human capital
HC issue 7.11
Teambuilder:
Profile:
Doltone House
Salary packaging Still viable? Exit interviews Why they matter
Who’s the best? The Top HR Service Providers revealed As voted by you
How to beat stress and build your emotional capital
EDITORIAL 2010 forecast: Caution expected, with a chance of optimism
N
ot to end the year on a negative note, but a recent news article in The Sydney Morning Herald deserves a mention in this issue of Human Capital. The article reported the suicide of a France Telecom employee – the 25th staff member to take their own life during the preceding 20 months. Many of the employees left notes blaming management decisions or stress at work. Since February 2008, France Telecom – a former state monopoly – had been undergoing massive restructuring. While this is an extreme and tragic case, negative emotions can sometimes get the better of all of us. Fortunately, this month’s feature on building personal reserves of emotional capital proves that it’s not just negative emotions that can become entrenched with regular use – optimism too can become a habit. As psychologist Martyn Newman suggests, people with high levels of emotional capital are not only more resilient but are generally more productive, more creative, solve problems better and more quickly, live longer and enjoy high levels of leadership influence. In other words, when people feel better, they perform better – and that’s good for everyone. Indeed, optimism seemed to be in the air for the exceptional HR service providers interviewed for our cover story. The majority sensed the worst of the economic woes of the past 12 months are over, and suggested 2010 will be a year of cautious rebuilding. Here’s to that. And here’s to another year of Human Capital. On behalf of the team, I wish you all a safe and relaxing festive season, and look forward to your continued support as we enter our eighth year of publication in 2010.
In the first person… “The theme is ‘we trust you’. We’ve spent a lot of time recruiting you; you have the most amazing colleagues; and we trust you to do your job” – Manoj Varghese, director – people operations, Asia-Pacific, on his company’s unique work culture (page 48)
“People are proud to be associated with the brand – I want to maintain that and ensure they enjoy coming to work each day” – Christopher Dan, group HR manager, Doltone House, on brand power (page 52)
“Exit data doesn’t speculate why staff might leave; it pinpoints what actually drives quit decisions” – Lenore Lambert,
editor’s letter issue 7.11
managing director chief operating officer editor journalist production editor contributors marketing manager marketing coordinator traffic manager design manager designer photographer senior web developer it/is manager sales director
Mike Shipley George Walmsley Iain Hopkins Daniela Aroche Carolin Wun Katrina Fox MatthewsFolbigg Frontier Software Chifley Business School The Next Step Chandler Macleod Group Danielle Tan Jessica Lee Stacey Rudd Jacqui Alexander Lucila Lamas Thilo Pulch Kevin Kim Colin Chan Justin Kennedy
Editorial enquiries
Iain Hopkins tel: +61 2 8437 4703 iain.hopkins@keymedia.com.au
Advertising enquiries Fiona Wissink tel: +61 2 8437 4746 fiona.wissink@keymedia.com.au Sophie Knight tel: +61 2 8437 4733 sophie.knight@keymedia.com.au
subscriptions
tel: +61 2 8437 4731 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au
Key Media
www.keymedia.com.au Key Media Pty Ltd, Regional head office Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Hong Kong, Toronto www.hcamag.com Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept as HC can accept no responsibility for loss.
director, Exit Info, on exit interviews as a powerful HR tool (page 42)
“We can exert considerable influence on our experience of happiness and unhappiness by the way we live and think, how we perceive life’s events, and how we react to them” – Martyn Newman, Randstad consulting psychologist, on emotional capital (page 36)
www.hcamag.com
1
this issue INSIDE
Cover story: Who’s the best?
12
Why do some service organisations not only survive but thrive in a tough market? After easily the toughest year of the past decade, Human Capital’s readers have cast their votes for the top HR service providers
30 Salary packaging: Flexibility the key Ken Gilbert provides some helpful tips to ensure salary packaging remains a viable option for employees
Letters to the editor Do you have a burning HR or people management issue you would like to share with others? Would you like to share your thoughts on the challenges you’ve faced and how you’ve overcome them? Want to kick off some debate about your industry? If so, Human Capital would like to hear from you. Send through your comments to editor@hcamag.com.
get happy 36 C’mon Decades of research has established clear links between specific emotional skills and our health, wealth and wellbeing. Iain Hopkins asks Martyn Newman if these skills can be developed – and how organisations can stand to benefit
stage left 42 Exit Why do your employees walk out the door? If you only have a vague sense of their reasons for exiting, it may be time to sharpen up your exit interview skills
WINner For voting in our HR Service Provider awards Jo Perkins, head of human resources, EMI Music Australia is the winner of a $100 gift certificate from de Groots gifts
www.hcamag.com
3
Shortage of workplace learning opportunities, leading to increased salaries in the mid-tiers
instep HR Career Experts
Page 4
Thorny issues for HR in 2010
D
uring the past year, there hasn’t been a great deal of discussion within the HR community about the long-term impacts of the global financial crisis on HR careers. Appropriately, discussion has centred on the impacts for organisations and employees. Let’s take a closer look at some of the specific implications for HR practitioners and their careers as we travel into a post-GFC environment in 2010.
Engagement – disengagement
There has been much discussion regarding the issues of disengagement within the general workforce. The Corporate Leadership Council has published data to indicate that while employee turnover is down, there has been a significant increase in disengagement. This indicates that when the employment market improves, turnover will jump. Will the HR profession follow this overall trend? As a small subset of the total employment market, it is reasonable to suggest that HR professionals are no more or no less engaged. Therefore it is reasonable to deduce that there is a percentage of the overall HR population that will be actively looking for new opportunities when the market picks up. HR professionals, who have had a tough year in roles that have required a constant focus on cost drivers alone have said: “This isn’t the reason why I went into HR!” The view is, that while being commercially responsible is paramount and delivering costfocused initiatives is a key requirement, throwing the baby out with the bath water seems to have occurred in some companies. The McKinsey Quarterly stated in one of its studies: “Companies that retained or gained market leadership during the 1990–91 recession … refocused their spending in line with competitive opportunities instead of tightening their belts on operating expenses.” It would be reasonable to suggest that these companies also gave their HR professionals the green light to continue employee development programs, which helped to maintain general employee and HR engagement levels. The bottom line is that there will be an increase in HR professionals moving into the market in early 2010. As disengagement levels motivate professionals to look externally on the supply side and the expected upswing in the general economy kicks in, we’ll see an increase in the number of roles on the demand side.
4
www.hcamag.com
While the university sector has for years been pushing the idea of work-integrated learning that makes use of structured work placements and internships to help students put theory into practice, very little leadership seems to have been shown by HR leaders across Australia. There are very few opportunities for young aspiring HR professionals to experience corporate Australia. Programs such as The Next Step’s partnership with the University of Western Sydney’s Ivan Wood Scholarship are very, very rare. This is from the profession that manages development for everyone else! Coupled with a lack of opportunities while still learning, there are very few postgraduate roles that are in the style of traditional graduate HR programs such as those run by BHP and the banks. The Australian Bureau of Statistics has confirmed that employment prospects for the approximately 119,200 people in HR for 2011–12 are strong. If there are few entry-level roles, this will mean the salary pressures that existed before the downturn for intermediate HR professionals (lucky enough to have some good experience) will return and probably increase. Combine a growing profession with few entry level opportunities and the only result will be significant wage pressure for the intermediate HR career market over the next business cycle.
Structural changes
There is little doubt that many of the initiatives that have been implemented in HR over the past 18 months have been driven by cost-saving. These cost-saving initiatives are responsible for head count reductions in large corporate organisations as technology and shared services take out traditional HR roles. Thankfully, for the HR community, the growth of HR roles in small and medium sized organisations will continue through the next ‘up’ economic cycle. Therefore, the trend of HR roles shifting from the big end of town to mid-tier scale organisations will continue unabated.
2010 – What will it look like?
The HR recruitment market defiantly improved at the start of the current financial year, although it’s still at a snail’s pace compared to past years. The improvement in consumer confidence will take some time to bite before companies recruit broadly and increase head count in HR. There will be some challenges for HR leaders in the next cycle. These range from an increase in turnover due to disengagement trends, to the challenges of the early HR market, and structural changes resulting in less HR roles in corporate Australia. While these challenges and others exist, the market for HR is looking brighter for 2010 than 2009. Craig Mason is a Director with The Next Step, a specialist consulting practice in the human resources market. For information call (02) 8256 2500 or email cmason@thenextstep.com.au website: www.thenextstep.com.au
Recent HR Market Moves supplied by The Next Step
Flexirent has appointed Michelle Pombart as HR Director. Michelle has held senior HR roles with Vodafone Australia.
Advisor. Previously Kylie was with Australian Industry Group as Industrial Relations & WorkCover Advisor.
Nick Avery has accepted the role of Head of Talent and Resourcing with HSBC, based in Hong Kong. Prior to this appointment Nick was with Fosters Group as General Manager HR.
Tyco Services has appointed Dallas Pearce as HR Manager. Dallas’ most recent role was Manager Employee Relations with BlueScope Steel.
Gayle Philpotts has been appointed HR Director for Pfizer.
Andy Poole has recently been appointed HR Manager – Supply
General Pants recently appointed Angela Foskett as HR Director. Most recently Angela was General Manager of HR for Virgin Mobile.
Lee Croucher has joined PPC Worldwide as Business
Previously Gayle held similar roles with Wyeth, SunRice and George Weston Foods.
RBC Dexia has appointed Georgia Siabanis as Senior Manager, HR. Previously Georgia held the role of Business Partner for HR, RBC Dexia Investor Services in Toronto, Canada. MLC Investment recently appointed Tamara Desmond in the role of Senior HR Business Partner. Prior to this Tamara was HR Business Partner Aust & NZ with Hewlett Packard.
Nicole Clark has recently accepted the role of HR Director with
PPB. Nicole has previously held senior HR roles with News Digital Media and Macquarie.
Kylie Jones has joined Sigma Pharmaceutical as Senior HR
Chain with Woolworths. Andy’s most recent roles were in the UK with Smiths News PLC.
Development Manager. Lee was with the Department of Transport and Main Roads as Change Manager – Roads Business Group.
Jon Smiles has accepted a role with Unico as General Manager,
People & Culture. Jon’s most recent role was Group HR Manager with Orica Chemnet.
Carol Morley has commenced with NAB as People & Culture Business Partner within Personal Banking. Carol gained most of her experience within The Boeing Company in the US and more recently here in Australia.
Robyn Casey has accepted the role of HR Services Manager with Superpartners. Robyn has a strong generalist background gained during a long and successful career with Coles Group.
By supplying Market Moves, The Next Step is not implying placement involvement in any way.
www.hcamag.com
5
issue 5.10
news
Page Legal Experts
06
Managing Modern Awards
W
ith 1 January 2010 fast approaching, employers must carefully consider the new modern awards which will soon apply to their workplaces to provide a safety net of enforceable terms and conditions for employees.
Who is covered by a modern award?
Modern awards are industry or occupation based, and will apply to all national system employers and employees who perform work covered by a particular award. However, identifying coverage for specific employees may be more problematic, as coverage may extend to lower-level management positions in some industry awards, and certain professions traditionally excluded from coverage may be covered by others. Employers are also concerned by the broad coverage provided by the Exposure Draft of the new Miscellaneous Award 2010.
Who is not covered by a modern award?
A modern award will not cover an employer bound by an enterprise agreement with respect to any employee who is covered by the enterprise agreement. Nor will it apply to high-income employees who have a guarantee of annual earnings exceeding the highincome threshold of $108,300 (indexed annually). This guarantee of annual earnings will need to be in writing and agreed to by the employee within 14 days of commencing employment. While in these circumstances the award will not apply, employees may continue to be covered by the award for the purpose of other provisions of the Act. For example, employees will still be able to commence unfair dismissal proceedings despite being paid above the relevant threshold.
What terms will be in a modern award? Modern Awards will contain terms relating to: • minimum wages • types of employment • overtime and penalty rates • superannuation • allowances • dispute resolution procedures
6
www.hcamag.com
• annualised wage or salary arrangements • work arrangements A modern award cannot exclude the National Employment Standard (NES), but may include industry-specific details about the matters contained in the NES, or terms that are incidental to or supplement the operation of the NES, provided they are not detrimental to the relevant employees. For example, the Clerks Award supplements the NES provisions relating to annual leave, entitling an employer to direct an employee (with four weeks notice) to take annual leave in the event of an annual close-down of operations or where more than eight weeks leave is accrued.
Individual flexibility agreements
Flexibility clauses have been included in modern awards to permit employers and individual employees to agree in writing to a reduction in one or more minimum entitlements under an award in order to meet the genuine individual needs of the employer and employee, so long as the agreement results in the employee being ‘better off overall’. For example, award flexibility clauses are contained within the Clerks Award and the Miscellaneous Award, and provide that the terms the employer and individual employee may agree to vary are those concerning: • arrangements for when work is performed • overtime rates • penalty rates • allowances • leave loading Such agreements must be made genuinely and without coercion and duress. The Act states employers cannot make an offer of employment conditional on the employee agreeing to a flexibility arrangement, which is the main distinction between these arrangements and the flexibility provisions offered to employers under AWAs.
Transitional Arrangements
Transitional arrangements will apply to a limited number of terms and conditions, mostly relating to minimum wages, shift allowances and loadings. If modern award rates are more than what an employer is paying under a current award, transitional provisions will apply so that increases are phased in. There will be a five-year transitional period, with the first increase being on 1 July 2010,.
Guidelines for Employers
With the date for application of modern awards looming closer, employers are urged to: • consider the application of any modern awards to their employees • amend employment agreements to ensure compliance with new terms and conditions under the modern award and NES • consider individual flexibility agreements and/or negotiation of enterprise agreements in circumstances where compliance with the relevant award is not practicable. Fay Calderone is a Senior Associate with MatthewsFolbigg Lawyers. For more information call: (02) 9806 7412 or e-mail: fayc@matthewsfolbigg.com.au
Training & Development
Page 8 Professional Development Experts
WHAT MAKES A BETTER LIFE? A
number of companies have dealt with the global economic downturn by reducing hours of work, forcing employees to take leave, and converting full-time jobs to part-time ones. Unions and employees have reacted strongly to the lack of consultation, claiming that the change in work hours and conditions has reduced standards of living and placed individuals and families under financial strain. A recent University of Sydney study found that one in five working Australians worked more than 50 hours a week, almost two-thirds are overweight or obese, and that depression and stress-related diseases are increasing rapidly in the workplace. In summary, the economic boom that took place in Australia did not necessarily result in overall benefits for the community. The drive by human resources experts to promote work-life balance as a key strategy for organisations to gain a competitive advantage has clearly not been successful. The economic downturn forced employees to work less and take more holidays – whether they wanted to or not. While employers and government have justified this approach as transitory, the underlying assumption is that work and life are mutually exclusive. Yet the work-life balance model used in Scandinavia during the 1980s – from which Australian HR experts derived their model – promoted work and life as complements. The Scandinavian model produced happier, healthier and more productive employees, better functioning families, lower crime rates, stronger relationships between employees and employers, and more supportive social security systems. Can the same be said of Australia? Affirmative actions programs have seen women assume
8
www.hcamag.com
leadership roles across the spectrum of professions, while a corresponding number of men are undertaking home and carer roles as they are increasingly required to share these responsibilities with their partners. Technological developments also mean that many jobs can be performed from home, but organisations’ human resources departments have not exploited the work-life balance potential of this: flexibility for carers of children and the elderly, which may reduce the impact on health and education systems; and eliminating the daily commute reduces carbon emissions. These are the associated benefits of work-life balance initiatives. With the tentative signs of economic recovery, there is growing optimism among Australian businesses and employers. It will be interesting to see if employees, having experienced reduced working hours and the potential of work-life balance, will be willing to hop back on the long working hours treadmill. Contributed by John Taya John Taya is Unit Chair for Contemporary People Management for Chifley postgraduate programs.
