ARA CEO Paul Zahra on How to Handle a Crisis

 The former CEO of David Jones, Paul Zahra, joined the Australian Retailers Association as COVID hit. Luckily, he’s not bad in a crisis.

How would you describe great leadership?

Most importantly, it comes down to self-awareness. It’s partly about understanding you won’t always have the answer. And it’s always about treating everyone with respect.

One of the things you’re passionate about is getting the best out of people. That’s never been more important, right?

Absolutely. Often the best solution comes from the frontline team. Leaders who do well are able to go up and down the hierarchy and make everybody feel they’ve got a voice.

You took over as the CEO of the Australian Retailers Association in April 2020 and we all know what happened then. What are the benefits of starting a leadership role in the middle of a crisis?

I don’t want to wish that on anybody because it was really tough. I didn’t meet my team face-to-face until 12 months later. I was hiring and firing people via Zoom, which is never a great place to be. But the pandemic gave the industry instant recognition because retail was such a focus. And because I was [in the media, speaking about] the impact on the retail industry, it meant the industry knew very quickly there was a change of leadership. That was one of the positives. I’ve managed crises my whole career. I’m not too sure if the crises have followed me or if I’ve been part of them [laughs] but it’s been a skill set. You have to be able to control without being in control, if that makes sense. You have got to be comfortable being uncomfortable because you don’t know what the next day is going to bring.

You’ve said that this crisis will see the rebirth of retail, not the death of it. Is that purely because of the digital transformation that’s taken place?

What COVID has done is accelerate trends that were already occurring in the industry. It’s forced retailers to move at lightning speed. We’ve seen this massive trajectory in online shopping. In the next year or so, online will be double what it was pre-COVID in overall percentage of sales; it was below 10 per cent but it’ll be closer to 20 per cent. We don’t see COVID as a positive but we see the impact it’s had in driving a trend and the outcome has been exceptional for customers.

Ruslan Kogan describes his business, Kogan.com, as a statistics business masquerading as an ecommerce business. But is it fair to say many retailers have a long way to go when it comes to analysing the data and fine-tuning the algorithms to drive success?

I think retailers have become really good at storing and collecting data but they haven’t necessarily mastered the analysis and use of that data. There are some retailers that are doing this exceptionally well – you only have to look at supermarkets to see that. But the skill set we once looked for in retail was high emotional intelligence. It’s become much more evidence-based and scientific.

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What’s the future of bricks and mortar? In the United States, shopping malls are becoming lifestyle precincts with yoga studios and upmarket bars. Do you see that happening here as well?

Yes. When I was the global retail adviser for PwC [2016 to 2018], the advice was to invest heavily in digital and to shrink your physical footprint. It’s the same advice I’d give today. The move to technology has meant that retailers don’t need to have such a large physical footprint. The most successful retailers will be omni-channel, where the customer can shop across any channel and be serviced.

So what does that mean for our CBDs?

Unfortunately, COVID has impacted them significantly. I remain positive it’s a short-term not long-term issue… but the move to working from home will fundamentally change the landscape. I expect to see state governments moving to a mix of residential and commercial [in CBDs] because companies have discovered they can operate with less office space. For the first time in my memory, the property market has been heavily disrupted.

You represent 7500 members, ranging from big retailers to small businesses. That’s a lot of opinions and different needs to manage. What have you learnt about managing stakeholders in your career?

The most important thing is that you need to listen. In this role, I listen to what members have to say, determining and understanding their motivation and being clear on ARA’s position. Managing expectations is important as well.

Managing expectations is something some leaders struggle with.

It’s a management competency that’s really important. You need to be able to deliver bad news. I call it the sandwich skill, where you deliver the bad message and you come back to a compliment. It works for me.

How important is lobbying in your role?

One of the reasons I took this role on is because I wanted to learn new things. And lobbying is one of them, to be honest. It’s about relationship development and management and a lot of the work that the ARA is involved in is advocating to government. The things we’re fighting for often involve legislative change or government action and if you’re not able to communicate your position effectively, you’ll most likely be ignored. I’ve taken the skills I used with investment committees and shareholders. It’s a different audience but there are a lot of similarities.

What’s the secret to swaying someone to your way of thinking?

Evidence-based arguments because numbers talk. You have to get actual evidence rather than anecdotal information. What’s worked well with government has been bringing to the forefront a case study on what retailers are experiencing. That’s been powerful in demonstrating a point.

