ONE-ON-ONE MASTERCARD’S MIKE McCARTHY
HUMAN RESOURCES DIRECTOR
THINK LOCAL, ACT GLOBAL GLOCALISATION
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CRISIS CONTROL IR DISPUTES
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EDITOR’S LETTER / HUMAN RESOURCES DIRECTOR
2013 AT A GLANCE… ONE-ON-ONE MASTERCARD’S MIKE MCCARTHY
I’ve attended countless industry events this year and while I’m not great at getting to breakfast events on time (especially as the year rushes to a close and the temptation to hit snooze gets stronger), I am grateful for attending one breakfast event recently. It was useful primarily for providing insight into what is top of mind for HR practitioners as 2013 merges into 2014. When asked their views on what HR directors need to do to succeed in an increasingly complex and fast-paced business world, these were two responses from a panel of HRDs: “Have a strong point of view on a wide range of topics. See yourself as a business leader. I hate the business partner approach – it implies you sit outside the business. Be a part of the DNA of the business”. “To tackle big, complex agendas, have a belief that you can do it; a can-do attitude goes a long way. Also aim for resilience and courage to back your decisions”. A quick glance at our annual wrap-up shows just how intense the year has been, and how prescient those words are for 2014. HR has such a wide and daunting mandate and it’s impossible to be across everything all the time. While by no means definitive, this report outlines some of the key issues and trends across five core areas of HR. We also have features looking into significant business issues such as glocalisation, international IR accords and engaging ageing workers. No small topics here! Another participant at that same event possibly didn’t quite know how wise he was being when he suggested HR practitioners needed to simply “have a laugh” every now and then. And on that note, the HR Director team wish our loyal readers and supporters a happy and healthy Christmas and New Year. We look forward to your support in 2014.
HUMAN RESOURCES DIRECTOR HCAMAG.COM ISSUE 11.12
HUMAN RESOURCES DIRECTOR: THE NEW NAME FOR HC MAGAZINE
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We also have features looking into significant business issues such as glocalisation, international IR accords and engaging ageing workers. No small topics here! HCAMAG.COM
THINK LOCAL, ACT GLOBAL GLOCALISATION CRISIS CONTROL IR DISPUTES
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CONTENTS / HUMAN RESOURCES DIRECTOR
17 COVER STORY
2013 Annual Review It’s been a busy and event-filled year in HR. In its end-of-year wrap-up, HR Director has identified key trends from 2013 and looks ahead to the new year across six key areas
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HR in the black Continuing to meet growth expectations while driving efficiencies across the business? Priceless. Iain Hopkins talks to MasterCard’s regional HR leader
48
Green shoots of optimism: The Global Accord on Workplace Safety It’s taken a disaster of the magnitude of the Rana Plaza collapse for the push for multinational corporations to negotiate and apply ‘global’ workplace standards across their supply chains to gain momentum. What does the Bangladesh Accord mean for global business operations?
44
Acting locally, thinking globally Glocalisation calls for HR executives to mix both global and local initiatives. When executed correctly, the benefits can flow evenly between local subsidiaries and the corporate headquarters based overseas. Andreas Raharso outlines how to make it work
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REGULARS 04 | Insight: HR in crisis mode 52 | 5 minutes with... Kelly Hartman, SEEK
FRONTLINE INTELLIGENCE 10 | In Step — HR career experts
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INSIGHT / IR DISPUTES
MANAGEMENT Industrial strife can be devastating for employers, but what can HR practitioners do to ensure small problems don’t escalate, and that if problems do flare, the damage is minimised?
HR has long been criticised for not understanding the intricacies of Australia’s admittedly complicated IR landscape. Yet volatile IR situations have the potential to damage the organisation externally through damage to brand and reputation, and also internally through damage to morale and employee trust in leadership. Although the number of industrial disputes and working days lost over the past decade has declined (see graphs at right and on p.6), there have been several damaging flare-ups. The most obvious recent example of the significant disruption and carnage caused by industrial strife is the 2011 Qantas dispute, in which a combination of job cuts, pay disputes and, ultimately, the grounding of the airline, created a combustible environment. Where does HR sit in terms, firstly, of preventing employee grievances escalating to industrial action; and, secondly, if a point of no return is reached, of ensuring the damage is minimised?
KEEPING THE PRESSURE DOWN Prevention is always better than a cure. That is, if industrial action can be prevented in the first instance, that’s better for all parties – but especially for the employer. HR professionals and others in leadership roles can take steps to prevent minor problems from escalating into broader conflict.
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“The first thing is to recognise that conflict is a natural part of work and organisational life and that stifling conflict can lead to a variety of negative outcomes,” says Russell Lansbury, emeritus professor, work and organisational studies, at the University of Sydney. Unions and other representative groups can play a positive role in a workplace, and indeed unions are sometimes referred to as the ‘‘managers of discontent’’. Understanding the potential avenues of discontent and friction in the organisation can be achieved in part by
INDUSTRIAL DISPUTES YEAR BY YEAR 2003
104
2004
149
2005
106
2006 2007 2008 2009
41 21 34 33
2010 2011 2012
45 28 30 Source: ABS, 6321.0.55.001 – Industrial Disputes, Australia, Mar 2013
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allowing employees the space to voice their concerns. Being unable to air frustrations – through either formal or informal means – usually results in higher turnover, which can itself be an indicator of frustration and discontent. Allowing employees to air their concerns can not only help organisations gain an understanding of issues that may result in industrial disputes if left unchecked, but also gives employers a chance to respond – they may be able to calm tensions by explaining why certain complaints cannot be acted upon, for example. “Of course, once legitimate concerns have been expressed to management, it is important that these be addressed in some way,” Lansbury explains.
HR IN THE MIX Lansbury notes that some HR professionals – especially those with limited experience – are proving a hindrance to negotiation, as many are reluctant to engage in it. This is despite the proven benefits over time of negotiation. He adds that successful negotiation can result in ‘win-win’ solutions, which reap benefits for all parties. “This may take longer and involve greater willingness on both sides to search for solutions which will benefit each other than the more common ‘zero sum’ approach where winner takes all. We have a long tradition of adversarialism within the political and industrial culture in Australia, which seems to make it difficult for parties to agree to share power or seek outcomes which involve collaboration,” Lansbury says. An ‘us vs them’ approach can prove detrimental to organisations, as negotiations with unions are an important part of resolving industrial disputes before they spill into strikes, walkouts, or other actions. While unions have declined in a number of industries, for a variety of reasons, they still remain important in certain industries and organisations. “HR has tended to neglect negotiations with unions, and many organisations appear to be ‘contracting out’ this important role to law firms or consultants, which can result in these processes being conducted by third parties who are not responsible for ongoing relationships within the workplace,” Lansbury says. He recommends that organisations ensure that they have mechanisms to facilitate regular communications between management, unions and employees. Unions can become useful sources of knowledge and information to help guide management.
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“Once legitimate concerns have been expressed to management, it is important that these be addressed in some way” Russell Lansbury
A FAILURE TO COMMUNICATE? While it won’t solve all your problems, open communication is important when dealing with disputes. Here are Russell Lansbury’s strategies for improving communications: yy Undertake regular surveys to monitor the concerns of employees (eg organisational climate surveys). yy Act on issues raised in such surveys by means of focus groups or discussion forums. yy Have a well-established and accepted system of handling employee grievances as they arise. yy Provide opportunities for senior management to have genuine interaction with employees (preferably out of their usual comfort zone). yy Hold regular consultative meetings between managers and employees at all levels of the organisation. yy Conduct regular training for all employees on interest-based negotiations so that employees feel free to raise issues without fear of recrimination. yy Address issues when potential conflicts arise (eg signalled by individuals, groups or unions) and have alternative dispute resolution procedures involving mediators who have the confidence and trust of both management and employees.
NON-UNION EMPLOYEE REPRESENTATION Leadership teams must also be aware of non-union employee representation, which may be growing as unions decline. Lansbury notes that works councils are gaining traction in European countries. Works councils in most countries are consultative bodies and do not negotiate wages – although the situation can sometimes be blurred. In the German auto industry, for example, unionisation is very high in some companies (eg VW) and the union is very influential in the works council. By contrast, at
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INSIGHT / IR DISPUTES
WORKING DAYS LOST
PUTTING OUT THE FLAMES
800 700 600
Working days lost
500 400 300 200
2011/12
2010/11
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2001/02
2002/03
2000/01
1999/2000
1998/99
1997/98
0
1996/97
100
Compiled using ABS Industrial Disputes data 1996-2012
Daimler-Benz, there is less unionisation and works councils are more independent of the union. In German banks, there are low levels of unionisation, but works councils are important. “When Greg Combet was Secretary of the ACTU he had a positive attitude to works councils, but this has waned and there is little enthusiasm by employees,” Lansbury says. “But there is evidence that the role of OHS committees – which provide a form of consultation – are widespread and well accepted. It’s possible that they could expand their role or other similar bodies be established in the future.” Professional associations covering occupational groups, such as lawyers, doctors and accountants, also use various methods to advance their members’ interests. Lansbury notes it was on the guilds and professional associations that the early trade unions based their modes of operation, and he doubts these groups will give up their occupational associations any time soon. And unions in some areas remain strong, especially in fields where there is a strong occupational identity, such as teaching, nursing, the police service, fire fighting and engineering. “In these areas, the unions act like professional associations to protect the skills and status of their members … employers take them seriously because they have strong bargaining power and solidarity,” Lansbury says.
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Unfortunately, sometimes matters get out of hand. Whether it involves traditional industrial action or simply a few ex-employees’ comments going viral, it is easy to see how any dispute, big or small, can snowball once it is opened up to the media. Often, the consequences can be greater than anticipated. An organisation’s reputation takes years to build but can be shattered in moments due to bad publicity. So organisations must move quickly and efficiently to reduce the amount of damage caused. The first course of action when facing a crisis or issue that threatens reputation and image is to come back with a strong message. “The initial message should acknowledge the situation and inform the public on the company’s sentiment surrounding the issue. The company should then explain the actions it’s taking to resolve the issue and highlight any parties it’s working with in this process,” says Nicole Reaney, director at InsideOut PR. As the address to the public is to a broad audience, clear and concise messages are essential. It is best to respond with humility and honesty, as counter or contradictory claims and messages will mean false statements need to be retracted. To further decrease miscommunication and misunderstandings, organisations should have crisis and issues management plans that identify processes, roles and responsibilities of employees during a period of media scrutiny.
EUROPE LEADS ON MEMBERSHIP According to the OECD, Sweden, Norway, Finland, Denmark and Iceland have the most unionised workforces in the world. The Nordics have union membership rates of more than 50%. Rates in Sweden and Finland are nearly 70%. Unions in these nations function more as ‘career protectors’ than as ‘job protectors’ – while they do negotiate with businesses, their primary missions are to manage extensive unemployment benefit funds, and provide their members with training and placement services.
AUSTRALIA HOLDS STEADY In Australia, the ABS reports union membership has remained steady at 18% for the last three years. There were 1.8 million people in August 2012 who were trade union members in their main jobs. Among industrialised nations, most would be surprised to learn that strike-loving France has one of the lowest union membership rates, sitting at around 7.5% of the workforce.
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“Employees should be aware that they are not to speak to media under any circumstance, unless they are an approved spokesperson for the company. This isn’t about hiding messages; it’s about ensuring messages hitting the public are correct, and accurately reflect the organisation’s position,” Reaney says. Knowledge gained prior to a dispute erupting, such as from employee grievances or failed negotiations, can also allow employers to prepare for a media backlash before it occurs. “The organisations that deal with crisis and issues most effectively are the ones that handle the situation in a way the public respects and admires – with integrity,” Reaney says. The spokesperson should be someone from within the organisation, and not PR staff (who should instead act as support for spokespersons). Some situations may call for specialist or technical knowledge, in which case a head of department is best for the position. Otherwise, the CEO should be the spokesperson, as this demonstrates to the public their attachment to the organisation and to resolving the issue. Should HR be the spokesperson? Rarely, if ever, believes Chris Lamb, HR director at Lend Lease Australia.
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“You never want to put the HR director in front of the 6 o’clock news because that demonstrates to the viewer or the public that the CEO doesn’t take it seriously enough to be there. If the HR person has to be the face of that sort of stuff, that would set off alarm bells. I’d be saying, ‘Where’s the CEO, where’s the COO?’ Have you ever seen a HRD on media being the face of a company?” Regardless, restoring the public’s positive opinion of the company will take a long time, and the digital age of online and social media makes it even more difficult. “Actions are louder than words in this case – and it’s better for an organisation to be ‘head down’ restoring and resolving the situation while reviewing messages such as those contained in advertising,” Reaney says.
KEY HR TAKEAWAY Developing skills in managing IR issues needn’t be wholly tied to the legislative landscape. Acquiring skills in conflict resolution and ways to manage issues as they come up is a skill set that stands HR professionals in good stead regardless of the politics of any legislative changes.
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INSIGHT / EMPLOYEE WELLBEING
MENTAL HEALTH IN FOCUS
A poll of ASX Top 300 companies* revealed that 40% of participants did not perceive mental illness as a risk to their employer, and of those who did, 50% said there were no policies in place to manage this risk. Here’s a snapshot of what it means for business
THE COST TO BUSINESS
3.2 days per worker are lost each year through workplace stress
Stress-related workers’ compensation claims have doubled in recent years, costing over $10bn p.a.
Work pressure accounts for around half of all psychological injury claims, while harassment and bullying represent about a quarter of such claims
GEN Y MORE INCLINED TO HIRE PEOPLE WITH MENTAL ILLNESS
42% Gen Y
29%
WHAT ARE THE BENEFITS OF HIRING PEOPLE WITH MENTAL ILLNESS? Hard-working
60%
Gen X
Fitted in well with team
16%
57%
Baby boomers
Good for the company
51% 8 | DECEMBER 2013
A survey of over 5,000 workers indicated that 25% of workers took time off each year for stress-related reasons
DID YOU KNOW? The WHO predicts depression will be the number one cause of disability in both the developed and developing worlds by 2030 and, according to a study by beyondblue, mental illness already results in a loss of $2.7bn in employee productivity in Australia each year
TOP TIPS ;; Develop and demonstrate an active commitment to mental health in the workplace, and make sure it is visible to all. ;; All business decisions should be integrated with solid health and safety management practice. ;; Hold all managers accountable for maintaining a mentally healthy workplace, regardless of level. You may also want to acknowledge and reward them for doing this. ;; Integrate workplace mental health policies/practices into the values and goals of the organisation. ;; Ensure clear objectives and performance measures are in place and that all policies are implemented. ;; Provide employees with workplace practices that promote good mental health. ;; Reduce the stigma and discrimination against those with mental health problems. Sources: * Chartered Secretaries Australia Other infographic information supplied by WISE Employment
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FRONTLINE INTELLIGENCE / HR CAREER MANAGEMENT Craig Mason is Managing Director of The Next Step, the leading HR talent specialist in Australia. cmason@thenextstep.com.au; www.thenextstep.com.au
HR driving cultures that innovate Many companies are facing tough trading conditions as we approach 2014. In this environment, competitive advantage built through innovation is a key enabler to business performance.
In Melbourne, The Next Step hosted an Executive Panel Discussion to explore the theme of building a culture that delivers innovation. On the panel were; Willem Pruys, General Manager Human Resources, Bunnings; Michaila Stanton, Human Resources Manager, Bank of Melbourne; and Mike Finch, Co CEO and Artistic Director for CircusOz. While the panel members represented different businesses with different industry challenges, there were some clear themes echoed consistently. These themes included the following:
CLEAR VISION More than any other industry, there is constant pressure in the entertainment world to innovate to remain competitive and relevant. Circus Oz has done that over its history and now shares its experience in its corporate programs.
One of the key insights from Circus Oz, which Mike shared during the panel discussion, is that it is essential to create a framework of values and vision that employees can then move freely within. This is underpinned by the view that innovation is about culture and not R&D. Mike spoke passionately about this and Michailia and Willem certainly reinforced it and agreed Bunnings and Bank of Melbourne see innovation as being all about the right cultural settings.
CUSTOMER FEEDBACK The panel also agreed the critical element
10 | DECEMBER 2013
that should drive innovation is customer feedback. No matter whether it’s external customers of the organisation or internal customers for the HR community, to innovate, the best ideas are generated specifically from audience and/or customer feedback.