Phone 1300 CHIFLEY | 1300 244 353 Visit www.chifley.edu.au
Corporate Culture Column Evolving your Workforce
Page 09
We are Wired as Storytelling and Storyreceiving Creatures… but why are we generally so bad at storytelling?
C
handler Macleod recently undertook a study in partnership with FINSIA – the Financial Services Institute of Australasia – on the lessons learnt throughout the GFC with particular emphasis on the Financial Services Industry. The study, entitled Broadening Horizons – Investing in Talent, highlighted a number of findings and lessons to take into the future for the industry. A key finding from the study is an issue that has also been identified across a number of industries – the lack of communication from organisations to their staff throughout the financial crises. “Many respondents pointed to failures of communication by managers and their leaders throughout the period of the crises. This indicates that staff may have developed a negative attitude towards HR and their leaders because they felt their value to the company was being scrutinised rather than supported through the period of uncertainty.” Microsoft founder Bill Gates is quoted as saying, “passionate leadership won’t succeed if contradictory signals are sent.” No doubt Gates knew something about organisational communication around strategy. Microsoft is anything but ambiguous. Yet any organisation’s strategy needs to be just as compelling if it is to engender an enthusiastic take up by its people, and it will become most effective when it is transformed into a well-told story. Essentially, we are wired as storytelling and story-receiving creatures and we search for truth and authenticity. Just as we remember with surprising clarity the stories told to us as children, we can retain anything that is thoughtfully crafted and convincingly delivered. Just as we remember best anyone who tells us good stories – President Obama, for example – it is through just such confidence in the use of storytelling that our organisations’ internally communicated strategies can be brought to life. This is a skill that anyone can build with focus and that any senior team can develop. Just as any of us can easily re-tell a well-told story to others, when we make the effort, we can ensure that the recipients are able pass it on faithfully.
When there is a significant challenge, it comes down to how well the senior team share the story with the workforce. To effectively drive an organisation through its people, its leaders must make the complex simple and the simple compelling. Leaders can not assume that others will inherently know or understand their message. Confidence in the use of storytelling can bring organisational strategy to life, and it is in the way an enterprise communicates with itself, that the most forceful of business advantages is found. However, to tell great and effective stories, we must make great plans to deliver them. In every re-statement of strategy comes a message that change is afoot, the script is different and, most likely, someone’s part has changed. The stories that are told become all the more important when the news is not good. Bad news might be part of everyone’s emotional journey, but the lessons in managing its effects on organisational culture are critical. Dramas tend to become crises when those most affected by adverse change translate what they perceive as mixed messages into fear. Whether it concerns the closure of a plant, a restructure, a financial downturn or worse, the manner in which information is imparted can have lasting effects on morale and worker sentiment. At a time when the story that is told is negative, simple communication plans must be developed to ensure the right information is delivered in the right way by the right people. The key lies in the planning, understanding who is going to hear the message and giving appropriate forethought as to what their emotional reactions may be. The timing, tone and positioning of a message can minimise its adverse impacts. But it needs a plan. Leadership operates at many levels and those required to effect it must clearly understand the implications of impending change before being expected to implement it. If they are to tell the new story persuasively and with conviction they must understand its effects on their own teams before they are to be asked to act it out in their own actions and behaviours. Without giving the organisation’s leaders the time to reflect and absorb, those responsible for strategy might find changes other than those intended in the script already taking place. When that happens, the unplanned nature of the reactive communication required to fix unintended consequences may in turn cause other unexpected eventualities. Leaders with mastery of the strategy story need to take responsibility for its staging, timing and how it plays out on stage. If the agenda is to play out as they envisaged, they must bear the ultimate responsibility for what happens in their organisations. Ensuring those responsible for delivering it have been able to soak in what is expected is a communication responsibility of the first order. Organisations that haven’t accounted for this in their planning should step back before putting their drama into play.
Craig McCallum
www.chandlermacleod.com
General Manager Marketing: Specialist Recruitment & Consulting Services Tel: 02 9269 8879 Craig.McCallum@chandlermacleod.com
www.hcamag.com
9
issue 5.10
international
HR TECHNOLOGY
Page 10
performance management systems Question:
Our organisation is considering purchasing a performance management system. What are the primary considerations when reviewing these systems?
Answer:
Employees are one of the largest costs for many organisations and are also one of their greatest assets. Effective performance management will promote employee engagement and maximise workforce effectiveness. When reviewing systems it is important to consider how your existing processes can by simplified and how an on-line system can make the task less onerous to managers. By automating these processes you can streamline this sometimes cumbersome task and leverage your human capital more effectively. Many organisations have evolved. Their performance management methodology is no longer considered an arduous annual task but a primary element of their talent management philosophy and a key component of employee lifecycle management. When reviewing systems it is ideal to look for one that supports best practice performance management, rather than a system that can duplicate outdated manual processes. It is imperative that a new system saves time for everyone involved. There are four main functions underpinning performance management. They are planning, coaching, reviewing and reinforcing – the system you select will add enormous value to your organisation if it can simplify and support all four functions. Planning – in organisations with paper-based performance management, the planning stage can be cumbersome and time consuming. The planning phase should take into account the career development objectives of each staff member as well as look to align workforce goals with company strategy. A system that supports cascading individual, departmental and corporate goals is ideal to ensure workforce alignment with corporate goals. Look for a system that allows organisations to create their own user-defined KPIs across different performance categories, as this will increase the likelihood of greater performance across these areas and will further support engagement. A solution that allows ratings for individual and team performance will align your workforce and promote greater teamwork.
10
www.hcamag.com
During the planning phase, succession planning needs to be considered. Who are the flight risks in your organisation? What skills do they possess that are needed by the company and what are the future skill requirements of the business? Selecting a system that can support succession and career planning will ease the planning burden and ensure you have a constant supply of talent underpinning your business as it evolves and grows. Coaching – by coaching employees during the review process they will obtain comprehensive feedback which drives future performance. A system that allows changes on the fly will assist managers in capturing useful information during performance review meetings. By uncovering areas for improvement during coaching and feedback meetings, areas for learning will be identified which will further support employee growth. A system that stores a complete history of previous appraisals will give the manager a comprehensive picture of the employee – particularly if they have recently joined from a different department. Underperforming employees can be costly to an organisation – the coaching phase can help to transition underperformers into valuable team members. If underperformance is not addressed, a gradual loss of productivity across the entire team may result. A solution that assists to identify and coach these employees may save your company thousands of dollars in lost time as well as help keep team morale at high levels. Reviewing – regular reviews of performance plans are an ideal way to ensure employees stay on track with their goals. Regular review meetings allow skills and competencies to be updated, which will ensure your skills framework remains current. Identifying and developing staff potential is one of the goals of performance management systems. A system that provides flexibility with review timeframes and skills updates will support the needs of everyone in your organisation. Reinforcing – by conducting regular meetings to review objectives and progress assists with reinforcement. The alerts and triggers functionality offered by many performance management solutions will assist by scheduling regular meetings. Positive reinforcement will also occur through pay increases by selecting a system that offers integration with the payroll system; managers should have access to a complete history of salary increases. In order for performance management to be effective, review meetings must be conducted at regular intervals to demonstrate to staff and management the organisation’s commitment to this process. A solution that automates the dissemination of the review forms in predefined company timeframes will ensure companywide commitment to this important function. In addition, the system needs to follow up with managers and staff when forms are not completed. This will save busy HR departments time Finally, by selecting a system that is fully integrated with your payroll and HR software, you will add value to these core functions and support best-practice performance management. Nick Southcombe General Manager Frontier Software Pty Ltd (03) 9639 0777 www.frontiersoftware.com
news issue 7.11
NEWS
Future gazing: The post-GFC world of work
O
nce-powerful employer brands are at risk of being unable to attract top talent in the next decade, according to a recent PricewaterhouseCoopers report on how the downturn will change the future of work. According to the report, Managing tomorrow’s people: How the downturn will change the future of work, the bonds of trust between some employers and employees have been eroded by pay and promotion freezes, changes to pension schemes, cuts in recruitment and diminished training budgets. In contrast, some organisations have excelled in the unstable environment, doing more with less, and engaging and developing their employees at a time when many view career prospects as stagnant or diminishing. “The winners and losers in the war for talent are starting to reveal themselves,” said PricewaterhouseCoopers partner Jon Williams. “Businesses that have continued to focus on investment and employee engagement, while staving off the global financial crisis, are emerging as clear leaders. Likewise, businesses that continued to offer their employees new opportunities and invested in their people pipeline are now at a competitive advantage,” he added. The report used scenario planning to map how the crisis will impact the shortage of talent predicted for tomorrow’s world. It looks back from 2020 and tells the story of how three fictitious organisations emerged from the current crisis – specifically in terms of their people strategies. The conclusion is that, as global economies start to stabilise, companies need to assess whether their people plans – including the ways people are recruited, rewarded, retained, incentivised, trained and retired – are fit for the future.
Raising the bar for employment practices: Harmers B
usinesses pursuing a ‘high performance culture’ should ensure employment processes are well managed and that employee expectations are communicated at a company-wide level to avoid any perception by employees of personal intimidation or discrimination, according to Harmers Workplace Lawyers. Nichola Constant, senior associate at Harmers Workplace Lawyers, said the best high performance businesses were the ones that ensured their workplace processes were implemented correctly. “Companies that set high standards for employee performance and company commitment, without the most rigorous of management guidelines and training, risk being subject to legal remedies by individual employees,” she said. Constant said while many employers have a good understanding of what constitutes best practice in this area, the importance of adhering to best practice performance management has been heightened by employees’ increased access to unfair dismissal legislation contained in the Fair Work Act. “If an organisation has poor performance management processes, or even has good process but poor implementation, then it’s
MBS the top business school in Asia-Pacific
T
he Economist Intelligence Unit’s (EIU) 2010 Which MBA? report has named its annual list of the best business schools in the world. The Iese in Barcelona came out on top, followed by IMD, last year’s winner, at number two. Third was the Haas School of Business, followed by the Booth School of Business in Chicago at number four. With six spots in the top 10, US schools dominated the
worldwide ranking of full-time programs. A total of 54 of the rated schools are from the US, 40 from Europe and 13 from Asia and Australia. Ranked the number one full-time MBA program in Asia-Pacific and 17th on the world stage in this year’s rankings was Melbourne Business School (up from 26th last year). MBS ranked ahead of INSEAD (23) and Hong Kong University Science and
possible that an employee who has been dismissed for failing to adhere to certain performance standards may have cause to bring claims of unfair dismissal, breach of the Fair Work Act’s general protection provisions, or breach of contract claims upon the employer,” she said. Constant said a key element to ensure individual employees don’t feel daunted or intimidated or targeted by performance standards or the managers who monitor those standards, is to ensure expectations are communicated at a company-wide level. “Employers should communicate any ‘high-performance’ message equally with all employees, and that the message should be explained as company-wide or business division objectives to avoid any employee perceiving it to be an action of individual intimidation or discrimination. “Also, for any employee that works parttime or on reduced hours, is taking maternity leave or has carer’s responsibilities outside of work, it’s important they feel confident that an overarching expectation of high performance can be met by all employees, regardless of their individual circumstances, such as their ability to give out-of-hours time commitment to the business,” Constant said. Technology (30). Internationally it has placed ahead of prestigious schools such as Columbia, (20) and MIT Sloan School of Management (19). No other business school in Australia ranked in the top 50. The two-year MBA programs, which continue to dominate in the US, have faired better. They offer more time for personal development and networking and, following the internship after the first year of the program, they also facilitate entry into a new industry or function. www.hcamag.com
11
issue 7.11
cover story
Credit
where it’s due
Why do some service organisations not only survive but thrive in a tough market? After easily the toughest year of the past decade, Human Capital’s readers have cast their votes for the top HR service providers
L
ast year’s HR Service Provider awards were shrouded in a certain amount of trepidation for the year ahead. Most people interviewed for our awards coverage were bracing themselves for a tough 12 months. They were correct. Although Australia appears to have escaped the clutches of a full-blown recession, it’s been a challenging year for both HR professionals and their outsourced service providers. According to a market pulse survey by Insync Surveys conducted earlier in 2009, HR leaders are definitely feeling the economic squeeze. When asked if their budgets had changed, 43% said they had been cut. Just 9% said they experienced an ability to invest in more people-based initiatives. Likewise, when asked if their budgets were likely to increase in the 2009/10 financial year, 26% anticipated further cuts,
12
www.hcamag.com
while the majority (61%) believed they would stay the same. Where does this leave HR service providers? Clearly, those offering value for money, quality service and market knowledge have risen to the top. Now into its third year, the Human Capital Top HR Service Providers provides an insightful snapshot of who is exceeding client expectations. As ‘people’s choice’ awards, decided by the votes of loyal HC readers, they have special resonance. Over the following pages, read about the future of HR outsourcing, the impact of the financial crisis and what the latest trends are. Human Capital also talks to some of the winners across six key fields: recruitment services, HR technology & software, career development & training, teambuilding & incentive providers, online job boards and migration & mobility.
About the survey The Human Capital Top HR Service Provider Survey asked our readers for their opinion on who’s the best service provider across six categories. This year we had a record number of respondents. Just over 2,000 senior HR professionals, CEOs and MDs from organisations responded directly to our online petition at www.hcamag.com and via our weekly e-newsletter. Gold, Silver and Bronze awards have been awarded based on the number of votes received, while two runnersup in each category received Highly Recommended awards
cover story issue 7.11
www.hcamag.com
13
issue 7.11
cover story
Recruitment agencies Preferred recruitment agencies
The Next Step HR Partners 2discover Hudson Michael Page
Why are they so good? • “2discover always come up with the goods, no matter how difficult the assignment we give them. They manage to fill those hard to source roles and as a company that recruits for our culture and values, we are very particular about who we employ. They are quick, professional yet friendly and take a keen interest in our company. We are not just a revenue source to them but true partners in our business success.” • “HR Partners are very professional in this niche HR market. They have the best talent pool from their candidate database. Great recruiter.” • “Hudson provides great service, suitable candidates, and they know our business.”
