Knowledge Center: Article
Route to the Top 2019: Interview with Aurizon’s Managing Director and CEO Andrew Harding6/23/2020 Heidrick & Struggles
Andrew Harding is the managing director and CEO of Aurizon, Australia’s largest rail freight operator. He joined Aurizon in December 2016. His prior role was as the global chief executive of Rio Tinto’s Iron Ore business. He held a number of other leadership roles in Rio Tinto, where he spent 24 years.
Heidrick & Struggles: How would you say the role of the CEO has changed over the past 15 years and how do you think it will change in the future?
Andrew Harding: The role of the CEO is evolving because society is evolving. So boards’ expectations of the CEO have also changed. In addition to day-to-day management of the company, CEOs also have to focus on the well-being of employees, environmental issues, and maintaining a good relationship with the community. And while, in the mining industry, climate change and community relationships are not new issues, they are evolving, and as a CEO you have to be better at managing risk and nonfinancial issues. The other dimension is the relationship with the board. Good CEOs in the future will have to be even better at managing the relationship and boundaries with the board in order to get better results for their company. And layered on all this, they will need to manage multiple stakeholders’ expectations in a fast-paced business environment and countless new technologies, which also asks for a greater cultural awareness across the geographies where their companies operate.
If I were to highlight one issue that will rise up on the CEO agenda, I think mental health will be the biggest and hardest one to handle in the future. It’s a very complex matter to manage as an employer, considering that the boundaries between workplace and non-workplace factors can be very unclear. It will take some time to formulate a sound strategy to address it and to go beyond the existent well-being initiatives that focus mostly on stress reduction.
Heidrick & Struggles: Could you share a formative challenge in your career that gave you the confidence that you could step up to the next level?
Andrew Harding: The experience that gave me the most confidence early on in my career happened when I was a supervisor. Through a series of events, I was handed over the management of a mine for a month, and I didn’t have the experience required for that task. I learned a lot, not in the least how to manage a cyclone-generated emergency. But the first big lesson I learned at that early age was that it’s important to take on unexpected challenges, as they will help lift your confidence to an incredible extent, which in turn is an essential building block in your ability to act decisively. The second big lesson was the importance of delegating and the need to trust implicitly the people I work with. When you are delegating something, the people you are tasking with actions will not do the same job as you would; they will do it better or worse, but unlikely the same way. There are parallels between that experience and the CEO role, because you don’t always have the answers; you are not a subject-matter expert, and at times the data you have sight of is not perfect, so you have to trust that your experts can guide you.
Heidrick & Struggles: If you think about the critical gap for a CEO today regarding skills and experiences, what do you think that is and how do you think you could tackle it?
Andrew Harding: I would say that CEOs need the confidence to let the board know what they cannot do well so that it can compensate for any imbalance and develop a strategy together. CEOs and boards alike have to be comfortable with any skill and experience gap and accept that it’s unlikely any CEO will have intimate knowledge in all areas. And related to that is the ability to build the right team with people who will complement the CEO’s skill set and experiences, with the longer view that at least half of that team could be candidates for the top role.
Heidrick & Struggles: Turning now to digitization and its impact on business, how are you developing the right skill sets that combine technical skills with leadership?
Andrew Harding: Part of the puzzle is to plan your transformative technology-driven projects mindfully and avoid trying to change too many things at the same time. It’s expensive and inefficient, and it overloads your employees with learning to work with a lot of new tools while simultaneously doing their day-to-day job. Instead of doing that, we built a road map, which described the problems we wanted to fix and in what order, and, importantly, ensured we would never address more than three problems at one time. We set very clear change management systems for technology implementation, so that our employees understand what the processes and expectations are. If you don’t have the technological expertise on your team or board, one thing you can do is go and look at disruptors in other sectors and countries and learn from what they are doing.
Heidrick & Struggles: What is your view on appointing internal or external candidates to the CEO role?
Andrew Harding: Most organizations would tend to appoint internally, to a large extent because boards can be risk averse. It’s easier to assess someone they have seen in a variety of scenarios in their company, someone who has earned their trust. I came in from an adjacent sector, and it was an easier move than stepping in to run an airline or chemical company. It doesn’t mean you cannot succeed, just that the pathway to success will be longer and harder. What is actually easier is to bring in someone in your company who is at a lower level and give them the organizational experience that will put them on a more equal footing, and give the board the opportunity to get to know them.
Heidrick & Struggles: If we stay on the topic of succession planning, how far down your organizational hierarchy would you look for CEO candidates?
Andrew Harding: Our succession planning is set to identify who could replace me, the group executive team members, general managers, and a few people in roles below that, which counts up to 200 people. We also look closer at particular groups that are underrepresented, such as women and Indigenous Australians. We have only 21% females and 5.6% Indigenous Australians in the organization. That means we have to be more direct at managing their recruitment and inclusion.
Heidrick & Struggles: How are you developing these potential candidates?
Andrew Harding: I talk to all my team and the people who work for them about their careers, and based on conversations with them and their bosses, and my own judgment, I suggest development solutions for them. These could range from executive courses, presentation skills, and confidence building to technical understanding of our business, but they are generally more focused on leadership skills at that level.
Heidrick & Struggles: How much do you work on culture actively as CEO, or how much does it naturally reflect who you are and your way of working?
Andrew Harding: I have a more pronounced bias to leading by example, so it’s more about the personal intervention on what I spend most of my time on. At the same time, I’ve worked with the HR group to design learning and development programs for all our people. For instance, when our frontline leaders get promoted from being a train driver to the first level of management, they receive leadership training. I have also introduced the concept of change management for technological implementation and a requirement to have a discussion about risk when making decisions on capital spending. These are all cultural changes, be they personal or systematic.
Heidrick & Struggles: What would you like your legacy to be; how would you like to be remembered as a CEO?
Andrew Harding: Getting succession planning right and handing over to an internal candidate would make me feel that I have been successful from a leadership and culture perspective. And, of course, to deliver growth to the business, which is a challenge in the current environment, and achieving real customer centricity. That would feel like a pretty solid legacy.
To gain more insights on today’s CEO, see the full Route to the Top 2019 report.