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Panpa Bulletin : February 2007
PANPA Bulletin February 2007 COVER STORY 21 lines: Fred Hilmer talks ganisation. The structure I left for my succes- sor in 2005 had seven people reporting to the chief executive . A culture adrift Culture was by far the toughest nut to crack at Faifax. This was partly due to the traditional, craft-based origins of the company, but it also had a lot to do with a high turnover of chief executives, which had left the organisation rudderless. Fairfax was in the unusual position of having two sets of customers – readers and advertisers – with competing interests. The default position on the readers was that they were lucky to have Fairfax, whereas I wanted them to feel valued and listened to. Advertisers were treated with distrust, especially among editorial staff, whereas I wanted them to be treated as partners, within certain limits. The tension this causes is evident when newspapers consider putting advertise- ments on the front page. Readers expect the front page to be the most important news. Advertisers would prefer more of it – or even all of it – to be used for advertise- ments. Similar conficts of interest arise with the front pages of sections. I believed the front page of Fairfax’s papers should be restricted to news; I was prepared to stick with this even when important advertisers, such as Toyota, were keen to buy the whole front page and the competition was happy to oblige them. But I was willing to have advertising on the front pages of sections such as real estate. Fairfax had an industrial dispute over this issue with journalists in Melbourne, but I refused to budge and after a day they backed down. In terms of the market, Fairfax’s default position was to be a victim. The company was always the one that was going to be taken over or have business stolen from under its nose. Instead, I wanted to foster a proactive culture in which Fairfax was the aggres- sor. In fact, the company bought a lot of businesses and sold very few. It bought the New Zealand papers, Text Publishing, RSVP, Strategic Publishing, the Port Stephens Examiner and other community papers. Fairfax sold Australian Geographic because it was basically a retailer and sold its stake in telco AAPT because it didn’t ft Fairfax’s business, but that was about it. It was a case of the myth defying reality — and the myth was that Fairfax was a poor little com- pany, even though its market capitalisation almost doubled to $4 billion in seven years. Changing an entrenched culture is not easy. I spoke a lot about being competitive and proactive, and put out a values state- ment that reinforced this, but it was of limited use in a cynical organisation suspicious of management speak. I believe the only way to deal with such trenchant opposition is to walk the talk and let the facts speak for themselves. At Fairfax that meant the company would make acquisitions, be polite to read- ers, work better with advertisers, reward merit and reject business cases that were not supported by analysis. There were dis- cussions about editorial, balanced reporting, turning down over-infated investments and continuing to keep a close eye on costs. Culture changes when you do things differently but it takes time. After so many chief executives some of the old hands probably thought my days in the top job would be numbered and they could wait me out. It didn’t work for them this time. Professor Fred Hilmer, the CEO of John Fairfax Holdings from 1998 to 2005, reveals the truth behind the headlines in his new book The Fairfax Experience: What the Management Texts Didn’t Teach Me. In the following extract he discusses Fairfax's organisational structure and cultural problems.
November December 2006