14
www.hcamag.com
What doesn’t kill you makes you stronger – that was perhaps the mantra for recruitment agencies throughout 2009. Faced with a flat employment market with too many candidates and not enough vacancies, as well as the increasing prevalence of employers directly utilising social networking tools for recruitment needs, 2009 has seen many agencies either fold or be swallowed up by larger agencies. The votes from readers leaned heavily towards smaller niche agencies rather than larger generalists – perhaps an indication that the recruitment sector in Australia and indeed the world is facing some serious challenges. Advances in technology and a nagging suspicion that recruiters can do better has forced some agencies to raise the bar – and show how they really can add value. “There’s no question that 2008/9 has been a tough year,” says Craig Mason, director of two-time Gold winner The Next Step. “The big impact in a recruitment business is the human element. In a depressed market, a business like The Next Step is in the front line. We’re in constant contact with excellent professional people who are deeply unhappy and feel stuck in roles that are unsatisfying, or worse, cannot find meaningful work.” Luckily, the worst seems to be over. John Leith, CEO of Bronze winner 2discover, says that temporary and parttime positions have ticked over steadily, but now permanent roles are once again on offer. “We’ve found the last two months have turned around for us. Recruitment is always the first to feel the economy tighten up, but is also the first to see things improve,” he says. Still, HR professionals will be watching their recruitment budgets with eagle eyes. While the debate over the fixed
costs of RPO/in-house recruitment teams versus the variable cost of outsourced recruiters continues to rage, David Owens, managing director at Silver winner HR Partners, says that internal recruitment teams have had an “interesting” year. He believes the majority of in-house teams have been well supported over the past 12 months, with many organisations pushing as much traffic as possible through these internal teams. At the same time, in some cases he feels there simply has not been enough recruitment activity to justify the headcount numbers many of these teams have grown to. “This has resulted in some organisations using the in-house recruitment team as an internal talent pool and a number of in-house recruiters and recruitment team managers have migrated into mainstream HR roles in the last 12 months,” he says. Leith agrees, and notes that many organisations will continue questioning the fixed costs of internal recruitment teams until hiring practices really pick up. “The big plus for external recruiters is that you only use them when you need them.” Mason notes that in many ways the HR recruitment market over the past year has been a snapshot of the total employment market. The overall unemployment rate did not reach the levels expected by the Reserve Bank and most economists, and while this does not infer that many people weren’t hurting, the bigger picture is better than what most thought would happen. Unemployment topped out in the high 5% range. “Similarly, as a percentage of the total HR market, not as many HR professionals lost their roles due to economic downturn pressures as you would have expected. This meant the supply side wasn’t as deep and as wide as many employing HRDs and companies imagined,” says Mason.
cover story issue 7.11
Preferred Recruitment agency
Craig Mason, Angela Horkings, Kathy Fries-Wilson and Michael Murrie, Directors, The Next Step “The Next Step is delighted to be voted by the readers of Human Capital as the Gold medal winner in recruitment for the second year in a row. We believe that this recognises the dedication of our team members to provide the HR profession with the best possible customer service through a difficult year. We hope to continue to match the expectations of the HR community in the future.�
www.hcamag.com
15
issue 7.11
cover story
Preferred Recruitment agency
David Owens, Managing Director, HR Partners “In 2007, the year Digby Morgan acquired HR Partners, the business won the Highly Recommended award in the annual Human Capital awards for Australia’s top service provider in HR Recruitment. Last year, 2008, HR Partners was awarded Bronze. This year HR Partners has been awarded the Silver medal, and the team in Australia is delighted that we have progressively polled better results in each of the last three years. It’s a wonderful acknowledgement of the quality of the work being done by our teams in Brisbane, Melbourne and Sydney. We are doing very well in a tough market. Clearly, next year we have everything to play for and we are looking to win Gold in 2010 and gain further ground for our reputation in HR recruitment.”
16
www.hcamag.com
cover story issue 7.11
The main issue in the HR market, and most other professional disciplines, Mason says, was that the demand side has been extremely soft. Excellent HR professionals, who found themselves in the job market through no fault of their own, have found 2009 very difficult as roles simply dried up. “The early career HR market was the area most significantly impacted with very soft demand over 2009,” says Mason. “That’s not good news for the future supply of HR professionals. In a year or so there’ll be a problem for HRDs looking to recruit those HR professionals who have 3-plus years’ experience.” There were several significant shifts in the HR recruitment market in Australia between 2008/9 and into 2009/10: • Not surprisingly, internal recruitment roles dropped from 16% to 4% of the HR market • On the flip side, with the focus on executive packages in the current market, remuneration roles doubled, jumping from 4% to 8% • ER/IR roles increased from 1% to 3% • HR generalist roles moved upwards from 51% to 59% of the HR market Moving into 2010, Owens anticipates that the market will be increasingly competitive. “I think the challenge for organisations will be to have a broad range of offerings which ensure they have a compelling value proposition. Recruiters themselves will need to keep pace with this increasingly sophisticated and demanding environment,” he says. Many recruiters are moving into the HR consultancy space as well, in order to provide ‘one-stop shops’ for HR professionals. 2discover, for example, is facilitating HR networking events and offers outplacement services, psychometric testing and coaching services. The agency also offers 100% guarantees – thus minimising risk for HR professionals concerned about the success rate of new hires. As always with any successful business relationships, Mason says the secret to partnering with a recruiter is to take a long-term view. “HR professionals reasonably expect that any business that operates in the delivery of professional services does so with the right motivations and motives, building up the relationship and adding value over the long haul.”
Preferred Recruitment agency
Julie Carran, General Manager, 2discover “We are proud to be awarded the Bronze Top 5 Award for ‘Preferred Recruitment Agency’. Thank you to our clients and candidates who voted for us. Without you it wouldn’t have happened. This award recognises our first-class service and our biggest assets – our employees, candidates and customers. Thank you again, Human Capital and its readers.”
www.hcamag.com
17
issue 7.11
cover story
online job boards
The online job board market, for so long dominated by the ‘big three’ – Seek, MyCareer and CareerOne – has been shaken up by the emergence of new technology such as Twitter, Facebook and LinkedIn. For the first time, this year Human Capital’s readers have voted a professional networking site – LinkedIn – onto the list. It’s a clear indication that HR and recruiters are increasingly using professional and, to a lesser extent, social networking sites to attract candidates. Although technically speaking it’s not a ‘job board’, LinkedIn does present job posting opportunities within the different LinkedIn groups. Some might suggest that online professional network recruiting is simply the evolution of traditional job boards – or indeed, that the two can work effectively side by side. Michael Harvey, CEO of Silver winner CareerOne, believes the latter is true. “At CareerOne we see huge opportunity in working with social and professional networking sites and, indeed, incorporating these opportunities into our portfolio. Monster in the US has just introduced a communities section providing opportunities for like-minded professionals to interact with each other on the employment website – a great example of how online job boards could take advantage of the rise in social and professional networking,” he says. For the time being, job boards have nothing to fear. According to Nielsen NetRatings, the total unique browsers between September 2008 and September 2009 for Seek was 3.636 million, CareerOne with 1.601 million, and MyCareer with 1.189 million. In cases where speed is of the essence and for certain jobs/professions, there are few options better than job boards. Joe Powell, managing director of Seek Employment (Australia and New Zealand), says a recent Seek employee satisfaction & motivation survey indicates that 88% of jobseekers intend to use job boards to find a job versus 10% favouring social media. “We talk to our clients regularly and we’ve yet to see any concrete examples of success in attracting talent via social media. While there’s no doubt it’s here to stay, we don’t think people are going to try and find a job
18
www.hcamag.com
through a network when they can just go to one place with all the jobs. Both jobseekers and advertisers need to invest significant time on both sides of the fence to uncover and manage interactions through networks to get anywhere,” he says. Kevin Howard, general manager at Highly Recommended winner Job Media, believes we may be putting the cart before the horse, and maintains that it’s important to differentiate professional networking sites with social networking sites. “The people who are trying to make a living from becoming social networking consultants would have you believe that employers are increasingly using social networking sites instead of job boards, but it’s just not true,” he says. Howard says that just like anything new, the costs of maintaining an online social networking presence must be weighed against any return on investment and, again, this is a hazy area. “Only a tiny percentage of employers have made any serious investment in this area, but most of those companies need to use job boards as well,” he says. Howard believes social networking sites like Facebook and Twitter fail as recruitment tools because they are not targeted and are ripe with privacy and discrimination issues. Online professional networking is different, Howard maintains. “LinkedIn is the standout professional networking site but it’s very different to Facebook or Twitter. People on LinkedIn expect to be recruited or approached with a view to doing business – that’s what it’s designed for. I know several recruiters who are having some success with LinkedIn, but even so, it’s nowhere near displacing the job boards.” Another channel that Howard believes has greater potential for recruitment than the social networking sites are targeted webbased discussion forums. “Ultimately, good recruitment involves exploring all available avenues to attract the best people possible. No single channel will ever reach all potential candidates, so job boards will have a prominent place for the foreseeable future,” he says. To stay one step ahead, CareerOne is constantly upgrading and refining its product. “We’re in the second phase of the transition
Preferred online job boards
Seek CareerOne MyCareer Job Media LinkedIn
Why are they so good? • “Seek is easy to use, provides relevant target markets, provides the ability to pull statistics which measure our effectiveness, and can also provide a national account and service level.” • “The ratio of quality of candidates received on MyCareer is far better than those received through other job boards.” • “I vote for Job Media because their ‘jobs in HR’ job board is HR specific.”
to the Monster technology platform,” says Harvey. “We’re working hard to bring the new site to Australia so advertisers and job hunters can enjoy the benefits it reaps. Beyond that, we’ll leverage off Monster product development and enhancements as they are introduced, to finally bring some real product innovation to this market.” Both Harvey and Powell are optimistic about the outlook for the Australian economy. “We’ve seen four months’ growth now in job ad numbers so it’s certainly a positive trend starting to happen and one that we hope continues,” says Powell. “The feeling we’ve got is that clients are more upbeat and Hudson’s employer confidence report has just had its biggest jump in several years – so our expectation for 2010 is that it’s going to be a lot brighter than 2009.”
cover story issue 7.11
Preferred online job boards
Kevin Howard, General Manager, Job Media “We feel honoured to receive this award for the second consecutive year, in such a competitive market alongside some very big players. Many thanks to everyone who voted for us and of course to all the employers, recruitment companies and job seekers who recognise the value in what we do.� www.hcamag.com
19
issue 7.11
cover story
Preferred career development & training providers
rogenSi Pollak Learning Alliance Australian Institute of Management AGSM UNSW Global
Why are they so good? • “rogenSi’s training absolutely stands out from the rest. All their consultants are lively, incredibly engaging and memorable.” • “AIM has the courses we need.” • “Pollak has the ability to tailor their programs for us. Their quality of programs and speed of delivery is beyond compare.”
20
www.hcamag.com
Career development & training providers
How many HR professionals this year aimed to work smarter, not harder? And what’s the only way to work smarter? Sure, technology helps, but it is continuous skills development that has the biggest impact. Yet in a year which saw every aspect of HRM slashed to bare bones, L&D was the area that seemed to suffer the most. As businesses attempt to work themselves out of the economic downturn, the smart money will be on those organisations that valued training and looked to maintain highly skilled and talented workers regardless of the economic landscape – yet in some instances this was easier said than done. Lindsay Sturman, CEO of TP3 Group (owners of Silver winner Pollak Learning Alliance), says the slow down was particularly evident in the face-to-face IT training space. “We saw our clients unable to afford having staff spending extended periods of time out of the office, they had reduced training budgets and were dealing with short-term business critical developments,” he says. The landscape has undeniably changed. Sturman says that most clients were undergoing rapid change with respect to shifting strategies and objectives while trying to better service their client needs in a changing market. “Given that change in strategy usually leads to change in organisational structure, we found that many clients had teams of people in new roles that were lacking key competencies – not to mention the massive change management exercise. So conversely, though we experienced a slowdown in the IT space, it was offset by unprecedented growth in the professional skills area – particularly customised, industry and client specific programs,” he adds. Organisations have also had to shift their L&D focus on ‘critical’ areas such as sales and coaching, and developing the mindsets of teams to cope effectively under pressure. Are there specific skills that HR professionals should be looking to build in their workforce as they position themselves out of the economic slump? David McMurdo, director of Gold winner rogenSi, believes so. Following on
from research conducted by rogenSi analysts globally, McMurdo says there is little doubt that the central element to re-building and expansion will be the development of people. “We’ve seen several of our clients invest heavily through the last 6–9 months and in every case they have won market share, increased customer satisfaction, maintained or grown staff engagement and increased profit. Those that invest quickly will come out stronger than those that don’t.” The key skills trends have mainly been in the customer service areas. Building senior teams that are aligned to new strategies, and creating the right sales leadership skills, processes and mindset are central to this, as is enhancing the frontline skills and mindset of sales teams and customer support people. In addition, it’s about ensuring that everyone in the business is aligned and focused on the customer – “true customer centricity”, says McMurdo. The biggest challenge that training organisations such as rogenSi face is providing clients with return on investment statistics. “Companies have talked about this for a long time but if you cannot demonstrate that your interventions and initiatives drive real ‘return’ then why would we expect our clients to invest? The tracking of this remains the biggest challenge but one that we have invested in strongly,” says McMurdo. Because of the intensity of the changes occurring, Sturman found that truly partnering with a client meant ultimately understanding the culture of the organisation and making sure that the service provided matched that culture and was seamless. “As a supplier we became an extension of the organisation we were servicing and in a couple of instances were mistaken for employees!” he says. Throughout the challenging times, Silver winner Pollak’s clients indicated that the most valued employees were those that adapted to change quickly and viewed it as an opportunity. Sturman says the next year will be a prime time for HR and L&D to foster those skills across the whole organisation. “Change is a part of life and is necessary to grow and evolve – organisations that are going to succeed in the future will need HR managers who understand and support this,” he concludes.
cover story issue 7.11
Preferred career development & training providers
David McMurdo, Director, rogenSi “rogenSi, the consultancy for Exceptional Performance, is delighted to have won the ‘Best Service Provider – Career Development and Training’ award for the second year running. We recognise what a tough year it has been across many industries, and therefore we want to thank all of our clients across Australia for their continued support over the last 12 months. We know that by continuing to invest in their key asset – their people – that the knowledge, skills, process and mindset development undertaken will help put them in market-leading positions in the years ahead. Thank you.” www.hcamag.com
21
issue 7.11
cover story
Preferred career development & training providers
Lindsay Sturman, Chief Executive Officer, TP3 Group (Pollak Learning Alliance) “We are grateful to the readers of Human Capital for awarding us Silver as the ‘Preferred Career Development and Training Provider’. We were delighted to achieve last year’s Highly Recommended status and this year’s elevation to Silver is an honour. We look forward to another year of partnering with our clients to provide flexible and effective learning solutions.”
