Human Capital Magazine

human capital

HC issue 7.5

PROFILE:

teambuilder:

Mars Food

Bupa Asia-Pacific

What’s your spike?

Developing leadership selfawareness Caught red handed Pre-employment screening

Aftermath The cultural fallout of redundancies

Expert insight: Motivation on a budget

EDITORIAL Survivor guilt T

he following story may be apocryphal, but it has a ring of truth to it. A Singaporean organisation recently conducted a fire drill.

When employees came back into the foyer of the building they were informed that if their key passes worked they still had a job; if they didn’t work security would bring their belongings down to them and they would be escorted from the building.

The shock of losing colleagues through redundancy has been likened to grieving. However, just like the grieving process that follows the loss of a loved one, there are ways to cope. Also like the more traditional definition of ‘grieving’, it’s natural to rely on a support network of family and friends in the corporate world when redundancies are made. But what happens when that support network does not exist in the workplace? What if there has been no communication or sense of leadership, and decisions have been made in an underhanded or particularly heartless manner?

As this month’s cover story reveals, it is the corporate culture that will underpin how redundancies are handled. It is also the corporate culture that will dictate how strongly an organisation will recover or bounce back from such shocks. Although many organisations claim to be ‘resilient’ it is an empty claim without the three Ts: truth, trust and transparency. While this recession may shake out the managers from the leaders, it will also cut a scythe through organisations dictated by cultures of fear, uncertainty and aggressive leadership traits.

editor’s letter issue 7.5

managing director chief operating officer editor journalist production editors

contributors

marketing manager marketing coordinator traffic manager design manager designers photographer senior web developers

it/is manager

Mike Shipley George Walmsley Iain Hopkins Daniela Aroche Tim Stewart James Schwier MatthewsFolbigg Merryck & Co Onetest The Next Step Chandler Mcleod Group Danielle Tan Jessica Lee Stacey Rudd Jacqui Alexander Ben Ng Thilo Pulch Kevin Kim Storm Kulhan Colin Chan

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

In the first person…

“There is what we call capability in the business to bounce.

That is where trust and deep relationships come into play – they are all intangibles but an essential part of the outcome called resilience” – Quentin Jones, managing director, Human Synergistics, runs through the post-redundancy cultural aftermath (page 30)

“Irrespective of how good the behavioural interview is, there are things you cannot ascertain. You cannot ascertain whether or not they missed out on the degree, or have a botched credit rating or even a criminal record” – Greg Newton, managing director, Verify, on the vital role of pre-employment screening (page 40)

“When things tightened up we obviously looked at all expenses, but anything we felt had a good positive impact on our culture was a no-go area” – Meahan Callaghan, SEEH HR director, on keeping motivation up in tough times (page 26)

“Someone once said to me that HR is the organisation’s great multi-tasker, and I think in many ways that’s true” – Penny Lovett, HR director, Bupa Asia-Pacific, on one aspect of HR’s role in a multinational corporation (page 52)

4

www.hcamag.com

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.

this issue

inside 14 Cover story:

The cultural toll of redundancies

How will your corporate culture shape up following redundancies? Iain Hopkins investigates why some organisations will thrive and others will falter

20 The ‘being’ of leadership

Some leadership traits are easier to develop than others. While many L&D vendors concentrate solely on the doing of leadership, others concentrate on the self awareness, personal values and mental toughness required to be a leader

contents features on a budget 26 Motivation Gloom, doom and more gloom. Is it any wonder the motivation of your employees is slipping? Iain Hopkins talks to one HR professional providing cost effective motivation boosters to her employees

40

Caught red handed

Despite the temptation to cut corners in the recruitment process, employers that cut pre-employment screening and background checks do so at their own risk

Executive reward: A golden opportunity 44

Current market volatility provides an excellent opportunity to improve and re-evaluate executive reward programs, writes Yolande Foord

regulars 4 In Step

10 Mentoring

6 Legal

46 Profile

8 Psych Corner

52 Teambuilder of the month

9C orporate Culture

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.

instep InStep

HR Career Experts

Page 04

Vertically Integrated – HR roles in ‘09

A

s always, significant column space is currently being dedicated in the HR trade media advising HR practitioners about what they ‘should’ and ‘shouldn’t’ be doing in their roles. The usual comments are being quoted such as the need to be “commercially focused” and “be at the business table”.

