Angus McKay Angus McKay is the newly appointed CEO of 7-Eleven Stores. He commenced the role on March 18 of this year and has been charged with advancing the company’s strategic reform program, which is focused on growing 7-Eleven, improving operations and enhancing its people and culture to ensure it can boast 21st Century workplaces that are fair, efficient and customer focused. He has previously held CFO roles at Asciano Limited, Fosters Group and New Zealand Milk Limited. COMPANY PROFILE: 7-Eleven Stores 7-Eleven Stores is the master franchisor for 7-Eleven convenience stores in Australia. In 2016, 7-Eleven Stores is in the very early days of rebuilding and restoring its brand image and reputation following last year’s revelations of widespread underpaying of staff by some of its franchisees. Justin Grey: Why did you take the 7-Eleven role? You clearly like a challenge… Angus McKay: I do indeed. I looked at it as clearly a massive challenge, but a brilliant one. I’ve got a rich, unique opportunity to enter a premier retail business and get to work with a group of people to help solve issues that are in front of us, helping to grow and continue to grow. I’ve got a fantastic mandate from both the board and the shareholders, which is very rare entering a job, that you get such an open mandate. Fundamentally, this is an exciting space, and in spite of the things that we are dealing with at the moment, it remains an exciting space, one in which this business is uniquely positioned to avail itself of. JG: In a sense you’ve got a clean slate – 7-Eleven can only really go up after the difficulties of last year. AM: All those issues from last year are still with us. They are now mine and I’ve got full accountability and responsibility for them. The reality is how we learn from what’s going on and actually make it better from those mistakes. It’s a very interesting and, dare I say, pristine place I get to play. JG: You’re very well qualified as a business executive, but you haven’t a great deal of time in retail specifically. How does that place you? AM: Look, I struggle with CEOs that say you need to come with a specific experience. God forbid anyone actually asked me to go out there and be a retailer. That would be a mistake. I would argue the same thing when I ran Skilled or Pacific National. That’s not a job for the CEO. Mine’s all around the people that you employ, the direction that you collectively set for the organisation, the goals that you set for the particular organisation. My job is to keep bringing people back to those priorities, motivating them to get to those, Holding them accountable for what’s important and what drives the objectives and outcomes that you set yourself up for. I like to think I am a pretty quick study. Right now, my brief is not to come in here and pretend to be a retailer. I’ve got lots of people who are very good retailers working all around this business. JG: 7-Eleven Stores chairman, Michael Smith, has charged you with improving operations and working on the people and the culture in the business. What’s the strategy and timeframe for implementing that? AM: I’m still going through the process of assembling a strategy and making sure that I get all my stakeholders aligned on that. Culture gets built over years. It’s not something that I could snap my fingers and make occur. I can snap my fingers around standards, and that’s already happening. People are already hearing and feeling what I believe are the right standards, and they are pretty high in that sense. The wider team, as it gets shaped and formed over time, people in the organisation will have a long view of those standards and values. From there, culture starts form in an organisation. In terms of business operations, this business has got a terrific track record. The momentum in the organisation, the desire to be different and do things differently, is fantastic. JG: It was a shock to a lot of people what happened to 7-Eleven last year, given how for years 7-Eleven was seen as a leader in franchising in Australia… AM: There’s no doubt that certainly the vast majority of people around here are devastated at what’s come to light. They need to be accountable for what we knew or suspected and where we did nothing. Where use the word ‘spin’, I don’t really mean that because that’s got a negative connotation. My perspective on what has happened is, we will clearly be known for what has been well highlighted, well publicised, and what we are now doing. What we should become better known for is the way we respond. The way we have taken accountability, the ways we’ve actually looked to drive leadership in the franchise world. How we have accepted our medicine to make sure that we are an exemplar. Not just in the franchise world, but in general retail and the Australian business world. JG: It’s been said that the compensation bill could go up to $100 million for around 2000 underpaid staff. How is that compensation process tracking? AM: Look, statement number one, that 100 million number has been made up by a number of journalists out there. I’ve never seen that number until I read it in the newspaper. We are not focused on the dollar number. A simple message that I make sure we will understand is, we want people to come forward who have been aggrieved by this process. We will go through the process of assessing those claims and then trying to make restitution for what is the right number that they are owed. What that end the number comes down to, is irrelevant. What we want to do is make sure that we actually treat every claim on its merits and get that through the system as quickly as possible. The process is moving on; it’s slower than I would like. I think part of that is how we go about actually verifying the claims that are being put into the system and making sure that we don’t end up with fraudulent claims coming through. JG: What is the franchisee count at