With more than one million members and $45 billion in funds under management, Sunsuper has become one of Australia’s leading superannuation providers. Jonathan Jackson spoke with CEO Scott Hartley about changing focus and building a high performance culture to lead successful change.
When Sunsuper appointed Scott Hartley to the position of CEO in 2014, it was a time of change. That’s not to say the business was poorly managed, indeed it was quite When Sunsuper appointed Scott Hartley to the position of CEO in 2014, the opposite. Yet to facilitate the growth required to bring Sunsuper into the future, change was necessary.
Before we look at the changes Hartley has brought to the organisation and why these changes were necessary, it is important to understand how Sunsuper achieved its prior success.
In 1992, the Keating Labour government introduced the Superannuation Guarantee (SG), a compulsory system of superannuation support for Australian employees. Paid by employers the legislation was well received, with the Australian Taxation Office stating that the first year of this new Act boosted coverage to 80%. By the end of the following decade, coverage rose to 91%, and the SG rate increased from 3% to 9% and rose more recently to 9.5%.
By 2005 employees could choose their own retirement fund and ‘transition to retirement’, meaning a person could contribute a larger portion of their salary to super and replace their salary income with a drawdown from the pension scheme. That’s probably too much information, however it gives you an idea of the importance and acceptance of superannuation funds in Australian life.
Sunsuper was formed just as compulsory superannuation was set up, as a sweeper fund for all Queensland workers not captured under a union or corporate arrangement. It was born as profit-for-members fund to act as a private entity equally sponsored by the Queensland Chamber of Commerce and Industry, the Queensland Council of Unions and the Australian Workers Union.
Given the nature of the industry at the time, Sunsuper was able to grow organically and developed with minimal staff for the first decade of its life. When the first CEO, Don Luke entered the fray in 1996 he was tasked with building a strong commercial company, with a competitive team that could grow the funds under management.
When Luke retired in 2007, he could hold his head up high having expanded the fund and picked up a number of big brand corporate clients including PWC, HSBC and Virgin.
“Effectively Sunsuper came to see itself as a large profit-for- members fund – not an industry fund as it doesn’t have the support of any one particular industry and not a retail fund, but a fund that incorporates the best of both worlds,” says current CEO Scott Hartley.
“Sunsuper has the commercial head of a retail fund in that it is a profit-seeking organisation, but it beats with the heart of a profit-for-members fund in that it seeks to return those profits to members in the form of lower fees and higher investment returns,” Hartley says.
And is a successful one at that. So why the need for change?
Well, for one thing when Hartley arrived, the fund was still Queensland centric with around 80% of members coming from the sunshine state.
There was a cultural problem as well.
“The culture was somewhat siloed and male dominated at board and executive level. As such, in my view, we were well positioned but weren’t realising our potential.”
It is Hartley’s view that a high performance culture will outperform a really smart strategy and he therefore embarked on a journey to bring high performance culture into the organisation. At the half way mark of this cultural evolution, Sunsuper is a different organisation and the change already implemented has led to Sunsuper being named Chant West’s Fund of the Year for 2017, an award given to the Australian fund that demonstrates excellence across a range of criteria including member services, fees, investment performance and insurance administration.
Sunsuper has also been recognised by Chant West as Best Fund: Member Services 2017 and Best Fund: Corporate Solutions Fund of the Year 2017 and 2016. Further accolade has come from SuperRatings which awarded Sunsuper their Best New Innovation award for the company’s Life Income account, which features an easily activated income account and a retirement bonus for eligible members.
Furthermore, Sunsuper’s contact centre has been recognised for its industry-leading customer service for the third year running and this year the company was once again awarded with the highest possible ratings from a number of the nation’s key superannuation ratings agencies, Canstar, Chant West, The Heron Partnership and SuperRatings.
So you can see Hartley’s approach has had a positive effect. You should also note that in a market place where there is approximately 200 super funds, with the largest market share held by AMP and Australian Super at 5.5% each, the integration of a high performance culture was required not only to compete with the major funds, but also excel in a fragmented industry.
