EPISODE DETAILS

Episode number 3

Episode working title Paul Anderson on surviving a crisis through communication and collaboration

Episode overview In this episode of the ‘Making to the other side’ podcast, Paul Anderson CA, CEO at NZSki, talks to Chartered Accountants ANZ’s Regional Manager Mike O’Leary. They discuss how the pandemic impacted on the snow season in NZ, and how NZSki’s collaborative culture not only ensured that they could continue to operate but also helped them reach new heights of productivity.

TRANSCRIPT

Mike O'Leary: Hello and welcome to ‘Making it to the other side’, a podcast by Chartered Accountants Australia and New Zealand, with me, your host, Mike O’Leary. In this podcast, we are talking to Chartered Accountants who are making a difference every day in helping businesses navigate the financial implications of crises and plan for the future.I’m sure many of our listeners are avid skiers and enjoy hitting the slopes during snow season. There’s nothing better than skiing all day under clear blue skies and on fresh snow. If you’re in New Zealand and were lucky enough to enjoy a few days on , The Remarkables or Mt Hutt this winter, you might have noticed a few significant differences. And that’s because, like most other industries, the tourism industry was of course hugely affected by the outbreak of COVID-19 this year. Our guest on the podcast today is someone who can give us a unique insight into just how the pandemic impacted on the snow season in NZ. Paul Anderson is a Chartered Accountant and CEO at NZSki. He’ll talk us through how things unfolded ahead of what was going to be another record-breaking season. They reacted quickly and managed to continue to operate, albeit under some very different circumstances. So let’s now go to my conversation with Paul.

Mike O'Leary: Paul, thanks for joining us today.

Paul Anderson: Kia ora, Mike.

Mike O'Leary: Can you tell us a bit about the journey you've taken to become the Chief Executive of New Zealand Ski?

Paul Anderson: Yeah. It's been a bit of an unusual journey in many respects. I've been through a number of sectors and working in both public and private sector. Started my life off as a policy analyst at New Zealand Treasury in Wellington, straight out of a Master's Degree in accountancy at the University of Canterbury too long ago for me to remember the exact dates, but spent four years there. Did the usual Kiwi OE up to London, worked in banking up there for a couple of years. And then came back and actually went to work for my former boss, who had been at Treasury, who was now at Telecom, and spent a good stint there in a variety of corporate finance and business finance roles. Then I took a sideways shift in Telecom and chose to take on an operational role which was just a fantastic way to broaden myself out a bit. And then I took my first general manager role as general manager corporate services for Christchurch City Council, which was effectively CFO with property, procurement, and IT thrown in for good measure.

Paul Anderson: Did that through the earthquakes, negotiated the cost-sharing agreement with the Crown, and thought that was a good time to leave. And at the time this role in Queenstown had been advertised. It wasn't a role I thought I was well experienced for but, by fortune, the board was looking for someone who was commercial and still relatively young, because we've got a pretty young workforce so they needed someone that could connect with a young workforce. And we've got a fabulous operational team, so the fact that I was a bit green in terms of the ski industry wasn't a huge impediment. It helped that I have got a passion for skiing and have done that all my life. So I was lucky enough to join this family run business, family owned business, seven years ago, and I've been there for that time, which has been fabulous to be part of this industry.

Mike O'Leary: And what attracted you personally to that change in role?

Paul Anderson: I was really looking for my first CEO role. That was... I'd been in Christchurch City Council for around six years. While I was there, Christchurch City Council was kind of like doing three jobs. The first couple of years was growing into the role, then with the earthquakes coming along it became much more about a response to the earthquakes. And I loved the challenge and the mental stimulation that you get in the public sector, or in local government, but I did want to return to the private sector. So, with this role coming up, I was keen to give that a go, put my hand up, and really the thing I think that helped me, apart from my commercial and financial background, was the fact that I connected quite well with the family who are the owners of NZSki and got on very well with them in just one interview. Sir John Davies, who's the owner, is a really intuitive businessman, and he took a punt and the rest is history.

Mike O'Leary: Paul, can you tell us at a macro level, what was the New Zealand 2020 ski season looking like in, say, January of this year?

Paul Anderson: Yeah, look, we've been growing the industry for the last five to seven years and it's really been on the back of a really good, strong domestic base with our local visitors and then growth out of the north island. Before the growth part, it's been a lot about Australia and that increasing connectivity to east coast Australia, the ease at which they can now fly into Queenstown. Queenstown, as a resort destination, has a lot of what they've got to offer, and we've engineered our mountains, our resorts, in Queenstown, being Coronet Peak and The Remarkables, around that market. So we've been growing in the high single digits for a good seven years, and we reached 700,000 visitors last year, which was an all time record, so this year we were just looking forward to the same. Carrying on growing. We've been investing strongly in increasing our capacity over the years, so we were shaping up for a great season.