DECENTRALISE AND LOCALISE The panel went on to say that to make the best use of the customer feedback a certain amount of delegation to a local level is critical. This allows the ability for local business managers to identify the specific needs of their local customers, audiences or employee groups, which then allows for a unique response to be delivered.
Willem indicated Bunnings is passionate about allowing as much decision making to be made at a local level as possible. This extends to the individual stores being encouraged to set their own vision and priorities to meet the local customer’s specific needs. In another example of this decentralised decision making, The Bank of Melbourne allows its branch team the freedom to tailor their look and feel, which is very different to a normal bank approach. The panel’s view was that innovation at a local level is hindered by head offices dictating to a micro level. By allowing some personality and flair to be displayed (within boundaries of course) and trusting this freedom will be well used, outstanding results will be achieved.
DIVERSITY WORKS HR needs to champion outside the box thinking when looking at talent. The panel all agreed that focusing clearly on the
experience a business wants for its customers and hiring accordingly was crucial. This thinking allows for the freedom to hire diverse talent, which is the right talent.
As Michailia indicated, Bank of Melbourne focuses on the right capabilities for its customers and, as a result, has former builders, restaurateurs and many others represented in their branch teams. By demonstrating to their customers they understand individual local concerns they have created an experience different to the competition. Willem added to this point by suggesting: “No business has won awards for being the same as its competitors !”
FINAL WORD There were many other additional great take out points for the audience that attended but perhaps one was paramount: “As the custodian of culture, by default Human Resources can also be custodians of Innovation.”
In a whitepaper presented by KPMG’s Human Capital business, Robert Bolton makes the case that winning companies first and foremost have developed the capacity to sustainably innovate and culture, it seems, is the key. As the panel displayed, the levers of an organisation’s culture to promote innovation are well within the hands of skilled HR Leaders and, like many others, they believe driving innovation is HR’s big opportunity. Ultimately, the starting point is for HR professionals to take stock of their own capabilities. Evaluate if they have capacity to play the key role in delivering a culture that innovates and, if not, work out how to develop it.
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MARKET MOVES / RADAR
Recent HR Market Moves Michelle Farrar-Eagles has recently joined Merivale, one of Australia’s largest hospitality groups, as HR Director. Michelle has an extensive background in HR and Law and has indepth experience within the retail sector. Prior to the appointment, Michelle ran her own consulting business, The People Playground and consulted to the National Retail Association. Australian owned, QSRH Group, has appointed Rashida Khan as HR Consultant. Rashida will work closely with the business to support its aggressive growth plans for the future. Rashida brings with her a strong HR background and considerable experience in M&A and greenfield environments, predominantly in the IT Software sector. Rashida was most recently GM, HR for RP Data. Matthew Kay has joined IPSOS Australia, a leading research company, as HR Director. Matthew has held senior HR Management positions across a broad range of industry sectors including Consumer Electronics, Finance, IT and Medical and brings with him, indepth experience in changing and ambiguous environments. Prior to joining IPSOS, Matthew was Head of HR for Samsung Electronics.
Honeywell has recently welcomed on board Adam Jadresic as Pacific HSE Leader. Prior to this, Adam worked as GM HSEQ for Harbour City Ferries, having spent his early career in safety and rehabilitation within healthcare, emergency services and consulting, and specialist safety management roles at Qantas. Adam has his Masters in OHS and a Graduate Certificate in Management RACV recently appointed Maggie Goldie as Manager OH&S and Workers Compensation. In addition to her medical qualifications, Maggie has vast experience in leading safety teams, having previously held roles such as Global Vice President EHS with Tyco Fire & Security and General Manager Safety at Boral. Zak Zisopoulos has joined KPMG’s Climate Change and Sustainability consulting practice in the role of Manager. Most recently, Zak was employed by global multidisciplinary consulting firm, Aurecon, in the role of Regional Health & Safety Manager covering both Australia and New Zealand.
Novartis Animal Health has recently welcomed Susie Dennis as Head of HR for ANZ. Susie joins from EY, where she was Senior HR Manager, Assurance Practice and brings with her a wealth of HR generalist experience. She is passionate about focussing on behavioural change to drive business improvement and has a strong background in coaching and leadership development.
The Victorian State Government has recently appointed Nicole Prince as Safety Director of the Construction Code Compliance Unit. Nicole brings a wealth of experience, having spent many years in senior safety roles within the construction and transport industries.
Stuart Bissett has been appointed as Head of People and Culture Stream at AMP. Stuart will sit within the transformation office and will manage the various HR streams of AMP’s transformation program. With a broad HR generalist background, Stuart has been a functional and business lead in a range of large scale change programs. Stuart was most recently at News Ltd where he was the principal HR lead for the editorial transformation program across multiple sites.
Babette Graham joined KPMG, Melbourne in October as Senior Manager, People Strategy. Babette has worked internationally for organisations such as the Cologne Institute for Management and, most recently, Oliver Wyman Financial Services Consulting. Her roles with Oliver Wyman included Head of EMEA, Talent Management and Human Capital Director EMEA; Babette’s breadth of expertise will be a huge asset for KPMG.
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By supplying Market Moves, The Next Step is not implying placement involvement in any way.
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PROFILE / MIKE MCCARTHY
“The lure of innovation should be tempered with a focus on the more basic elements of HR” Mike McCarthy
HR BLACK IN THE
Continuing to meet growth expectations while driving efficiencies across the business? Priceless. Iain Hopkins talks to MasterCard’s regional HR leader, Mike McCarthy
12 | DECEMBER 2013
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Coca-Cola, IBM, McDonald’s. All are names and logos recognised the world over. Anyone who’s ever stepped into a retail outlet – that is, most of the global population – might add MasterCard to that list. The company was born in 1966, when a group of 17 bankers established an organisation for the reciprocal acceptance of their credit cards. This was branded as ‘Interbank’, a name that held until 1969 when it rebranded as Master Charge. The familiar logo of red and yellow interlocking circles also came into being in 1969. Yet, it wasn’t until 10 years later, when the logo combined with the new name – MasterCard – began to seep into the public consciousness. Today, MasterCard is the world’s number two credit and debit card company, and its global dominance appears to be spreading. MasterCard and larger rival Visa Inc have been trying to capture new business in emerging markets, where cash payments still dominate but use of cards is growing at a fast pace. It’s paid off: the company reported a 14% rise in quarterly profit in October 2013, as more people across the world opt for plastic instead of cash.
GROWING PAINS It’s no surprise to learn that Mike McCarthy, MasterCard Worldwide’s group head, human resources, Asia Pacific, Middle East & Africa, selects growth as his top HR concern in 2013. Specifically, growth across such a varied and geographically dispersed region. “Our biggest strategic people challenge is how we ensure we have the right people, with the right experience and skills, in the right places at the right times,” he says. This challenge is being navigated by strengthening talent management processes, using a wide range of recruitment approaches to attract high calibre candidates from the full spectrum of industry sectors, and by improving global mobility functions to facilitate movement of internal colleagues between regions. Talent has been sourced from the financial services, telecoms, technology, merchant and consumer goods sectors. The company has used its global reach to attract colleagues from its European, Latin American and US businesses. McCarthy, who has held senior HR regional roles in companies like Standard Chartered Bank and Royal Bank of Scotland, lists the enhancement of MasterCard’s talent management process as his
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greatest career achievement as it has been such a facilitator to business growth, The existing talent management strategy was struggling and could not deliver the high calibre individuals required to take key leadership roles. “We now have a much more in-depth understanding of the people within our organisation,” he says. This has enabled MasterCard to significantly improve its ability to assess its people’s strengths and development opportunities. As a result, MasterCard has executed developmental plans designed to prepare staff for the senior roles they have the potential to fill, says McCarthy. “While it’s satisfying to be able to fill a strategic need for the business it’s also satisfying to be able to provide our own people with significant opportunities for progression,” he adds. Demand for talent has also required a rethink about sourcing and recruitment. McCarthy concedes social recruitment is a channel “ripe for exploitation” and MasterCard has made strong strides to generate candidates through LinkedIn. Yet, research from Randstad Sourceright indicates active job seekers – the people who notice or search for and respond to job opportunities, and are more likely to take action to join a talent community – are estimated to make up just 30% of the talent pool. The remaining two-thirds of the population, the highly regarded and sought-after passive talent pool, cannot be reached via employer branding and job distribution, social or otherwise. As such, MasterCard has pursued a more holistic and dedicated sourcing strategy via recruitment process outsourcing (RPO), although McCarthy says it’s too early to judge how effective that will be. At the much less sexy and sophisticated end of the scale, a refresh of employee referral programs has succeeded in providing a pipeline of high caliber candidates – “A timely reminder the lure of innovation should be tempered with a focus on the more basic elements of HR,” McCarthy says.
THE WORLD IS MY OFFICE APMEA is a diverse region, containing highly developed markets such as Singapore, Hong Kong, Australia and Japan and developing nations such as India, Bangladesh and Myanamar. This, in addition to disparate cultural and legal frameworks, necessitates a great deal of flexibility based on an understanding the differences and nuances present in each jurisdiction. McCarthy notes, from the HR point of view, he simultaneously seeks to avoid
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PROFILE / MIKE MCCARTHY
“Being part of HR puts us in a very privileged postion when it comes to people’s development” unnecessary customisation of policies, while also making appropriate adjustments after consulting with the experts: the country managers and HR professionals based in these countries. “I’ve worked in several organisations where I spent more than 30% of my time ‘educating’ head office on why global policies would not work in particular countries and experienced a high degree of frustration at the amount of time and effort required to gain agreement to tweak a policy in order to make it work,” McCarthy explains. “I’m fortunate that, in MasterCard, the HR and business leadership are very global in their outlook, treat their regional staff as local experts and will listen with a genuine openness.”
ADDING VALUE McCarthy leads the 20-strong APMEA HR team, which works with around 1,200 employees in 25 countries across the region. The team includes HR business partners, talent acquisition, management and development, compensation and benefits, and HR operations. Even early in his career, McCarthy always had a desire to contribute to the management of a business at a strategic level. “HR seemed to offer this opportunity as even entry-level HR professionals tend to work with senior executives from the start of their careers,” he says. It’s perhaps that early exposure to working with senior leaders that has made McCarthy an advocate of mentoring. He believes the benefits flow equally in both directions. “The mentor can gain an indepth insight into another part of the organisation while developing their people development skills, and the mentee benefits by gaining a sounding board and an experienced guide to facilitate the honing of their approach to their development, in-role efficiency and career progression.” 14 | DECEMBER 2013
While there will always be people advocating formal mentoring over informal (or vice-versa), at MasterCard the identification of a suitable mentor is most often included in the development plans of high potential staff. Given the importance of real chemistry between the mentor and the mentee, McCarthy believes this is most often achieved through more informal means such as senior executives cooperating on identifying the best possible match, rather than through a more rigid, mechanistic system. This input into professional development is one of the most enjoyable elements of HR for McCarthy, who mentions he takes the greatest satisfaction from seeing how his team’s interventions have helped shape the business and seeing how they’ve made a telling contribution to the organisation’s success. “On a more personal level, I really enjoy helping people to maximise their potential and watching them go on to build productive and successful careers,” he says. “Being part of HR puts us in a very privileged position when it comes to people’s development and gives us an irresistible opportunity to make a real difference to their lives.”
ONWARDS
The feedback HR Director has received over the past 12 months indicates times are still tough, and there’s still an expectation of doing more with less in the HR space. Does McCarthy agree? He does, and notes the ongoing balance of growing the business while fine-tuning efficiencies across the business. This focus, he adds, provides the HR function with a real opportunity to add value through regular organisation reviews, which ensure the right resources are concentrated in the right places and functions. “On a day-to-day basis, this entails a high level of discipline and scrutiny around how we invest in our growing headcount, with each and every additional hire requiring approval from our head of finance, our regional president of APMEA and myself before it is so much as advertised,” McCarthy says. However, he concedes that although the broader economic environment may remain tight, the growth of the APMEA business means the company cannot rest on its laurels. “We must continue to increase efficiency and develop ever more innovative ways of meeting the talent challenge in close cooperation with the divisional presidents and business heads around the region,” he says.
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Managing Director, Transfirmation Partners
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National HR Manager, IKEA
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It’s been a busy and event-filled year in HR. Over the following pages, HR Director has identified major trends from 2013 and looks ahead to the new year across six key areas Introduction: HR in the broader picture p.18 | Workplace law p.20 Retention p.24 | Financial reward p.27 | Education p.28 Talent management p.32 | Technology p.36
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2013 ANNUAL REVIEW
HR IN 2013: THE BIG PICTURE HR BUDGETS According to a recent survey*: yy36% of respondents said their HR operating costs had risen markedly over the past two years yy33% said their activities budgets had increased yyNearly half (45.5%) of HR professionals expected their companies’ HR operating budgets to increase over the next two years zzJust 10.9% expected budgets to decrease yy39.7% expected their HR activities budgets to increase over the next two years *XpertHR’s HR Staffing, Costs and Structure Benchmarks 2013 Report, which surveyed more than 150 private and public companies employing more than 200,000 people, including 1,978 HR staff
18 | DECEMBER 2013
The end of 2013 presents some interesting challenges for business. At an October forum presented by HR consultancy Randstad, the current state of the Australian economy and how the changing global conditions would impact local operations and hiring expectations were explored. Keynote speaker Stephen Koukoulas, past chief economist of Citibank and senior economic advisor to the prime minister, presented a surprisingly upbeat forecast for both the Australian and global economies. Koukoulas noted that Australia was emerging from an economic “soft patch” and suggested that business and consumer confidence was the critical ingredient to further improvements. Remarkably, he added, regardless of who has been in government, Australia has had almost 23 years without a recession.
CURRENT STATE OF PLAY Prior to forecasting, it’s necessary to get a sense of where Australia currently stands. Economic growth sits at 2.6%, a touch below trend. Inflation is low and steady at around 2.2%, which is within the RBA’s target range. Unemployment is holding at around 5.75%; Koukoulas noted this was obviously not as good as the 4% of several years ago but concluded it was fair given the soft patch. Wealth is rising; stocks are up, as is construction, as well as housing prices. The supply and demand situation – essentially there has not been enough housing constructed in the last two to three years due to economic constraints – means there is pent-up demand for new housing. Retail spend is also poised to shift upwards. These are all positive signs, as Koukoulas noted: “Once you feel wealthier you are more inclined to spend”.
VERY CLICKABLE
Here are hcamag.com’s five most-clicked articles from 2013: xxAre you ready for the 457 visa changes? This year saw the introduction of several changes to the 457 visa program, designed to safeguard jobs for “Australians first and foreigners second” xRescinding x a job offer: HR’s best-practice approach While HR is often involved in hiring and firing, one of the trickier aspects of people management falls between those two extremes and clearly struck a chord with readers xFBT x changes Prime Minister Rudd’s decision to cut the statutory reporting method of novated leasing prompted reader fury. This was short-lived; PM Abbott has scrapped the changes xHow x to tell an employee they smell It seems frivolous but sometimes HR gets lumbered with the most difficult tasks; broaching the topic of employee bad habits or poor hygiene proved popular with readers xTermination x post medical leave: when is it OK? Another tricky and rarely discussed topic exploring how employers can remain compliant with relevant legislation while keeping productivity ticking over ...and our most-commented on story of the year: Single workers ignored in work-life balance equation Research revealed that workplace flexibility policies designed to be family-friendly may have an unintentional side effect – single workers also struggle to find time or energy to ensure their work and home lives are balanced.
