Who’s is Australia Post Anyway? A failure of Board Governance

So Ahmed Fahour, CEO of Australia Post, resigned yesterday, immediately after announcing a strong profit result and despite being supported by the board chair who said he had done a fantastic job of turning around the 100% government-owned Company.  Perhaps it was the disclosure of his $5.6m salary, perhaps the government enquiry into Australia Post’s salaries, perhaps the Prime Minister’s comment to the board (appointed by the current government) that salaries were too high, perhaps that Farhur had been there 7 years.  But what is clear is this:  it’s yet another failure of board governance that allowed this situation to arise.  Let me explain why the wrong people are being castigated.

Farhour was appointed by the board in 2010 and his salary was agreed by the board.  So, if his salary is too high, it is the board’s fault, not Farhour’s.  Further evidence of the board’s failure is that, not only is the latest annual report not available on Post’s website, the remuneration of board members and senior executives are not available either.  But, since it has become public that five execs receive $1.3-1.8m, yes million, each, yes each, it can be assumed that the board is quite well paid also.  We’re all doing well financially, thank you!

So who is on the board?

The eight current members are not exactly a who’s who of directors, apart from chair John Stanhope and well-regarded ex-Telstra exec Holly Kramer.  The board includes two people without a degree, two lawyers, three commerce people, two Arts degrees, two Australia Medallists, an ex-president of the Qld Liberal party and an ex-Liberal Party MP.  Apart from Farhour, the members are John Stanhope, Brendan Fleiter, Dominique Fisher, Holly Kramer, Bruce McIver, Michael Ronaldson and Jan West.

Whatever they have achieved and whatever their backgrounds, not following basic disclosure rules (the last public annual report was for 2014, just before the massive layoffs to cut letter service in 2015), and agreeing to pay these huge salaries are their responsibilities and their failures of governance.  They should all be sacked before Farhour.

The proposed solution is counter-productive

Not only is the solution wrong, it is counter-productive.  PM Turnbull has somehow arbitrarily removed salary setting from Post’s board…and suggested that theRemuneration Tribunal will be responsible for salary setting for Post and similar government-owned organisations…with suggestions that a top salary of around $1m will be the maximum allowable.

Of course is sounds good…but the problem is that other organisations, other executives, other boards are now penalised, limited and handicapped because of the errors of the Post board…who carry on with no penalty!!

So the answer is:  don’t change the system, sack the specific people responsible.

And the real error hasn’t even been discussed yet.  The decision to cut individual letter delivery (but not business delivery, at least in my area), making the delivery slow, unreliable and unnecessary (not to mention costly with the massive letter charge increases) are putting Post’s long term reputation at great risk, even though they are short-term profitable.  That’s why Farhour was sacked…and it’s  another failure of board governance that they forgot the purpose of their organisation was to serve the public, not just make money.

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2 thoughts on “Who’s is Australia Post Anyway? A failure of Board Governance

  1. Very well said Graham. I was shocked by the lack of transparency and of qualifications of the board. Are they appointed by Government? That might explain it.

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  2. Yes, Sandie, they are appointed by the government, it being a 100% owned government organisation. Actually an acquaintance of yours was on the board and probably there when they made the initial Fahour salary decision…might be interesting to ask her about this! My previous experience with government-appointed boards is similarly poor, but I’m not sure private boards, which are largely appointed as ‘mates’ of existing board members or people having a good profile, are much better. after all, the salary explosion of board members has resulted with private (ie non-government) boards too.

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