Mike O'Leary: And what was your first indication that something was going wrong?

Paul Anderson: We're part of a broader business, so Trojan Holdings, which is our parent company, also owns 40% of Bungy and Hermitage Guided Walks on the Milford and Routeburn tracks, that's the tourism part of their business. So we were pretty wired into the challenges coming out of initially the Chinese; the downturn in Chinese visitors, so we'd taken some actions as far back as December, January, to start to trim some of our investment plans. And then, come March, that was when things really started to get serious. It was very clear that the Chinese weren't going to

come, then as we got into lock downs, that we were going to have closed borders for some time. And we had to go through the very real possibility that we weren't going to be able to operate. But we were determined to operate, and to do everything to show that we could operate safely.

Mike O'Leary: What were the first big decisions? The tough ones that you had to make?

Paul Anderson: It was really whether we could operate or not. We had to go through a lot of business planning. My finance manager and his team were working overtime on financial models, and just making sure we understood what it looked like not to operate, versus only operating a little bit. Obviously, we knew our business was going to be smaller, so if we could operate we knew that we weren't going to have that 40% of our visitation that comes from the Australian market. So, we had to make some tough decisions around our permanent headcount and just right-size our business for, not just this year, but we could see that, beyond this year, it would take a while to start to grow again. So, we had to make some tough decisions on reducing the size of that workforce initially, then we had to make some hard decisions around how we would operate this year.

Paul Anderson: As I said, our businesses are built around a capacity that includes 40% visitation from Australia, so take that away and it became apparent to us that we actually didn't need to run both of our ski resorts for seven days a week, all season, and that we would have enough capacity with just one resort on weekdays and both resorts during the weekend. So they were some of the tougher decisions. There were other things we had to look at also. Our product set, to make sure that it was right for the domestic market, and of course pricing, to make sure we were attracting Kiwis and appealing to, hopefully, a new market.

Mike O'Leary: Did you have to make some really difficult decisions about staff?

Paul Anderson: Yeah. The toughest decisions for us were those initial staff that we had to offer redundancy to. In some respects it was made easier because we could offer them some seasonal roles. So, to put it in perspective, in a normal year NZSki, we have 70 permanent staff and 1,250 seasonal staff. So we really scale up massively for that winter season. This year, at our peak we employed 698, so significantly less than what we usually operate, but the people that we didn't employ this year; they weren't here so they couldn't work for us anyway. So they're people like snow sports instructors and technical roles who couldn't come in from overseas to work in New Zealand anyway.

Mike O'Leary: Now, besides the financial measures, you had to put in place some protocols around distancing, hygiene, across the board?

Paul Anderson: Yeah, it was one of the first decisions we made, actually, just going back to your previous question. In April, I reached out to a couple of the other large operators in New Zealand and said to them, just suggest that we work together to develop some industry protocols so we could then go to the government and prove that we were responsible and able to operate safely. The three biggest ski operators in the country have about 85% of the market, and to their credit, the smaller operators trusted us to develop those protocols for the whole industry. So that worked exceptionally well. When you're fighting for your survival, collaboration was actually

a really great tool. Once we got into the season, of course, we could go back to competing on product and price like we usually do. But to get the operational protocols sorted, and really clear, was a great way to start.

Paul Anderson: And even in the season we were still comparing notes about how those protocols were being implemented so we could just fine tune them. Things like wearing masks on transport or lifts, and how we were managing the lift queues, and how we were moving people through our base building facilities, and so on. Being able to compare with other people in the industry was really helpful.

Mike O'Leary: Did those protocols continue to develop over the season as you refined and collaborated with the other ski providers?

Paul Anderson: Yeah, they did. We'd developed the protocols for level two operations. And just days before we started, we got to level one in the country. So the level two protocols got put on the shelf. And we launched into the season all guns blazing, we could remove the restrictions. We still, under level one, had increased cleaning protocols and staff PPE available, but then, of course, when Auckland went into level three and the rest of the country went into level two and we were given less than 24 hours notice of that, like all business, so we had to pull those protocols back out, reread them. I'd just about forgotten what we'd prepared. And we actually closed our resorts for a day to give us a chance to reconfigure certain areas, like food and beverage or lift operations, to make sure we could responsibly manage or set up an environment for our customers to physically distance, and keep our staff safe as well, of course.

