A good leader builds opportunities and takes people with them it’s not just about getting the job done, according to Tony Howarth, Chairman of $1.7 billion WA energy powerhouse, Alinta. Majella Corrigan reports.
With a background in banking, it’s not surprising Alinta Chairman, Tony Howarth thinks financial literacy is crucial to strong leadership and effective management, but he places just as much importance on other key attributes needed to succeed in the business world the ability to invest in people, trust, integrity, commonsense and empathy.
Howarth worked in the banking and finance industry for more than 30 years before becoming Chairman of Alinta in 2000. Back then, Alinta was government owned with a very narrow view of business reticulation and selling gas in Western Australia.
But Alinta has rapidly transformed to a national corporation that operates, manages and part-owns more than 22,000km of gas pipelines and 12,000km of electricity lines, which are worth about $5.7 billion and include 1.1 million gas and 583,000 electricity connections in Victoria and WA.
More recently, Alinta bought the Australian assets of US company Duke Energy for $1.7 billion, giving it three major gas pipelines and power stations in Australia and New Zealand.
For management of such a geographically vast group of assets, Howarth has to believe in and trust the corporation’s senior people. And invest in them as well. In order to manage assets of that size, Alinta has a staff of about 1400 people.
To me at a senior management level, it is all about integrity and trust and commonsense, he says. They are the three things running strongly through everything I believe.
You have to also be financially literate you have to understand the financial drivers of the industry you are in. You’ll always be faced with challenges and threats and it’s important to be able to defend your view in a financial sense and also in a strategic sense.
Leadership is about having vision, being able to engender confidence and bring others with you in an environment of loyalty and trust.
Howarth does believe that people are the strength of a business, and it’s crucial for employers to invest in them.
I grew up in banking and when my parents suggested joining the bank I am sure they had in their minds largely the job security that went with that choice at the time, he said. That job security is now a thing of the past and Howarth believes that, particularly for middle and senior management, the responsibility is shared employees do the best for their job and the employer helps make them the most employable they can be.
I don’t agree with employers who say there’s no point in investing in people because they only leave, he said.
What you really look for is someone that you know could leave tomorrow and get paid more, but wants to stay because they want to work for your company because they believe they can make a difference.
The worst thing to have is someone who feels trapped in the job because they feel they may not get another and they become very protective of their role, rather than creative and engaged.
Sometimes the business environment changes so quickly and you do have to let really good people go and sometimes those people can have been the heroes in driving through the changes. But it’s better for them to go on to other things.
It’s always a difficult discussion to have but both of you have to be ready for that both the employer and the employee.
You’ve got to keep investing in your people, improving their employability. The employee also needs to understand and accept that in today’s world it’s not job security but employment security [that] is the key issue.
That’s not to say the loyalty is lost. There will still be people who spend most, if not their entire career, with one employer. It is just a recognition that the pace of change has quickened and it is in all our interests to be prepared, according to Howarth.
It is also important to recognise that training is really only part of the investment. Other ways of doing this is, for example, encouraging your people to have experiences outside the workplace.
Howarth says the key characteristic to look for in senior management is someone who has the right attitude, understands what they do and can grow into the business, someone that can make decisions and is able to defend them, but not in an aggressive, negative way.
The right attitude includes being able to control your ego.
There’s nothing wrong with self-interest, but it’s got to be wrapped up with commonsense and be heading in the same direction the business is going, he said.
Often things like ego get out of balance with commonsense and that’s when you see some of the corporate examples of trouble.
Leaders also need the human qualities of empathy and courage.
Good leaders will take people with them, he said.
Some leaders rush ahead and find themselves isolated and others get behind and push people into situations they wouldn’t go [into] themselves. Neither of those behaviours make a good leader.
Howarth believes the difference between leadership and management is that a manager’s job is to achieve an outcome leadership is about getting more than the outcome.
A good leader builds opportunities and takes people with them it’s not just about getting the job done.
At Alinta, it is really the Managing Director and management team that have made the substantial changes in attitude. The Chairman and the Board set the values and the type of organisation they want, and in doing that they pick the CEO.
In Alinta’s case they choose to invest in Bob Browning whose recent background had been with Aquila (the US company whose Australian assets were later acquired by Alinta), but had also spent 16 years with Coca-Cola.
The market would say that our choice was good Bob Browning is very well educated, he has technical skills and a human resources background.
From the Chairman and Boards’ viewpoint it was getting that choice right and then letting Bob build the management team that has allowed us to grow and develop, Howarth says.
Alinta has achieved its status as a major utilities and services provider largely by acquisitions and that requires careful management, but more importantly, Howarth believes, a strong culture to start with.
To successfully acquire other businesses you have to have strong culture and performance yourself, he said.
Certainly I have a view that in business you have to earn the right to acquire. You have to run your own business excellently and have laid strong foundations before you have the right to grow by acquisition.
We spent 18 months after Alinta was privatised and floated, just focusing on lifting the performance of our own business before we looked to acquire anything.
A lot of acquisitions fail because the company acquiring a business may not be running its business as well as the one it is buying, and this will only dilute value.
I am very strongly of the view that senior management should do other things than just the job for example getting on a not-for-profit board.
Howarth does this himself he is on the Senate Committee of the University of WA and also involved in the Prime Minister’s Community Business Partnership. He is also a Director of the Australian Chamber of Commerce and Industry.