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Wages growth is weak and has slowed from 4% to around 3%. While this is good for keeping inflation lower, a stronger economy will place pressure on wages. The jobs outlook is soft – full-time job advertisements are down, but part-time are up. Current figures place 30% of workers in part-time jobs, which Koukoulas believes will need to be addressed by the government, especially regarding part-time workers’ benefits and superannuation. The broader and more complex issue of labour productivity was raised. Koukoulas noted it was very industry specific whether employers or government regulations had the most impact on productivity, but assuming all employers were trying to enhance productivity, the government side needed to be looked at. One issue is balancing labour market flexibility (such as facilitating the flexibility to improve labour participation), while remaining commercially viable. “It’s this balance between what workers are willing to do for what wage, versus what employers are willing to pay for operating 24/7 or being open on Sundays,” he said. Another issue is encouraging over-65s to remain in the workforce. “We’re living longer, but just because you’re over 65 doesn’t mean you go from being a high-performing, well-experienced person to doing nothing,” Koukoulas said. This returns to the issue of ensuring contingent workers are treated fairly in terms of benefits, leave entitlements, etc. The government also has a role to play in reskilling displaced workers from fading industries – for example, manufacturing. Koukoulas cited one private sector entrepreneur, Lindsay Fox,
SKILLS THAT WILL BE MOST CRITICAL TO COMPETITIVENESS FIVE YEARS FROM NOW: 29% leadership skills 17% creative/innovating skills 16% business development skills
52%
believe their top productivity challenge is a lack of leadership for the next phase of growth ... only 9% of employers rate their leadership capabilities as excellent
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and his efforts to reskill workers from car manufacturing into transport logistics and truck driving. “Move these people into an area where they can be productive and add to economic growth. That’s fantastic for productivity.”
GLOBAL UPDATE The current state of the global economy is less encouraging but is certainly not as ‘doom and gloom’ as some commentators would have us believe. “The world economy was slowing but it is now generally positive,” Koukoulas said. “The global growth forecast is to lift in 2014.” The US, he noted, is an exception – especially with its latest budget dramas. Job numbers remain mixed, unemployment is trending lower, and house prices have increased – “some positive signs,” Koukoulas said. The Eurozone has improved, with the potential for 1% growth in 2014 (a positive development given the chronic downturn of recent years). Yet the risks remain very real. “Chronically troublesome banking systems and sovereign debt” are key hurdles. Asia remains the “game changer” for Australia. Over 30% of Australian exports go to China, hence the nervousness when China’s outlook slips. “China had this 20-year low in the middle of the year, but they’ve gone back up again,” Koukoulas said. “In 2014, GDP might get to 7.5% or higher.” In short, Koukoulas said the patient was coming to life, having been comatose for some time. “We’re not healthy yet, but you’ve got to start the process somewhere. Overall it’s more good news than bad out of Asia, and our future is linked to Asia.”
KOUKOULAS’ FORECASTS yy GDP will increase to 2.75% by the end of 2013, then to 3.75% into 2014 yy The unemployment rate will hit 6% but then fall as rate of growth picks up yy Inflation will remain low for the remainder of 2013 but lift in 2014 as the economy expands yy The next move for interest rates is up yy Stocks will rise, as will bond yields yy The A$ will return to parity with the US$
TOP THREE WAYS EMPLOYERS WILL ADDRESS SCARCITY IN THE NEXT 10 YEARS: 36% recruit more temporary/contract workers 42% recruit more people on flexible work arrangements 30% recruit more people from overseas
TOP STRATEGIES TO IMPROVE PRODUCTIVITY IN THE NEXT FIVE YEARS:
61%
strengthen employee engagement and collaboration
54%
improve middle management capabilities
Source: Randstad World of Work Report 2012/13
DECEMBER 2013 | 19
2013 ANNUAL REVIEW
WORKPLACE LAW
Another year, another round of changes to Australia’s employment laws. Legislative changes mostly stemmed from the Fair Work Amendment Act 2012, which continued to be rolled out throughout the year. While it’s impossible to provide a comprehensive account of all workplace law ‘hot issues’ and changes in 2013, over the following pages we present an overview.
BULLYING Eradicating workplace bullying remains a priority for business leaders. Legislative changes were rolled out on 1 July, including alterations to the Fair Work Commission’s (FWC’s) power to intervene in cases of workplace bullying. Additionally, FWC received a $5m yearly increase for anti-bullying orders. Bullying is defined in the legislation as unreasonable behaviour towards a worker or group that creates a risk to health and safety; Safe Work Australia has expanded this to include online comments. Under the changes, employees who feel victimised can report the bullying to the FWC. From there, the FWC will decide on proceedings, which could include a mediation or hearing between the parties. If the FWC sees a risk of bullying continuing after a hearing, they have the capacity to order the bullying to stop. They may also order the employer to monitor those involved and review their bullying policies for
LEGAL LANDMARKS 2013
20 | DECEMBER 2013
JANUARY yy Tasmania and SA implemented the nationally operating Workplace Health and Safety Acts, designed to generate health and safety harmonisation across the nation. They were rolled out in NSW, Queensland, the ACT and NT in 2012. yy The federally funded ‘dad and partner pay’ became available, which entails payments of up to two weeks’ pay based on the national minimum wage.
FEBRUARY yy An investigation by the Federal Government into the impacts of FIFO workers on the lives of locals resulted in the recommendation that FIFO workers sign ‘social contracts’ promising good and proper behaviour.
MARCH yy The deadline for compliance with the Privacy Act 1988 (Cth) was announced as March 2014. Organisations began their move to reconsider how they would handle personal information.
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any issues with compliance. If the orders are not complied with, penalties and additional remedial orders will be issued. The legislation states that actions that comply with health and safety laws are permitted, meaning workplaces that are on the level are unlikely to be affected. However, workplace lawyers still recommend undertaking a policy review. This will not only avoid trouble with the FWC but, more importantly, will ensure that workplace bullying does not continue undetected.
DID YOU KNOW?
Of the 235 discrimination complaints made to the Fair Work Ombudsman in 2012/13, 28% were from pregnant women. The other top complaints came from people with disabilities (21%) and those who had family/carer responsibilities (11%)
DISCRIMINATION AND HARASSMENT “The standard you walk past is the standard you accept; that goes for all of us, but especially those who have a leadership rank”. So said Lieutenant General Morrison in a recorded speech in response to the Australian Defence Force’s (ADF’s) sexual harassment scandal earlier this year. It was a timely reminder for all managers: the standard you walk past is also the standard you are personally liable for. Under a number of Australian anti-discrimination laws – the Federal Sex Discrimination Act and the Victorian Equal Opportunity Act, to name two – accessory liability is imposed on those who request, instruct, induce, encourage, authorise or assist the unlawful behaviour of others. Managers can be found personally liable and a damages award made. The reach of these provisions is largely untested by our courts, but this is not through lack of trying. Lisa Croxford, special counsel, Herbert Smith
APRIL yy The Fair Work Ombudsman signed a Memorandum of Understanding with Defence, pledging commitment to supporting reservists and releasing them to undertake defence service. The memorandum was designed to help establish a cooperative, mutually supportive and beneficial approach to managing employees who are also members of the Australian Defence Force. yy A full-bench decision by the Fair Work Commission (FWC) saw employers and employees able to enter into longer individual workplace arrangements before deals could be terminated. Essentially, the notice period for terminating an individual flexibility arrangement under the Fair Work Act was extended to 13 weeks. HCAMAG.COM
Freehills, notes that her firm has defended numerous cases in which accessory liability was argued by complainants. The fact that the cases did not proceed to full hearing was a result of the huge pressure placed on organisations to come to a commercial settlement of claims – or risk adverse publicity like the type experienced by the ADF. “In our practice, we’ve seen managers copied on emails containing pornographic material, managers being present when racist comments or ‘jokes’ are made, managers who tolerate a direct report’s ‘playboy’ reputation with staff. We’ve seen them because those managers have failed to act,” Croxford says. Lieutenant General Morrison’s speech was applauded as an example of outstanding leadership that turned an overwhelmingly bad news story into a public relations success. It demonstrated a zero tolerance policy on unacceptable behaviour in the workplace. It encouraged everyone in the ADF to stand up and call attention to bad behaviour – something all managers should aim towards.
DID YOU KNOW?
On 1 January 2013, the model Work Health and Safety Act commenced in SA and Tasmania. This means Victoria and WA are now the only two jurisdictions with ‘non-harmonised’ WHS legislation
THE RISE OF MEDIATION Mediation has traditionally been an underutilised tool when complaints of bullying arise. Mediation as an early intervention tool can offer a quick, cost-effective and flexible process for resolving complaints of bullying behaviour before that behaviour escalates. Whether or not a particular matter is appropriate for workplace mediation needs to be determined on
MAY yy The FWC launched a number of new initiatives to assist self-represented parties. These included a pro bono legal scheme to provide independent legal advice to self-represented parties involved in unfair dismissal jurisdictional hearings, as well as the introduction of an Appeals Practice Note to promote consistent administrative processes when dealing with appeals, including the option of determining an appeal ‘on the papers’ without the need for a hearing.
JUNE yy Plans to extend the FWC’s powers to intervene in cases of workplace bullying, as well as the Commission receiving an increase of $5m a year for anti-bullying orders, were announced. yy The salary threshold for unfair dismissal was increased to $129,300. yy Maximum compensation for unfair dismissal was increased to $64,650 (from $61,650). yy The minimum wage was increased by 2.6%, bringing it up from $606.40 to $622.20 per week.
DECEMBER 2013 | 21
2013 ANNUAL REVIEW
Mediation, as an early intervention tool, can offer the parties a quick, cost-effective and flexible process for resolving complaints of bullying behaviour before it escalates a case-by-case basis, suggests Michaela Moloney, special counsel at K&L Gates. “It must be recognised that mediation will not always been be the most efficient tool for the resolution of a bullying complaint. There will be cases of workplace bullying where the imbalance of power is so profound or the conflict and bullying so advanced that attempting mediation with the parties will not be appropriate and may cause further damage to the complainant.” However, in other circumstances, particularly where the offending behaviour has recently commenced and the parties are willing to agree to participate in mediation, the process offers an effective way for an employer to address the behaviour and for parties involved to seek to reach some kind of resolution. The mediation process is also a flexible one in which a trained mediator can manage behaviour and utilise techniques such as joint sessions and private sessions to ensure one party is not being disadvantaged in the process. The process also offers flexibility, allowing the parties themselves to develop innovative resolutions that address their individual needs. Although the use of a trained mediator comes at a cost, this is significantly less than the costs that would be incurred by parties if the matter proceeded to litigation.
JULY yy Natalie James, previously a senior manager with the Federal Department of Education, Employment and Workplace Relations, was officially appointed as the Fair Work Ombudsman. yy Employer superannuation contributions began increasing, with the benchmark of a 9.25% increase being reached in July. yy 457 Visa changes were introduced, giving the FWO greater powers to monitor compliance, such as holders being paid at the market rates specified on their approved visas, as well as their jobs matching the job titles and descriptions on the visas. yy The FWC heard the case to increase pay by close to $2 per hour for retail workers between the ages of 18 and 20, the first step in a broader move to increase the pay for young workers in retail by the Shop, Distributive and Allied Employees Association.
22 | DECEMBER 2013
PERFORMANCE REVIEWS
Here are four tips to ensure your organisation protects itself from bullying claims arising from performance management: 1. Maintain objectivity and focus on the performance issues, not the person, during performance management meetings. 2. Ensure that the emphasis of any performance management meetings is on the future – that is, short-, medium- and long-term goals – even though discussion of performance issues will necessarily involve discussing the employee’s past performance. 3. Document all performance management discussions and meetings (as you may already be doing). 4. Pay attention to your oral and written communications and consider the impact these have on the employee.
REDUNDANCIES With more staff cuts being announced every week as private and public sector organisations act to stem costs in the face of economic uncertainty, workplace lawyers have continuously warned employers to tread carefully when letting staff go. Joydeep Hor, managing principal of law firm People + Culture Strategies, says employer understanding of how to terminate staff employment in a fair yet commercial way is still a “massively underdeveloped skill” in Australia. “Whether it’s for redundancy reasons, performance, misconduct or just a bad fit, termination of employment and the law surrounding it is a very complex area that many employers just aren’t getting right,” says Hor. In particular, termination due to redundancy warrants a proper pre-termination process of assessment, consultation and redeployment. Section 389(1) of the Fair Work Act 2009 (Cth) sets out the requirements for a genuine redundancy
AUGUST yy The Sex Discrimination Amendment (Sexual Orientation, Gender Identity and Intersex Status) Act 2013 came into effect, offering protection against workplace discrimination on the basis of sexual orientation, gender identity and intersex status. These amendments also extended the definition of marital status to “marital or relationship status”, which encompasses de facto same-sex couples. yy The Fair Work Amendment Act 2013 made further ground, with ‘family-friendly’ changes coming into play, such as concurrent leave for new parents, pregnant employees being entitled to transfer to safe jobs within their organisations, and an expansion of those who could apply for flexible work arrangements – including employees with caring responsibilities, those with disabilities or who were experiencing family violence, those 55 years or older, and parents or guardians with school-age or young children.
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that will provide an exemption from an unfair dismissal action pursuant to Section 385(d). These requirements are that: • the position no longer exists • there has been consultation as required under any relevant industrial instrument Section 389(2) states that it will not be a genuine redundancy if there are opportunities for reasonable redeployment either within the employing entity or within the employing entity’s “associated entities”. In order to avoid a redundancy becoming an unfair dismissal an employer should – where the employee is otherwise eligible to bring such an action – therefore: • be able to establish that the position no longer exists • consult as any applicable award or agreement requires • explore redeployment to any available position for which the employee is qualified, regardless of location, remuneration or status, within the organisation or an “associated entity” of the employer
ADVERSE ACTION CLAIMS Avoiding adverse action claims remains something of a dark horse for employers. Despite efforts to stay abreast of case law related to the adverse actions provision in the Fair Work Act (2009), legal experts have warned that even commonplace employer actions can result in an adverse action claim if HR doesn’t follow the letter of the law and adapt policies to avoid falling foul of the provisions. Commonplace actions such as informing an employee that their role may be made redundant, instituting a disciplinary enquiry, investigating complaints against the employee, or issuing a ‘show cause’ letter, may constitute adverse actions under the Fair Work Act if the employee can claim that this action was a result of them exercising their workplace rights. The onus of proof lies with the employer,
SEPTEMBER yy A Tony Abbott-led coalition government was voted in, with a promise to reduce the power of unions and limit red-tape administrative burdens on employers. Senator Eric Abetz was appointed as the Minister for Employment.
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who must then prove that the adverse action was not a result of the employee attempting to exercise their workplace rights. A workplace right includes a large range of matters, including union rights, the right to request flexible work arrangements, the right to make complaints about their employment, the right to make enquiries about pay, and the right to request information about further disciplinary action. An adverse action can be anything that affects an employee adversely. In simple terms this means that any disciplinary action taken against an employee, such as a suspension, or even a written warning, could constitute an adverse action. Under the legislation, any adverse action against an employee will be deemed to have been taken for an illegitimate reason unless the employer can prove to the contrary. It is important for managers to be able to justify and document their reasons for the actions against employees, particularly in performance management situations. The Fair Work Act posits a need for employers to protect themselves against adverse action claims. To do this an employer may consider establishing a recruitment process that complies with antidiscrimination laws, equal opportunity legislation and the Act. This may include: • making staff involved in recruitment aware of their statutory obligations • educating managers about employees’ rights • introducing policies to facilitate expression of employee concerns coupled with appropriate conflict resolution provisions • Training managers to maintain records of employee concerns and requests Once a workplace right is understood by employers and employees, the likelihood of an adverse action claim being brought is significantly reduced.
OCTOBER yy Moving to reform the Australian Building and Construction Commission, Employment Minister Eric Abetz instated WorkChoices advocates Nigel Hadgkiss and John Lloyd in the Fair Work Building Industry Inspectorate. yy The Australian Human Rights Commission’s Pregnancy and Return to Work National Review commenced, encouraging Australians to make online submissions, particularly regarding discrimination while on parental leave or upon returning to work.
...and look out on 1 Jan 2014 for: amendments to the Fair Work Act will come into force, which for the first time will give employees an avenue to bring claims regarding bullying to the FWC for quick intervention and adjudication. Previously, the only avenue was to resolve the matter internally or through more time-consuming avenues such as safety or workers’ compensation claims.
DECEMBER 2013 | 23
2013 ANNUAL REVIEW
RETENTION presented by A significant 22% of Australian employers selected “increasing workforce performance & productivity” as the single biggest human capital challenge their organisation faced in 2012/13. A further 18% selected “retaining top performers” in the Randstad World of Work Report 2012/13. While there’s no shortcut to achieving either of those objectives, an effective reward and recognition (R&R) strategy may help. What trends shaped R&R in 2013, and what lies ahead? HR Director talks to Dave Jackson, director, Solterbeck, to get his views.