22
www.hcamag.com
cover story issue 7.11 Incentive/teambuilding providers Preferred incentive/ teambuilding providers
Solterbeck RedBalloon Days AchieveGlobal Accumulate Member Advantage
Why are they so good? • “The support Solterbeck provides alleviates the stress and worry about the day-to-day administration of our rewards program. We can always rely on them to get the job done with a minimum of fuss.” • “RedBalloon are innovative, great communicators and marketeers of their unique products.” • “Accumulate have innovative ideas and the flexibility to meet any occasion. Lovely people to deal with.”
Incentive programs in the past were used to inspire sales teams to deliver strong sales results. But the industry has grown in sophistication to keep abreast with the demands of large corporates, and the requirement for performance improvement is now enterprise-wide. “It’s no longer just about sales. It’s about reinforcing the corporate values and encouraging the desired behaviours. The dramatic growth of peerto-peer recognition programs is evidence of this,” explains Sue Jackson, executive chairman of Gold winner Solterbeck. A performance improvement company like Solterbeck now considers its role to be as a deliverer of increased engagement and incremental performance across all business partners – including all employees and channel partners. While the range of these service providers now extends from employee benefits advisors such as Member Advantage, to truly innovative ‘experiential’ rewards such as those offered by RedBalloon Days, all programs should be tied to individual goals, desired organisational behaviours, and also be part of a larger retention strategy. During a period in which pay rises in many industries is frozen, non-cash rewards are being used to recognise and reward when desired behaviours are achieved. This means good employees still receive a better package than poor performing employees. “Money comes and goes. How much is enough money to value people unless you have an incentive or bonus program in place? The advantage of a recognition or benefit program is that it can go across the whole organisation. There’s no class distinction as to what gets delivered,” explains Cheryl Patten, general manager of Highly Recommended winner Member Advantage. Jackson refers to research done as far back as Frederick Herzberg’s in the 1960s, which suggested that increasing salary doesn’t necessarily lead to satisfaction. “Recognition and a sense of achievement are also strong motivators. Non-cash rewards offer a ‘trophy’ value or experience that cash
can never deliver,” she says. Incentive plans should not implemented on an ad-hoc basis. The stakes have lifted, Jackson says, and the quality and skill required to now write these plans has reached a new level of sophistication. While some employees will baulk at having their pay reduced and neither employer nor employee will see any benefit in removing an incentive program altogether, Jackson says the majority of employees will reduce their expectations in difficult times. “They can accept the need to work harder at achieving goals and therefore rewards,” she notes. In the case of non-cash reward programs, employers should tighten up eligibility and performance criteria to maximise results – especially sales results. For example, staff might have initially had a sales target by product, but now there are additional criteria around things like cross-selling, new customers and the timing of sales. “You need to make sure you can measure your program. There are many organisations that have quite complicated point systems in place, but most HR departments aren’t set up to run a benefit program in the first place and are daunted by the extra workload. Look at employee take-up and engagement with the program,” says Patten. How can organisations continue to set realistic targets and accurately measure ROI aspects of incentive plans for managers in a volatile market? Jackson suggests the answer may be to convert to annual rather than quarterly or monthly target cycles, which may smooth out a lot of the volatility. “Remember that while employers may have more bargaining power in this market, those with vision are balancing the shortterm financial challenges with addressing the medium- to long-term workforce needs and motivation,” says Jackson. “Performance improvement should be approached as an intelligent and integrated strategy. That is, best practice performance improvement is holistic in its planning, approach and implementation, in line with business objectives and the HR strategy of a company.”
www.hcamag.com
23
issue 7.11
cover story
HR technology & software providers
Preferred incentive/ teambuilding providers
Sue Jackson, Executive Chairman, Solterbeck “Solterbeck is delighted to be voted as Gold Medal winner in Human Capital’s 2009 Awards. Solterbeck takes great pride in assisting companies to motivate and communicate with employees and channel partners to deliver improved business outcomes. We thank Human Capital’s readers and our clients for recognising us with this very special award.”
24
www.hcamag.com
In the ever-evolving world of technology, 2009 was a chance for many organisations to take stock of their existing HRIS. Nick Southcombe, general manager at two-time Gold winner Frontier Software, confirms that most organisations have been consolidating what they already have, yet the relentless march of the tech world has encouraged others to look at the most recent applications to hit the market. “Online recruitment systems and performance management systems have continued to grow in functionality,” he says. “Other organisations, particularly those that have already implemented integrated HRIS systems like those provided by Frontier Software, are seeking to better understand and fully utilise what they already have in place. Additionally, many organisations, particularly those with US or UK parents, have been consolidating onto single systems and to single vendors, and sometimes setting up shared services arrangements.” The majority of Bronze winner EmployeeConnect’s clients are looking to use software tools where there are real and measurable business benefits. This is particularly the case with online recruitment and online performance management solutions. There is also an increasing emphasis on software tools that provide HR metrics and eliminate the need for the excessive use of manual reporting systems. “Recent events have forced many organisations to shift focus towards accountability,” says Ari Kopoulos, national sales & marketing manager at EmployeeConnect. “As a result, HR processes will not only need to be strategic, but measurable down to the dollar.” Specifically, this means that organisations are looking for dynamic reports – headcount, liabilities, competency gap analysis, budget VS actual, FTEs, etc, or monitoring activity costs and associated outcomes. What has the economic downturn meant for HRIS providers? Kopoulos notes that unnecessary spend or implementing a new system when the old one still works will be difficult to justify. In this regard he says that vendors without a well defined value proposition will find it challenging and could face consolidation or just simply fall off the radar. “The more progressive vendors would have heeded that signal and have started to build even more value into their solutions with a set of tools that interpret the business strategy into a measurable HR strategy. As such, the user can expect solutions with more content, tighter integration both internally and externally, and a larger selection of reports. In terms of deployment, the focus on cost & risk will start to favour the SaaS model,” he says. With devices and platforms that facilitate 24/7 connectivity becoming the norm, Kopoulos believes organisations will start to realise the true value of social software. “One obvious example is integration of the recruitment process. From a workflow perspective, the approved recruitment request is sent directly to a social networking site and selection of suitable candidates sent back to the user,” he says. However, some aspects of the vendor/ client relationship remain unchanged. As always, Southcombe
cover story issue 7.11
Preferred HR technology & software providers
Frontier Software Taleo EmployeeConnect Sage MicrOpay SuccessFactors
Why are they so good? • “Frontier has excellent consultants, fast response time, and great help desk and customer support.” • “SuccessFactors simplified and streamlined our performance management and succession planning tools to an online easy-to-use system for managers and staff.” • “Sage MicrOpay provides clients with an excellent payroll/ HR package.”
believes outsourcing is an opportunity for HR to offload the more transactional components of their function, including payroll. This allows HR professionals greater opportunity to develop and manage the people strategies of their organisations. “Outsourcing is not the aberration of responsibility; it is the delegation of responsibility,” he says. “Outsourced service providers execute on behalf of their client. Successful outsourced business arrangements are where the outsource service provider is engaged as a partner and is not seen as just a vendor.” The key to that relationship is constant and honest communication along with regular face-to-face meetings. Southcombe adds that it’s also important that service providers understand their audience and adapt their messaging accordingly. “The Payroll, HR and Finance business units all have different drivers and perspectives and trend talk in different languages,” he explains. Due to the fact that management of human capital is often an organisation’s largest expense, Southcombe believes that 2010 will see decision makers focus on deliverables and outputs from their existing systems. “There will an increasing focus on HR and Payroll metrics. When the financial crisis comes to its inevitable end, recruitment will boom and so will the need for online recruitment tools,” he notes.
Preferred HR technology & software providers
Nick Southcombe, General Manager, Frontier Software “At Frontier Software we always strive for consistency and exceptional performance. For our comprehensive and integrated HR solutions to be recognised in this way by third parties for the third year running is a thrill to everyone at Frontier Software. We very much thank the readers of Human Capital magazine for this honour.”
www.hcamag.com
25
issue 7.11
cover story
Preferred HR technology & software providers
Ari Kopoulos, National Sales & Marketing Manager, EmployeeConnect “To our clients, partners and loyal readers of Human Capital, we would like to thank you for the recognition in this esteemed award. It is your voice, opinion and experience that fuels our continuing journey to redefine the way technology is built, delivered and utilised in the workplace.�
26
www.hcamag.com
cover story issue 7.11 migration & mobility service providers
From September 2008 to April 2009 there was a dramatic 30% drop in the use of the 457 visa program. Likewise, the federal budget reduced the skilled migration program. While these trends mirrored the general downturn in recruitment activity, it was an uncertain year for most migration agents and mobility service providers. Perhaps they could take heart from two fundamental factors: employers in certain sectors continue to suffer from shortages of skilled workers – hence the ongoing need to recruit from overseas; and secondly, government legislation is constantly under revision, meaning their services are always in demand. Teresa Liu, partner at Gold winner Fragomen, says the trends in global mobility and corporate migration volume continued to follow business needs and sentiment throughout the year. With the impact of the global economic downturn, many businesses had to realign themselves to revised projects and business plans. “Economic crisis notwithstanding, businesses remained focused on potential opportunities, and particularly during the second half of 2009, we saw renewed confidence from business with new projects planned for 2010 within sectors that included health, IT, energy, mining and resources. This more positive sentiment has certainly been helped with signs of recovery in China, which experienced solid positive growth in the last quarter,” she says. In addition, the completion of a series of extensive federal government reviews into the efficiency and integrity of the temporary foreign worker (subclass 457 visa), and the resultant changes that came into effect on 14 September, have kept migration specialists busy. “We’ve seen a definite trend in companies having to focus more energy on the changing compliance aspects of global mobility and corporate migration. “As a firm, we’ve spent considerable time with our clients during 2009 to assist them in understanding the new and more onerous sponsorship obligations and amended visa rules, and to provide support in their review of their current practices and systems to ensure compliance and to avoid penalties in this area,” Liu says. The third major trend for 2009 saw Australian employers increasing
their support of permanent residence applications. This trend, in many cases, was a reflection of the instability in the economy with employers seeking to provide as much surety to their foreign national employees about their long-term positions within the company and their ability to remain here. Of course, as Liu notes, once the employee gains permanent residence, he/she is then ‘out’ of the temporary residence program, including the various conditions and obligations that attach to both the visa holder and the employer. While the changes to the 457 visa have been in place for some time, Liu believes prudent HR professionals will keep a close eye on the details of those changes, particularly from a policy and on-the-ground processing perspective. This is because although law, and to some extent written policy, has been released, there are still areas of grey that will need further attention and clarification by the government. “It’s also important for companies employing foreign nationals under this visa program to be aware that there are now ongoing obligations that will require strong and robust management systems,” warns Liu. As an example, an employer has an ongoing obligation that the 457 visa holder’s terms and conditions – including their market salary – continue to be at least ‘no less favourable’ than their Australian counterparts throughout the life of their employment in Australia on the visa, and must notify the Department of Immigration of changes in their job duties within 10 working days of that event happening. “By now, businesses looking to or who employ foreign employees under the subclass 457 visa program would have already started the process of reviewing their current practices, policies and record keeping systems in light of these changes. If a business has not, it will be critical to do so fairly quickly and to have those amended practices and policies in place before what we all hope to be business as usual in 2010,” she adds. When it comes to choosing a migration agent, Maurene Horder, CEO of ‘Highly Recommended’ Migration Institute of Australia, recommends checking whether your advisor is a member of the peak professional body, the Migration Institute of Australia. “Our members are all registered
Preferred migration & mobility service providers
Fragomen KPMG Toll Transitions Hamilton Watts Migration Institute of Australia
Why are they so good? • “Fragomen have competent staff who understand our business requirements and have rapport with key people within DIAC; they deliver on time and I’ve had a 100% success rate with Fragomen in the five years I’ve been dealing with them.” • “KMPG are professional and solution oriented.” • “Hamilton Watts are efficient and flexible to work with expatriates and repatriates with varying time zone restrictions. Their legal expertise is reliable and therefore I have the confidence that relocation will be legally accurate and a smooth transition for the executive.”
migration agents who have to abide by a code of ethics as well as the compulsory code of conduct,” Horder says. “This gives clients an extra level of confidence.” She adds that using a skilled professional who knows how to navigate their way around the migration system means that visa applicants have a greater chance of meeting government requirements. Registered migration agents are obliged to maintain current knowledge and are well-placed to offer up-to-the-minute advice. www.hcamag.com
27
issue 7.11
cover story
Preferred migration & mobility service providers
Robert Walsh, Managing Partner, Fragomen “This is a great achievement for the firm. We pride ourselves on the fact that all our lawyers and registered migration agents understand the unique challenges of managing an immigration program. We work to deliver significant valueadd services to our clients. We strive for a comprehensive, solutions-focused approach to corporate immigration requirements. Fragomen would like to thank all our professional advisors for their dedicated work, and the HR professionals who voted for us as their ‘Preferred Migration and Mobility Service provider’.”
28
www.hcamag.com
cover story issue 7.11
Preferred migration & mobility service providers
Maurene Horder, CEO, Migration Institute of Australia “The Migration Institute of Australia is the professional association for migration agents. Our members provide advice to individuals and businesses regarding living, working and studying in Australia and are leaders in the migration field. We are proud to accept this award in acknowledgement of our members’ high standards of professional conduct.�
www.hcamag.com
29
issue 7.11
salary packaging
Salary packaging:
Flexibility the key Ken Gilbert provides some helpful tips to ensure salary packaging remains a viable option for employees
S
alary packaging continues to be offered to employees in many companies, despite the changes to tax rules over the last three years, which have made some salary packaging options less attractive. The key factor behind this fall in popularity was the change to personal tax thresholds (upwards, firstly to $150,000 in July 2006 and to $180,000 from July 2008). Additionally, changes to the Fringe Benefits Tax (FBT) rules have removed advantageous tax treatment from some items which were popular salary packaging benefits (such as laptop computers and PDAs). However, offering salary packaging to employees continues to provide them with an opportunity to tailor their reward to suit their lifestyle and needs. Companies are increasingly seeing salary packaging as not only a responsible approach to reward, but an important part of the value proposition they deliver for their employees.
30
www.hcamag.com
What’s it all about?