Bob Browning is on the board of shipbuilders Austal Ltd and while at Challenge, I was on the board of Alinta. It allows you to experience what it’s like to be a non-executive director. It gives you a different view of working with a board.
Howarth believes leadership can be taught largely by being given these type of experiences, and says potential leaders should also learn to become good listeners.
You need to be a good listener. There is a saying that you have two ears and one mouth and they should be used in those proportions.
It’s through listening you can start to understand and then appreciate diversity and you realise there often is no right answer, but by listening you may get to a better answer.
To be a good manager and build a strong team you need to appreciate a diversity of views and be able to bring them together and end up with a shared set of goals.
As a leader you should be bringing people to common goals through shared agreement.
Even if they originally held a different view you can’t get 100 per cent agreement but you can get a good outcome that the whole team will commit to.
So who does Howarth admire in the corporate world?
I’ve had lots of mentors but they may not have known that that’s what they were. I have known outstanding people all through my career, at all levels and looked to learn from them.
I also think that there is a huge number of people in fact, I think the majority of people who run their companies professionally and with dedication. But it’s only the ones that display the wrong characteristics that get the media attention. We don’t celebrate enough the ones who run their businesses well the successes.
Tony Howarth says there are also people outside the corporate world who he finds inspiring.
I met a young fellow about seven years ago who was in a sporting accident and became a quadriplegic.
I watched that young man aspire far beyond what people would generally expect of someone with that sort of disability. He eventually went to Oxford as a Rhodes scholar I think the first ever disabled Rhodes scholar to undertake a law doctorate.
Those are the sorts of people that inspire me, rather than necessarily the most outstanding corporate personality.
What are the most valuable lessons Howarth has learnt in his long career?
Firstly, before all else fails, tell the truth because all else fails.
Secondly, if you find yourself in a hole stop digging. There are usually a lot of people standing around you who can help.
Thirdly, you are normally appointed to a senior management role because people believe you have the right experience and capability and because you are good at what you do. Your responsibility then is to make decisions and trust your knowledge and experience. In other words, to be a leader you must lead.
You’ve got to trust others until they prove otherwise. If you don’t show trust then an environment of mistrust will emerge and then you’re lost.
You have to trust people to get on with their job, but when that trust is lost, you do then have to deal with it and quickly.
What are Australians best at?
I think it is the people side of business internationally they are trusted.
They are emotionally intelligent and we often don’t use that enough.
Emotional intelligence allows us to cross cultures pretty easily. Australians can move in and accept other cultures it’s a great strength and it provides great opportunities.
Alinta is one of Australia’s leading energy infrastructure companies. Its corporate head office is in Perth, with its network management operations based in Melbourne.
In March this year, Alinta agreed to acquire a diversified portfolio of gas infrastructure and power generation assets from the Duke Energy Group for $1.69 billion, and has developed a new corporate structure to incorporate these assets.
Alinta’s activities now include:
Alinta is the leading supplier of gas in Western Australia, selling gas to more than 480,000 industrial, commercial and residential customers in 2003. The Wesfarmers LPG contract, due for renegotiation by June 2005, is a significant contributor to this division.
Alinta holds ownership interests in gas and electricity infrastructure assets including:
- AlintaGas Networks (74 per cent ownership) this is WA’s leading natural gas distributor, delivering gas to businesses and about 60 per cent of WA households through a network of more than 11,000km of pipelines.
- United Energy Distribution (34 per cent ownership) an electricity distribution company with networks covering about 1450 square km and serving about 596,000 connections in Melbourne and the Mornington Peninsula.
- Multinet (19.9 per cent ownership) Victoria’s largest natural gas distributor, distributing about one-third of Victoria’s annual gas load to about 630,000 commercial, industrial and domestic customers.
- Alinta Infrastructure Trust (100 per cent ownership) the Trust owns the Duke assets Alinta has recently purchased including the Port Hedland and Newman gas-fired power stations in WA and a stake in the Goldfields, Queensland, Eastern, and Tasmanian Gas Pipelines, the Bairnsdale gas-fired power station and the Glenbrook cogeneration power station in New Zealand.
Alinta Power Services
Alinta Power Services holds long term management contracts over the power generation assets housed in the Alinta Infrastructure Trust. In addition, Alinta Power Services is responsible for the 140MW gas fired electricity cogeneration plant currently under construction at Alcoa’s Pinjarra alumina refinery, and the execution of a power purchase agreement to support the construction of a 90MW wind farm near Geraldton in Western Australia.
Asset Network Services holds long term service agreements for each of the gas and electricity distribution businesses and the gas transmission pipelines owned by Alinta.
National Power Services provides construction and maintenance services to both Alinta Network Services and other external customers.
Tony Howarth CV
- A J (Tony) Howarth AO, FIABF, FAIM, FSIA
- Alinta Board Chairman and Non-Executive Director
- Tony Howarth, 52, worked in the banking and finance industry for over 30 years and was the former Managing Director of Challenge Bank Limited. He is Chairman of Home Building Society Limited and St John of God Health Care Group and a Director of Mermaid Marine Australia Ltd. He is also a Director of the Australian Chamber of Commerce and Industry. Tony is a member of a number of community organisations including the Senate of the University of Western Australia and the Prime Minister’s Community Business Partnership.
- He has been the Chairman of Alinta Limited since its incorporation in January 2000. Tony is a member of the Remuneration and Nomination Committee.