HR Director: Looking back over 2013, what have been the significant trends that have occurred in terms of talent retention? Did retention ever leave corporate agendas? Dave Jackson: Talent retention has never left the agenda in good firms. Organisations not continually working hard to provide an engaging and challenging environment for key talent will lose them – perhaps not overnight in every instance, because opportunities are still off-peak in many industries, but I think good firms see that investing now is a forward-looking move. I think 2013 was also characterised by very careful recruitment management, with big investments within many organisations. The trend was fewer placements, with every vacancy being carefully reviewed to see if it had to be filled or if the work could be spread amongst other roles. But when an answer was ‘go’, the recruitment process has never been as fierce.
focused ever more on high-performance culture, more closely linked to demonstrated outcomes and behaviours, and greater use of recognition data for insight and analytics. As a general rule, in 2013 we also saw recognition practices move further towards being activity based, away from largely financial-based forms. In terms of reward, one interesting trend is differentiating reward strategies to drive retention of key talent; what my colleague working globally in pharma terms ‘‘two-paced reward’’. And in the sales reward space, we saw a big move to cloud-based Incentive Management Systems for cash/commissions, and some interesting shorterterm sales sprint activity using non-cash rewards. I think almost all these examples are driven by one thing: more efficient use of limited resources… investing where it matters most.
TWO-PACED REWARD Put simply, this means two differentiated reward plans. In terms of pay, one plan is a traditional (default) reward plan designed around the average employee, and the second is a higher-leveraged reward strategy for key talent with a bigger upside and bigger expectations. This is not about executive reward but rather reward for key talent across all levels of the organisation. On the benefits end of the reward scale, differentiation for key talen t has often existed, but informally. A two-paced reward strategy is more deliberate, and asks what benefits appeal to key talent, and how this can be differentiated, both in terms of opportunity and delivery.
HRD: Related to the above, can you pinpoint any key trends in the R&R space in terms of what’s being adopted, and why? DJ: Yes, in fact I saw 2013 as perhaps the biggest year of change in R&R since 2007/08. On the recognition side, we saw recognition strategies
24 | DECEMBER 2013
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HRD: What sort of advice would you pass on to HR directors who perhaps already have a high-performance team: how do they ensure that high performance is sustained? How and when do they refresh their R&R offerings and what are some obvious ways to do that? DJ: Don’t look away! Glib it may be but true it remains; the world is changing fast. HRDs must align the efforts of the team to the strategy (again), as strategies continue to evolve to ensure the company is on course to hit its goals. These course corrections are not a rehash of the whole strategy, but rather subtle changes to ensure the strategy remains effective in a dynamic environment. By aligning the team to the strategy there is clarity of expectation – a key to a high-performance environment. Reward and recognition should both support and drive the actions needed to fulfil the strategy, and the alignment of these programs ensures all areas of the organisation are pulling in the same direction. The key to linking these is flexibility. Old set-andforget strategies and fixed-form technologies simply don’t cut it. The R&R strategy must provide a responsive tactical framework that can be dialled up and down – zoom in, zoom out, focus, realign, re-energize. Then reload and repeat.
HRD: Budgets are tight. Morale and motivation is down, especially in the sales team. What do these circumstances translate to and can they be turned around by smart investment in R&R and incentive programs? DJ: It’s an interesting dilemma, especially in variable reward roles such as sales, which is where we are advising clients to give greater focus on inputs – sales behaviours, sales milestones, and the like. The strategy alarms many, at first, and especially the CFO: how can we afford to reward people when numbers are down? Our response is how can you not?! A well-crafted program that rewards improvements in sales drivers is a powerful tool to bridge the gap between falling financials and falling morale. There will always be those afraid to pursue this strategy, but the power of a virtuous spiral is undeniable and the brave firms will win.
HRD: It seems neuroscience, understanding how the brain works and reacts, has seeped into just about every area of the HR space. Have you seen it in the area Solterbeck operates in? DJ: Science-based insight continues to influence the design and delivery of our services, most
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THE VIRTUOUS SPIRAL
Virtuous spiral relationships occur when an organisation values and rewards its people, and as a result they are committed to performing well. Through their performance, employees can propel their organisations to higher levels of accomplishment, and as a result the organisation is able to reward them better and also attract and retain talented people. This in turn spirals the organisation to higher and higher levels of performance. Virtuous spirals have been branded as the ultimate competitive advantage – powerful and hard-to-duplicate sources of positive momentum and higher and higher levels of performance.
obviously the motivational aspects of R&R, but also our employee communications and events services. For example, understanding of matters such as salience and empathy have shaped corporate events for many years, albeit often instinctively rather than deliberately. And I referred earlier to the science around virtuous spirals of performance and reward influencing R&R design. As well as the availability of the science, increasing accountability of investments is also contributing to a more robust scientific perspective. It’s no longer enough to hope something will engage the audience, or drive the desired discretionary behaviour: we want proof.
HRD: Anything else you’ve come across which may influence R&R in 2014? DJ: I think the big influence in 2014 will continue to be financial. Tight economies means tight budgets, which means R&R needs more than ever to be focused, with clear objectives and measurable outcomes. Using scarce resources wisely is an enterprise-wide necessity; the wonderful characteristic of reward and recognition is that it is inherently well suited to this mandate as fixed costs are low and variable costs can be tied to outcomes.
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2014 R&R TRENDS 1. THERE’S AN APP FOR THAT: MOBILE RECOGNITION The growth of recognition apps will result in an increase in recognition initiatives. Employees will access mobile devices and tablets to acknowledge and praise peers here and abroad. Hot apps in this space include Socialcast, GiveAWow and iAppreciate.
2. LET’S GET SOCIAL: SOCIAL RECOGNITION Employers have started to embrace social enterprise platforms for internal HR functions. This includes social recognition; it could mean the death knell of the use of traditional recognition portal programs which have a strong rewards component embedded in them.
3. CHECK MY RESULTS: LINKING RECOGNITION TO RESULTS As per the above, technology enables improved tracking and recording, not just of recognition actions, but also results achieved. Leader boards can be
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visualised online with progress on strategic initiatives along with recognition given tracked accordingly.
4. THE MEDIUM AND THE MESSAGE: INTERACTIVE RECOGNITION Face-to-face video capture and the spoken word will likely be explored as the next medium for sending personal messages of praise and acknowledgement besides the tried and true written and graphic formats.
5. ALL ABOUT ME: PERSONALISED RECOGNITION Are your team stars no longer getting enthused by generic gift certificates? Perhaps you’ve received feedback about how much certain people hate public recognition and prefer one-on-one? The demand for more meaningful appreciation for a job well done will result in greater personalisation, and these preferences will be captured when onboarding new employees or during performance reviews.
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Do we pay for performance? We all say that we pay for performance, but do we really? Of course, our company philosophy probably spells out a clear intention to pay people for performance. Our executives want that, and so do our shareholders. Even our clients and the public believe that we should only get paid for results. However, before we get convinced by our own PR, let’s examine some of the factors that influence our ‘pay for performance’ ability in practice.
FUNDING
If you don’t have the money, you can’t pay increases. The GFC saw employers in the US and Europe freeze increases and, in some cases, actually reduce compensation. Even those who got something received an increase too small to meaningfully differentiate their high performers. In Australia, we are seeing some large group employers refusing to let profitable subsidiaries cross-subsidise others, and some funding pools are therefore substantially different. The intention is clearly to incentivise divisions to feel the direct impact of their own successes or failures. The tough result is that star performers in ‘dog’ businesses might be hard to attract or retain in turnaround roles where they are needed, without some significant individual incentive. We need stars in underperforming units.
COLLECTIVE BARGAINING
In organisations where collective bargaining prevails, it is very difficult to fund and incorporate performance-based rewards. Unions by nature prefer a common remuneration structure, and there is seldom additional salary budget available for starperforming individuals or divisions after the annual agreement is concluded. If this is done, management will be pushed even harder next year for ‘keeping something up its sleeve’. Gain sharing or pain sharing within a unionised environment is possible but takes a great deal of time and maturity in the relationship. Its success is often affected by the historical relationship between the parties.
THE EXTERNAL MARKET
HR compensation specialists spend a great deal of time participating in surveys to benchmark company
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pay rates against market ranges and trends. It is highly unlikely that your salaries are going to exactly match your benchmark – either finance will be lower or IT too high. Correcting the anomalies will require an executive directive to boost certain skill groups’ salaries at the expense of others (within the overall budget for adjustments). This may well mitigate against your pay-forperformance philosophy for a while.
THE INTERNAL MARKET
Most established employers have all kinds of historical internal anomalies that should ideally be corrected – even if over time. For instance, should an above-average performer remain at the 95th percentile when you have a star performer who is still at the 50th percentile? To correct this within budget constraints will require some deft footwork. Are you going to pay only for superlative performance, or on a more graduated basis?
EXTRANEOUS CONSTRAINTS
Several employers introduce other factors that might constrain simple performance-based remuneration: • Employment equity considerations might require a levelling of base pay, for instance. Attracting an executive from a targeted group might demand an additional margin. Counteroffering a rare (but not necessarily highperforming) skill set is likely to compromise your output-based pay strategy. • Another example is pressure to reduce your Gini coefficient. There may be lobbying to curb the earnings of your top-profit drivers in order to close the differential between the highest and lowest earners. Is this what is best for your business or do you have a workable alternative?
INEVITABLE COMPROMISE
Whenever you are asked whether your HR policy is to pay for performance, be careful how you answer. The market is both unfair and fickle. Performance is also subjective and not necessarily permanent. Nevertheless, if we are serious about attracting and retaining high performers, we had better devise smart ways of compensating them. If not, somebody else will.
About the author Gary Taylor is a master HR practitioner with the South African Board of People Practice. He has worked in multinational organisations on two continents, and has contributed articles to journals in Australia, South Africa and the UK.
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Education & DEVELOPMENT Australian employers are both unprepared for and unaware of critical leadership needs they may face in the future. That’s according to a survey by Right Management, which found that only 22% of Australian organisations had a ‘talent pipeline’ to cover future needs, with just 18% being concerned with their lack of potential leaders. Additionally, 45.5% stated that skills shortages were rampant throughout their organisations. How can these significant challenges be overcome? Given the tight L&D budgets most organisations are saddled with, smarter insights and interventions are crucial. For the challenge of a lack of leadership talent, it’s worth considering how neuroscience is transforming the leadership development space. To meet this challenge – general skills shortages – it’s worthwhile considering the talent right in front of you. HR Director chats with Cynthia Stuckey, managing director, Forum AsiaPacific, about how to undertake a skills audit.
SKILLS AUDITS
HRD: When is it appropriate to do a skills audit of existing employees? Cynthia Stuckey: We typically recommend
at least an annual review as part of the performance appraisal process. Organisations often would not execute skill audits for 100% of their employees, but rather define the critical roles or those roles having the greatest impact on the business strategy. If it is not possible to do an annual review, we recommend companies assess their key talent when
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they change their business or growth strategy. For example, if M&As are the primary growth strategy and the company now plans to focus on integration of the assets but at the same time wants to grow organically, these two growth strategies require very different skill sets and measurement systems and management capabilities. One would need to assess their talent related to the strategy to identify the capability gaps. The data used from this type of skills audit is used to inform future talent needs, strategy selling, talent acquisition plans, leadership/succession planning, establishing role performance or capability development plans. The other uses would be for recruitment and onboarding – to establish initial capabilities, validate quality of hire, and determine skill transfer in the new hire process.
HRD: Can you outline the planning required? CS: Before doing a skills audit, it is critical for companies to consider the following: • What are the objectives for the skills audits? How will the information be used? • What is the business strategy? • What are the human capital strategies around recruitment, onboarding, training, capability gap analysis, individual development, and rewards, etc? These can all be impacted by integrating the intent and audit objectives and process.
HRD: Do you find that employers may be unaware of the skills right in front of them? CS: Yes, in fact there is evidence that organisations have a tendency to promote people who excel at their present role and often are not aware of the gap in skills required to perform the advanced or new
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role. This is why employers often make mistakes when promoting people as they use the wrong performance metrics and skills evaluation to determine suitability for new roles or promotions. At Forum, we’ve seen in many cases that people are individual contributors and effective at their role, but they also have a gift of leading or coaching others. However, without formal skill audits or systems to collect this information, talent and skills are not leveraged. So yes, skills are right in front of organisations; the more important question is: are the skills right in front of them the skills they need to drive their business and growth strategy?
HRD: What steps must be followed when undertaking a skills audit? CS: The steps involved depend greatly on the purpose and intent for the audit, as well as how the data will be leveraged to improve the business. Key steps might include: • Assessment design – there are many predesigned tools available on the market but you may want to adjust the instruments to align with specific behaviours or competency modelling. • Distribution – whether through a single-rater, 180 or 360 assessments, or interview or scored test, there is usually some instrument and individuals involved in rating employees’ skills. • Reporting of the results from the skill audit (individual, group, by business unit, or role) and organisational gaps or performance issues can also be summarised. • Review and analysis – often the data needs to be analysed, whether it be for individual performance/gaps or organisational input to take action on one of the many human capital processes mentioned above. • Documentation of results and plans – individual, management, departments, etc.
LEADERSHIP General skills are one thing; leadership skills are quite another. And given the increasingly complex, competitive, global and technology-driven marketplace, organisations must be especially vigilant about leadership development. When asked at a recent forum to sum up their thoughts on leadership in this challenging era, three financial services HR professionals responded as follows.
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“There is evidence that organisations have a tendency to promote people who excel at their present role and often are not aware of the gap in skills required to perform the advanced or new role” Cynthia Stuckey
yy“Dealing with complexity, and confidently working with customers and employees. Also, generosity of spirit, and I don’t mean just monetary. I mean genuine concern for the people you work with and deal with every day” – Tony Fiddes, general manager, group people capability, Westpac yy“Being humble; showing courage and a sense of humility. What do you stand for? What are you contributing back into the community? Also, breadth and depth of experience – how courageous were you in your career path?” – Nat Nicholson, executive director of HR, ING DIRECT yy“The issue is around leadership as a collective not an individual. How to create a group of leaders working towards the same common goals and culture – that’s the key” – Stephen Barrow, GM people, products and markets, National Australia Bank How can some of these objectives be met? There are countless leadership courses out there, but increasingly there is one common factor underpinning all of them: neuroscience.
WHY NEUROSCIENCE? Modern technology allows us to see into the brain so we can see how the different regions respond and react to different stimuli. This helps us understand how some people become great leaders while others, who appear talented, do not. The discoveries may surprise you.
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2013 L&D INSIGHTS PREFERRED TRAINING METHODS – MANAGEMENT AND SENIOR STAFF
TRAINING PROVIDED TO EMPLOYEES Provide training in-house
5.1 11.9
27.1
Seminars and conferences 16.4 47.5
29.5
15.7
On-the-job training 4.8 27.4
30.6
16.8
Classroom training 6.5 38.7
41.9
Structured online or CBT - PC based 16.7 30
30
55.1
Pay for staff to attend conferences, seminars, etc.
8.7
30.4
41.7
Pay for staff to attend vocational training
6.2
30.1
38.1
Time off without pay to attend TAFE or academic course
13.9
34.8
29.6
11.3
Time off with pay to attend TAFE or academic course
17.8
16.8
45.8
3.7
Apprenticeships
10.4 Never Rarely Sometimes
17.0
13.2 8.5
Often A major part of our training strategy
37.1
11.3 18.3
Unstructured or ad hoc online - PC 33.9 33.9
16.9
8.5
Unstructured or ad hoc online - mobile device based 33.9 Actively dislike Don’t like Don’t mind
33.9
12.5
7.1
Like Preferred method Source: TP3 – tp3.com.au
THE LEADER RELATIONSHIP Thanks to research undertaken by Goleman, Boyatzis and McKee in the early 2000s using fMRI (functional magnetic resonance imaging), we know how the brain reacts to good and bad leaders. The study found that good leaders, whom they called resonant leaders, stimulated 14 different regions of the brain. These were areas to do with attention, social interaction and relationships. Poor leaders turned off 11 regions and stimulated six. Significantly, the regions switched off involved the social side of the brain. The areas turned on involved negative emotions and a reduction in attention. In other words, leaders who connect with those around them are able to stimulate the sections of their people’s brains that enable them to accept new ideas and work together more socially. That’s how they are able to build strong teams who work well together. That’s how they produce consistently high results. If you build the relationships, the results will follow.