Simply speaking, salary packaging is an arrangement between an employee and an employer where the employee foregoes part of their salary in return for the employer providing benefits of a similar value. If the employee elects to ‘pay’ for the selected benefit from ‘pre-tax’ dollars, the employer is also required to pay FBT on the value of the benefits provided. While strictly speaking, the employer is liable for FBT, this cost is typically passed on to the employee under salary packaging arrangements, whereby the ‘value’ of the benefit provided (which is deducted from the employee’s salary) incorporates the FBT liability. The financial advantage for employees comes when, in certain instances, they pay less FBT on the value of the benefits provided than the income tax they would have paid on the equivalent amount of cash salary. Employees earning below the top tax rate don’t typically receive a significant
financial advantage by taking benefits in lieu of salary. This is because the FBT rate is equal to the top income tax rate plus Medicare levy, so the individual would potentially pay less income tax compared to paying FBT on a benefit of equivalent value. However, there are still some benefits that receive concessional tax treatment, and therefore are worth considering: • employer and employee superannuation contributions to complying superannuation funds are not subject to FBT, and attract lower tax than personal income tax rates, although they are subject to maximum contribution limits in any one year (depending on the employee’s age) • motor vehicles provided by the employer (for example under a novated lease arrangement) continue to receive concessional FBT treatment • specific organisations such as public hospitals, trade unions and charitable
Alphabet – advertorial
issue 7.11
Alphabet Fleet Services Who we are Alphabet Fleet Services (Alphabet) is a wholly owned subsidiary of BMW Group Financial Services, and is an international fleet management company with over 300,000 vehicles under management. Originally established in the United Kingdom in 1997, Alphabet has grown rapidly and now has operations in 15 countries across Europe and Australia.
What we offer Over the past few years we in Australia have been working hard to make sure Alphabet boasts an exceptional level of knowledge in vehicle financing, salary packaging through novated lease and fleet management. We are continuously working towards improving systems and reporting to cater to all of our customers’ needs which enables us to evolve with their company to become not just a supplier, but a true partner. Our customer service, management and operations personnel have a collective average of 10 years’ experience in the finance industry. With our offices in Mulgrave, Melbourne, and a total of nine staff, we are able to leverage off the operational competence of BMW Group resources, providing vehicle administration and management and, above all, exceptional customer service. Because of our unique size, with in excess of 5,000 novated lease accounts, our primary focus is on customer service and making sure our customers are 100% comfortable with their product, and particularly the way their novated lease is set up. The Alphabet Novated Lease has been designed from the ground up to provide companies with a professional, efficient and cost effective product – as a true ‘value add’ for their employees. An Alphabet Novated Lease offers the following features and benefits: • Offers the versatility of being able
to ‘stand alone’ or include all operating costs. • Flexible standard contract terms from 24 to 60 months. Twelve months is also available on application. • Flexible residual (final lump sum payment) values. • Alphabet can set maximum residual value guidelines to reflect the contract term and the anticipated future vehicle resale value, and observe the minimum residual guidelines as set out by the Australian Taxation Office. We recommend the minimum to all employees as a ‘hedge’ against downturn in market values at lease end. • All types and makes of vehicles can be financed.* • New and used vehicles may be financed. • Prompt turnaround time for finance applications. Our focus on service is also designed to achieve greater customer loyalty, by offering companies a total solution for all their motor vehicle requirements. Applications for finance can be submitted on line and are assessed with approvals given within two working hours**. Documentation is issued within 24 hours electronically and settlements to suppliers are processed the same day.
Our competitive interest rates All employees will have access to the prime corporate interest rate applicable under the corporate plan we put in place, irrespective of the term of loan required (from 24 to 60 months). There are no loan establishment fees, recurring document fees or administration fees. As part of our service, employees can be provided with a payout schedule prior to the commencement of their lease, detailing the pay out amount at any time during the term of the lease – a benefit many of our competitors cannot match. Disclaimer *The only exceptions being commercial vehicles which are not recognised as passenger vehicles by the Australian Taxation Office for the purpose of salary packaging. ** Working hours are between 9am and 5pm, Monday to Friday, approvals are subject to our normal lending criteria.
Alphabet Fleet Services Log onto www.au.alphabet. com to find out more about us, or call one of our professional consultants on 1800 220 580.
www.hcamag.com
31
issue 7.11
salary packaging
organisations are fully or partially exempt from FBT up to certain limits, depending on their FBT status • ‘otherwise deductible’ items such as self-education expenses and professional association memberships are not subject to FBT, and if paid by the employer under a salary packaging approach, the employee receives the tax advantage immediately, rather than having to claim this deduction in their annual tax return – a cash-flow advantage even if the end tax result is neutral There is no doubt that flexible packaging is a responsible remuneration strategy if appropriately applied in the right context. For example, where employees are finding that the reduced income tax rate is making the packaging of a novated lease less efficient, they could still make after-tax contributions – known as the Employee Contribution Method (ECM) –
to reduce the FBT liability. Similarly, those employers who provide health insurance on a salary packaged basis could simply allow for employees to participate on an after-tax basis but still have the advantage of reduced costs, due to the buying power of the employer corporate. Also, employers are increasingly introducing other benefits that are not necessarily tax efficient but provide a benefit in other ways, for example, by using corporate buying power to obtain discounted financial services and lifestyle benefits such as discounted travel programs.
Flexibility the key
Allowing employees the flexibility to vary their own remuneration package offers them a number of advantages and may be considered a benefit in itself. Flexible packaging:
• provides employees with an opportunity to tailor their own reward to suit their lifestyle and needs. For example, an employee may choose a higher value of superannuation contributions and a lowervalued packaged car • can be a motivating factor for employees who are able to make informed decisions about their reward packages • may provide additional financial benefits to employees who take advantage of the concessional taxation arrangements for cars and superannuation, without extra cost to the employer • is a way for organisations to recognise the achievements of high performing employees with rewards tailored to the individual • can provide organisations with a competitive edge in attracting and retaining staff continued page 35
Need advice?
Ask the experts! We would all like to have experts on hand when we need information. This month, Fleetcare’s Nigel Malcolm answers some questions on salary packaging with a Novated Lease Questions? Got a tough question to ask our panel of HR and people management experts? Send your question through to: editor@hcamag.com
Staff retention made easy
The Australian economy is gearing up for another boom and this means more opportunities will inevitably land on the desks of quality employees. So how do you keep them and avoid the employee shortage of the last boom? A Novated
32
www.hcamag.com
Lease is the ideal salary packaging scheme to attract, retain and reward quality staff. Don’t fully understand Novated Leasing? Fleetcare’s managing director, Nigel Malcolm, drills it down for you.
Q A
What is a Novated Lease?
In simple terms, a Novated Lease is a method of purchasing a new or used car by deducting car repayments from an employee’s pre-tax salary. This can reduce the amount of income tax they pay and leave employees with more disposable income to spend. There is
also the additional benefit of bundling running costs such as insurance, fuel and registration into one simple monthly repayment. This reduces the stress of juggling bills and car repayments from week to week. A Novated Lease really does give an employee more financial freedom.
Q A
How exactly does it work?
It is a three-way agreement between employee, employer and a financier. The employee leases the vehicle from a financier and transfers the obligations of their lease to their employer. The employer
ask the experts – advertorial
issue 7.11
then deducts the repayments from the employee’s pre-tax salary and repays the financier, reducing the employee’s tax obligations.
Q A
That sounds like a lot of work?
Not really. The novated lease provider takes care of all the administration duties including Fringe Benefit Tax (FBT) administration, vehicle selection and co-ordination of the lease agreement. Fleetcare, for example offer a 24/7 referral service so that employees turn to Fleetcare rather than their employer with any queries. It’s a lot of benefit for the employee at no direct cost to the employer.
Q A
Ok. But what are the benefits for the employer?
With the GFC drawing to an end and another boom already set to take off, the skills crisis of 2007 is looking to return. Although this is a positive result for the economy there can be detrimental effects for companies who are not prepared. The Australian Human Resources Institute has found that after taking training, recruitment, specialist knowledge and productivity into account, the cost of replacing an existing employee is at least 150% of their current salary (2007 Vedior Asia Pacific Employment Trends survey). With this in mind, pursuing a novated lease program which costs your company nothing suddenly becomes a great return on investment. It’s a win-win situation for everyone involved.
Q
Could a novated lease help attract quality employees as well as retain them?
A
Absolutely. A well-rounded remuneration package involving a salary package option is always more tempting for potential employees than one without. If an employer displays quality in a remuneration package then that company will inevitably attract the right kind of quality employees.
Q A
Which Novated Lease providers are the best?
Fleet companies have begun providing novated lease options for the individual. There are arguably more benefits of going with a fleet based company as apposed to a pure novated leasing company. Fleetcare, being an independent fleet management company, has no ties with any financiers, manufacturers or suppliers meaning we get our customers the best choice and price on their vehicles, associated costs and finance. A lot of pure novated leasing companies do not include maintenance and running costs in their service, meaning employees still have to balance all their automotive costs and bills. Our company pays the bills for the employer and then sends one easy monthly invoice, simplifying their lifestyle and providing fleet discounts on fuel, maintenance and a host of other optional extras that a fleet management company has the luxury of providing. (We’re even offering a free iPhone with every approved lease before 15th of December). We have specialised and dedicated maintenance, registration and client services teams which means each aspect of your novated lease is handled by an expert in that field.
“A well-rounded remuneration package involving a salary package option is always more tempting for potential employees than one without”
Q
How do I implement salary packaging with a Novated Lease for my company?
A
All you have to do is contact Fleetcare, fill out a credit application and we will handle the rest for you. It’s really that easy. HC
Further information To find out more call Fleetcare on 1300 655 170 or visit fleetcare. com.au
www.hcamag.com
33
issue 7.11
34
salary packaging
www.hcamag.com
salary packaging
What employers think employees want
What employees want
1. Paid parental leave for primary caregiver
1. Discounted private health insurance
2. ability to work from home
2. Home computer/internet packages
3. Paid parental leave for secondary caregiver
3. Home loans at lower interest rates
4. Discounts on company products 5. Employee share plan 6. Home loans at lower interest rates 7. Ability to make super contributions greater than 9% 8. Self-education expenses 9. Company car/lease 10. Additional base salary in lieu of annual leave
4. Self-education expenses 5. Discounts on movies/hotels/ airfares 6. Discounted income protection insurance 7. Discounted home/contents insurance 8. ability to work from home 9. Subsidised gym membership/ personal trainer 10. Other loans (ie, personal or car) at lower interest rates
Ask your employees
The secret to getting the benefits list right is to ask your employees. Salary packaging and other benefits deliver the greatest value to the organisation when employees see it as ‘adding value’ to their lifestyle. Yet many organisations fail to ask what their employees want. In fact, Mercer’s 2008 ‘Benefits Outside the Square’ research revealed there is a significant mismatch between the benefits employees would like to access, and the benefits their employers think they would like. This mismatch provides an opportunity for employers if they’re able to make the list of available benefits match what the majority of employees are looking for. In practice, this often means adding benefits to the list that don’t create additional costs for the employer (such as self-education expenses, or providing individuals with access to private health insurance). Other times, it means taking out benefits that employees don’t value (and may be costing the company significantly),
and replacing them with more highly sought-after benefits.
Considerations
Salary packaging may not be for every organisation and consideration always needs to be given to salary packaging in the wider reward context. The number of employees who can benefit, as well as the costs and benefits to the employer, need to be considered from the outset. The criteria for assessing whether salary packaging is appropriate includes: • strategic fit – does it complement the reward plan and culture of the organisation? • manageable – does it require major administrative effort or cost to administer? • defensible – is it a practice which will withstand scrutiny? • competitive – is it a common practice for a similar range of jobs? • legal – is it within the intent as well as the rules of the taxation system?
issue 7.11
In structuring a salary packaging approach there are a number of issues that need consideration: • a consistent costing methodology • coverage of policy • limits on amount able to be packaged • the calculation base for benefits and payments related to salary • degree of flexibility • range of benefits to be provided • taxation • administration • financial counselling • communication Organisations also need to provide salary packaging with the degree of flexibility that’s in line with their culture, HR practices and reward philosophies. Salary packaging that provides freedom of choice for employees can work effectively in organisations that want to foster autonomy, empowerment, entrepreneurialism and higher levels of accountability. This is in line with the increasingly popular approach to remuneration management, which is to manage reward using a ‘total fixed remuneration’ or ‘total employment cost’ approach, where there are benefits for both employee and employer.
Future outlook
Tax thresholds may drift in employees’ favour over the short and medium term but there is still no doubt that packaging continues to be tax efficient in certain instances. Perhaps more importantly, it provides employees with decision-making power over their rewards package. It is an effective tool for employers keen to remain competitive and position their organisation as an ‘employer of choice’, now and into the future. HC
About the author Ken Gilbert, is the human capital business leader at Mercer. He can be contacted at ken.gilbert@ mercer.com or visit www. mercerHR.com.au www.hcamag.com
35
issue 7.11
corporate health – emotional capital
C’mon get
happy
Decades of research have established clear links between specific emotional skills and our health, wealth and wellbeing. Iain Hopkins asks Martyn Newman if these skills can be developed – and how organisations can stand to benefit
H
arvard Law School sponsors an annual conference in applying mindfulness meditation to the practice of Law. Consultants at the global consulting firm McKinsey and Company view ‘Spiritual Intelligence’ as essential for successfully leading in the 21st century. Google sponsors daily meditation sessions for its employees. While corporate health initiatives have traditionally focused on physical wellbeing, increasingly the focus is shifting towards emotional wellbeing. Many leading organisations in business, law, education and other fields are using emotional intelligence to promote competent leadership, reduce stress and foster health and well-being. The timing is perfect. After a difficult year during which employees have put up with downsizing, salary freezes and resource cuts, many are disgruntled and suffering from low morale and high stress; at worst, they may be looking for a new job early in 2010. An October Aequalis survey of 280 jobseekers revealed that 45% now lack trust in senior management, 62% are experiencing lower morale, and only 22% have said they are not moving at the first signs of an economic recovery.
36
www.hcamag.com
Focusing on emotional capital
Martyn Newman, Randstad consulting psychologist and author of Emotional Capitalists – The New Leaders, says it’s no surprise traditional corporate wellness programs focus on physical health – yet he argues that the real productivity and wellness gains will be obtained from a concentration on ‘emotional capital’. “It’s much easier to move the external building blocks such as the climate in which people work – pot plants, gyms, childcare, etc. But we’ve found that irrespective of the environment – and Martyn Newman we can’t always control our environment – greater value can be obtained by teaching
corporate health – emotional capital
issue 7.11
www.hcamag.com
37
issue 7.11
corporate health – emotional capital
(I can’t get no) satisfaction Martyn Newman outlines three significant findings from research into happiness: Firstly, external conditions and other general factors account for no more than 10–15% of the factors that contribute to satisfaction. • A number of studies have shown that once essential needs are met, money contributes minimally to raising levels of satisfaction with life. Obviously, for those who are without the basics, money becomes a means of survival, but beyond a relatively low threshold, extra wealth does not increase satisfaction. • What about intelligence? Are smarter people happier? Apparently not, since the research suggests neither education nor a high IQ leads to greater happiness. • What about age? Does the excitement of being young translate to happiness? No, in fact older people are more generally satisfied with their lives than young people, and they’re less inclined to depressive moods. • Being in a committed relationship? A complex picture: people in partnerships are generally happier than singles, but certain studies suggest that this may be due to the fact that they were happier in the first place. Secondly, although there is some level of genetic predisposition for being happy or unhappy, future life satisfaction is not set in stone. • Genes influence such traits as having a positive, easygoing personality, dealing well with stress, and feeling low levels of anxiety and depression. However, a systematic study of 4,000 sets of twins, in which life satisfaction data was compared for identical versus fraternal twins, concluded that only about 50% of life satisfaction comes from genetic programming. “We are neither at the mercy of our moods nor our environment, but rather our emotional wellbeing is more in our control than we ever imagined. “This view is consistent with the third discovery of research into wellbeing and happiness — that we can exert considerable influence on our experience of happiness and unhappiness by the way we live and think, how we perceive life’s events, and how we react to them,” says Newman.