Mike O'Leary: Now, some of those decisions you had to make within hours. Did you set up an emergency management committee or a crisis committee within your management team?

Paul Anderson: It was my senior leadership team so I think, when the prime minister announced it, it was, I think it might've been 8:00 or 8:30. The first call I made was to my closest competitor over in at Cardrona, and we kind of compared notes about what we were thinking. Then I think it was about 10:00 PM, I pulled together a video conference of my senior team to agree how we were going to operate the next day. The first important decision was that we were going to close the next day, we make a decision every morning at about 6:00 AM about whether we're going to open and close, send out the ski report, and we have thousands of people turn up. So, we had to make a decision really quickly about our operating parameters and, of course, I had to let the board know that too because they were pretty interested in what was going on.

Paul Anderson: So we made that call, we closed the resorts to give us a chance to review the protocols, decide what we needed to do and train staff, all within that 24 hour period, to be ready to go. I think it was the Thursday morning when we reopened.

Mike O'Leary: Yeah, I'm really interested the amount of support you got from your leadership team and particularly from your board.

Paul Anderson: Oh yeah. Look, it was amazing. And I wouldn't just single out my leadership team either. The management and staff at all levels just rose to the challenge. I think, as

leaders, what we needed to do was make some fast decisions and create a level of certainty where really there was none. And then empower the staff to get on and do their things. There's no way we could get out there and tell the lift operators how they needed to do their jobs safely. We needed to set those principles around contact tracing, physical distancing, and cleaning and hygiene. And make sure they understood those principles, and then provide some guidance on how we thought things could operate, but then give them the power to make changes to ensure things were operating safely and well from a customer perspective.

Mike O'Leary: Did you have to do a lot more communication across the board in the organisation to ensure that happened?

Paul Anderson: Yeah. I mean, that day transition was really challenging from a communications perspective because we just really didn't have the time. It's more crisis management, and you tend to be far more autocratic than you usually would be. When there's a bit more time, you can take that time, arrive at a more consensus level of decision making, and allow those decisions to be communicated in a far more collaborative way. But because of the speed of the decision, it really had to be, "This is how we're doing it. Let's get on with it and fine tune it as we go." Communications to customers was really critical as well. So making sure all our social channels were giving good and consistent communication through to our customers about what they should expect when they arrived on a resort, because it did look different. The main thing was being patient, and being kind to each other. Just reiterating the government's guidance, really. And on the whole, 99% of the people were amazing.

Paul Anderson: I get around and catch up with all my seasonal management teams during the year. You could see their mood and their stress levels as we were moving in and out of COVID levels and so on. The level of staff anxiety was really high, particularly when we were going into level two, and staff were trying to work out whether they were there to create the environment or enforce the environment, but also having to deal with a handful of customers who could become unreasonable. And we talked a lot about the fact that different people deal with stress in different ways, and made sure we were available and we provided support where staff had been exposed to that, but most of all that, as leaders, we were there to support them whenever it did happen.

Mike O'Leary: And reflecting now we're through one part of it, do you have a different workforce or a different attitude amongst your workforce?

Paul Anderson: Yeah, I think we do. The thing that I've been setting an expectation around is that the way we've changed and become more productive, we need to maintain that because I'm not planning for next year for us to have Australians here. If we do, that's fantastic, but I think we need to prepare for the worst and plan for the best, or hope for the best. So, we achieved levels of productivity that we didn't think was possible simply because we had to. We had staff from all departments working in all departments, and across a ski resort you've got multiple areas of operations where quite often they can tend to run as silos, but this year - one of our company values is making sure you lend a hand wherever you can, so if there's a stairway to be cleared of snow, it doesn't matter who you are, you just do it. And this year more than ever, that was critical for making sure we operated.

Paul Anderson: And personally I don't know how many departments I worked in. Roads, lifts, rentals, food and beverage; wherever I could help. You'd see staff under pressure and you'd just roll up your sleeves and get into it. It was fabulous.

Mike here again! If you are enjoying this episode of ‘Making it to the other side’ then why not check out some of our other stories. Listen to my conversations with CAs playing an absolutely crucial role in helping businesses recover from crises. You can subscribe and download ‘Making it to the other side’ from your favourite podcast app.

Mike O'Leary: You must've had some fairly large skill shortages with the lack of international workers coming in. Is that how you filled those gaps as well?