What do you consider your greatest strength as a leader?

I’d like to think that I’m a good listener. I’m super-focused and disciplined in what I do. The biggest strength I’ve got is compassion – I focus on people and performance. I’ve never worried about strategy; I’ve always worried about culture. Strategy is great but culture is what drives the whole business.

That’s interesting because I’d imagine five or 10 years ago that would have been out of step with what else was going on in the corporate landscape?

That’s true. I sometimes feel that I’ve got a super-power because I understand women and women are the bigger component of the workforce within the retail industry. That’s why I’ve been such a champion and advocate for
diversity and inclusion because it’s been at the core of my thinking. And unless we get gender equity, we’ll never be able to solve the other diversity pillars.

I want to come back to diversity but on culture you were probably a bit ahead of the curve.

There are two types of leaders. There are those who use their position for good and understand we don’t want to just profit from the community that we operate in, we also want to be able to give back. And there are others who are capitalist by nature and only looking for commercial outcomes at all costs. That style of leadership is quickly dying.

It’s had so much prominence for so long, though, hasn’t it?

Absolutely. ASX companies put shareholders first and that’s the wrong attitude. First, it sets you back from the customer. And I’ve always believed the best way to get customer satisfaction is to have employee satisfaction.

You were the first openly gay CEO in Australia. That was in 2010. Obviously, diversity has improved in that time but not at the rate you would hope and certainly not across the spectrum.

No, definitely not. It’s moving in the right direction but it’s not moving fast enough. When I first joined a department store – not as a CEO but as a middle manager – the board had a majority of men. But 75 per cent of discretionary purchases were made by women and one could argue that if there was gender equity at the board table the issues facing a very disruptive business would have been seen because the focus would have been much more customercentric. They would have seen that the world of shopping had changed and had moved to more digital. That’s just a fact. There’s enough evidence around to say that balanced gender equity at the board level reduces risk and improves shareholder return.

And there’s the cultural diversity piece as well.

That’s it. Diversity goes beyond gender, of course. There’s the cultural aspect, there’s the LGBTQI community, there’s people who have a disability and there’s Indigenous people. The LGBTQI community is the only one out of the diversity pillars that has a social taboo associated with it so if you solve for the LGBTQI community, you generally solve for everybody else. That’s the ultimate litmus test in my mind.

You spent four years chairing PwC’s diversity board. When diversity becomes a business focus, do you see improved results?

Yes. Despite all the narrative around setting quotas, unless you set a quota and hardwire it by budgeting for that to occur, you don’t get the outcome. I worked closely with the [then] CEO of PwC [Luke Sayers] and had a significant impact on the way the company saw diversity and inclusion. It was very progressive but there are companies that haven’t even got it on their agenda. They’re going to be left behind.

I asked for your greatest strength as a leader. What’s your greatest gap?

Seeing the good in everybody and that’s a problem [laughs]. I have to remind myself to measure people on what they do rather than what they say. I’m still learning.

When you announced that you were stepping down as CEO of David Jones after a tumultuous time, you said you were simply tired. I bet a lot of CEOs feel that way but few voice it.

I regret making that comment, to be honest, but it talks to the person I am. I just ran out of gas and I needed a break. I’d been there for 15-odd years and I grew up there so I felt it was time for a change. Often we don’t take the time out – it’s hard for CEOs to have proper breaks. They can’t really disconnect.

So what made you want to get back into the cut and thrust of retail at the ARA? Did you miss that adrenaline?

It’s embedded in me. It’s in my blood. I just love the industry and the dynamic nature of it; the innovation that’s required for survival and for it to thrive.

How have you been looking after your own physical and mental health during the COVID crisis?

The most important thing for me is getting up each morning at 5.30am and going for an hour’s walk with my partner [Duncan Peerman] and our dog, Oliver. I do that every day religiously and that’s been really important. It allows me to think through the challenges of the day. I’ve always been an early-to-bed and early-to-rise sort of guy. It’s important in this job because I often have to jump to the news of the day.

Are you a good sleeper? What’s keeping you awake at night?

My concerns are always about meeting expectations. I’m one of those people who once I make a commitment, I want to follow through.

What’s one piece of advice you’d give a brand-new CEO?

When you’re in a CEO role, it’s an extremely powerful position and you won’t be short of people giving you advice. Always trust your gut because advice often comes with an agenda and sometimes it may not always be clear to you. That was my biggest learning.

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