NEW EMOTIONAL INTELLIGENCE “Great leaders are emotionally intelligent,” says Sonia McDonald, director, LeadershipHQ. “They recognise emotions within themselves, understand why they are experiencing them and know how to manage them.” Neuroscience takes our understanding of emotional intelligence one step further. It shows us that leaders’ emotions are ‘contagious’ and can infect
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their team within milliseconds, before either the leader or team members are consciously aware of it. The bad news is that people experience negative emotions with far more intensity than positive, with the limbic system (our emotional centre) firing almost instantly to colour our perception of the world. Boyatzis calls this “emotional resonance”. “That puts the responsibility for the emotional wellness of the team squarely into the leader’s court,” says McDonald. “Great leaders must be aware of and able to regulate their own emotions. They must understand their strengths, weaknesses, and values, and their impact on others so they are able to create the perfect environment so positive emotions resonate through their team.”
BEING SOCIALLY SMART In a 2010 study, researchers used fMRI to prove that different regions of the brain were activated when people thought of positive or negative experiences. When they focused on a bright future, those parts of the brain that deal with openness and innovation were activated. In those who focused on their failings, those positive regions of the brain were closed down. Great leaders are socially smart. They understand how to inspire their team members by focusing on the positives, knowing that this is the key to motivation and sustainable growth. They nurture their social relationships so they can continually stimulate the positive responses they need and show their team members the opportunities that lie ahead of them.
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FURTHER EVIDENCE McDonald has been working with emerging leaders mainly in the construction and engineering arenas, industries not known for a focus on emotional intelligence or relationship building. These industries have typically focused on the bottom line, with financial results as their key measure of success. McDonald has noted that some of the issues in these arenas include high staff turnover, work dissatisfaction, safety incidents, poor decision-making and ineffective self-regulation leading to increased stress. Yet training, coaching and interventions through a neuroscience lens have shown significant impact on emotional intelligence and engagement. “The leaders’ new ability to manage their emotions, thinking and stress led to more effective decision-making, positive leadership and team collaboration,” McDonald says. “A shift from results focus towards relational leadership improved work satisfaction and boosted productivity. If it works in tough, raw industries like these, it can work in yours.”
WHAT DOES THIS MEAN FOR EMERGING LEADERS? Traditional leadership training has been designed to focus on planning and strategy – provable
results – but research suggests we need to tip the balance towards studying relationships and human interactions. Neuroscience shows us that great leadership evolves out of emotional understanding and selfmanagement, and strong, supportive relationships. It tells us that if we take care of the social and interpersonal elements first, the bottom line results will come. And not only will they come, but they will be achieved in a way that is sustainable in the long term. “Our leaders will come not from the most technically proficient members of your organisation,” McDonald says. “They will emerge from the socially aware and emotionally mature people that you may never have considered as leaders.” This has significant ripple effects, including impact on recruitment and training strategies, and career planning processes. Should they be redesigned now that neuroscience has provided so much useful and vital insight into the way people work? “Neuroscience is changing the way we build our businesses and organisations. It is proving that a business which focuses on the needs of its people is not ‘soft’. In fact, it is more likely to be the business which is sustainably successful,” says McDonald.
HOT L&D TRENDS CROWDSOURCED LEARNING With 94% of L&D professionals seeking to speed up integration of learning into the workplace, more are turning towards ‘job aids’. These job aids generally involve the use of Web 2.0 tools (wikis, blogs, etc.) to interact with employees. Experts suggest that allowing employees themselves to generate content such as videos, blogs and other didactic pieces on their workplace experiences is invaluable. These allow employees to teach each other, as well as providing feedback to management on what needs to be changed. EXPERIENTIAL LEARNING This popular fad of the mid-1980s is making a comeback in the corporate world, particularly in the field of coaching and as a tool to improve worker relationships. Using elements of neuroscience, experiential learning can be particularly effective in breaking down established patterns, habits and behaviours. It disrupts those autonomous systems and dynamics, and it forces people who are embedded in their hierarchical roles to interact and behave with each other in different ways, in a very different environment.
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This may be challenging physical environments like the wilderness. The key is the methodology associated with adventure. What defines an adventure are two fundamental elements: going into an activity that has uncertain outcomes, which makes it difficult to predict what will happen at the end of it; and a notion of risk – whether it’s physical, emotional or behavioural. PHILANTHROPIC TEAM-BUILDING Need to boost collaboration and communication skills? The Helping Hands project, which works to construct prosthetic hands for landmine victims, is continuing to gain ground in Australia as a teambuilding exercise. Teams go through the process of building the hands, and they are then sent to someone in need. First, team members have their hands bound to simulate an amputee’s experience. Together they build a prosthetic hand from metal and plastic and then decorate the box it will be shipped in. Participants can then write with the hand they have made to give them a broader understanding of the impact their hand will have. Once quality tested, the hands are shipped out to those who need them across the world.
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TALENT MANAGEMENT & SUCCESSION presented by
Good leadership consistently appears at the top of organisational priority lists, yet there appears to be a dearth of suitable talent to groom into these roles. Is this actually the case, or are organisations simply not looking at the right people or perhaps applying too narrow a lens on who is suitable? The availability of talent comes down to an organisation’s ability to think outside the square and be proactive. Restricted timeframes, a sense of urgency and a prescriptive approach all point to a shortage of talent. Yet if companies take the time to build a talent inventory, the opportunities are endless, suggests Nick Bailey, partner, Grant Thornton. “The debate as to whether leaders are ‘born or bred’ continues to rage,” he says. “Employers that acknowledge the expectations of today’s employees and adopt more innovative employment practices, such as situational development, increased mobility and flexibility, are more likely to have success encouraging more executives to move their careers into management.”
CEO SNAPSHOT The majority (66%) of CEOs at Fortune 500 companies were appointed internally, with 57% having started other companies and 47% claiming an intention to start another company in the future. Few (2%) have PhDs, with 25% having Master’s degrees and 47% Bachelor’s degrees. 81% of new CEOs had the same nationality as the company’s headquarters, and 95% were men.
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THE NEXT CEO: IS CROWDSOURCING THE WAY TO GO? LEADERSHIP, 2014 STYLE Part of the current problem is taking a too-limited view of suitable candidates for leadership. To be an agile and scaleable business and to compete effectively in volatile economic conditions, an organisation needs to employ and actively develop a range of leadership styles. This is when a legacy culture and preconception of what a leader should ‘look like’ can present a significant risk, Bailey suggests. Uncovering hidden talent through assessment and competency analysis ensures that all an organisation’s assets are identified and utilised, as well as validating the need to bring in external talent as required. While succession planning is no longer just about executive roles and must now cover ‘mission critical’ roles as well, Bailey suggests a good starting point is to align capability with business strategy. Undertaking a skills audit (outlined on p.28) can provide an organisation with a live heat map that will illustrate where the gaps are in a business. “An organisation needs to identify and define which roles are business critical, and how they contribute in the future organisation and workforce plan,” he says. “These definitions are critical to the design of a succession plan that factors in emergency fill, short-term and long-term talent into the plan.”
“Can a culture be high performance and not be based on an ‘up or out’ development model?” Nick Bailey BUILDING FROM WITHIN Following an audit, if talent/skills gaps are identified, the preference is usually to groom talent from within, but this is not always practical in the short term. The linkages between the workforce plan and L&D and the business strategy are critical to ensure as much as possible that you have the right skills in place. But where a business is today and where it aspires to be can sometimes be too big a stretch for current capability. “There is a balance to be found here,” Bailey suggests. “Can a culture be high performance and
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Following the announcement of a full restructure of Microsoft, CEO Steve Ballmer announced his retirement from the company this year, giving the organisation 12 months to find his replacement. While Ballmer was appointed by Bill Gates himself, Microsoft’s search for its next CEO has resulted in the formation of a committee including Gates, current and former CEOs and CFOs from large organisations, and executive search heavyweight Heidrick & Struggles. Following the acquisition of Nokia, some believe Ballmer may be grooming Stephen Elop, CEO of Nokia and former head of the business division of Microsoft, for the top job. However, the general public has different ideas. The unofficial website, nextmicrosoftceo.com, gives anyone a chance to submit and vote on a possible CEO for the tech giant. Gabe Newell, managing director at video game innovator Valve Corporation, tops the list.
not be based on an ‘up or out’ development model? The strongest employment brands derive the majority of their equity from the way they invest in and reward their people. However, an organisation must keep both an internal and external view on talent to ensure they have the right person in the right role at the right time.” What’s important to keep in mind is that succession planning should not be an elusive, secretive strategy. All employees, from manager and above, should be held accountable for identifying and developing their successors – not just internal but an external view as well. Successful talent-led organisations build this into the KPIs of their executives. Do all high-potential employees know that they are high potential? “Ideally you would hope so,” Bailey suggests. “However, as with all types of selection the communication associated with the program is the key, as setting expectations and then not meeting them will create risk and disengagement. “Hence, the succession plan will need to be designed to highlight a series of options and contingencies rather than ‘promising’ a certain outcome.” As a bare minimum, Bailey suggests companies ‘open up’ career options to people internally. Here are three ways to do this: • Develop global workforce strategies that provide mobility opportunities, flexible working arrangements, and
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2013’S MOST TALKED-ABOUT CEO? Yahoo’s Marissa Mayer, appointed as CEO in 2012, made her presence known when she abolished teleworking at the company this year. Soon after, she boosted paid maternity leave in her organisation to 16 weeks, which also applied to adoption, foster child placement and surrogacy. Despite the waves in workplace policy, perhaps the most reported story involving Mayer was her spread in Vogue. The 38-year-old businesswoman was photographed in a blue dress lying across a white lawn chair, accompanied by a 3,000-word profile. The article resulted in a backlash from media outlets and industry commentators, who called the image “wince-inducing” and claimed it undermined Mayer’s credibility. However, the furore also brought to light lingering sexism towards females in executive roles, with defenders quick to point out that Mayer’s embracing of her femininity in Vogue is no different to male executives such as Radek Sali of Swisse and Alan Joyce of Qantas posing in ‘superman poses’ for publications such as GQ. Since Mayer’s appointment, Yahoo has seen a slight resurgence – taking a more active role in social media (such as acquiring Tumblr) and redesigning the brand’s image as a modern tech company.
rotations affording breadth and scope to transferable skills. • Take heed of your EVP and ensure that this resonates as loudly within an organisation as it does with the external market. • Take advantage of innovations in employee smartphone applications and other social media platforms, which speed up the exchange of information. Examples include Yammer and Huddle, both of which help employees stay connected and match the cadence of the business.
ESSENTIAL DEVELOPMENT ELEMENTS: TECHNOLOGY CAN HELP Major talent management functions all play a part in a comprehensive leadership development program and can be well supported by a unified
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talent management technology platform. These functions include recruitment, assessment, performance management, succession planning and career planning. Here is HR Director’s five-step guide to leadership development:
1. DETERMINE THE BEST LEADERSHIP STYLE FOR YOUR ORGANISATION There are many theories about and techniques for determining the right leadership styles for an organisation. The leadership style, for instance, that is required by a head of corporate security would obviously be vastly different from the leadership style of an art museum director. Company culture will also play a major role in determining leadership style. One of the main reasons for the high failure rate of new CEOs – more than half never make it past the fouryear mark – is poor organisational fit. Here are two ways to assess leaders’ fit: • Get to know them better. Psychological and behavioural assessments have been statistically linked to current and future success in leadership roles. • Understand the culture better. Ask your board, employees, vendors, and consultants for insight into what makes an effective leader in the company. Use both sets of information to find alignments or disparities. If there is a glaring cultural conflict, be ready to find a better candidate who possesses the unique skills your organisation requires.
2. IDENTIFY CURRENT AND POTENTIAL LEADERS WITHIN OR OUTSIDE THE COMPANY Companies must weigh the cost and timing of developing internal leadership against the cost and availability of hiring from the outside. Research has shown that one of the key advantages of developing leaders internally is that they achieve productivity almost 50% faster than external candidates.
3. IDENTIFY LEADERSHIP GAPS To fully recognise leadership gaps, companies should determine current and future leadership requirements and compare those with the
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current leadership team. Then look at the leadership development pipeline and identify gaps in skills and the time required to fill those gaps either via succession plan or recruitment.
4. DEVELOP SUCCESSION PLANS FOR CRITICAL ROLES Succession planning avoids disruption and employee trauma when the CEO leaves, whether the departure is anticipated or not. But a succession plan should not be confined to executive roles. As part of the leadership program, companies should evaluate critical roles throughout the organisation. For the greatest efficacy, succession planning should be supported by technology systems that provide the ability to do the following: • Create backfill strategies that use data captured in the recruiting and
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performance review processes, coupled with individual career plans. • Add multiple candidates to a succession shortlist and view all the best options. • Display multiple talent profiles – from C-level executives to individual contributors – side by side to quickly identify the best fit. • Track candidate readiness based on skills, competencies, and performance; promote top candidates based on relative ranking and composite feedback scores.
5. DEVELOP RETENTION PROGRAMS FOR CURRENT AND FUTURE LEADERS Linking pay to performance can be a motivator for an employee, but goal alignment helps potential leaders stay focused on what is important to the company. Recognise excellent performance, and base the upside of bonus potential on the success of both the employee and the company.
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HR TECHNOLOGY What’s hot in HR technology as 2013 draws to a close? There’s no escaping the fact that mobility is on the wish list of every company whose employees are not bound to their desks. Solutions that provide the workforce with greater ‘on the go’ options are taking the HR tech space by storm. “Executing key functions without having to return to base is the key driver behind mobility,” says Nick Southcombe, general manager of Frontier Software. Bring Your Own Device (BYOD) is also changing the business landscape, bringing both challenges and opportunities. From a manager’s perspective, being able to execute all the necessary approvals away from the office (such as in an airport lounge) is both liberating and empowering. Talent management will be the next area to go mobile, Southcombe suggests. “We’re already seeing aspects of recruitment, workforce management,
training and performance management appearing on mobile devices. Clearly, the next step is unlocking the value of mobility,” he says.
BIG DATA The recent advent of cloud-based technology has resulted in organisations being able to store and utilise vast amounts of data at a fraction of the cost and manpower required in the past. Technology and data are now part of the day-to-day life of most HR professionals. The trend is leading to structured and unstructured data combining to give deeper insight for HR professionals. At an October conference for HR professionals working in financial services, a panel of three senior HRDs was asked for their thoughts on big data. The consensus was that all business leaders, whether in HR or not, must have analytical capabilities because data on its own is useless. Stephen Barrow, GM people, products and markets at National Australia
2013/14 TECH ADOPTION SOCIAL RECRUITING TOOLS
18% 21% 19% 42%
Currently using No immediate plans to use Planning to use within 12 months Unsure
ENTERPRISE SOCIAL PLATFORMS
23% 17% 6%
Currently using No immediate plans to use Planning to use within 12 months Unsure
54% Source: Navigo’s 3rd Australian HR Technology Report
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Bank, said that HR was “pitiful” in its use of data and he found this surprising as HR typically had huge amounts of data on employees, obtained at various points in the employee life cycle. Tony Fiddes, Westpac’s GM, group people capability, added that HR’s use of big data today was similar to where HR sat with social media a few years ago: at the bottom of a significant learning curve. That learning curve will only get steeper. A new trend is combining big data analytics with psychology, thus allowing employers to uncover new insights into driving workplace performance. “Businesses are generating so much data today, and they are not really tapping into it to understand the workplace as well as they could,” says Dr Peter O’Hanlon, head of analytics at OneTest. The huge roll-out of big data initiatives in the marketing world is an indicator of the success it could have if used internally to examine employee engagement, company culture, and other aspects of the workplace. O’Hanlon cites OneTest’s own move towards using big data and psychology together to gauge how employees like to communicate. By collecting data on the methods of communication used, and then analysing how employees who use them are reacting and how efficient the use is from a psychological standpoint, employers are able to gain greater insights into what works and what doesn’t. Employers may already be using some insights from employee assessments such as psychometric tests, but even this trend has not gone far enough. O’Hanlon acknowledges that whenever an aspect of
JACK OF ALL TRADES, MASTER OF ONE To properly execute big data in HR, four primary skill sets are required: 1. Maths and statistics knowledge 2. IT, database and programming skills 3. Business leadership and understanding 4. Industrial and organisational psychology, organisational design
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INVESTMENT IN HR TECHNOLOGY OVER PAST 12 MONTHS
6% 35%
32%
10% 17%
Performing software upgrades on existing systems Implementing new systems Replacing existing systems Implementing functionality in existing systems Unsure
HR MOBILE SOLUTIONS
15% 23%
5% 57%
Currently using No immediate plans to use Planning to use within 12 months Unsure
Source: Navigo’s 3rd Australian HR Technology Report
the workplace is measured, a “false dichotomy” manifests that pits human understanding against information and data, when really the goal should be to link the two. “Depending on how you use it, you really should be harnessing big data to support your decisionmaking rather than outsourcing your decisionmaking to a black box … we’re not trying to replace the role of an HR professional; it is really making the decision-making more effective by providing them with more knowledge.” O’Hanlon adds that if big data is treated as a purely technical numerical approach, it is likely to fail – whereas analytics works well when focused on business problems and working with people. Some suggest the conversation is moving from big data to ‘big insight’. And with 85% of business leaders saying more data is not leading to better decisions, this can’t come soon enough. “There’s no point in having data unless it addresses an issue,” says Eugene Burke, chief science and analytics officer at CEB’s SHL Talent Measurement Solutions. Burke cites high-potential programs as just one example of where big data can assist. Using data insights it’s possible to know the kind of people with the drive to achieve senior roles in organisations, and the kinds of motivations that need to be in place to turn those motivations into performance.