Paul Anderson: No, because some of those jobs are too highly skilled to be able to fill with a CEO, who's not trained to do too much apart from being a CEO. The jobs where we became more productive were really those lower skilled jobs, where you could move people between them or train them very quickly. So, for example, rentals. I remember going in there one morning and they were under pressure, and I said to a young woman who was fitting people into boots, I said, "Give me 30 seconds on how you do it and just give me a job." And there I was for two hours just trying to break the back of a queue and help people through that process. The biggest skill shortage was snow sports instructors. So, we usually employ a good 500 snow sports instructors, of which 400 come from overseas, so they weren't here.

Paul Anderson: Initially we thought we weren't going to need many of them because that Australian market wasn't coming, but the new New Zealand market that turned up, actually turned out to be a little bit more similar to overseas tourists, in that they wanted to spend more money, they wanted snow sports instruction, and so on. So we were really short in that area. There are a few other skilled roles, like patrol, snow making, grooming, to name a few, that we were short on. On the whole, I don't think customers noticed some of them. What they wouldn't have seen is how hard the staff we did have worked to make up for those shortfalls. But in some instances, we may not have had enough groomer drivers to groom quite as much terrain as we usually would, or to build the terrain park jumps as fast as we normally would. So we had to make some sacrifices on service levels.

Mike O'Leary: Now you've talked about the increase in local New Zealand skiers. Did you work with the other ski providers for that or anything? Tourism New Zealand, or any government agencies?

Paul Anderson: Yeah. We benefited before the season from some unbelievably good PR and publicity through the mainstream media. I think the ski industry really became a beacon of hope, and the media were genuinely trying to help and offer some hope for people. And it was a great story because, as you know, coming out of lock down, what all of us wanted was just to get back to doing the things we love, and being able to socialise in those kinds of environments with people we love. So that was just terrific, and it was a great help from the media to get that message out there.

Tourism New Zealand and local regional tourism offices also worked really hard, and we're really grateful for their support to move their normal focus away from, for example, Australia or international promotions, to more domestic, and that really helped us a lot. And I think a lot of that work will help us again next year, where people, I'm hoping, will plan for holidays not necessarily just in school holidays but also through that August, September period where we usually have good Australian visitation, but this year the locals got to enjoy the mountains by themselves.

Mike O'Leary: And that local demand, was it regular or was it lumpy?

Paul Anderson: It was very lumpy, and not surprisingly because we've all got jobs, we're all working hard, so not everyone can go and ski during the week. We're used to that at , our resort just outside Christchurch, because that usually gets a more local market so we knew what that looks like. In short, very busy school holidays and very busy weekends, and if you can afford to take a day off work during the week, get up there and you have an absolute ball. So, that was, I refer to it as a very peaky demand profile, and it means that your average skiers per day go down.

Mike O'Leary: And how did you respond to this peaky demand day-by-day?

Paul Anderson: It's mainly through rostering. We had to be far more nimble with our rostering and be able to scale up and scale down. But I mentioned before, also productivity and cross-utilisation; encouraging staff to move between departments. So, for example, between, say, seven and nine o'clock our roads are really busy, so we've got a full roads crew out there clearing the road, preparing the road, directing traffic into car parks. Of course, people get up there and then they flow into guest services, through rentals, out into lessons, and we encourage departmental heads to move their staff through those other areas wherever they could help. And then, of course, at lunch time they go into food and beverage, so there's tables to be cleared and so on. I was incredibly grateful for the way our seasonal management staff and all other staff rose to that challenge to make sure all their staff were helping wherever they could.

Mike O'Leary: So, forecasting skiers on the ski field is really difficult. How about forecasting revenue?

Paul Anderson: Much less. That wasn't so difficult. Yeah, look, we are well down. That positive PR, as I said, was really helpful pre season. It also told a story of a very busy school holidays, which I think the powers that be in Wellington made it look like the ski industry was doing incredibly well. The reality is that we're probably about a third down on visitors for the full year, and more than 40% down on revenue because, of course, the New Zealanders, on the whole, don't spend as much as people from overseas. So, look, we're here and we've done far, far better than we thought we were going to do, and we're very grateful for that. But the hard thing is, the fixed costs associated with our business and our investment in infrastructure relies on a certain scale of visitors, and it's going to take us a while to rebuild that scale.

Mike O'Leary: Paul, tell us, are there some things you did during lock down and opening the ski field that you're going to continue with, that were a huge success?

Paul Anderson: Yeah, look, I think that idea around productivity and making sure people understand that, to go and work in another department, you don't need to know 100% of what the specialists in that department know. And that's obviously for roles that aren't safety sensitive, but being able to go on and help, is a huge part of that. So, we often talk as a country about productivity and how generally we don't have the greatest productivity. I think that's probably been our greatest increase in productivity, is just the awareness of staff about the ability to move between departments and help out.

