1 00:00:05,040 --> 00:00:07,840 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. 2 00:00:08,000 --> 00:00:11,320 Speaker 1: The last six months have seen workplace culture and governance 3 00:00:11,400 --> 00:00:15,120 Speaker 1: hit the headlines like never before. From the massive cultural 4 00:00:15,160 --> 00:00:18,400 Speaker 1: review at nine Entertainment through to the showdown between the 5 00:00:18,400 --> 00:00:21,439 Speaker 1: board of wise Tech Global and the company's founder, Richard White, 6 00:00:21,800 --> 00:00:24,560 Speaker 1: culture and governance have had an impact not just on 7 00:00:24,600 --> 00:00:27,640 Speaker 1: the companies and the people who work there, but presented 8 00:00:27,920 --> 00:00:31,280 Speaker 1: an ongoing challenge for investors. I wanted to take a 9 00:00:31,280 --> 00:00:34,160 Speaker 1: closer look at this today from the perspective of investors, 10 00:00:34,200 --> 00:00:35,920 Speaker 1: why they need to be doing due diligence on the 11 00:00:35,960 --> 00:00:40,040 Speaker 1: company's culture and governance before putting their hard earned into 12 00:00:40,080 --> 00:00:43,960 Speaker 1: that company. On the flip side, what companies, particularly younger 13 00:00:44,000 --> 00:00:47,440 Speaker 1: businesses like startups, need to do to make sure their 14 00:00:47,479 --> 00:00:51,120 Speaker 1: own cultural issues don't cause legal headaches in the future. 15 00:00:51,800 --> 00:00:54,080 Speaker 1: Nick Birch is the founder and director of law firm 16 00:00:54,240 --> 00:00:56,480 Speaker 1: Birch and Co. Nick. Welcome to Fear and Greed. 17 00:00:56,880 --> 00:00:57,520 Speaker 2: Hello, Sean. 18 00:00:58,840 --> 00:01:00,960 Speaker 1: I mentioned Nine and wis Tech. I will plenty of 19 00:01:01,000 --> 00:01:05,200 Speaker 1: other examples too. Why should investors care about culture? 20 00:01:06,600 --> 00:01:09,000 Speaker 3: I think it's a reflection on the way the company 21 00:01:09,040 --> 00:01:12,759 Speaker 3: have used the law suan that if you're going to 22 00:01:12,840 --> 00:01:15,319 Speaker 3: turn a blind eye to a bad culture or a 23 00:01:15,319 --> 00:01:20,640 Speaker 3: problematic culture, then these days you're ignoring your obligations from 24 00:01:20,840 --> 00:01:24,520 Speaker 3: a workplace safety a positive obligation perspective, and you're thumbing 25 00:01:24,520 --> 00:01:28,479 Speaker 3: your nose at the law. Also, culture drives performance, which 26 00:01:28,520 --> 00:01:30,720 Speaker 3: drives profit. You're going to lose good talent, You're not 27 00:01:30,760 --> 00:01:33,200 Speaker 3: going to retain good people. Your board's not going to 28 00:01:33,200 --> 00:01:36,280 Speaker 3: hang around if you're not taking these things seriously. 29 00:01:37,520 --> 00:01:39,840 Speaker 1: Are we seeing more of it now because we're more 30 00:01:39,840 --> 00:01:43,000 Speaker 1: aware of it than five years ago, ten years ago. 31 00:01:43,640 --> 00:01:45,240 Speaker 2: We're definitely more aware of it now. 32 00:01:45,520 --> 00:01:48,960 Speaker 3: I think that the conversations are being had around what's 33 00:01:48,960 --> 00:01:52,280 Speaker 3: acceptable in the workplace. The law is moving to catch 34 00:01:52,360 --> 00:01:55,520 Speaker 3: up with what society used as being acceptable behavior in 35 00:01:55,520 --> 00:01:59,640 Speaker 3: a workplace, and we're in that transition phase, which is 36 00:01:59,640 --> 00:02:05,000 Speaker 3: often conflict phase between people's previous behaviors being viewed through 37 00:02:05,240 --> 00:02:09,920 Speaker 3: a lens of twenty twenty five and it's not