Customer really is king, according to a survey of Australian directors by KPMG, released today.
The survey of 600 members of the Australian Institute of Company Directors (AICD) was carried out in December 2018, at the end of a year dominated by headlines of poor treatment of customers by financial institutions.
In almost every question, customers – and employees – were given top priority in the eyes of directors, ahead of other stakeholders or issues. The survey covered listed, private, not-for-profit and public sector.
Alison Kitchen, KPMG Chairman said: “After 12 months of the Royal Commission and what it exposed, perhaps it is not surprising that the survey showed treating customers well is top of mind for directors. This reinforces the findings of a separate KPMG survey of CEOs released late last year. After years of perhaps paying lip-service to the idea of the customer being king, organisations are now truly putting customer at the centre of their thinking. Restoring trust was not identified as a specific answer in this survey but it seems to have permeated other issues like keeping customers and employees satisfied.
Angus Armour, AICD MD and CEO said: “It shows that directors and their organisations are looking to create value while balancing different stakeholder priorities. They should be asking key questions including how can my board take into account the varying needs of both short term and long term shareholders?
“Seeing company culture feature as a priority for directors in this survey, alongside recognition of employees as a priority stakeholder group, is telling. Boards should consider how they can communicate a clear sense of purpose that engages employees through alignment to their personal values. The broader community and customers are also increasingly looking to business to demonstrate a sense of purpose and values.”
Angus Armour said: “Last year’s survey showed that a significant proportion of directors felt unable to challenge executive management on issues that have potential to damage reputation. This year’s results are more positive, however 30 percent of respondents this year were not confident they had adequate tools and information to challenge management, so there is work to be done in this respect.
“It was very interesting to see the different responses given by the various age groups. This shows the importance of board diversity, not just in gender but also backgrounds and experiences, which varying age levels would naturally represent.”
Alison Kitchen said: “Overall, the most heavily weighted theme was People, Conduct and Culture - unsurprising given royal commissions and enquiries into conduct, and quality of service in financial services and health. Internal culture and conduct, employee satisfaction and customer satisfaction are all key. KPMG believes that this reflects directors’ priorities: the need to focus on improving outcomes for customers and employees over short term financial performance and maximising returns.”
She added: “Directors appreciate that the focus on governance and culture after the GFC was rightly on financial soundness and stability. In today’s business environment, that focus is too narrow. With the release of the Royal Commission’s Final Report, and in echoing the APRA Inquiry into CBA, it is clear that supervision must extend to include non-financial risks and to consider the interests of all stakeholders.”
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