Mike O'Leary: So, that agility you'll keep going for future seasons?

Paul Anderson: Yeah, absolutely we will. When things are growing it's far easier to add more resource in, and in some respects what the downside of that is, is it forms silos within your organisation. So keeping a bit leaner and encouraging people to move around is - that's going to drive that productivity harder. And, I think it's also far more fulfilling for the staff to get much more appreciation outside just a certain department. There are other things we did as well. We took the opportunity to move to almost 100% cashless operations. So, cash and cash handling has costs associated with it, and security issues that are associated with it. So we took the opportunity to say, "Well, actually cash is pretty filthy. We'd rather not see too much of it," and we knew from our stats that not that many people use it. There's enough to still accept it. And we've got an IT system or a resort management system that allows people to load cash onto their ski cards, so they can use that to pay for snow sports lessons or food and beverage all over the resort. So we took that opportunity and that's definitely something I would like to keep going.

Mike O'Leary: Paul, have you taken the time to look to next season?

Paul Anderson: Yep. We're in the middle of our planning process at the moment, actually. So, for me, next season looks a lot like this season. I'm hoping we get a few more Kiwis attracted to the ski industry for ski holidays. And I think we will, because on the whole the feedback we had through our customer surveys was incredibly positive, and people I think will go back to their places of residence and tell their mates who might've had less rewarding holidays that a holiday in or Queenstown is fantastic. They got to ski the whole time in bluebird days and the snow was great, and there's everything to offer here.

Mike O'Leary: Paul, we talk about making it to the other side. Do you see another side, or do you see this current situation continuing for a while?

Paul Anderson: Yeah, no, I definitely see another side but it is going to take some time to get back there. I know as an industry we're keen to maintain our capacity, because when we get the borders reopened, it is going to be busy again, and we don't want to make short term decisions that then are difficult to recover from. But in the short term, I think our challenge is going to be around labour. Labour shortages are real, and this is something that powers that be in Wellington have got a very macro understanding of. We operate in a reality of regional skills shortages and a heavy reliance on people who are prepared to work seasonally. And unless you're a working holiday maker, you're generally not keen to work seasonally. So labour is going to be an issue, both on the skills side and the number of people we need.

Paul Anderson: The other immediate challenge we've got is, while - with the cash flows less than desirable, we have to curtail our investment plans. But at the same time, we need to be ready for when the tap gets turned back on with particular those trans-Tasman tourists. So that's an interesting balance to strike. But I definitely see another side. If we get a trans-Tasman bubble next year, we will be - there are going to be six million Australians who usually travel the world, who may only be able to come to New Zealand, so there's some massive upside risks for us to plan for.

Mike O'Leary: Paul, you've talked a lot about resilience, and I'm interested in your own views about your own personal resilience. What have you discovered about yourself in this process?

Paul Anderson: There's probably a couple of observations. One is, during the planning period when we were all in lockdown at home, and it was endless Zoom and Teams video conferences, I found that my leadership style changed and there was far more time spent giving direction and creating clarity. And I think, in times of crisis, that's what's needed of leaders; the time that you usually spend building consensus isn't available but actually that your team accepts that and wants to go with it. And we actually talked about that as we went into the season. I said, "Look, thanks for tolerating a far more directive style. Now I want to revert back to a more consensus driven approach”, and they realised that they had. The other thing was probably it made me reflect on why I kind of jumped into that more directive style so quickly, and I think for me it was my experience with dealing with Christchurch earthquakes or the Canterbury earthquakes when I was GM corporate services at Christchurch City Council.

Paul Anderson: That made me, I guess, accept - excuse my French but, that shit does happen. And it's at those times that leaders really need to stand up. That's when your leadership is more important. And I said to staff all the way through that they will be more resilient as a consequence of having to deal with these tough times, because I really believe that is what's helped me through this one.

Mike O'Leary: Paul, can I thank you for your insights into your industry, your company, your staff and yourself?

Paul Anderson: Kia ora, Mike. Thank you very much. It's a pleasure to share and I just hope people get something out of that.

Mike O'Leary: I hope you enjoyed my conversation with Paul as much as I did. He gave us a remarkable insight into the industry, the company, the staff and himself! It was inspiring to hear how an unprecedented situation like COVID-19 actually led to positive change for NZSki. It united their people at all levels of the organisation and motivated them to come together and lend a hand wherever they could. They rose to the challenge and it’s made them more productive and resilient than ever. I don’t know about you, but I am definitely planning a trip to the snow next season! Thank you for joining me on ‘Making it to the other side.’ Until next time.