advantage.