stacking up. 38 00:02:11,200 --> 00:02:15,280 Speaker 1: So I want to split this discussion into established businesses 39 00:02:15,320 --> 00:02:19,800 Speaker 1: and startups. So park startups for the time being. With 40 00:02:20,000 --> 00:02:23,639 Speaker 1: established businesses, is it more likely that they're going to 41 00:02:23,720 --> 00:02:28,200 Speaker 1: run into cultural problems when they're founder led businesses Wistech 42 00:02:28,240 --> 00:02:32,799 Speaker 1: being an exampleman Resources Chris Ellison being another example. Allegations 43 00:02:32,800 --> 00:02:35,239 Speaker 1: at this point is that actually where you're going to 44 00:02:35,320 --> 00:02:38,360 Speaker 1: run into more problems, or is there some trend in 45 00:02:38,400 --> 00:02:42,600 Speaker 1: some industries or is it just a bit arbitrary so 46 00:02:42,600 --> 00:02:43,639 Speaker 1: we're not talking startups. 47 00:02:43,639 --> 00:02:45,480 Speaker 3: Though I'd love to be able to say that it's 48 00:02:45,520 --> 00:02:51,240 Speaker 3: industry specific, that it's workplace specific, but unfortunately it's not 49 00:02:51,400 --> 00:02:55,160 Speaker 3: that the correlations aren't there across particular industries. If you 50 00:02:55,200 --> 00:02:56,840 Speaker 3: go to an industry that it's going to have a 51 00:02:56,840 --> 00:03:00,720 Speaker 3: bad culture. What I will say as a common is 52 00:03:00,760 --> 00:03:03,520 Speaker 3: that it's very rare that we see these types of 53 00:03:03,560 --> 00:03:07,840 Speaker 3: complaints and expose as in relation to female led organizations 54 00:03:08,480 --> 00:03:12,640 Speaker 3: that I think the male ego has a big element 55 00:03:12,680 --> 00:03:14,880 Speaker 3: to play in relation to where we're finding this culture. 56 00:03:16,360 --> 00:03:19,959 Speaker 1: Okay, what about startups and particularly startups which rely on 57 00:03:20,240 --> 00:03:24,799 Speaker 1: sales and I mean appealing to the male ego here, 58 00:03:24,800 --> 00:03:27,240 Speaker 1: but it's probably broader than that. The whole idea that 59 00:03:27,919 --> 00:03:30,760 Speaker 1: you can red sales people up and reward them with 60 00:03:30,880 --> 00:03:34,040 Speaker 1: financial incentives and all this sort of stuff. Can you 61 00:03:34,120 --> 00:03:36,800 Speaker 1: do that and have a good culture. 62 00:03:37,400 --> 00:03:42,560 Speaker 3: Absolutely if the company has at its core clearly stated 63 00:03:42,920 --> 00:03:46,400 Speaker 3: values around what they are actually setting out to do. 64 00:03:46,880 --> 00:03:51,880 Speaker 3: That the sales driven incentives, that the profit driven incentives 65 00:03:51,920 --> 00:03:55,240 Speaker 3: are all coming back to the foundational purpose. But it's 66 00:03:55,280 --> 00:04:00,640 Speaker 3: when that foundational core values are not known, not spoken about, 67 00:04:00,680 --> 00:04:05,120 Speaker 3: not clearly articulated, that it becomes difficult to have that 68 00:04:05,240 --> 00:04:09,080 Speaker 3: anchor in something that's meaningful and protecting the workplace itself. 69 00:04:09,920 --> 00:04:13,240 Speaker 1: So the lesson in that is right from the get go, 70 00:04:13,480 --> 00:04:16,520 Speaker 1: even if you are a startup and strapped for time 71 00:04:16,680 --> 00:04:18,760 Speaker 1: and cash, you need to get that right. 72 00:04:19,720 --> 00:04:23,120 Speaker 3: And it costs nothing to spend an hour half a 73 00:04:23,200 --> 00:04:26,360 Speaker 3: day holding a mirror up to yourselves and your foundation 74 00:04:26,520 --> 00:04:31,120 Speaker 3: group to actually set down who are we, what are 75 00:04:31,160 --> 00:04:33,839 Speaker 3: we about, and how do we treat each other internally, 76 00:04:33,880 --> 00:04:35,559 Speaker 3: and how do we treat the rest of the world. 