38
www.hcamag.com
people the skills of how they manage their response to their environment. This gives them a deep sense of control, which is one of the key factors that predicts a person’s sense of wellbeing and also enables them to adapt to the demands of the changing workplace environment. This in turn gives them a greater resilience to face the inevitable stressful challenges that work presents to them.” Newman adds that people with high levels of emotional capital are generally more productive, more creative, solve problems better and more quickly, live longer and enjoy high levels of leadership influence. In other words, when people feel better, they perform better.
Optimism and resilience
The elusive goal of most people – genuine happiness – is closely aligned with several emotional and social skills. Top of the list is optimism. Far from being a pie-in-the-sky ‘always look on the bright side of life’ trait, optimism is about dealing with difficulties and sensing opportunities. The backside of optimism as a skill is the capacity to develop a deep resilience against setbacks and disappointments. “Optimists make a choice to refuse to be set back by disappointment and failure and instead leverage that experience to imagine a different outcome. So rather than focusing on mistakes, which most of us do and then turn inwards punitively and beat ourselves up, people high in optimism tend to focus on the values and lessons they can extract from that experience. Rather than drowning in negative emotions that overwhelm us and paralyse us, optimists focus immediately on a set of tasks which need to be accomplished to move the situation forward and change their circumstances,” says Newman. What does this mean for the workplace? Most critically, optimists are able to maintain productivity while others struggle and become ‘paralysed’ by setbacks. That resilience is also the clearest predictive factor of an employee’s capacity to continue to focus on goals and provide productive outcomes in the workplace. Newman adds that optimism should not be confused with cocky self-assurance; rather, it’s a skill that brings positive mood to the workplace. “Positive emotions like optimism become contagious. A person who’s optimistic is constantly focused on benefits, looking in every situation for what’s possible and the benefit to be extracted from that experience. This has a remarkable effect of lifting the mood of everyone around them. We know from Gallup and Hewitt and countless other researchers that a positive mood leads to much higher levels of output and productivity,” he says.
corporate health – emotional capital
“We can exert considerable influence on our experience of happiness and unhappiness by the way we live and think, how we perceive life’s events, and how we react to them” – Martyn Newman Leadership traits
Over the past 10 years, Newman has carried out research regarding the behaviours of top leaders across the world. Optimism and resilience were two of the 10 clearly definable, clearly measurable behavioural traits demonstrated by truly successful leaders. Interestingly, he says, the majority of these skills are emotional and social in nature – not technical. “We’ve measured some of the brightest and best technical people in the world – for example, Exxon Mobile which has some of the nation’s top engineers – and the skills that set great leaders apart, which are not technical excellence but emotional and social skills. We’ve collectively called them emotional intelligence or emotional capital,” Newman says. Newman outlines some of these skills: Self confidence The ability to back your judgment and feel a sense of competence, and to value yourself for the distinctive individual you are. Assertiveness Being able to look people in the eye and be straightforward and communicate with integrity – but always looking to see how your message is being received and trying to get buy-in rather than bull-dozing people over. Self actualisation When the psychological jargon is stripped away this comes down to passion – the amount of positive-focused energy that a leader has to drive business results and engage the hearts and minds of the people in the organisation. Relationship skills Nearly 80% of our success in life in general comes from the quality of our relationships. For leadership, this is even more important. All leaders who are effective at what they do treat their people as emotional and intellectual investors in
issue 7.11
the business and go out of their way to build high quality, personally-engaged relationships with all stakeholders. Empathy Empathy is often considered something quite soft but it allows you to build a deep and meaningful emotional connection with another human being because you recognise their experience and recognise what you have in common. You may or may not agree with them, but that simple acknowledgement that we understand another person’s experience forges a remarkable capacity to influence that person and build an emotional contract between people. Can these skills be developed? Newman says that unlike IQ , emotional intelligence can continuously be developed and built upon – but a particular strategy is needed in order to do so. Fortunately, it is not only negative emotions that can become entrenched with regular use – optimism, too, can become a habit. “These skills are supported by various structures in the emotional part of the brain. It takes time and direct practice for someone to deliberately concentrate on these skills for them to change and become habits that are supported by the neurological wiring in our brain. The exciting news is once you define the building blocks, you can set about increasing your emotional skills and building your social competencies over time,” he says. Newman says a key to an emotional capital program is to create a compelling learning environment. He suggests inviting senior people into a room where the business case and the ROI of these so-called ‘soft skills’ can be laid bare. “People leave that session at least having had their questions intelligently responded to. Hopefully they will be curious about taking the next step in that process,” he explains. It’s then important to benchmark a person’s www.hcamag.com
39
issue 7.11
corporate health – emotional capital
emotional intelligence so they can get an accurate sense of the skills they currently have, and where there are opportunities to focus on a new set of skills to take them to the next level of leadership. “You must have good technologies to do that – we use the emotional capital inventory, a product of 10 years of research that has identified these 10 skills and how they can be measured,” Newman says. The third step is to tailor a blueprint that maps out the particular skills targeted for development and provides the building blocks in a detailed report – the ‘emotional capital report’ – which is packed with coaching strategies and other tips. Although Newman says individuals must have a desire to develop these skills, he adds that HR can help. “One of the critical first challenges that HR faces is creating the environment in which people can table their concerns, their cynicism and anxieties. Most people who are bright and have technical skills find the idea that emotional skills can be important and developed as quite confusing, especially in the hard commercial environment of business.” he says.
Creating significant change
The ripple effects of enhanced emotional capital can be massive. Once people see leaders building relationships with others they feel valued, they feel listened to, they feel there are opportunities to contribute opinions and decisions, and an environment is
40
www.hcamag.com
Once people see leaders building relationships with others, they feel valued, they feel listened to, they feel there are opportunities to contribute opinions and … creativity and innovation are valued created in which creativity and innovation are valued. It gives tacit permission for middle managers and team leaders to model these behaviours and copy them. “People need to be able to develop the language to name and explain these values and behaviours – then you start to get real cultural shift,” says Newman. “The trouble with many organisations is you walk past a set of values pinned to the notice board in the canteen. Yet we know the most successful companies are filled with people who can articulate the values the company is committed to – but more than that, they understand the behaviours associated with those values and are passionate about living those values in the workplace.”
Love what you do
Given that most of us spend approximately a third of our life at work, loving what we do for a living is a key consideration in maintaining emotional wellbeing. Passionate people spend twice as much time thinking about what they’ve accomplished, how achievable the task ahead is, and how capable they are of achieving it. So, can we learn to be happier in our lives? Newman believes so. “The most fundamental finding from the science of happiness is that almost every person feels happier when they’re with other people, especially when they are contributing to others. Practising kindness, compassion and other virtues lifts your stocks of emotional capital. Giving makes you feel good about yourself and it creates meaning in your life. You have a sense of purpose, because you matter to someone else and feel more connected to others,” he says. Newman adds that happiness makes people more effective, because building emotional capital goes hand in hand with a capacity to maintain peace of mind. “When your mind is peaceful, your mood lifts, and you take in information effectively. Your mind becomes agile and creative. A consistently positive mood also enables you to foster positive feelings in the people whose cooperation and support you need,” he concludes. HC
advertorial – HICA
issue 7.11
Staff Health Plans that perform
Being an employer of choice
A
ustralian employers are facing serious challenges trying to attract and retain workers in an era of a shrinking and ageing workforce. Many of these employers are meeting this challenge with a range of workplace strategies to enable them to claim ‘employer of choice’ in their particular sector. Another emerging challenge is that the workforce is facing major health risks. Heart disease, obesity, diabetes, cancer and stress are issues that no employer can afford to ignore. An appropriate health plan provides employees with the peace of mind and security of affordable healthcare as well as convenience, savings, service and support. This in turn generates enhanced employer loyalty and increased productivity. Implementing and maintaining a staff health plan that is valued by staff and administratively simple for employers is not a straightforward matter. The employee base of most companies generally comprises a diverse range of healthcare needs and budgets which is unlikely to be met by a single underwriter. With 38 Australian registered health funds offering a vast number of policy options, determining the most appropriate health cover scheme is a daunting and time consuming task.
So where does one start when considering an employee health plan? There are a number of ways a corporate plan can be structured. The structure of the scheme primarily depends on the budget that has been set aside for this benefit. Some issues for consideration are: • What value of subsidy (if any) is to be provided by the employer? • Will a company sponsorship apply to all or selected employees? • What level of care, service and support will staff have access to under the plan? • What resources are required to implement, manage and review the plan to ensure viability? • Are there FBT implications and how can they be minimised? • What structure is most suitable?
Employer subsidised schemes
An employer subsidised plan is one where the employer pays all or part of the health insurance premiums for all or nominated employees. Alternatively, the employer may subsidise the scheme by agreeing to pay an excess for staff should they be hospitalised. The employee enjoys reduced premiums due to the high excess contract, while effectively having excess-free cover. If the budget does not provide for a high level of subsidy, the scheme can be structured to achieve the best result within the budget constraints. In this case, there are at least nine alternative structures that would be available to an employer and still provide a worthwhile staff benefit.
Unsubsidised schemes
Suzanne Still HICA CEO
Professionally established health plans need not be subsidised by the employer to provide a value proposition to employees. A voluntary scheme dynamically comprised of high value contracts from various underwriters, offered with any discounts, increased benefits or special offers that may be negotiated, together with convenient access to professional advice and service is a value proposition.
This option involves a review of the employee demographics and the identification of the range of health cover benefits required. A suite of products for various levels of hospital and ancillary (extras) covers can then be selected from different health funds. Employees can choose the cover which best suits their needs or budget as the hospital and extras cover within the scheme can be ‘mixed and matched’.
Health Insurance Consultants Australia (HICA)
HICA has been providing consulting and broking services to the corporate sector for over 25 years. We offer our clients a consultative approach that is responsive, flexible and outcome focused. HICA specialise in the implementation and management of innovative corporate health schemes that control costs and reduce HR workloads. Employees can access information and support via our advanced online facilities and priority telephone service. We review schemes annually or as required to ensure they continue to perform. All of HICA’s products and health plans are supported by ongoing access to highly trained professional consultants at no cost. To review your existing plan or implement a new plan, contact HICA for a free, no-obligation consultation.
Further information Health Insurance Consultants Australia Pty Ltd (HICA) PO Box 1000, Templestowe VIC 3106 Ph: 1300 732 757 Fax: +61 3 9431 4469 Email: corporate@hica.com.au Web: www.hica.com.au
www.hcamag.com
41
issue 7.11
exit interviews
exit stage left Why do your employees walk out the door? If you only have a vague sense of their reasons for leaving, it may be time to sharpen up your exit interview skills
42
www.hcamag.com
exit interviews
W
hile employees have been hanging on to their jobs and riding out a tough year, the start of 2010 may see a different scenario emerge as the economy improves and people start looking elsewhere for work. Rather than letting those employees disappear from the ranks without a trace, employers should be capturing as much information as possible about their reasons for leaving via exit interviews, experts advise. “With HR departments often straining to meet multiple demands, exit interviews can be regarded as a nice thing to have,” says Shaun Rogers, research project manager with Insync Surveys. “Organisations that skip exit interviews open themselves up to a range of unacceptable and potentially damaging behaviours. Exit interviews provide an early warning system, alerting management to possible discrimination or fraudulent activity and any current or potential compliance breaches.” Lenore Lambert, director of Exit Info, maintains that by failing to conduct exit interviews, or not doing them well, organisations are missing out on the single most accurate source of information to identify what is really driving staff turnover. “Some organisations look to their engagement data for this but studies and anecdotal evidence have shown engagement data predicts only about 25% of quit behaviour,” she says. “Exit data doesn’t speculate why staff might leave; it pinpoints what actually drives quit decisions.” In addition, the opportunity to complete an exit survey demonstrates appreciation of the outgoing employee’s time and efforts with the organisation – an important factor when word of mouth can spread like wildfire. “It is tempting to drop exit interviews, but I think there can be a good return on investment for the organisations that choose to run them and collect that data, and then use it to change their strategy – whether that’s the recruitment, induction, retention or leadership strategy,” says Leslie Alderman, partner, career management services, Chandler Macleod Group. “The
data can be extremely powerful if you have an organisation that’s open enough to receive that criticism and feedback.”
Who does it?
Exit interviews can be conducted by three separate parties, and all three have their pros and cons. Depending on the size of the organisation, it is common practice for HR to conduct the interview. Alderman notes that HR’s success will largely depend on their relationships with employees and whether the exiting employee feels they have the objectivity to really let loose. An alternative is to have the manager’s manager do the interview. This, however, can be troublesome. “It can end up being a personal refection of them, so if the employee is leaving because of their manager, well, the manager’s manager probably hired that person so it reflects badly on their recruitment decisions and their ability to manage that manager. It’s not objective and they may be selective about what they choose to write down – it’s a can of worms,” says Alderman. Other organisations may engage a third party to do exit interviews, and while this may engender a sense of objectivity, Alderman warns that some service providers will use junior staff to conduct the interviews – whether that’s face to face, over the phone or via questionnaire. “You must have the ability to ask probing questions to get the good, hard data about the real reasons why people were going. Experienced consultants are best,” she says. While a third party has no agenda other than to get the truth, timing can be crucial. Alderman says that targeting individuals prior to them leaving can go one of two ways. Firstly, if they have already secured another role, Alderman believes more truthful responses will be forthcoming. Alternatively, if the employee hasn’t secured another role they may need to have referees and will feel compelled to speak positively about the organisation. To obtain honest answers, Alderman says it’s crucial to set the guidelines upfront. “Make it clear why you want to obtain this information, how it will be used, who will see it, and reinforce that it will be done
issue 7.11
confidentially. Make sure they know that general information based on demographics and other factors will be revealed to senior managers but not location or department – unless it’s a sizeable organisation, which would make tracking answers to one individual difficult.”
