The System is the Solution

In 1991, Glenn Matthews decided that he wanted one day to be CEO of Panthers. He says that while he was never promised the job, he was always given enormous encouragement and support in his growth with the company. ‘There’s always been an atmosphere of “anything’s possible” at Panthers’, he says. ‘It’s an environment that nurtures self- belief.’

When Roger Cowan retired in 2005, Glenn Matthews was able to step comfortably into the position of CEO.

The flat structure replaced the ‘us and them’ culture that still existed in some sections of the Club, with an atmosphere of co-operation — both within each business unit and between team leaders. Glenn Matthews says,

‘Teamwork is important and you need to be comfortable with ambiguity. You need to be able to say to yourself, this is my role, but it might work better if someone else comes to assist me with this. Also, if you see something that needs to be done, and it’s not in your area, do it. But the people in that department also need to accept that and not feel threatened.

The leaders of the new small business groups had stepped into a whole new world, according to Bob Adamson.

We’d taken a bunch of young, enthusiastic, energetic supervisors who were now leading a team. We then had to start training those people, to give them some business acumen, and the skills to run a business. So we framed a scheme called Business Unit Development. We ran that for eight or nine months, took every group through it. There were regular sessions, and each of the team leaders brought along different members of their teams each time.

But it was much more complicated than that. There always seemed to be another step to take. We were never satisfied. The overall structure had to support what we were doing. We regularly held one or two day workshops to go over it all and do some fine tuning or make changes. If we brought another book into our management library we would discuss how it might add improvements. For example, The Empty Raincoat by Charles Handy inspired some change in our attitudes, so we looked at other books he had written.

Panthers was probably the first registered club to embrace official quality assurance, moving towards ISO 9000 accreditation with Standards Australia. The incentive increased when the NSW government’s purchasing arm let it be known that the Government would only deal with companies that had qualified through ISO 9000.

Since the move to Mulgoa Road, with its new space and improved facilities, the conference and banquet business had become a lucrative part of club activity. Panthers’ thinking was that there would be very few others in the conference business that would go to the trouble and expense involved in quality accreditation, so there would be significant commercial benefit in taking it forward. Eventually, after management compared the annual expense of Standards Australia re-auditing to the commercial return, it decided not to proceed with the accreditation. However, they elected to retain the stringent quality control measures and systems that were part of the process.

We removed a few items that were there to make it easy for Standards Australia to audit a company, but left the rest in place. We felt we were in a good position to take advantage of the valuable tools in such a system, but without spending the money.

People have asked, what’s the point of having all these systems when we’re a service industry? Much of what we sell is intangible — so how can we monitor the quality? Basically, the general idea of all that documentation is that we can look at our customer — whether it’s an internal or external customer — and ask ourselves, what does this customer want from us? Is it good entertainment? A comfortable environment? Good food? Or just excellent service? Having identified that, then in the preparation of that product, we have to ask “what does ‘good’ look like?” And if we can define what good looks like, we have to write it down so that everybody knows. When a keg of beer is delivered to the dock, how do we guarantee its quality from the time it arrives till the time it’s poured into a glass? There has to be a system in place to ensure the quality through all the stages. The same applies to a leg of lamb. Who ordered it, was it from the right supplier, what did we do with it when it got here, did we store it properly, did we cook it properly, serve it properly — slice it, put it on a plate, present it to the customer?

Adamson recalls that some people, particularly those who saw themselves in creative roles, found it hard to embrace the concept of systems written down to do everything. He gave an experience with a chef as an example.

I asked him, ‘What goes wrong most in the kitchen?’ ‘Well, we don’t get the right information from the people in the functions department.’

So, if we could fix that by putting a system in place that ensured that you did get the right information, that would give you more time, less stress, to get on with being creative in the kitchen? Once we identified the quality control that was most important to the chef, it was simple to get his commitment.

If you have all the basic mechanisms in place, that leaves the creative person free to be creative.

Peter Sheridan is Panthers’ Group Internal Auditor.¹ He began work in the early 90s, and was very impressed with the systems that were in place when he arrived.

There was a quality system that documented all the policies and procedures for the majority of operational areas. This is very important from an auditor’s perspective, because you have something to audit against — that’s the standard. You can easily see how a department is performing against that standard. It was a very different environment, and a different culture from other places that I’d worked. Most of my experience had been with large corporations or government departments which were much more regimented. I hadn’t worked in a flattened organisation before, but there were still policies and procedures in place to temper that and make it easy to adapt to.

I came to the club soon after the structural changes, into what was now a decentralised organisation. When an organisation goes flat, a lot of the normal controls can get a bit wishy-washy. I believe that Roger foresaw this and decided to put something in place to temper any falling down in controls. It would give them a way of monitoring the functions to see that the business controls remained in place, allow them to keep an eye on things.

Cowan’s motives in appointing an internal auditor were exactly as Sheridan said.

I was concerned about the tendency for good systems to degenerate into chaos if not constantly checked. People look for short cuts and sometimes they even think they are making improvements, but they are not seeing the full picture.

A small change by one person, then another one by a different person, a bit later a slight improvement by someone else, and after a few months the system is nothing like what was intended.

We were still working to overcome some significant problems brought about through rapid growth and I could not afford to have systems deviating from the plan.

When I appointed Peter Sheridan, he was given authority to look into every nook and cranny.

Panthers was probably the first club to appoint an auditor as a permanent member of staff. The internal auditor had the authority to investigate any matter that came to his attention except one. There was an agreement that all management salaries would be confidential, known only to the executive of the Board and the external auditors.² On Cowan’s recommendation, the Club also implemented a Board Audit Committee in 1997, although there is no regulation under corporate law requiring it.

It was also the first club to implement total quality management systems. The results are evident in the recognition it receives through awards and government subsidies in such areas as energy and risk management.

Over the ten years leading up to the interview with Glenn Matthews for this publication, the Club has been looking at the possibility of having its own property trust. Management had presented a number of papers to the Board advocating such a move, but a company needs to have substantial financial resources to pursue the concept.

The timing is now right for us. The experts tell us that the critical mass is a total property value of $200 million, so at more than $500 million, we’re now in a great position. Our assets grew as a result of strict governance policies over the years, and our very successful amalgamation strategy. Major companies like Woolworths and Bunnings all invest in property trusts.

In 2006, the Board and the members approved a proposal for the management to begin pursuing such a venture. Matthews says the Club will always retain at least 51 per cent interest in any trust, but it will open up enormous opportunities for the company and its 14 properties. It will enable Panthers to convert part of its equity in property into working capital.

It’s another transition for the small business that Roger Cowan took on in 1965, and left forty years later, which is now positioned to take its place as one of Australia’s leading property trusts.

It almost lost that chance. At one stage the Club was on the brink of losing half the potential of the property trust. The amalgamation story involves allegations of management lies, broken promises, back door takeover fears and preservation of power bases. The ensuing conflict could have put a very large part of that future value at risk.

In a way, the ailment began with the fiery difference of opinion discussed in the next chapter – the possibility of a rugby league merger between Parramatta and Penrith.

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1. Peter Sheridan left Panthers in the early 2010s.
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2. The exception that prevented the Internal Auditor from having access to management salaries was driven by the same respect for confidentiality that would become significant in later controversy. ↩︎

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