77 00:04:35,920 --> 00:04:38,560 Speaker 1: Not hard, now, well it's not, though. I think Air 78 00:04:38,600 --> 00:04:40,800 Speaker 1: Wallax is a good example where they've actually come out 79 00:04:40,800 --> 00:04:43,400 Speaker 1: and been quite public saying we're a startup, we tried 80 00:04:43,440 --> 00:04:45,360 Speaker 1: really hard, we thought we were doing the right thing, 81 00:04:45,400 --> 00:04:49,559 Speaker 1: got it wrong, And they've said that themselves, how hard 82 00:04:49,640 --> 00:04:51,600 Speaker 1: is it? And air Wallax has gone on to say, 83 00:04:51,600 --> 00:04:53,480 Speaker 1: and we're trying really hard to get our culture right, 84 00:04:53,640 --> 00:04:56,560 Speaker 1: which is fantastic but how hard is it? I mean, 85 00:04:56,560 --> 00:04:58,640 Speaker 1: you say you can do that for half a day, 86 00:04:59,000 --> 00:05:01,240 Speaker 1: but if you don't do it, and you'll find yourself 87 00:05:01,279 --> 00:05:03,440 Speaker 1: a year to three five years into a business, how 88 00:05:03,440 --> 00:05:05,280 Speaker 1: hard is it to turn things around? 89 00:05:05,640 --> 00:05:07,359 Speaker 3: It's not going to get easier the longer that you 90 00:05:07,400 --> 00:05:10,720 Speaker 3: wait to do it. Sean, yep, And as I mentioned 91 00:05:10,720 --> 00:05:13,560 Speaker 3: earlier that the law requires us to do it. As 92 00:05:13,640 --> 00:05:17,080 Speaker 3: leaders of organizations, we have a positive obligation to ensure 93 00:05:17,080 --> 00:05:20,040 Speaker 3: that sexual harassment doesn't take place in the workplace. The 94 00:05:20,120 --> 00:05:23,240 Speaker 3: law can't be clearer than that, and you need to 95 00:05:23,279 --> 00:05:26,200 Speaker 3: take steps to ensure that it doesn't happen. So, however 96 00:05:26,279 --> 00:05:29,640 Speaker 3: that looks like in your organization, you've got to do it. 97 00:05:30,160 --> 00:05:32,320 Speaker 1: But even broader, I mean, so certainly there are laws 98 00:05:32,320 --> 00:05:36,760 Speaker 1: around sexual discrimination or harassment, sorry, but workplace. 99 00:05:36,360 --> 00:05:37,120 Speaker 2: Health and safety. 100 00:05:37,560 --> 00:05:39,800 Speaker 3: But to pick up on your earlier point around why 101 00:05:39,839 --> 00:05:44,800 Speaker 3: should investors care about culture? Coming back to retention of talent, 102 00:05:45,600 --> 00:05:49,279 Speaker 3: the values, proposition and the core foundations of who we 103 00:05:49,360 --> 00:05:52,240 Speaker 3: are as a company are vital to that and investors 104 00:05:52,800 --> 00:05:55,279 Speaker 3: should be asking about those things and what does the 105 00:05:55,279 --> 00:05:58,919 Speaker 3: company do to protect and amplify those values. 106 00:05:59,520 --> 00:06:01,359 Speaker 1: So let's get enter that in a moment, Nick, that 107 00:06:01,400 --> 00:06:10,320 Speaker 1: we will be back in a moment. I'm speaking to 108 00:06:10,720 --> 00:06:13,680 Speaker 1: Nick Birch from law firm Birch and Co. Okay, so 109 00:06:13,880 --> 00:06:16,400 Speaker 1: before the break, we're talking about the need for investors 110 00:06:16,720 --> 00:06:20,479 Speaker 1: to be considering these cultures when investing in a company. 111 00:06:20,600 --> 00:06:21,480 Speaker 1: So how can they do. 112 00:06:21,480 --> 00:06:23,880 Speaker 2: It in their due diligence phase you mean? 113 00:06:24,040 --> 00:06:26,560 Speaker 1: Or yeah, yeah, in their due diligence phase. So they're 114 00:06:26,560 --> 00:06:29,200 Speaker 1: deciding whether or not to invest, what should they be asking? 