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2013 ANNUAL REVIEW
GOOGLE’S PROJECT OXYGEN Perhaps the best-known use of HR big data is Google’s Project Oxygen mission to build better managers, which commenced in 2009. Google’s people analytics team analysed data on performance reviews, feedback surveys and nominations for manager awards to come up with eight criteria for effective managers that were ranked in importance and then integrated into training, coaching and performance reviews. The changes resulted in a statistically significant improvement in manager quality for 75% of its worst-performing bosses.
“If you go to the CFO and say – for example – one in seven high performers is likely to succeed in a high-potential program, I don’t think you are going to get the money [to invest in a program for high potentials]. But if you go and say you’ve asked the question, and the question is ‘Will they get there?’, and here is the data that shows what changes the results, then business leaders are going to start listening to you,” he says. With so much data being generated by different systems, Burke believes one of the biggest challenges for the technology part of talent management is how to help organisations integrate data effectively via dashboards for managers. “I think that is going to be a trend that will come up so the managers can get access to the right kind of data,” he says. “In a broader context it’s about developing a more endto-end view of the people in the organisation.”
media and having clear objectives going into a social media-based revamp is vital for extracting the most value from that investment,” says Southcombe. “As the technology develops, the most effective social solutions won’t be stand-alone; they’ll integrate across the spectrum of HR, talent management and workforce management functions.” The reason for HR’s quick adoption is plain to see: developing and executing a people and culture strategy is essentially a social activity, and it touches all parts of the organisation. It’s about working with people, from recruitment and internal communications through to remuneration, staff welfare, engagement and productivity. Harnessing the intrinsically social nature of human beings with new social technologies can potentially transform HR. Automating process-intensive functions – employee surveys, recruitment, staff recognition, information sharing, and personnel functions – has the power to significantly reduce costs, and improve the efficiency and efficacy of these HR activities. Social technologies can also enhance what can be achieved in HR. Imagine being able to monitor staff sentiment in real time rather than via a quarterly opt-in staff survey, says Nathalie Lynton, HR manager at IT solutions firm Ensyst. “How much more useful would it be to be able to respond immediately to any expressions of dissatisfaction or reduction in staff morale? How might this impact staff turnover?” In the traditional area of recruitment and talent management, a survey by McKinsey found that if HR added social capabilities into their processes, there would be a 30% increase in the speed of finding the right expert, and potentially a 10% decrease in the cost of finding that expertise within the organisation.
SOCIAL BUSINESS The social enterprise continues to gain mass. If businesses haven’t already flagged this as a key collaboration enabler, they risk falling behind. There is, however, a need to distinguish between internal and external social media. Internal is the collaboration and communication enabler, while external, from a human capital perspective, includes broadcasting your brand as an employer; recruitment; and maintaining contact with alumni. “Understanding external and internal social
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Organisation-wide collaboration means quicker problem-solving. Whether it’s finding the solution to a client’s technical issue or a problem with the coffee machine, social networks enable problems to be shared and solutions accessed more readily.
MOBILE WORKFORCE Just as you were getting used to the BYOD phenomenon, a new approach has reared its head. Corporate Owned, Personally Enabled (COPE) has been touted as the best of both worlds, blending employee and employer needs more effectively. The acronym was born in February 2012, when Philippe Winthrop, of VeliQ, was prompted to resolve the problem of corporate liability in the mobility equation. His approach involves companies leveraging economies of scale to negotiate good deals on mobile devices, providing employees with a shortlist of devices to choose from, and allowing them some leeway for personal use, while retaining ownership. Ultimately, like BYOD, this is about flexibility. It’s recommends that employers considering COPE should: yy pay for the devices, and their operation yy offer ‘agreed devices’ with controlled network access and security arrangements from anywhere yy ensure employees’ use is managed so that it is ‘appropriate and reasonable’
KEY 2014 TRENDS Nick Southcombe identifies four key tech trends for 2013/14: yy Businesses are investing in new technology and there has been a shift towards human capital management solutions in addition to traditional payroll. yy Large organisations are looking for comprehensive solutions from a single vendor. yy There is an industry-wide transition to outsourced arrangements, from application hosting through SaaS to full business process outsourcing. This not only shows that businesses want scaleability and flexibility, but it also reflects the need to partner with technology leaders that offer an evolving, integrated solution. yy Mobility. Expect a more sophisticated approach to communication and collaboration ‘on the go’. With an agile, globalised workforce, this technology is key to unlocking enterprise intelligence and increasing productivity.
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PRIVACY AND OWNERSHIP A former employee of US-based Verizon Wireless had thousands of her personal emails read by her employer after returning a phone provided to her by the company. The employee failed to clear her passwords from the phone, resulting in her supervisor gaining information regarding her family, health, career and finances. Although it was found the supervisor had acted unlawfully, the same conclusion might not be reached in Australia. “Commonwealth privacy and telecommunications interception legislation would not prevent an employer accessing and reading the personal emails of a former employee stored on a company-owned smartphone,” says Joel Zyngier, senior associate at Holding Redlich. “Such conduct would be unlawful pursuant to the Workplace Surveillance Act, unless the employer had previously warned the employee that the employer might monitor or access the private emails.” Zyngier confirmed that the employer owns the information stored on a company-issued device. This does not include information stored on non-company servers that the smartphone can access. As the legal and moral obligations of the employer when dealing with this situation are complex and difficult to navigate, a robust IT policy that is easily adhered to is all-important.
TOP APPS Here are three of HR Director’s favourite apps from 2013: hhWORKDAY The Workday app is one part of the Workday system, which is an extensive cloud-based HR and financial service. The app provides customers with a sleek layout that allows access to all elements of the broader service – a rarity with mobile apps. hhMYPAYROLL Developed by web application veteran Studio Ziveri SRL, this app provides a thorough and extensive payroll tool that amalgamates all documents necessary in the employee and employer relationship to maximise the productivity of the payroll function. hhKUDOSPOINTS This app can be rolled out among staff, and provides an informal, fun way to provide peer-to-peer recognition through a social network. Running on many mobile platforms, the app allows users to send and receive points for recognition, bringing gamification even further into the workplace.
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CORPORATE WELLBEING / MATURE-AGE WORKERS
AGE SHOULD NOT WEARY THEM Engaging with an older workforce Danni Hocking dispels some myths about mature-age workers and outlines why wellbeing initiatives must be tailored to this everincreasing segment of the workforce With change the only constant in global markets, businesses are facing challenging operating conditions – and Australian companies have not been immune. Many are struggling against the backdrop of a strong dollar, sluggish economic growth and weak consumer sentiment. And while staying profitable in unstable times is a challenge, it’s one companies must face head on if they want to succeed. One key to increasing productivity – and with it, profitability – is attracting and retaining the best people. In fact, recent Best Employers research undertaken by Aon Hewitt, reveals organisations that invest in people, manage them well and contribute to their overall wellbeing, achieve double the revenue growth of other organisations, and 9% more profit per employee.1 It is therefore no surprise that more and more employers are seeking the best ways to invest in their employees and increase their chances of attracting and retaining great people. It sounds simple, but it isn’t always.
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DEMOGRAPHIC REALITY Australia’s workforce is ageing. The retirement age is climbing and in May 2009, the Federal Government announced eligibility for the Age Pension will increase from 65 to 67 by 2023, with the first increase taking effect in 2017. This means more and more Australians are likely to continue in the workforce as they grow older, which presents new challenges for employers seeking to get the best from their employees. Despite some stereotypes to the contrary, an older workforce is not the death knell for productivity. Far from it. Older people are not necessarily less engaged or less productive than their younger counterparts; in some cases, their experience and knowledge leads to greater productivity. Many older employees have more to contribute to workplace profitability than some of their younger colleagues. At the same time, it’s true that age is, in itself, a risk factor for a range of health conditions, particularly chronic conditions such as diabetes, cardiovascular disease, musculoskeletal disorders and even cancer. All of these are conditions that may affect an employee’s ability to perform – or even attend – work. For an employer, that spells a potential negative impact on the bottom line. That’s why it makes good sense for employers to actively address the risk of conditions such as Type II diabetes, which can be dramatically reduced by lifestyle factors such as diet, exercise and smoking status. When it comes to injury and recurrence of injury, the same principle applies. Older workers in manual labouring jobs are more susceptible to injury than younger workers. And the chance of old injuries recurring is also higher. So how should employers achieve this?
TAILORING EMPLOYEE OFFERINGS The simple answer is to implement programs that increase employee health and well-being. The positive effect of health and well-being on productivity is well documented, but what is less well understood is the best way to tailor programs for older employees. For best results, employers need to track not just injury and health concerns, but workforce engagement. High levels of absenteeism and workers’ compensation claims translate directly to high above-salary costs. Knowing exactly what your absenteeism levels are, the reason for the absences and key compensation costs is a vital step
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in getting a clear picture of what potentially unnecessary costs an organisation may be incurring – year in, year out. As one would expect, high levels of absenteeism can indicate low levels of engagement. An analysis by research firm Gallup, for example, revealed that disengaged employees have rates of absenteeism that are 27% higher than their peers.2 And with every sick day costing an employer an average of $385, it’s a measure that needs to be understood. Which brings us back to the question of the ageing workforce. Some health concerns, particularly those due to modifiable lifestyle choices, can significantly increase levels of absenteeism. For anyone, being overweight or obese increases the risk of cardiovascular disease, high blood pressure and Type II diabetes – and it’s a risk that intensifies with age. On the other side of the equation, in some companies it’s common for employees not to take their full leave entitlements. If employees are not taking leave, why not? For those not taking sufficient leave, increased stress can result in ‘burnout’ and, ultimately, affect productivity much more seriously than taking a break and not being at work at all.
WHAT’S YOUR ‘APPETITE FOR ABSENCE’? Employers should ask themselves about their appetite for absence. For example, do you encourage employees to take leave, or do you adopt an (even unspoken) ‘presence equals performance’ mentality, which is always counterproductive in the long run? Are you open to offering employees extra leave, with or without pay? Understanding the answers to these questions will help inform effective absence management programs. Once the information is collated, interventions can be developed to address high-risk areas and mitigate costs. A second step can be to engage a specialist to undertake people risk profiling. This means looking at the investment an organisation makes in its employees, for example in terms of benefits, superannuation, leave policies and other programs designed to engage staff – of every age. It also means looking at the health profile of employees, including health issues likely to increase with age. Doing so makes it much easier for an organisation to articulate expenditure, understand potential people risk areas and develop tailored interventions most likely to reduce their own organisational risk profile. It’s also important to understand that while
DID YOU KNOW? According to the Intergenerational Report, Australia to 2050, the number of traditional working age people to support each retiree is expected to fall from five people today, to 2.7 people in 2049-50. In 1970, there were 7.5 working age people for each person aged over 65 years
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CORPORATE WELLBEING / MATURE-AGE WORKERS
initiatives that focus on creating a health and wellbeing culture can positively affect employee health, it’s important to tailor the programs to the workforce in question.
ALL ABOUT ENGAGEMENT About the author Danni Hocking is principal, people risk solutions, Aon Hewitt
For older employees to embrace health initiatives, they must be realistic and suitable for their age and ability. The same goes for injury management, particularly for blue collar workers. If health and safety and even fitness programs are centred on the job the employee is actually doing, and on avoiding injury specific to that job, the outcomes are likely to be better. Other successful initiatives aimed at increasing the engagement of older workers centre around changing negative stereotypes. Programs that encourage the integration of the different generations can overcome these: older people can be encouraged to work as mentors for younger ones, and vice versa.
Of course, older employees do retire, and managing that transition has its challenges as well. For employees whose sense of self-worth and usefulness is tied into their job, career transition and retirement can be very difficult emotionally. Holistic plans that involve families can help make the process run more smoothly. Ultimately, employers should have nothing to fear from an ageing workforce. There is no evidence that older employees have less to offer, or are less productive than younger ones. However, the reality is certain health and well-being concerns do increase with age, so finding ways to manage these appropriately is critical. The good news? Employers that embrace appropriate well-being programs will feel the benefits. Aon Hewitt (2012), Aon Hewitt Best Employers in ANZ study J Robison (2011), The Business case for wellbeing. Gallup Business Journal website http://businessjournal.gallup.com/content/139373/ business-case-wellbeing.aspx 1
2
A RETURN ON WELLBEING INVESTMENT
A health risk management strategy is a holistic approach towards health management of employees, which ensures all health and wellness measures provided by the employer work together effectively to aid any employee at any health status, with any health issue. Employees will fall somewhere on the health spectrum below:
Well
At risk
Illness
Disability
Integration of all health and wellness measures A health risk management strategy allows companies to: xx understand the health risk profile of their employee population xx identify what risk factors exist within their employees xx develop a plan to address these factors and promote wellness and healthy behaviours When developing a strategy, employers should ensure there is an articulated benefits philosophy in place. This helps develop a holistic vision with measurable objectives. It also helps to ensure the health and benefit plan initiatives are aligned with HR and organisational strategies. Some best practice guiding principles to keep in mind when developing a health risk management strategy are: MANAGE CLAIMS In general, in mature insurance markets, insurers set premiums for coverage according to expected claims plus administrative expenses. For medium- and large-sized groups, past claims
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experience is the best indicator of future claims experience and hence, all other things being equal, the higher your claims, the higher your premium. In Australia, insurance premiums are set based on claims experience. Products such as group life and salary insurance are expected to stand on their own financially, which means the insurer expects a loss ratio of well below 100%. As a HR leader, do you understand the loss ratio for each of your insurance policies? MANAGE THE FULL HEALTH CARE SPECTRUM Employees will each fall somewhere along a spectrum within your organisation’s population: you will have employees who are well, at risk (due, for example, to lifestyle practices or family history), ill or disabled/unable to work. Providing each of them with support to keep them as well as possible will reduce future costs. For example, an employee who smokes could be at risk of developing heart disease or lung cancer as a result. As a proactive measure, their employer may want to consider helping them improve their health through education and personalised coaching. FOCUS ON CHANGING EMPLOYEE BEHAVIOUR All good risk management plans contain strategies to eliminate and manage risks. Managing the risks within your employee benefits plans is no different. Understanding the health risks of your employees, and managing these risks through datadriven initiatives and personalised support that focuses on changing behaviour, can have a long-term impact on insurance premium costs.
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EXPERT INSIGHT / TECHNOLOGY
All about the message HR is getting sharper at shaping the external messages put out by their company, but what’s happening in-house? EmployeeConnect outlines the benefits of internal communications through integrated workflow According to the Workflow Management Coalition, workflow represents “the automation of a business process, in whole or part, during which documents, information or tasks are passed from one participant to another for action, according to a set of procedural rules”. Workflow technology typically achieves this by enforcing separation between: • the definition of the various activities within the business and their data requirements • the business rules governing the flow of control between activities within the process • the roles and responsibilities associated with the work undertaken within the process activities • an underlying organisational model, which relates roles and responsibilities to the actual work performers Internal communication is the underlying substance that any integrated workflow fundamentally boils down to. It plays a vital role in the success of any organisation. Good internal communication involves regular and effective two-way communication with all members of staff at all levels and is a critical success factor that should be at the helm of any organisation. It not only leads to increased morale and staff engagement but also has a knockon effect on the performance of employees and, in turn, on the reputation of the organisation and usually the service it’s providing. It is no surprise that crucial factors in enabling engagement are strong leadership from the top that shows employees how their job fits within the company vision and strategy, and competent management that provides clarity and support and also contributes to a culture in which employees can see that the organisation lives its values. Good internal communication should also be as much about listening to people as disseminating information. Therefore monitoring, evaluating and making changes accordingly must be an integral part of any communication system. Here are the five best practices for establishing effective internal communication:
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1 Take internal communication seriously.