Getting it right
Exit interviews should take 30–45 minutes – anything less and the impression from the exiting employee will be that the employer really doesn’t care and is merely ‘ticking the box’. A survey or questionnaire can be done prior to the actual interview, but the results need to be probed with meaningful questions as a follow-up. The questions should be positively focused on encouraging the exiting employee to express their views in relation to: changes in the organisation; management and leadership competence; what the person did and did not like about the job; communication within the organisation and business unit, and so on. “The key is not to do it in a way that is overbearing or threatening in any way. Ask them how they would like the organisation to use that information,” says Alderman. A good exit interview covers not only the employee’s reasons for leaving, but also broader measures around that person’s perceptions of their work environment. In many cases, there are underlying issues and concerns that don’t surface when people are asked directly why they’re leaving. “There’s the tendency for employees to state socially acceptable reasons for leaving such as career opportunities or pay, in an effort to not burn bridges,” says Rogers. “Without solid questions and an unbiased approach, your
“The data can be extremely powerful if you have an organisation that’s open enough to receive that criticism and feedback” – Leslie Alderman www.hcamag.com
43
issue 7.11
exit interviews
Benchmarked trends Insync Surveys benchmarked responses to the question: How important were the following factors in your decision to leave on a scale of 0 (not at all important) to 5 (most important)? So where should HR be focusing? Overall, regardless of age, people mainly leave jobs because of dissatisfaction in the role and career opportunities. These are shown on the right side of the graph. The left of the graph reveals the factors that are less likely to impact an employee’s decision to leave.
decision to leave. They are uniquely not concerned about pay and conditions, when compared to Gen X and Gen Y who sometimes cite this as an issue. The four main factors that impact Baby Boomers’ decision to leave are: satisfaction in the role, personal reasons (including retirement), career opportunities and balancing work and life demands. Factors such as relationships with the team, concerns about job security, and cultural fit have less impact on their decision to leave.
Baby Boomers Baby Boomers are uniquely concerned about work stress and are more likely to cite this as a contributing factor in their
the role, career opportunities, better job offers, and professional development opportunities. Location of the job, relationships with the team, and concerns about job security have less impact on their decision to leave. Gen Y The four main factors that impact Gen Y’s decision to leave are: career opportunities, satisfaction in the role, professional development opportunities, and better job offers. Factors such as relationships with the team, concerns about job security, and culture fit have less impact on their decision to leave.
Gen X The four main elements that impact Gen X’s decision to leave are: satisfaction in
19.3% 18.6%
7.9%
Career opportunities 2.5%
Professional development opportunities
Balancing work and life demands
2.2%
Personal reasons (including retirement)
-8.1%
7.6% 5.3%
1.3% 0.9% 3.1%
-4.2% -2.2% -3.8% -5.4%
The incentive plan Your direct supervisor or manager
-8.7%
-5.3% -4.0% -5.0%
-9.5% -11.5% -9.1% -8.0% -9.5%
Fit the organisation culture -13.7%
Concerns about job security
-12.6% -13.3%
Relationships with your work team
-12.2% -13.3% -12.5%
-20%
5.9% 8.0%
3.6%
-4.3%
Work stress
Generation Y 13.2%
12.2%
-3.5%
Your pay and conditions
Generation X
18.8% 20.6%
12.3% 10.2%
3.1%
The level of challenge in my role
The location of your job
9.6%
2.3%
Approached with better job offer
Equipment, resources and infrastructure
Baby Boomers
16.1%
Your job satisfaction in the role
-15%
-6.8% -7.9% -9.8%
-10%
-5%
0%
5%
10%
15%
20%
25% Source: Insync surveys
44
www.hcamag.com
exit interviews
organisation might brush over issues such as poor leadership or bullying.” The disclosure control process needs to be watertight. Lambert notes that when an employer collects exit data internally, it can be considered part of the employee record, which means it’s not subject to privacy legislation. However, an external party that adheres to privacy legislation will protect the departing employee’s information according to their instructions.
All bad news?
While exit interviews are not all about the bad news, most people will be leaving for a specific reason. “A lot of the time the feedback can be taken as constructive feedback, but nine out of 10 people will stay where they are if they are happy and satisfied with the organisation, their manager and their career path,” says Alderman. “There may of course be situations out of their control – personal or financial reasons – where perhaps they have been happy but a once-in-a-lifetime situation arises and they just can’t stay. In those instances the feedback would be positive.” The same goes for Baby Boomers, who may have delayed retirement for several years following the erosion of superannuation savings, and who may once again be considering a transition into retirement next year. Their responses are unlikely to dwell on the negative.
The results
If the organisation is prepared to spend the time and energy in assessing the data, it can be a very effective tool in HR’s armoury, Alderman argues. “Look at the demographics, the trends, the issues, and then create some strategies around what’s coming through,” she says. “For example, if something comes through time and time again about the leadership team – perhaps they talk about values but act totally the opposite to those values – that’s a good sign that something is wrong. Perhaps you need to assess your leaders, do some 360s, and then put some leadership development programs in place.” Insync Surveys takes this a step further by benchmarking exit survey information from thousands of Australian responses.
“Exit survey benchmarking allows business leaders to confirm their gut instincts with hard facts. This is powerful because leaders can find out what’s really having an impact on employees’ decisions to leave compared to other organisations,” says Rogers. With aggregated data, Lambert says it’s important to have a flexible reporting tool that can be accessed by HR whenever they need it. HR can then identify the meaningful employee segments for analysis and then slice and dice it to really understand what’s driving turnover for each of the different employee groups. Examples of this are role types (eg, sales, professional, administrative, front line management), gender, departments, geographic locations (rural locations can differ from the big cities), and tenure profiles (eg, those with less than one year of service, or those leaving with less than a year in a new role). “Ultimately, HR should be able to easily answer the question: What’s the one thing that, if addressed effectively, will have the biggest positive impact on staff retention?” Lambert says. Rogers suggests HR leaders gather exit information to develop talent management strategies rather than merely concentrating on areas of dissatisfaction. “In particular, when organisational leaders move on, we can seek to learn from their aspirational qualities and knowledge via the exit interview process,” he says. “Future-oriented questions are commonly used to draw upon leaders’ knowledge of the business environment. An example question may be: Over the next three years, what will be the big story for executives at your organisation?” Despite the economic turmoil the key reasons why people leave remain the same. They include: their manager or colleagues (the old saying ‘people don’t leave companies they leave their managers’), career progression or lack thereof, and finally, money or a better offer elsewhere. “From Insync Surveys’ experience, the behaviour and actions of the boss are not commonly rated as the ‘primary’ reason for leaving,” says Rogers. “Although it can be a contributing factor in an employee’s decision, it doesn’t rate as high as other reasons centred on growth and enrichment – for
issue 7.11
“Exit survey benchmarking allows business leaders to confirm their gut instincts with hard facts” – Shaun Rogers example, career development opportunities, professional development, recognition and so on. This isn’t to say that staff do not leave ineffective managers, rather that more people leave unsatisfying jobs.”
Too little, too late?
It could be argued that an exit interview is too little, too late; the employee is already out the door and any action taken will be reactive rather than proactive. Alderman says one step can be done well before the exit interview: a post-interview, undertaken 60–90 days after the person joined the organisation. “You ask them if the role has turned out the way they envisioned. What was their experience throughout the recruitment stage? How was their recruiter? Was their desk ready when they arrived? Did they have a timely induction? Again, that provides some powerful, insightful information for you to act on,” she says. Rogers stresses that the intention of exit interviews is not to persuade employees to remain with the organisation. In most cases their hearts will already be out the door and persuading them to stay will only be a short-term solution. Instead, exit surveying allows organisations to maintain a sense of goodwill and provide an opportunity for departing employees to ‘get things off their chest’. Exit surveys are also important to identify issues that may be impacting remaining colleagues. “Exit surveys’ real impact is in identifying strengths and weaknesses in your retention efforts and also supplementing data collected through other staff surveys,” says Rogers. “A structured exit survey system can play an important role in employee research.” HC www.hcamag.com
45
issue 7.11
corporate culture
Inside job: How staff culture
drives performance How do employee cultures affect performance and the company’s reputation? Which cultures work and which are set to fail? Human Capital finds out
I
n 1988, General Motors (GM) executive Elmer Johnson wrote: “We have vastly underestimated how deeply ingrained are the organisational and cultural rigidities that hamper our ability to execute.” They were prophetic words, particularly in the context of GM’s near-collapse in 2009. Earlier this year, a former employee, Rob Kleinbaum, attributed GM’s imminent bankruptcy to its internal relationships. “Unless GM’s culture is fundamentally changed, [it] will likely be back at the public trough again and again,” he warned. Both employees recognised flaws in the company’s staff culture – that system of beliefs, norms, practices and values that guides behaviours. While organisations display their public identity through mission statements and marketing slogans, the employee culture is more indicative of what’s really going on in the company: how decisions really come about, how e-mails are composed, how bonuses and promotions are really earned and – most importantly – how people are really treated. Employee cultures are often glossed over for a valid reason: they are less conspicuous and more difficult to define. But some speculate that culture plays such a large role in an organisation’s functions that it should be at the forefront of HR’s major considerations. “The unsaid culture is so much more powerful,” advises Rebekah
46
www.hcamag.com
France, senior vice president, HR & Communications, BW Shipping. Recently, executives announced priorities for the new GM – customers, cars and culture will be the new measures. “Business as usual is over at GM,” says Fritz Henderson, CEO, GM, referring in part to the company’s insular culture. The new goal is to create a flatter organisational structure – one that welcomes feedback and encourages more open communication. Culture does not simply occur; it is built upon the HR framework that’s visible to the organisation. This framework generates unwritten rules, forming a guide by which employees decide what constitutes acceptable behaviour. What happens within the organisation’s walls affects its output. GM employees had described its culture as bureaucratic and out of touch with their needs. Not surprisingly, customers had the same complaints. Observers say GM is finally getting it right. While changes in financial models are being called for, a transformation in the company’s culture is also essential. However, cultures take time to develop. Scepticism about the corporation’s ability to transform its inner workings is reasonable: culture is certainly not created overnight. And oftentimes it is not consciously or methodically planned. This isn’t to say that culture completely evolves on its own either. HR has a significant role here. “HR
corporate culture
can celebrate aspects and shape the culture,” says France. She adds that HR’s role is potentially great, but only if it is appropriately integrated from the start. She warns that if HR doesn’t have a fundamental grasp of business strategies for the organisation, it can have unintended consequences. HR staff may know what the ideal culture is, but not what is necessarily best for the business.
Inside and out
A Sydney teacher describes her school working environment as “authoritative”. Trust has to be earned, and if rules are broken, staff are summoned to the principal’s office to explain themselves. “Sometimes we’re treated like students,” she says. “The language is the same. Kids ‘pass up’ their homework; we ‘pass up’ our reports. “Before class, students try to determine how much they can get away with. ‘Is she in a bad mood today?’ they ask schoolmates in other periods; we ask our colleagues the exact same question before meetings with our department heads.” The list of behavioural similarities goes on. In this case, the employee culture is built upon the key relationship in the organisation – that between teachers and students. The classroom serves as a smallscale model of hierarchies, and employee communication naturally follows the same pattern. Parallels like these are not unique to the education sector; across various industries, employee cultures take their cues from a central power dynamic. Some HR professionals believe staff treatment should correspond to customer treatment, because it sends a clear message that the organisation places equal value on both parties. Byron Clayton, HR director, Microsoft, says this is just one of many company efforts to provide an inclusive employee culture. Recognising that Microsoft is a complex organisation, Clayton says it takes time for people to grasp its cultural nuances. “I’ve not yet met a person who thought Microsoft was an easy organisation to join,” he says frankly. Diversity is a strong indicator of how far an organisation goes to include all
employees. Clayton stresses the importance of allowing employees to express their individuality as well as integrate into the company’s culture. “Every new person changes the DNA a little bit each time,” he says. “The balancing act can be summed up in these words: how does HR make the environment help people be themselves but also be the best for the organisation?” Celebrating ethnic and religious diversity is one way to go about it. Staff attended talks about Ramadan to better understand the beliefs of Muslims in the Microsoft community. Some non-Muslim staff abstained from eating and drinking, and experienced firsthand the challenge of fasting while continuing their daily office routines. “It creates a culture of understanding,” Clayton explains. And this understanding goes beyond religious harmony. Understanding creates trust and a sense of freedom for employees. The informal dress code makes this apparent as well. “Wearing expensive clothes won’t get you anywhere. The talent is inside your head,” Clayton asserts. Jeans and t-shirts represent the Microsoft employee mindset – be practical and comfortable. Another important external factor in determining employee culture is the country’s cultural context. France works closely with BW Shipping’s offices in Oslo, where she notices a different organisational culture from its Singapore arm. She notes that Scandinavian culture infuses into the offices there, creating a flat employee culture. “In Asia, bosses groom people, whereas Scandinavian bosses have no such responsibilities,” she says. France believes employers in places such as Singapore and Sydney have a unique advantage. With such an international workforce, no single identity is likely to dominate the employee culture. “You can really shape the culture by including all the different ways of doing things,” she says.
Getting it right
Many employers assume their culture is aligned with their mission statement. BW Shipping had a list of ‘values’ which
issue 7.11
eventually became redundant because they were so common. “Things like ‘team success’ became background noise – who wouldn’t want team success?” says France. HR had to decide what the goals and values actually meant in practice. And so HR rethought its priorities. “It didn’t have to be a fancy statement,” France recalls. “We wanted to decide what leadership really holds important.” However, BW Shipping’s HR department also wanted a great team to work with. This was not so much a value – given it had not been achieved yet – but more of an objective. The company gave itself 10 years to achieve its goal – “to have the most inspired and competent employees”. France says this “aspiration value” allows employees to understand what they need to work towards. Although culture itself is difficult to quantify, there are ways to measure its importance to employees. In Microsoft’s employee opinion surveys, a ‘culture index’ is gauged by questions asking how long staff plan to stay with the company and if they would recommend the work environment to friends and family. How people view the company over the long term is indicative of how the culture is working and what improvements are yet to be made. Clayton says there are other ways to judge if the present culture is right for the organisation. Attrition rates give employers a good idea. “As leaders, managers must carry forward the culture. They monitor the symptoms – is the heart beat irregular? If managers resolve the problem by searching for somebody else, they aren’t doing their job,” he says. HC
“As leaders, managers must carry forward the culture. They monitor the symptoms – is the heart beat irregular?” – Byron Clayton www.hcamag.com
47
teambuilder
Let’s just Google it… 48
www.hcamag.com
Photo: TMark Stennett Photography
issue 7.11
teambuilder
issue 7.11
Developing the codes and products that have become almost synonymous with the worldwide web is a complicated task. As this month’s teambuilder profile reveals, it takes some extraordinary people and a unique work environment
N
ot all internet startups failed in the early part of the new century. Some, including the garage creation of university friends Sergey Brin and Larry Page, have gone on to be some of the hallmarks of the worldwide web. Starting life as a search engine for Stanford University in California in 1996, Google has grown to be the favoured engine for the entire world. Its algorithms and codes now help users throughout the planet locate not just relevant websites, but also news, e-mail, academic resources, and even geographic locations. Such a rapid expansion of size, product range and user base doesn’t happen without organisation. But while the numbers and office locations expanded, Google has held on to some of the original management philosophies its founders first inspired. While some might say the freedoms and perks its employees now enjoy are only possible because of the rapid growth the company has experienced in recent years, Manoj Varghese, Google’s director – people operations, Asia-Pacific, takes a different view. He says Google’s unique work environment is a major factor behind the company’s rise and success, not simply a benefit of it.
