The euphemistic terror of business speak. “Strategic reviews” are part and parcel of everyday life in business. So are performance reviews, 360 reviews, key performance indicators (KPIs) and, for the higher-ups, bonuses, shares and performance rights. It’s one big game of change or be damned. Some people and companies seemingly have made it a way of life, I suppose to give their managements something to do.

But for many lesser employees, “strategic reviews” are synonymous with job cuts, survivor guilt and updating CVs. “Change management” is another bit of business speak that sends tremors through employees.

Strategic reviews are part and parcel of the new CEO seeking to change the company and expunging all signs of the predecessor. Sometimes there’s a crying need for such upheaval because the previous CEO had been a dud or stayed too long. That’s why Alison Watkins is at Coca-Cola Amatil, cleaning up after the decade-long reign of Terry Davis (now on the Seven West Media board).

Oil Search and Leighton Holdings ran strategic reviews of themselves last year. Oil Search because it had just completed a big LNG project in Papua New Guinea and wanted some ideas on what to do next — and then ran head first into the plunging oil price, which produced impairment losses of at least US$200 million this week. Leighton’s was after two years of management instability, a creeping takeover by some Spanish corporate types, bribery allegations, cost problems, big losses and write-downs and more management instability. The review basically said: “calm down”, do nothing and wait until the Spaniards complete their creeping takeover — and enjoy it! — Glenn Dyer

… and watch Westpac. There’s a new wanker, sorry, “head banker” at the Flying Saveloys from next Monday when Brian Hartzer takes the keys to the executive adding machine from the sainted Gail Kelly, whose last act on Thursday was to abandon, no, exit the South Pacific with the $125 million sale of Westpac’s operations across the region, except for Fiji and Papua New Guinea. Normally that’s the sort of decision high up in a strategic review — “low-hanging fruit” (i.e. the easy stuff) the expensive change consultants call those decisions.

According to media reports this week, Hartzer is already plotting, sorry, “planning” to revamp the management structure to get rid of the position he was given when headhunted from London by the board. His old role was CEO of Australian Financial Services. Getting rid of that post removes the need for the bank’s board to appoint someone who might be seen as a successor, or even a replacement.

Getting rid of that inconvenience will allow Hartzer (it is claimed in the AFR) to continue the reporting structure he had when he was in the post — whereby the heads of St George Bank, the retail head in Westpac, chief information guru and the CEO of wealth management arm BT all reported to him and not Kelly. In fact, the media reports reckon there will be other changes next week in the management of the bank, with the explanation given a bit suss — “improving customer service through better technology,” as the AFR put it.

Sounds like the early stages of a “strategic review” being dribbled out. And it also sounds like the usual rationale for job cuts, especially in the bank’s branches and other “customer-facing services” such as call centres. — Glenn Dyer

OZ Minerals’ strategic review. And then there’s OZ Minerals, a struggling miner that once had $1.5 billion in cash and now has a copper gold mine in South Australia, some cash and several other interesting possible mine discoveries in South Australia (all within range of BHP’s huge Olympic Dam mine, apropos of nothing). It’s got a new CEO, and guess what he announced this week …

Yep, a strategic review — part of which seems to have been made redundant by another company decision.

Here’s what new CEO Andrew Cole has in store for OZ Minerals, according to a statement from the company on Wednesday:

“A strategic review of the Company’s operations has commenced that will look at all aspects of the business from current costs to future opportunities, to be completed no later than April 2015; a multi-million dollar incentive partnership with the South Australian Government to further develop innovative extraction opportunities of OZ Minerals’ significant assets; the relocation of OZ Minerals’ corporate head office from Melbourne to Adelaide …

“‘Over the last eight weeks I’ve spent a significant amount of time listening to key stakeholders including our shareholders and staff … While today’s quarterly production figures highlight OZ Minerals is on a sound footing, all of those I’ve spoken with understand we need to respond to the changing dynamics of the sector we’re operating in. Our response begins today.'”

I don’t know about you, but after a year when the company got itself back on track and lifted production and sales of copper and gold above its market guidance (after a bad 2013), I’d reckon there first thing the new CEO needs to do is find out how the company has bounced back and who led it, and don’t change it. It’s a worry when you hear phrases such as “listening to key stakeholders” and, “several key changes to meet the challenges of a changing resources sector” and “position the Company for further growth” plus the “strategic review which will look at all aspects of the business from current costs to future opportunities”.

Cole’s review has been undone, though, by the decision to throw the company’s lot in with the South Australian government (where OZ’s Prominent Hill mine and several other solid new discoveries and prospects lie). What happens if the strategic review calls into question the worth of that deal and the concentration on South Australia and copper and gold? What’s the bet it won’t, or, if it does, it will be played down, making that review not so strategic at all? But I also bet there will be a clean-up and losses and job cuts down the track. CEOs, after all, have to earn their keep and justify the expense of the “strategic review”.

Having experienced a few strategic reviews, I can tell you they are more self-serving than strategic for those at the top of the corporate food chain who harvest the big, fat bonuses and performance rights (i.e. cheap shares at no cost, except to shareholders), which quickly are in the money as the share price rises because the last bunch of duds have been removed, at a cost, again to shareholders. — Glenn Dyer

Peter Fray

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