“We were in the top 10 public offer funds when I came on board, but there was and is no guarantee of remaining there unless we accelerated our own growth,” Hartley says.
Hartley had a choice when he started: plan A: become a top five, long-term sustainable player in the industry or plan B: hand the keys over to somebody else, which happens quite consistently. Plan B would be a bad outcome.
“To do that we wanted to achieve a customer score measured by Roy Morgan that would give us a top 10 ranking and broaden our member base outside Queensland to over 40%. We wanted to feel we were comfortably above median returns for our members and we also needed to reduce costs by over 50%.”
“We set very high aspirational targets and while we had strong net growth, we wanted to increase that by 50% and grow to a market share of over 2.5% per annum by 2020 and aim be in the top 5,” Hartley says of the goals he set.
“We implemented a strategy that had pragmatic short term focus on organic growth that competed with the banks and AMP in traditional segments such as corporate super, but we also needed to refocus and double down on our efforts pursuing retail adviser distribution. That was something we hadn’t done before.”
To complement its growth strategy, Sunsuper strengthened its investment capability by restructuring its investments.
The goal was to create strong investment returns over 1-5 years to put Sunsuper in the top quartile for returns in the industry.
Hartley also understands that consumer choice is on the rise and in that world customer experience is paramount. This understanding shared amongst the executive team and board, led to a major reinvestment to transform Sunsuper’s technology and operations to better enable a customer-centric, data driven, digital direct strategy.
“Our technology team was, combined with our customer design functions, to bring it to the front of customer thinking,” Hartley says.
“We don’t compare our customer experience to other super funds or banks, we compare to Amazon, Uber and Airbnb because they are the experiences customers expect from providers.”
But again Hartley reiterates the most important change was about becoming a high performance culture.
“The only way to achieve all of this change was to build a high performance culture that could drive strategy and transform the culture from something siloed to something instructive, inclusive and collaborative – where hierarchies and silos are invisible or irrelevant,” he explained.
“We wanted to elevate from a competitive mindset to being an attacker and disruptor in the market.”
Hartley says you can’t micro manage this type of transformation or high performance, so the company needed to move from a group of very good managers to very good leaders.
“That’s a big investment in leadership to support that change,” he says. Whilst the strategy was a top down approach, the cultural development was bottom up and it would lead to the full realisation of the company’s purpose.
“We reviewed and refreshed our purpose which is to inspire and empower Australians to achieve their retirement dreams: that is where our difference is, this gives us relevance.”
The vision of the company was also addressed: to be Australia’s fastest growing fund, together achieving market leading results, loved by our customers, respected by the industry and recognised as a great place to work.
The vision is a five year vision that the company is now well on its way to achieving, however the purpose is enduring.
A set of values, critical to building a high performance culture was implemented, with ‘customer first’ at the top of the pyramid. Trust, accountability, candour, collaboration, leadership and customer first are Sunsuper’s six core values and according to Hartley the staff live these values every day.
“We spend a lot of time embedding our values and running workshops and it is a big investment of my time, but if the CEO isn’t invested in cultural transformation then it won’t work. Good and bad habits flow downhill and therefore a culture shift has to come from the CEO and the CEO has to be 120% invested.”
The Board has also gone through a self-led transition and now incorporates four females and three directors based in NSW representing a national inclusive fund. Three independent directors have also been added, so there is a board full of people with complementary and diverse skills.
Sunsuper has achieved a great deal in the past two years which has been critical to its positioning.
“By 30th June, we will have basically doubled our assets in four years and increased market share by 1.5% to possibly over 2% market share,” Hartley says.
How has this been achieved? Through a cultural evolution that now has everyone working towards the same goal.
And while Hartley isn’t declaring victory just yet, the journey is progressing well.
“Winning is a team sport and that’s what Sunsuper is all about,” Hartley says.