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Five Leadership Tips from Sam Walsh

Management Rio Tinto's Chief Executive has overseen some huge changes at the mining giant, including monthly forecasting, writes Amanda Saunders

What does it mean to be a Chief Executive? Rio Tinto Chief Sam Walsh was thrust into the top job as the fix-it man, and pressing the reset button on a company  he says had "lost its way" led to his own "leadership metamorphosis".

Speaking to a room of aspiring big shots at Harvard University late on Tuesday, these are five of the leadership lessons he gave:

Speed is Critical

On assuming the helm in January 2013, Walsh knew speed of execution was critical and to get staff in line, he needed to develop momentum and  "a true sense of urgency and purpose".

He set three core priorities for the business: improve performance, strengthen the balance sheet and deliver results. He wanted Rio to be known for its cash generation and increase in shareholder returns.

In the early days, he says the chairman said to him: "Sam, you seem to be in an enormous hurry." Walsh replied: "Well, yes I am. It's not a time to muck around."

And as for the tough calls, "sometimes the options are not options, only painful reality."

He had to "restructure his executive team, merge business units together, close or mothball facilities and divest businesses which meant some very hard decisions and employment reductions at both executive and operational levels". Since taking over, more than half the staff at corporate HQ have been cut.

He says he learnt about tough decisions as a young manager leading the restructure of General Motors in Australia. He recommended the closure of five plants and the laying off of 10,000 people.

Evolutionary v Revolutionary

When Walsh inherited Rio, it was "a company that had lost its way... and lost the trust of the investment community". And the commodities boom was beginning to tail off.

"When you become a chief executive, you've got to decide early on whether it's time for an evolutionary or revolutionary refocus".

Walsh wanted to move with "revolutionary speed" but didn't think Rio needed a "wholesale reinvention".

"We had good people and good systems but we had allowed our attention to slip from our considerable strengths". It was time to press "reset", and bring Rio "back to the future" by reintroducing operating discipline.

Cash does not Lie

Walsh was told in his critical early months managing for cash was not possible for a business as large as Rio's. They were wrong, he says. He wanted monthly forecasting, but was told it was not possible. Wrong again.

"With apologies to the accountants in the room, cash does not lie. It is either there or it is not. With respect to the forecasts, well, last month's acounts are great, but why don't you try to drive a car looking forward in the rear-view mirror."

While the approah wasn't that revolutionary for employees, Walsh wanted every staff member to act as owners of the business, to spend each company dollar as if it was their own.

About 35 per cent of employees own Rio shares. And other majors started to copy Rio's strategy, he says.

"They often say that imitation is the greatest form of flattery. You know you are doing something right when your competitors start doing similar things after you."

At Rio's annual general meeting this year, a shareholder said cash was mentioned in the annual report 24 times.

"Now that is what I call success!"

Avoid Bureaucracy or Imitation

Walsh has some blunt advice: "Do not get sucked into bureaucracy or emulate what your competitors are doing - personally or as a company. Or think that answering emails or tweeting is adding value."

Executives need to manage their own careers, plot their own goals and fill the gaps in their CV. "No one else will do it for you," Walsh says. He also suggests executives take on additional responsibility, such as joining a not-for-profit board to gain experience.

"No one gets promoted until they exhibit the characteristics of the role that they are seeking. I have never met anyone who pushed their role to the limit if their authorities. Extend yourself. Nothing in life is delivered on a silver platter."

Ensure Clear Accountability

Walsh says a leader's plan is their promise. "Deliver on what you say you will do; that's how you build trust and credibility and make lots of money for shareholders."

As a CEO, you should never get distracted. "Decide early on whether an issue is strategic, that's for the CEO, or operational, in which case not surprisingly you delegate the issue to your experts in the field. That way accountability moves to where it belongs.

"What's the difference between being a chief executive compared to say a division head? Well the complexity, the breadth of the role and the workload is five times as much.

"There is a temptation to fire fight and to see every issue as the big issue to fix and a risk of being distracted by every 'helpful' side-line commentary. But don't."


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