Communicate to your internal audience with the same zeal, care and creativity as you do your external audiences. Your internal communication department should include expert communicators who understand the corporate vision and can create and deliver messaging in a compelling way. The head of this department needs frequent access to the lead communications executive or CEO.
2 Be consistent.
Every communication vehicle available to your business must be used to communicate the same consistent messaging with frequency. Your internal communication experts will create messaging based on the corporate vision and disseminate it frequently and consistently across all available platforms: intranet, newsletters, emails, voicemails, videos, facilities signage, employee meetings, etc.
3 Align communication with the brand.
If your internal communication is not effective, and you’re doing everything else right, it may be because your employees are living one brand while you’re trying to communicate another. Make sure what you’re communicating to employees fits the reality of what it’s like to work in, or be a customer of, your company.
ample mechanisms for feedback 4 Provide and two-way communication.
This is one of my client’s biggest priorities. They believe their communication is consistent, frequent, and reflective of the brand, but their culture and communication vehicles have not provided adequately for feedback. As a result, we’re implementing a robust two-way communication program that will help this client have a better understanding of the employee base.
5 Measure.
As with any communication strategy, measurement is key. The easiest and most cost-effective way to measure an internal program is to simply survey employees before and after communication, to determine if key messages have been heard and understood.
Further information For additional information on this or any other HR tech issue, visit employeeconnect.com or phone 02 8288 8028.
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BUSINESS STRATEGY / GLOCALISATION
Act locally,
think globally
Glocalisation calls for HR executives to mix both global and local initiatives. When executed correctly, the benefits can flow evenly between local subsidiaries and the corporate headquarters based overseas. Andreas Raharso outlines how to make it work In spite of the global recession following the 2008 financial crisis, globalisation continues at a steady pace. Some would argue the primary driver of globalisation today is multinational corporations (MNCs), but Australian firms are also aiming to compete on the global stage as indicated by the country’s increasing levels of outward foreign direct investments (see fig.1).
AUSTRALIAN OUTWARD FOREIGN DIRECT INVESTMENTS (FDI) IN US DOLLARS 30 25
$US26bn
20 15 10
ORGANISATIONAL CULTURE AND GLOCALISATION
$US11bn
5 0
2004
2010
Figure 1 – Australia’s Outward FDI jumped by 141% in just six years, an indication of Australian firms’ increasing expansion into overseas markets
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As more Australian companies set up local or regional offices in emerging and culturally diverse markets, HR professionals are being tasked with implementing sustainable human resource management (HRM) practices that are sensitive to local needs. HR departments traditionally rely on tools such as rewards or training to align employee behaviour with organisational goals. However, while these tools alone may be quite effective on home turf, there is also a need to align and ‘glocalise’ – a portmanteau that combines ‘global’ and ‘local’ – these initiatives when it comes to foreign subsidiaries. Furthermore, simply targeting behavioural change, especially in a place with a vastly different culture, is not likely to produce lasting change, even if it is succeeds initially.
Implementing a new HR directive from HQ is essentially an exercise in changing behaviour. However, attempting to induce behavioural change directly is ineffective and does not have any longlasting impact. Such an approach does not address
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the underlying drivers of behaviour and, eventually, people will simply revert to old and familiar ways. This is because the impetus to change does not reach the deeper layers of culture, which is comprised of the shared purpose and meaning within the group, as well as individuals’ underlying values and beliefs (see fig.2).
THE CHALLENGE OF CULTURE CHANGE Structures Management Systems and Symbols Organisational Behaviour and Norms
Underlying Beliefs and Values Shared Purpose and Meaning
Easily Observable Deep characteristics that lead to transformation and longer-term success
Source: Culture Transformation Report: Sustaining Culture Change. Hay Group 2012
Figure 2 - The highly visible aspects of culture is the tip of the iceberg; deeper drivers of change are not easily observable but have the power to change behaviour permanently.
The key to reaching these deeper layers of culture is to first understand that culture goes beyond the most obvious facets of the day-to-day workings of organisations, and are instead embodied by structures, management systems and symbols, and organisational norms. According to Hay Group’s model of organisational culture, culture is defined as: “The combination of organisational inspiration and purpose, motives and beliefs of individuals, and the norms and patterns of interaction of groups that drive both leaders’ and employees’ behaviours and results.” In other words, culture is the fabric that provides meaning and, in the absence of clear directives, guidance for people in the course of their work. This means in the ideal multinational corporation, local and regional operations can be relied upon to act on their own initiative while still sharing a common fabric of meaning with the larger organisation. But how do you go about implementing HR directives that originate from HQ in a local or regional office that may have very different cultures and norms? A potential solution lies in the adaptive process of ‘glocalisation’, which as the portmanteau suggests, calls for HR executives to think both globally and locally.
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MIXING GLOBAL AND LOCAL To think globally, the question HR executives must ask is, ‘What is the ‘personality’ of my organisation as a whole?’ Many senior executives struggle to answer this, but clearly defining this personality – the set of values and beliefs that guide how employees think and act on the job – will impact the way the organisation works. This ‘personality’ of an organisation is central to the organisation’s global culture and is a key factor in not only achieving a company’s goals, but also in attracting and retaining the best employees, creating a positive public persona, and strengthening stakeholder relationships. Thinking locally, on the other hand, involves a commitment to understanding local cultural differences, especially those that underpin the business climate of the host country. Here, the question to ask is, ‘What factors make this particular area unique when it comes to conducting business?’ An external subsidiary of the MNC, staffed with mostly local employees, cannot be assumed to reflect the corporate culture of HQ in its entirety. Besides the socio-cultural differences that may exist, the lack of direct supervision from HQ means the local or regional office may have developed their own routines and working styles. A locallysensitive approach to implementing HQ’s initiatives requires the HR team to recognise elements of local culture compelling enough to demand some level of accommodation. When recognising the need for balance between the global and the local, there may be a temptation to see glocalisation as a continuum between a state of global consistency, under which universallystandardised policies are implemented as-is locally, and a state of local responsiveness, under which fully locally-tailored policies are developed. However, as we delve into the pre-planning stage of the glocalisation process, we will see the two states should not be treated as part of a continuum.
Simply targeting behavioural change, especially in a place with a vastly different culture, is not likely to produce lasting change even if it succeeds initially DECEMBER 2013 | 45
BUSINESS STRATEGY / GLOCALISATION
CASE STUDY: PHILIP-MORRIS American tobacco company Philip-Morris’ mission is to “develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products”. After buying out Indonesian cigarette maker Sampoerna, Philip-Morris opted to accommodate its subsidiary’s unique practices – Sampoerna’s traditional belief in the power of the number nine was upheld and important meetings were held only on the ninth, 18th or 27th days of the month. Instead of mechanising the production process, Philip-Morris also maintained Sampoerna’s traditional method of hand-rolling cigarettes, which safeguarded the jobs of approximately 30,000 employees. Sampoerna’s practices must have been deemed compatible with Philip-Morris’ mission and thus approved, and this decision allowed Philip-Morris to break into the lucrative Indonesian market without compromising its own identity or risking crosscultural conflict and jeopardising local performance.
GETTING STARTED As a first step, it is crucial to start thinking about what makes your company what it is – the ‘personality’ of the organisation mentioned earlier. This should be treated as a non-negiotable aspect of organisational culture. For example, a company that places a high value on individual merit in its management philosophy cannot, without creating an internal rift in its culture, start treating personal relationships as the primary determinant of career progression simply because it faces pressure to accommodate local customs. The organisation’s ‘personality’ is an important consideration in the attempt to adapt global HR directives to local situations. However, the
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organisation’s overarching goals, as well as the purpose or intention behind any new initiative to be implemented, must also be considered. Near or at the beginning of the glocalisation process, HR executives must ask themselves: as long as an initiative stays faithful to its purpose or to the goals of the organisation as a whole, how can this initiative from HQ be tailored to fit local norms? The key to effective glocalisation, therefore, is not to approach global consistency and local responsiveness as a simple continuum along which one is pursued at a cost to the other. Rather, there are certain issues that call for strict global consistency, namely the organisation’s meaning and purpose and the ‘why’ behind any new initiative. The ‘how’ of implementation can be orientated towards local responsiveness.
COMING UP WITH THE PLAN Having a proper understanding of how to start glocalising is more than half the battle won. Of course, in order to clinch victory one needs to move into the planning and execution stages. This is where we will not find a one-size-fits-all solution; any in-depth discussion will need to be driven by the particulars of each case and host country, which will vary wildly. A framework comparing the global and local cultures can be useful to HR executives at this stage of the glocalisation process. Hofstede’s cultural dimensions theory is one systematic framework for assessing and differentiating national and organisational cultures. By describing the effects of a society’s culture on its members’ values and how this relates to behaviour, HR executives can classify a region’s cultural values into scaled dimensions that facilitate comparisons with other cultures.
STOCKMANN’S ESTONIAN EXPERIENCE The case of Finnish retail trade company Stockmann setting up its first department store in Estonia is an example of how standardised HR policies can be strengthened by tailoring them around the local culture1. When the Estonian outfit was first established in 1993, performance management policies in the company were initially standardised across all geographical units. But within a few months of operations, HQ identified challenges arising from local cultural differences, especially in the area of personnel development. For the Finnish HQ, customer satisfaction was the central objective (ie the ‘personality’ of the
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organisation) in all its areas of business. One Finnish HR executive notes when the company expanded into Russia four years earlier in 1989, the company had no issues with customer service as “Russians are open and go more easily and naturally to customers”. But in Estonia, the biggest challenge was to develop customer service skills. The same executive commented, “Customer service isn’t characteristic of Estonians. Estonians are a bit withdrawn, a bit passive, they don’t start talking whatever with a stranger.” To remedy this and ensure HQ’s mandate of customer service was maintained, a local training firm was brought in to emphasise the training of customer service skills for Estonian employees. To further inculcate customer service in staff, competitions between departments were held and good sellers given bonuses.
The organisation’s ‘personality’ is an important consideration in the attempt to adapt global HR directives to local situations The influence of Estonia’s reticent culture on the organisation’s personnel development program can be explained by Hofstede’s cultural dimensions, specifically the Uncertainty Avoidance Index (UAI). The UAI measures the way a society deals with the fact that the future is unknown – ambiguity brings with it anxiety, and different cultures have learnt to deal with this anxiety in different ways. Estonia’s high UAI score of 602 means locals have a high preference for avoiding uncertainty, and may also tend to be suspicious towards strangers. Therefore, from a socio-cultural perspective, Hofstede’s framework allows us to understand why Estonian employees are passive and do not actively approach customers. In the end, the Finnish company’s basic training and development practices for employees were the same in both the home and host countries, but staff
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development programs in Estonia were localised to address the lack of customer service stemming from the reticent local culture present in the country. While the Finnish firm’s central objective of customer service was non-negotiable across all of its geographic units, the performance management and training systems in Estonia were negotiable, and moulded to realise this central objective.
SUSTAINABLE GLOCALISED STRATEGIES Once a modification to HR policy has been determined to be in the best interests of local employees, the plans for glocalisation must be communicated back to global HQ for approval. Although HR executives may introduce modifications, it is ultimately crucial HQ finds the glocalised form of the initiative compatible with the larger organisation’s aims. Otherwise, the global aspect of the effort would be nullified. Emphasising the ‘win-win’ nature of the effort will go a long way in convincing HQ to give its approval to the plan and ensure glocalisation efforts are supported over the long term. Case adapted from: Ervasti Mia and Vesa Suutari Journal for East European Management Studies Vol. 9, No. 4 (2004), pp. 345-366 2 Esotnia – Geert Hofstede: http://geert-hofstede.com/estonia.html 1
About the authors Dr Andreas Raharso is director, Global R&D Centre for Strategy Execution at Hay Group. Contributing author Senthil Sukumar, is a research and content strategist, and Moses Lemuel is an applied research analyst at Hay Group.
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HR STRATEGY / GLOBAL IR
GREEN SHOOTS OF OPTIMISM The Global Accord on Workplace Safety
It’s taken a disaster of the magnitude of the Rana Plaza collapse for the push for multinational corporations to negotiate and apply ‘global’ workplace standards across their supply chains to gain momentum. What does the Bangladesh Accord mean for global business operations?
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HUMAN RESOURCES DIRECTOR
On 24 April 2013, Rana Plaza, an eight-storey commercial building, collapsed in Savar, a subdistrict of the Greater Dhaka Area of Bangladesh. A tragedy that killed 1,129 people and injured nearly 3,000, the event represented the worst factory accident in history, as well as the deadliest accidental structural failure in modern times. However, green shoots of optimism have since sprouted from this dreadful event. The Rana Plaza incident focused international attention on working conditions and workplace safety in the developing world, and the disaster may contribute to significant developments in the spheres of both corporate social responsibility and global industrial relations.
ACCORD ON FIRE AND BUILDING SAFETY Since April 2013, more than 80 international fashion companies with interests in Bangladesh have signed the Accord on Fire and Building Safety, an international agreement structured to address workplace safety standards in Bangladesh’s ‘Ready Made’ garment industry. Prime movers behind the Bangladesh Accord are the UNI Global Union and IndustriALL, two large trade union federations. For some time, these groups have pushed for multinational corporations to negotiate and apply ‘global’ workplace standards across their supply chains; but it is only in the wake of the Rana Plaza incident that their campaigning efforts have borne fruit. In certain respects, the Bangladesh Accord evokes the spirit of previous international concords, such as the International Framework Agreement (IFA); however, the provisions contained within the Bangladesh Accord go further, and will impact significantly on the ways in which global companies interact with local and international trade unions. In mid-July 2013, signatories to the Accord released an Implementation Plan, detailing how the Accord would operate in practice. Considered together, these developments signal major changes in how companies deal with workplace issues within their global supply chains and how they engage with workers’ representatives across the chain.
HCAMAG.COM
The Rana Plaza incident focused international attention on working conditions and workplace safety in the developing world KEY FEATURES The Bangladesh Accord obliges signatories to take significant steps to implement, maintain and ensure safety standards within overseas workplaces to ensure adherence to internationally acceptable workplace safety standards. In order to achieve these goals, the Accord sets out a keen regimen of workplace inspections, reporting, remediation and training. From an IR perspective, the Accord has several features that are particularly notable: zz It is a legally enforceable agreement between companies and global union federations (GUFs) in respect of workplace standards in those companies’ global supply chains. zz It incorporates a strong legal adjudication mechanism in respect of disputes over the interpretation and application of the agreement. More specifically, the Accord provides that disputes will be arbitrated in accordance with UNCITRAL Arbitration Rules. Arbitration awards made under the UNCITRAL arbitration procedure can be upheld and enforced by domestic courts, both in Europe and North America. zz It explicitly states that the workplace standards that must be adhered to include “internationally recognised workplace safety standards”.
THE IMPLEMENTATION PLAN In July of this year, parties to the Bangladesh Accord finalised their Implementation Plan. Perhaps the most noteworthy feature was the formal, multilevel governmental structure that will manage the implementation of the Accord. It will exhibit the following key features.
DECEMBER 2013 | 49
HR STRATEGY / GLOBAL IR
FOUNDATION The Accord establishes two primary offices: a bureau in the Netherlands will manage the affairs of the Accord and its relationships with international and local stakeholders. A second office in Dhaka, Bangladesh, will be responsible for managing on-the-ground operations (eg factory inspections).
STEERING COMMITTEE The Accord also establishes the Steering Committee as its executive branch. The Steering Committee held its first meeting at the International Labour Conference on 28 June 2013, and is scheduled to meet at least quarterly from now on.
