Setting clear goals and treating employees as owners is the key to successful leadership, former Rio Tinto CEO Sam Walsh AO has told the QUT Business Leaders’ Forum.
Mr Walsh had a 25-year career with Rio, serving as CEO from 2013 until last year. He told the audience at the Hilton, Brisbane, he had cut costs by $6.8 billion and improved safety and environmental records during his leadership of the world’s second largest mining company.
“In 2012 the company had reported a net loss for the first time in 25 years. To put it very, very bluntly, the company was living beyond its means,” Mr Walsh said.
“When you become a chief executive you have to decide very quickly whether it’s time for an evolutionary response or a revolution.
“I definitely wanted us to move with revolutionary speed, but at the same time the company didn’t need a wholesale reinvention.
“We had to bring back the operating discipline we were recognised for.”
Mr Walsh, who held senior leadership roles at General Motors and Nissan Australia before joining Rio, said he had driven a huge drop in capital expenditure, from $17.6 billion in 2012 to $3 billion last year.
“I wanted all of our employees to act as owners. I asked them to spend each dollar as if it was their own,” he said.
“This sounds like a pretty simple culture shift however for many companies like Rio Tinto it is an enormous change in mindset.”
Addressing the “elephant in the room”, Mr Walsh said his conscience was “absolutely clear” in relation to a corruption investigation into payments made to access a potential site in Guinea.
"The company has not made any accusations against me and nor do I expect that there will be," he said.
"I have acted ethically and legally at all times during my 25 years at Rio.
"I am positive the truth will ultimately prevail and I have no fear of the truth at all, hence why I come here today with my conscience absolutely clear."
On coal’s role in climate change, Mr Walsh accepted a “global price mechanism on carbon” was needed, but said a coal-free future relied on renewable technology accelerating.
“Coal is going to be around for the next 50 years,” he said.
Mr Walsh said he had taken “seriously hard decisions” during his time as Rio CEO and concluded leadership is “all about leading by example”.
“My advice is don’t get distracted,” he said.
“Decide early on whether an issue is strategic, then that’s for the CEO, or operational, in which case, not surprisingly, you delegate the issue to your experts in the business.
“There’s a heavy workload that comes with a CEO’s territory, but you can prepare for it.”
The next QUT Business Leaders' Forum is with former Aurizon Managing Director and CEO, Lance Hockridge on Tuesday, September 5.
*Mr Walsh's address is available to media*
Former Rio Tinto CEO Sam Walsh at the QUT Business Leaders' Forum.
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