115 00:06:29,200 --> 00:06:30,279 Speaker 1: What should they be looking for? 116 00:06:30,520 --> 00:06:33,359 Speaker 2: Can ask the direct questions, ask the direct question of 117 00:06:33,400 --> 00:06:36,960 Speaker 2: the board? What steps do you take to uphold your 118 00:06:37,120 --> 00:06:41,400 Speaker 2: positive duty in respective sexual harassment in the workplace? What 119 00:06:41,720 --> 00:06:44,599 Speaker 2: policies are in place for the company in relation to 120 00:06:44,680 --> 00:06:46,719 Speaker 2: the way that we treat each other? What are the 121 00:06:46,720 --> 00:06:51,320 Speaker 2: company's values. How often are the internal training and the 122 00:06:51,360 --> 00:06:55,960 Speaker 2: refreshers in respect of that culture piece, what does that 123 00:06:56,000 --> 00:06:58,880 Speaker 2: look like, and how often are they deployed within the organization. 124 00:06:59,640 --> 00:07:01,600 Speaker 2: In this same way that the due diligence. 125 00:07:01,279 --> 00:07:08,839 Speaker 3: Checklist would include environmental considerations, other regulatory considerations and finance questions, 126 00:07:10,000 --> 00:07:13,720 Speaker 3: culture needs to have its own heading and the detailed 127 00:07:14,080 --> 00:07:19,080 Speaker 3: specific questions around how are we actually making sure that we. 128 00:07:19,280 --> 00:07:23,000 Speaker 1: Cut moster So what's the size of the price here. 129 00:07:23,040 --> 00:07:26,600 Speaker 1: Inasmuch as if I'm an investor, I've done my due diligence, 130 00:07:26,680 --> 00:07:29,720 Speaker 1: I have options, and a company has a better culture 131 00:07:30,160 --> 00:07:32,960 Speaker 1: than another culture, at least in terms of my perspective. 132 00:07:33,480 --> 00:07:35,680 Speaker 1: Am I going to get a better financial reward? Do 133 00:07:35,720 --> 00:07:37,440 Speaker 1: you think in the long term if I go with 134 00:07:37,520 --> 00:07:38,080 Speaker 1: that company? 135 00:07:38,400 --> 00:07:43,320 Speaker 3: I'd say yes that the on a risk analysis basis, 136 00:07:43,720 --> 00:07:47,640 Speaker 3: a company that doesn't have these core pillars in place 137 00:07:48,320 --> 00:07:51,720 Speaker 3: is a bigger risk for the underlying value to be 138 00:07:51,800 --> 00:07:55,880 Speaker 3: destroyed by one bad headline than one that has those 139 00:07:55,880 --> 00:07:58,920 Speaker 3: things in place. The same way that if it doesn't 140 00:07:58,920 --> 00:08:03,720 Speaker 3: have adequate insurance or a particular privacy policy, without it, 141 00:08:03,760 --> 00:08:06,320 Speaker 3: the underlying value is at risky. 142 00:08:06,520 --> 00:08:08,680 Speaker 1: So, Nick, I totally agree with you, and in some 143 00:08:08,720 --> 00:08:12,239 Speaker 1: ways I'm being a devil's advocate here. As we go forward, 144 00:08:12,480 --> 00:08:17,600 Speaker 1: do you think that in a Trump world we're going 145 00:08:17,640 --> 00:08:21,880 Speaker 1: to have a period where this isn't focused on as much, 146 00:08:22,400 --> 00:08:25,320 Speaker 1: or do you think that we've come far enough that 147 00:08:25,600 --> 00:08:27,520 Speaker 1: it will just be part of due diligence no matter 148 00:08:27,520 --> 00:08:29,720 Speaker 1: who's living in the US or Australia for that matter, 149 00:08:30,000 --> 00:08:30,720 Speaker 1: going forward. 