Culture of freedom
Take a walk around Google’s campus in Shenton Way, Singapore, and it’s easy to forget you’re in a functioning workplace. Where the walls are not lined with pictures of team trips and functions, only the brightest colours shine through. The individual work desks can sometimes seem like an afterthought, with a significant amount of space devoted to communal and meeting areas.
There’s space for recreation as well. The table tennis table gets plenty of use, as does the Wii video game system. A fully functioning kitchen provides lunch, snacks and hot and cold drinks from two different points. And – should further distraction be needed – there’s also the commanding view over the Singapore skyline. Varghese says employees are welcome to take advantage of these facilities as much and as often as they like. “The most important thing is that at Google you have a lot of freedom to do what you want,” he says. That overwhelming trust in staff is the hallmark of Google’s culture. By investing in people, and then leaving them to do what they do best, the company is able to claim the best possible results. As Varghese puts it: “You get the best people, give them the right environment, and they’ll truly amaze you.”
Working hard
But it’s not all fun and games, as anyone observing the achievements of the US$150bn company could well surmise. “Google is not about just free food and it’s not about fun all the time,” Varghese says. “There’s a lot of work to be done.” Still, the freedom rule remains relevant. While staff have projects and deadlines like in any other organisation, they are usually left to their own devices to research, collaborate, design and implement as they see fit. Varghese says Google is definitely not a nine-to-five operation. “People set their [own] pace in a lot of ways,” he notes. He says the company and HR team will communicate a common theme to all staff. “The theme is ‘we trust you’,” he says. “‘We’ve spent a lot of time recruiting you;
you have the most amazing colleagues; and we trust you to do your job’.” Google’s famed product engineers enjoy an extra dose of that freedom. They are asked to devote 20% of their working week to their own ideas and experiments. Varghese says no questions are asked, and no forms are completed. But some of the company’s best innovations are developed during this time. Indian-born Krishna Bharat provides possibly the best example of the way this entrepreneurial freedom can lead to market success. As a researcher and engineer in Google’s Mountain View headquarters in September 2001, he developed a tool for tracking online news coverage of the terrorism attacks on New York City and Washington DC. Further development led to the creation of Google News, the company’s first offering outside of its traditional website search domain. Bharat still leads the team developing and enhancing the well-known search portal.
Finding the best
Not everyone can be a so-called ‘Googler’, though plenty put their hand up. Varghese says the company receives more than 3,000 applications from prospective employees every day (over one million per year), regardless of its advertised vacancies. That volume, combined with Google’s insistence on hiring only the best talent available, means a great deal of emphasis is placed on the recruitment process. “We spend a lot of our time looking at recruiting the right people,” Varghese says. “I’ve never seen any other company spend so much senior management time on it.” In the first instance, Google’s own programming talent assists the filtering www.hcamag.com
49
issue 7.11
teambuilder
process. It’s then up to specially-selected recruitment teams to select potentials against a unique criteria. As well as pure functional knowledge, Varghese says people who work at Google need to represent a good cultural fit for the organisation – particularly given
Developing staff
Of all the talent that resides within the Google domain, Varghese says there is still a need for training and development opportunities. “The great thing about people who are the best in their field is that they always know that they have
“The theme is ‘we trust you’. We’ve spent a lot of time recruiting you; you have the most amazing colleagues; and we trust you to do your job” – Manoj Varghese the freedoms and responsibilities their appointment will entail. “We have a number of peer interactions as part of the hiring process,” he says. An independent committee then considers feedback from a range of tests and potential colleagues before passing on the best possibilities to the relevant hiring manager. Even then, not every position is guaranteed to be filled immediately. “Hiring the right person is so important to us that we are willing to wait for the right candidate a lot of the time.”
50
www.hcamag.com
more to learn,” he says. For this, Google provides a wide range of training options to staff of all functions and levels. As pure engineering talent rises through the ranks, an added emphasis on soft skills is also required. “It’s important as a company that we provide the right skills sets in terms of management courses,” he says. Google also works to ensure skills are high throughout the online programming industry. For this, it works with academic institutions to run global coding competitions – ensuring the best up-and-
coming talent can be identified early, even if they are not yet in the job market. “The ‘hard-core’ technology is important,” Varghese says. “And the competitions help us in future years to create a pipeline.” At the other end of the academic spectrum, many Googlers accept sabbaticals from the company to complete further studies at PhD level or beyond. This helps the company to maintain a better than industry average retention level, particularly for its highest-end talents. “If people leave for PhD studies, they often come back,” Varghese says. “It’s a testimony to the culture that we’ve built as a company.”
Thank Google it’s (Almost) Friday
One of the favourite traditions among Google staff across the world is a regular get-together on Friday afternoons. Thank Google it’s Friday (TGIF) is more than a relaxing way to get ready for the weekend. Varghese says it’s an important sharing and bonding time that helps staff to understand their important place within Google’s organisation and history. “We’ve grown very fast over the past few years,” he says. “In the process it became important for us to educate the employees coming in about the history of the company and its products.” The TGIF events are also a chance for staff to speak directly with senior managers. “Our culture involves openness; there’s transparency and there’s discussion,” Varghese says. Even some of the company’s ‘legend’ programmers make themselves available, whether in person or through interactive technology. “It’s an opportunity for interaction; anyone can ask any question. Hearing how Gmail as an idea started and how it grew is fascinating,” Varghese says. In Singapore, TGIF is known as TGIAF. Scheduling demands the company hold the sessions on Thursday afternoons, hence the acronym: Thank Google it’s (Almost) Friday. HC
teambuilding
issue 7.10
www.hcamag.com
51
issue 7.11
profile
Family dynamics Corporate catering, conferences and events can create tense work environments that require resilient teamwork and decisive leadership. This month’s profiled HR professional outlines what his company offers employees
A
quick skim through any issue of Human Capital reveals that HR professionals need to have knowledge and understanding of a broad spectrum of diverse topics. For Christopher Dan, group HR manager at family-run business Doltone House, it’s the variety that originally attracted him to the profession. “Having a keen interest in business and following completion of my studies in that vocation, I realised that HR was the area within business where I could combine all fields of my interests from law, counselling, psychology and business management. Soon after that I started working in HR full time,” he says. Dan acknowledges that HR gave him the opportunity to deal with people on many different levels through the different HR functions and the variety of work associated with the profession. “Something I really enjoy is that no day is ever the same,” he says. Following a return to academic study to obtain specific HR qualifications, Dan has worked in HR since 1998, and he is now a certified practising member of the Australian Human Resources Institute. His enthusiasm is palpable. “I’m passionate about the HR profession, which has provided me with the opportunity to manage a company’s most important asset – its people. I don’t take that responsibility lightly. I’ve always taken great pride in my position and profession,” he says.
Gaining experience
During his HR career, Dan has worked across both the hospitality and corporate sectors. He says he specifically made the move from hospitality to the corporate
52
www.hcamag.com
world in order to study firsthand the different HR practices between the industries. “In many ways, I was able to use the elements of my hospitality practices within the corporate sector and vice-versa. The HR function is and can be such a positive business resource, which in turn can have an incredibly positive impact on the business,” he says. Dan had the unique opportunity of taking on a head of HR role in an organisation that had never before had such a role. TrippasWhite Catering operated from 20 sites nationally and provided onsite venue catering – like Doltone House – as well as airline lounge catering services. “I worked very closely with the managing director and general manager to implement new HR strategies while creating and maintaining a positive workplace culture,” he says. “With the introduction of new HR policies and procedures we were able to ensure a minimal human risk exposure to the business. As my role had previously not existed, it very much involved creating channels of communication and positive synergies between all levels of the company.”
HR at Doltone House
As group HR manager for Doltone House, Dan’s role encompasses everything from creating and maintaining a positive workplace culture for its 300 employees to ensuring compliance with statutory obligations. The company, which services hundreds of events and conferences in the corporate and wedding market each year, places unique demands on the HR function. “You could say my core function involves managing the human capital element of the business. I work very closely
with the three Doltone House directors to ensure that there is minimum risk exposure to the group. I’m also involved in strategic planning for the company’s growth, and ensuring that the decisions made at a board level are feasible and sustainable,” he says. “My goal in HR is to create a positive partnership between the employee and employer. HR needs to act as an independent mediator, negotiator, advisor and counsellor to all parties. HR is a channel through which people can communicate,” he says. Dan feels strongly that HR departments need to be accessible, and should be available to all people at all times. “A team member is a human, and may require HR to be available for them regardless of the day or time. I’ve always been a 24/7 person and my HR team have always embraced that philosophy,” he explains.
New challenges and strategies
Dan has some daunting challenges ahead. In addition to dealing with compliance issues with new workplace legislation, Doltone House recently added a six-star ‘green’ venue in Pyrmont to the Doltone House property portfolio. This venue, which incorporates not only an event space but also a café, cooking school and food emporium, will naturally bring a whole new set of employees into the mix. “In this stage of transition, it will be important for my team to provide direction and set good examples, along with assisting our new team members and focusing on the important objective of maintaining consistency across all of the
Photo: Thilo Pulch, www.pulchphotography.com
profile issue 7.11
www.hcamag.com
53
issue 7.11
profile
In his own words… Is there any other HR initiative of which you are particularly proud? For me, I take real pride in creating a positive HR experience for not only the employers, but also the employees. I want to be there for everyone, from the dishwasher to the director – HR is all about being accessible. I’m proud of the work we did that ensured no one at Doltone House was laid off due to the economic downturn. Thanks to the HR strategies implemented and working with the directors to ensure strong direction, leadership and management, Doltone House did not need to lay off one person. We put a lot of time into ensuring that the business decisions we made during this time minimised the risk to the human element of the business during a period of uncertain economic times – and it was very successful and pleasing. More generally, where do you see HR as a profession heading? HR needs to continue moving forward. HR managers need to see their role as that of ‘business partner’, and ensure they are a positive resource for the company they are involved in. HR is here for the future – it’s important that we all continue to provide a positive experience, as the HR role/functions continue to grow and evolve. People are a precious resource, and businesses need to understand how best to manage that resource, as ultimately it will be for the benefit of the company and the individuals themselves. Unfortunately, not every CEO or MD has had a positive HR experience, and therefore many may not see it as a positive thing. However, for the future of the profession it’s about working with these people and organisations to change their opinions and experiences!
Doltone venues. It’s also important that we continue to introduce our rewards and recognition program to our new venue,” he says. A key element of the Doltone R&R strategy is the Staff Anniversary Program, which recognises and rewards long-term staff for their loyalty, dedication and commitment. After key milestones, such as a year for continuous service, the employee is awarded a bronze service badge in the iconic Doltone ‘fleur-de-lis’ shape. Two years of service receives silver, five years is gold, and reaching the 10-year mark sees staff awarded with a gold badge studded with a genuine diamond. “The staff wear this badge with pride – it is a symbol of their success,” says Dan. Doltone House also has a gratitude program dedicated to recognising outstanding work on a day-to-day basis. While the company always had a rewards program for sales staff, there was an increasing desire to give front-of-house staff recognition too. Based on this, the HR team devised the Doltone Deliver Rewards and Recognition Card, which is issued to each staff member. These cards list attributes which Doltone view
54
www.hcamag.com
as commendable – such as encouraging teamwork or exceeding guest expectation. Whenever a team member demonstrates one of these they get a stamp on their card. Once five stamps have been achieved, they are rewarded with a $50 Coles/Myer voucher. With no limit as to how many times each individual can achieve, Dan says everyone has embraced this rewards program.
Teamwork
The Doltone motto is that ‘many minds make one great mind’ – hence there is a strong emphasis on teamwork in the company’s retention strategy. Each department within the company has a monthly meeting about team building, assesses what initiatives are in place and what can be done to enhance a positive team environment. In line with this, ‘teamwork’ is one of the attributes recognised as part of the ‘Doltone Deliver’ strategy. A multitude of team building exercises and activities such as pizza nights, BBQs and bowling are also held throughout the year. “Each department is constantly identifying opportunities for team activities and plans ahead for these,” says Dan.
While the term ‘high performing team’ gets thrown around with abandon in many organisations, to Dan it has a number of specific definitions: • a team that is exceeding expectations on all levels • a group of highly goal-focused individuals that create a powerful team • a group of people who are naturally highly motivated “On another level, while the individual’s characteristics are an important factor in creating this team, without the underlying dynamics to support the concept, it will ultimately fail,” says Dan. “We are aware of this and are constantly nurturing a positive and productive environment in which people can succeed in an individual and team sense. “In creating this positive culture, it’s important to take into account everyone’s different perspectives. It’s also important to consider the team when hiring, thinking: How will this new person fit into the team and how will they interact with the existing members? You need to look at it on both an individual and team level. By building a compound of strong individuals, who are all looking in the same direction and aware of the group strength, you can create a strong workforce,” he says.
Brand power
When asked to pinpoint how the culture of Doltone House could be defined, Dan says the two things that instantly spring to mind is that it’s both very positive and very professional. “As a family business, we place strong emphasis on bringing people in as part of the extended family. It is also unique because the directors are so hands-on and actively involved in doing the day-to-day business and running of the venues. As a result, each staff member forms a relationship with the directors, which is unusual for a company of this size. Working closely with the directors like this also means that staff have direct input into strategy and decision-making,” he says. “People are proud to be associated with the brand – I want to maintain that and ensure they enjoy coming to work each day.” HC
HR SUMMIT 10 ASIA-PACIFIC’S LEADING HR AND MANAGEMENT EVENT
profile issue 28-29 APRIL 20107.11 CRYSTAL PALACE LUNA PARK SYDNEY
SYDNEY
HR LEADERSHIP AND ALIGNMENT FOR 2010 HEAR SUCCESS STORIES AND PRACTICAL INSIGHTS FROM LEADING GLOBAL BRANDS LEARN HOW TO: » Add value to HR practices » Upskill your workforce to meet demands » Build strategies toward organisational alignment » Identify top leaders and recruit the best talent » Balance flexible work arrangements
HR Summit Sydney April 28-29, 2010 Crystal Palace Luna Park, Sydney For speaking opportunities: Stephanie Sudzina conference department manager stephanie.sudzina@keymedia.com.au (02) 8437 4727
Directors Forum sponsor
Strategic sponsors
For sponsorship opportunities: Sophie Knight national commercial manager – HR products sophie.knight@keymedia.com.au (02) 8437 4733
Workshop sponsors
Fiona Wissink business development manager – HR products fiona.wissink@keymedia.com.au (02) 8437 4746
Exclusive legal Bronze sponsor sponsor
» Strengthen succession planning procedures and talent management » Energise training and development sessions » Integrate HR with your company’s growth plans » Win the battle on skills shortages and plan for the future » Boost productivity & performance » Track latest industrial relations, migration and workplace agreement reforms www.hcamag.com 55 www.hrsummit.com.au