the moment? How many have exited the 7-Eleven franchise network? AM: I’m not going to disclose franchisee numbers. We certainly have had some people who have sold out of the business. We are not talking droves here. There are people that we have taken out of the business. I think that’s a very important message. Where we have seen people choose not to play by the law, we are taking steps to actually take the franchise off them. That has occurred over the past number of months, and even in my short time here has been two or three of those that we have done. We are continuing to build up some of our own corporate stores as part of the process. That’s not going to be an overwhelming number. The fundamentals are, people who are remaining interested in being a 7-Eleven franchisee, they need to do the right thing. The wrong people need to come out of the system. JG: How achievable is it that a franchisor with a large network of franchisees can be across what each individual franchisee is doing in their franchise? AM: I think the simple answer is we’ve got to be. 7-Eleven is no different from any other master brand. When someone does something like that in regards to wages under the 7-Eleven brand name, it affects our brand. Anything that affects our brand, we need to be across. In terms of the question of us taking accountability for wages, I’ll say we absolutely need to be accountable for anyone who works directly or indirectly for 7-Eleven – that they are paid a fair and equitable wage, and a legal wage, for what they do. The way we go about doing that is not to simply say we will relieve the franchisee that responsibility or accountability. We will just enforce it back through the system. Where that can’t be achieved, I’m certainly open to us actually picking up that cost. JG: How do you begin to restore faith between head office and franchisees? AM: There’s three camps. There are a lot of franchisees out there who have been doing the right thing, and they are all for us doing what we’re doing right now, which is, I suppose, asserting our rights to make sure the right thing occurs in the marketplace. We’ve got people who don’t want to do the right thing. I’ve been pretty clear with you what should happen to them if they don’t want to play by the rules. I’m not looking to restore their faith, I’m just looking to restore my brand. As there’s all the people in the middle trying to work out how does this all affect them. They may or may not have been partaking in the wages issues, but for them it’s around what’s 7-Eleven’s response going to be to this issue. It’s a long, long haul, but it’s pretty fundamental, simple steps. JG: I’m interested to hear what the franchisees who have done everything by the books and haven’t cut any corners, what feedback they are giving you… AM: They would be rightfully very annoyed. I can’t be any clearer when I say that we clearly knew what was going on. Without a doubt there was knowledge in this organisation and we did not step forward to do something about it. At that point in time, the hole gets pretty deep. To the degree that anyone is out there thinking that this hasn’t hurt them, it’s wrong. Of course, it’s with them, and that’s on our watch. JG: You’re working on a new fee structure and franchise agreements. How much is that going to appease the issue and make sure it doesn’t happen again? AM: We are most of the way through that process. Let me say to you, our model was certainly a portion of the issue, if I can use that expression. A larger portion of the cause was just pure greed. The changes that we are concluding around the franchise share of profits certainly, we believe, ensures that nobody needs to undertake underpayment of wages to make some profit. We’ve taken that completely off the table. Anyone who wishes to continue those practices is now completely falling into the category of greed. The franchisees have welcomed the changes we’ve made. In the main, they are doing what we would expect of them around making sure the payments are made legitimately to all the workers in the system. JG: With the franchisees that have sold out or expressed a desire to sell out, have you absorbed those as corporate stores for good? AM: Don’t overplay the corporate store piece. It’s clearly happening, but it’s not the main game in town. Where people have been able to exit the business and sell it on to someone else, the process is going on behind the scenes. Turnover is not exactly at record heights, but where it is turning over, it’s going through a normal cycle of supply and demand. JG: What are your thoughts on the Fair Work Ombudsman’s report and their recommendation that 7-Eleven enters a compliance partnership? How do you see that playing out? AM: The short answer is we are trying to do that with them. We are working with the FWO right now to make that a reality. We are charging full steam ahead with them to try and bring that into being. JG: The FWO report suggests 7-Eleven has a moral and ethical responsibility to ensure stores meet social community expectations. They are putting it on you to really affect the required change… AM: They are. I don’t think we, in any way, shift away from what they are asking us to do. JG: What’s the immediate plans for you in terms of the broader turnaround to get the popular opinion of 7-Eleven back up? M: A certain number of things I can promise you. We are all about the customer. It’s got to be right in the middle of everything we do. It’s all around expanding our footprint. It’s about our stores standing for something very different in the convenience retail landscape. Our proposition is unique and we are going to keep leveraging it, but all through one lens, which is satisfying what consumers need when they walk into a convenience store. That is a bit of motherhood there, but that is going to remain completely unchanged for us. Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.