150 00:08:31,400 --> 00:08:33,679 Speaker 3: I have been told many times Sean that I am 151 00:08:34,400 --> 00:08:38,520 Speaker 3: an over optimistic person and view the glass as being 152 00:08:38,840 --> 00:08:42,880 Speaker 3: more than half full. And so my expectation is that 153 00:08:43,240 --> 00:08:46,760 Speaker 3: here in our economy we have come far enough that 154 00:08:46,960 --> 00:08:52,120 Speaker 3: the outcry in our media around the public instances of 155 00:08:52,400 --> 00:08:55,720 Speaker 3: where these things have happened has been strong enough and 156 00:08:55,800 --> 00:08:59,079 Speaker 3: publicly supported that it isn't the type of behavior and 157 00:08:59,160 --> 00:09:02,600 Speaker 3: it's not the standard that are something that we are 158 00:09:02,640 --> 00:09:05,079 Speaker 3: willing to tolerate. I think we have come far enough 159 00:09:05,440 --> 00:09:09,800 Speaker 3: that to a certain extent, we aren't America, and we 160 00:09:09,920 --> 00:09:14,960 Speaker 3: do have different workplace conditions, thankfully. To also fall back on, 161 00:09:15,440 --> 00:09:15,719 Speaker 3: do you. 162 00:09:15,640 --> 00:09:18,520 Speaker 1: Think regulations that we have at the moment are adequate 163 00:09:19,080 --> 00:09:19,520 Speaker 1: to do that? 164 00:09:20,679 --> 00:09:22,760 Speaker 3: I think that they've gone as far as they can 165 00:09:22,920 --> 00:09:26,400 Speaker 3: at the moment. If that isn't a cop out of an. 166 00:09:26,320 --> 00:09:28,959 Speaker 1: Ouncer, no, no, no, I get I mean sorry, it 167 00:09:29,000 --> 00:09:30,400 Speaker 1: is a cop out, Nick, Don't get me wrong. It's 168 00:09:30,440 --> 00:09:32,079 Speaker 1: a cop out, But I totally agree with you in 169 00:09:32,120 --> 00:09:33,199 Speaker 1: a sense, in. 170 00:09:33,200 --> 00:09:35,080 Speaker 3: An ideal world, in my optimisty view of the world, 171 00:09:35,080 --> 00:09:37,920 Speaker 3: they would go much further than they are now to 172 00:09:38,559 --> 00:09:43,720 Speaker 3: ensure that every person who is in a workplace is 173 00:09:43,800 --> 00:09:47,360 Speaker 3: clear on what the minimum standards are for them, and 174 00:09:47,600 --> 00:09:50,360 Speaker 3: that it's not the privilege flue that few that actually 175 00:09:51,000 --> 00:09:53,280 Speaker 3: are afforded those protections because they understand them and are 176 00:09:53,360 --> 00:09:57,360 Speaker 3: articulate enough to stand up and vocalize the rights that 177 00:09:57,400 --> 00:10:00,199 Speaker 3: they have. But what we've got now, it was a 178 00:10:00,240 --> 00:10:02,520 Speaker 3: vast improvement of where we were five years ago, which 179 00:10:02,559 --> 00:10:05,640 Speaker 3: is daylight ahead of where we were ten years ago. 180 00:10:06,160 --> 00:10:09,480 Speaker 3: And the conversation will continue to have. We'll have these 181 00:10:10,120 --> 00:10:15,200 Speaker 3: flare ups in the media where that conflict between as 182 00:10:15,280 --> 00:10:18,800 Speaker 3: cultures evolve, it's going to happen, and we're on the 183 00:10:18,840 --> 00:10:19,440 Speaker 3: road to somewhere. 184 00:10:19,440 --> 00:10:22,360 Speaker 1: Great fantastic Nick, thank you for talking to Fear and Greed. 185 00:10:22,760 --> 00:10:23,319 Speaker 2: Thank you, Sean. 186 00:10:23,720 --> 00:10:26,440 Speaker 1: That was Nick Birch, founder and director of Birch and Co. 187 00:10:26,960 --> 00:10:29,360 Speaker 1: This is the Fear and Greed Business Interview. Join us 188 00:10:29,360 --> 00:10:31,560 Speaker 1: every morning for the full episode of Fear and Greed, 189 00:10:31,640 --> 00:10:34,079 Speaker 1: daily business news for people who make their own decisions. 190 00:10:34,320 --> 00:10:36,199 Speaker 1: I'm Seane Elmer. Enjoy your day.