ADVISORY BOARD The Accord finally established the Advisory Board as the primary platform for stakeholder input into the Steering Committee. Meeting at least quarterly, the Board will be chaired by an International Labour Organisation representative and is composed of representatives appointed by groups such as the Bangladeshi Government, the Bangladesh Garment Manufacturers and Exporters Association, the Bangladesh Knitwear Manufacturers and Exporters Association, affected brands, retailers, and suppliers, Bangladeshi trade unions and international NGOs.
FINANCIAL RESPONSIBILITIES
About the authors Manishi Pathak is a senior partner in the corporate practice of Kochhar & Co, Ius Laboris’ Indian member firm. Brian Burkett, Douglas Gilbert and Christopher Pigott are senior partners at Ford Harrison, Ius Laboris’ US member firm. Ius Laboris is a leading global alliance of employment, labour and pension law firms. It provides companies employing an international workforce with first-class legal advice and support on all HR issues. For further information, visit iuslaboris.com or email exdi@iuslaboris.com.
50 | DECEMBER 2013
The Implementation Plan also states that signatories will be responsible not only for funding the administration of the Accord but also any necessary safety improvements identified by the inspection process provisions. In the “safety improvements” category, the Implementation Plan articulates that signatory companies will be responsible for “ensuring that sufficient funds are available to pay for renovations and other safety improvements, as directed by the Chief Safety Inspector”. Notably, this financial obligation is not clearly provided for in the Accord itself; it is explained in brief in the Implementation Plan. Also, the Implementation Plan does not provide significant detail as to how signatories are expected to fund these safety improvements, beyond stating that these funds can be generated through “negotiated commercial terms, joint investment, direct payment for improvements, government and other donor support, or any combination of these mechanisms”. It remains far too early to assess the efficacy of the Accord. However, it is possible to make a few preliminary comments regarding the agreement’s
place in the broader landscape of global industrial relations. The fact that the Accord is subject to a strong binding arbitration mechanism is notable, and it is likely to be the first IFA or other global agreement between companies and GUFs that includes a binding arbitration mechanism of this nature. As a result, the Accord may play a role in developing, for the first time, a legal foundation for the relationship and interaction between companies and GUFs within the context of global supply chain management.
GLOBAL IR IMPLICATIONS The governance structure envisioned in the Implementation Plan appears to be well resourced, well staffed and governed by fairly detailed regulations and operational principles. Furthermore, it contemplates a full-time administrative capacity that exists separately from either GUFs or signatories, and has a mandate to interact directly with governments, international organisations and other relevant parties. These features suggest that, in practice, the Accord may be ‘operationalised’ in a far more robust manner than previous, similar arrangements. It is also clear that the Accord will place financial obligations, both direct and broad, on signatories regarding problems that arise in supplieradministered facilities. However, the Implementation Plan also gives signatories wide discretion as to how they should meet their obligations. Clearly, the practical extent of such a financial responsibility will depend primarily on how they choose to manage their relationships with suppliers, governments, and fellow signatories, in light of the Accord’s objectives and requirements. Finally, it is important to highlight that UNI and IndustriALL are trumpeting the Accord as a “historic” development in global labour relations. Looking ahead, it appears likely that they will seek to export features of the Bangladesh Accord to other elements of their international labour strategy. For example, it seems likely that both GUFs will seek to establish far more robust mechanisms to monitor and implement the commitments established by the IFA. More generally, it is virtually certain that they will seek to apply the ‘lessons learned’ from the Bangladesh experience to their broader labour strategy. The Accord may represent a new blueprint for how global companies interact with GUFs and trade unions within the global labour dimension.
HCAMAG.COM
ADVERTORIAL / REST SUPER
Changes to super: Challenges and opportunities for the future Damian Hill, CEO, REST Industry Super, outlines what’s in store for super under a new government
The new government has a significant challenge ahead in looking at the retirement income policy. It needs to look at how the superannuation system can be adjusted to accommodate the ageing population and ensure there are enough incentives for people to save adequately for their retirement. We agree with the Coalition’s view that people need certainty and stability in superannuation policies so they can plan their future retirement with confidence. We are heartened to hear the Coalition feels the same way and pledges not to make any unexpected detrimental changes to superannuation in the near term. Coalition superannuation policies may have implications for HR professionals so it’s important to be aware of what the government has in store for the future of superannuation.
PENALTIES FOR EXCEEDING CONTRIBUTIONS CAPS
So far, the Coalition has committed to implementing lower penalties for genuine mistakes being made that result in exceeding contribution caps. An increasing number of Australians have been confronted with large tax penalties because of genuine, unintentional errors resulting in their voluntary contributions exceeding their concessional or nonconcessional caps. This can be simply as a result of the timing of payroll payments. The new government also intends to revisit incentives such as the co-contribution scheme and will look at possibly increasing eligibility thresholds. However, this will only occur once the Budget is in a ‘strong’ position, so it may not occur in its first term of government.
THE IMPACT OF DELAYING INCREASES IN THE SUPERANNUATION GUARANTEE
The Coalition has committed to increasing the Superannuation Guarantee (SG) to 12%,
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The Coalition has committed to increasing the Superannuation Guarantee to 12%, but intends to delay the increase by two years but intends to delay the increase by two years. This means that the SG rate will remain at 9.25% until June 2016, eventually increasing to 12% from July 2021. However, the delay has not yet been introduced. While it sounds like good news for employers, it may dampen people’s ability to live more comfortably in the long term. That being said, Australia’s retirement system is already among the best in the world* so with our SG at 12%, we will be even stronger.
THE IMPACT OF SCRAPPING THE LOWER INCOME SUPERANNUATION CONTRIBUTION SCHEME
The Coalition has said that the Lower Income Superannuation Contribution (LISC) scheme, which effectively delivers a refund of contributions tax to low-income earners, will be removed. These changes will affect workers who are most at risk of retiring with less super, particularly women and low-income workers, many of whom are employed in the retail industry. This scheme is a well-targeted policy that is about ensuring individuals on low incomes are not penalised financially by the super tax system. So, withdrawing this policy is a real concern. The incremental rise in the SG and the LISC scheme were crucial tools in helping Australian workers prepare for retirement and build a nest egg. Delaying or getting rid of these schemes will reduce the ability of
Australians to independently fund their own retirement.
SUPERANNUATION CONTRIBUTIONS FOR PAID PARENTAL LEAVE – WHO PAYS?
REST fully supports the concept of superannuation being paid as part of any proposed parental leave scheme. However, we are concerned about where the funding will come from to support this policy; pre-election news indicated a 1.5% levy on companies to fund this scheme. Nothing is confirmed yet, but we will work as closely with the relevant government bodies as possible.
THE NEED FOR A LONG-TERM HOLISTIC VIEW
If there must be changes, there should be a full review and structured debate to make super policies less confusing and build confidence in the system. We encourage the current government to take a holistic view of super and avoid using it for short-term gains. REST is one of Australia’s largest superannuation funds by membership, with 1.9 million members and around $27b# in funds under management. Consider whether REST is appropriate to your objectives, financial situation and needs. Please read our Product Disclosure Statement (available at rest.com.au or by calling 1300 300 778). REST Industry Super is the Retail Employees Superannuation Trust ABN 62 653 671 394, issued by Retail Employees Superannuation Pty Ltd, AFSL 240003. *Melbourne Mercer Global Pension Index, dated 15 October 2012 # Current as at 28 May 2013
DECEMBER 2013 | 51
PROFILE / KELLY HARTMAN
“When people think of ‘HR’, we’re often viewed as blockers and not there to help people at all. I’d like to change how [HR is] viewed”
FIVE MINUTES WITH…
KELLY HARTMAN, SEEK From global talent management at investment banking firms to fashion shows at not-for-profits, Kelly Hartman, senior HR manager at SEEK, has a richly diverse work history. She spends five minutes with Cameron Edmond
52 | DECEMBER 2013
HCAMAG.COM
HUMAN RESOURCES DIRECTOR
HRD: How did you enter the HR profession? Kelly Hartman: I was at university studying psychology. I used to spend time in the career office just wondering what kind of careers were there for people with my degree. Then all the big organisations like BHP came in and did talks. I was offered a two-week stint doing statistics at Ansett Airlines, looking at organisational surveys and cultural surveys. I put together a 50-page report recommending what they should do with their culture, and they were impressed – they couldn’t believe how much people opened up to me. So I was flown around Australia doing this with all the reservation sales agents. I then stayed on as a consultant to help with training and development. After that, I applied for a graduate program at BHP. I didn’t get into the graduate program but while I was in the lift I was joking with one of the guys and it ended up being the head of HR. He remembered me and called me two weeks later to offer me a job. You just create your luck!
HRD: You undertook an NAB-sponsored secondment as a project manager at not-for-profit Reach Foundation. How did it differ from your usual work? KH: I was a ‘dream-catcher manager’ and that meant looking after a program to help young people realise their potential by using corporates to help, as well as running career training. I also worked with young people who usually came from foster homes; some were disadvantaged. I ran hip-hop camps and organised big events. A lot of the girls wanted to be models so we did a pirate fashion show where a lot of the girls were coached by professional models. While working there I helped bring in millions of dollars of in-kind donations, and did a lot of coaching for people who didn’t have the money for it. The principles of the work with Reach and my regular work are very similar; a lot of what we do is give people the confidence to follow their career path and their dreams.
lot of recruitment and bringing in the best talent. Our recruitment process is special. We have five or six interviews because we want to get the best people for the job; we also want to make sure it is right for the individual. It’s not uncommon for part of the interview process to include a coffee with their potential team. At every job I interviewed for, people said I should work at SEEK, which is funny as I had always used SEEK to find jobs, but never actually thought about working there. So I contacted the HR director, and five interviews later and within two weeks I had the job. They almost created a role for me, which was amazing.
HRD: What was your biggest career challenge to date? KH: The challenge currently at SEEK is bringing the best talent into our organisation – the technical expertise which we demand is rare, and then combining it with the importance we place on cultural fit serves as a challenge. It can be hard to get that blend of technical and culture mix. Also at NAB when we centralised the whole finance unit, which was a big challenge, but that is also my biggest achievement.
HRD: What’s the best bit of advice you’ve received? KH: My dad used to say, “If that’s the worst thing that has happened to you, then life isn’t that bad”. Think about the things that have happened to you and use that as an opportunity, not a negative.
HRD: The thing I love most about HR is... KH: Being able to help people and help businesses grow.
HRD: The thing I dislike about HR... KH: When people think ‘HR’, we’re often viewed as blockers and not there to help people at all. I’d like to change how the HR industry and the professionals in it are viewed.
HRD: Tell us about your current work at SEEK. KH: What I love about SEEK is that every time
HRD: When you’re not working, what do you like to do? KH: I love photography. I’ve had my own
you walk in you feel alive. Everyone is friendly; people actually care. You can wear what you want and you can be yourself. My role involves a lot of leadership training, a
exhibitions, and people say I should be a photographer. I love theatre and I’ve been acting for 10 years. I love keeping fit, and I go to the gym twice a day.
HCAMAG.COM
KELLY HARTMAN CAREER TIMELINE Qualifications ● Bachelor of Arts
– Psychology Major Monash University, Australia
1999–2005 ● National Australia Bank
Various roles including global performance and talent adviser, people and culture; and people and culture business partner, group technology – Leading the delivery of HR activities, centring on middle and senior management levels
2005–2008 ● Reach Foundation
Program manager (secondment position funded by NAB) The Reach Foundation works with young people, no matter what their background or current circumstances, to develop their capacity for self-belief. Reach is a non-profit, non-denominational organisation that raises funds for its activities through dedicated sponsors, committees and events
2008-2013
● Deutsche Bank
Various roles including global head of communications and business support, enterprise services, UK, Australia and Asia – Developing and implementing communications strategy for enterprise services in the UK and APAC region
Current ● SEEK
Senior HR manager IT, strategy and finance – Focusing on senior recruitment, leadership training and facilitation, cultural change, team building and talent management
DECEMBER 2013 | 53
SALARY WATCH
Finance & accounting salary and job trends Role
HOT
Hays
Michael Page
Robert Walters
Chief financial officer
-
$280,000+
$250,000+
$265,000+
Financial controller
-
$180,000+
$225,000
$203,000+
$165,000
$160,000+
$190,000
$163,000
Finance manager
$145,000
$160,000+
$165,000
$157,000
Audit manager
$140,000
$120,000
$140,000
$134,000
Tax manager
$130,000
$140,000
$135,000+
$135,000
Company/corporate/group accountant
$120,000
$130,000
$120,000
$123,000
Financial accountant
$100,000
$95,000
$110,000
$102,000
Management accountant
$105,000
$95,000
$108,000
$103,000
Treasury accountant
$105,000
$85,000
$110,000
$100,000
Commercial/planning manager
HOT
HOT
HRD medium
Payroll manager
-
$110,000
$115,000
$113,000
Credit manager
-
$140,000
$100,000
$120,000
Business/financial/commercial analyst
$105,000
$115,000
$105,000
$108,000
Systems accountant
$100,000
$110,000
$105,000
$102,000
-
$85,000
$100,000
$93,000
$90,000
$85,000
$85,000
$87,000
-
$115,000
$83,000
$99,000
$70,000
$68,000
$68,000
$69,000
-
$60,000
$68,000
$64,000
Bookkeeper
$75,000
-
$70,000
$73,000
Accounts receivable
$50,000
$63,000
$55,000
$56,000
Assistant accountant
$55,000
$60,000
$58,000
$58,000
Tax accountant Auditor Cost accountant Payroll officer Assistant accountant
Credit controller
$60,000
$63,000
$58,000
$61,000
Financial systems manager
$120,000
$125,000
-
$123,000
Treasury manager
$150,000
$140,000
-
$145,000
Head of tax/tax director
$200,000
$180,000+
-
$190,000
Accounts payable officer
$55,000
$60,000
-
$57,000
Manager accounts payable
$80,000
$95,000
-
$88,000
Hays: Salaries are based on Sydney roles, exclude superannuation and are based on a median of a lower and upper range Robert Walters: Figures are for Sydney permanent roles, taken from the median of a lower and upper range and inclusive of superannuation but exclusive of benefits/bonuses; + refers to an undetermined amount above Michael Page: Figures are a median of an upper and lower range and based on 5–7 years’ total experience in the stated role. Figures are for NSW and are inclusive of superannuation but exclusive of bonus/incentive schemes
54 | DECEMBER 2013
HCAMAG.COM
HUMAN RESOURCES DIRECTOR
IT SALARY INCREASES OVER THE NEXT 12 MONTHS
KEY TRENDS
All my employees will receive the same percentage increase
17%
Commercial management accountants, financial controllers and financial planning/ analysis professionals will remain in high demand over the next 12 months There is no shortage of domestic financial professionals and candidates, meaning it is uncommon for employers to sponsor foreign workers, with 65% of employers stating they do not plan to hire staff on 457 visas in the next 12 months Many senior professionals are returning from overseas markets due to uncertain economic conditions abroad. Expatriate contracts are coming to an end, with fewer opportunities overseas SMEs are the strongest in offering permanent opportunities – lean structures that were adopted during the GFC are becoming unsuitable for growing businesses Larger organisations have maintained leaner structures than in pre-GFC years
All my employees will receive an increase, but will vary according to performance
59% Only my best-performing employees will receive an increase
17% No one in my team will receive an increase
7% AVERAGE FINANCE & ACCOUNTING SALARY INCREASES
0-2%
22%
3-5%
75%
6-8%
2%
9-11%
1%
BASIS FOR FINANCE & ACCOUNTING BONUSES OVER THE NEXT 12 MONTHS Individual performance
MOST POPULAR BENEFITS OFFERED TO FINANCE & ACCOUNTING EMPLOYEES
22% Company performance
19% Team performance
3% Other
55%
72%
14% Combination of all
Car park
Mobile phone
41%
43%
Company car
Laptop
24%
Higher superannuation contribution
42% AVERAGE FINANCE & ACCOUNTING BONUS AS % OF GROSS SALARY
1-5%
50%
6-10%
33%
11-15%
10%
16-20%
4%
21-30%
1%
31-40%
1%
above 40%
1% Source: Michael Page Salary & Employment Forecast, Australia 2013/14
HCAMAG.COM
DECEMBER 2013 | 55
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NOVEMBER 2013 | 53
Published on Dec 9, 2013
The magazine for people who manage people.
Published on Dec 9, 2013
The magazine for people who manage people.