Whilst this is all good (and somewhat obvious) advice, the current economic cycle is providing some clear distinctions between the last cycle and the present.

In this month’s Instep, we look at the change of focus for HR roles that are being recruited in this economic cycle. A clear message appears to be that roles in the market are asking for HR professionals who can still manage the big picture, but be mainly paying attention to the detail and on delivering ‘execution excellence’.

As one senior HR practitioner said about a role for their team, “HR roles in this business need to be vertically integrated. We have an eye on the big picture, but the business is expecting us to be down in the detail with a delivery focus”.

Relationship management and influencing was the big ticket in HR in 2008

The importance of cultural fit is always the most important focus of any recruitment decision. The ability to manage relationships across business client groups and influence key decision-makers has been the main culture fit filter when recruiting HR professionals.

The view has been that an HR professional’s successful cultural fit with a business hinged on their capability to work with business leaders in a credible and respected relationship as the business grew and moved through change.

To manage relationships well and to influence decision makers requires HR professionals to be focused on the business strategy – the big picture. Whilst this is still important, HR roles in the market in 2009 are asking for more of a focus at the ‘doing end’ of HR.

In 2009, ‘detail’ is King

In an environment where there is a greater focus on cost containment, and regulation and compliance, a much stronger focus is being placed on the ‘detail’ in HR (along with all the other support functions within organisations). From boards and senior management to external regulatory and compliance bodies, there is a continuing and growing need for HR roles, to be forensically across the detail on a wide range of areas.

4

www.hcamag.com

On top of the need to be detail focused, HR professionals in Australia have the challenge of dealing with fundamental shifts in public policy, such as IR and remuneration, as well as continuing changes in the macro settings for workplace safety. No wonder most HR functions are frantic just keeping up with day-to-day information overload whilst dealing with HR resources being pared back.

In 2009, they also want ‘cut through’

One of the most profound changes in the HR recruitment market in 2009 (compared to 2008), is the focus on work execution excellence and the ability to ‘get things done’. This capability is at the heart of recruitment for HR roles (at all levels) in 2009, from generalist through to specialist positions.

The key HR capability identified in many specifications has become, “ensures closure and delivers on intended results”. Words that describe the key attributes of the desired and in-demand HR professional include - resilient, tenacious, structured and detail oriented. In terms of skills, project management and technical excellence are at the top of the list.

The current challenge existing for HR professionals who are in the market, is to demonstrate their ability to get ‘cut through’ in a business environment and deliver irrespective of the many and various barriers that exist.

Two questions on relationship management:

yy Is the ability to manage relationships and influence decisionmakers still important for HR professionals in this cycle? Of course! No question or doubt about it. yy Is relationship management and influencing the main focus of HR recruitment decisions now that the cycle has changed? No, not as much as last year.

The fact remains that in this cycle, it doesn’t matter what support function is in a business. Whether it is finance, information technology or human resources, the detail has got to be right and, as always, the HR recruitment market will reflect the overall trends in the broader market.

The HR recruitment market in 2009 is definitely focused on professionals to prove that they have the capacity to operate in fully vertically integrated roles. HR professionals must focus on delivery and being across the detail, so that the platform is in good shape for the upturn in 2010.

Craig Mason is the founding director of The Next Step, a specialist consulting practice in the human resources market.

For information call +61 2 8256 2500 or email cmason@thenextstep.com.au web www.thenextstep.com.au

Recent HR Market Moves supplied by The Next Step

Honeywell Limited has appointed Caroline Bosch in the role of Country Leader Human Resources. Previously Caroline was with General Electric Corporation where she held a number of Senior HR positions.

Imelda Todd has commenced as an Occupational Health &

Sally Hole has recently accepted the role of Senior Human

Uniting Care Ageing has recently made two senior HR appointments. Elaine Griffin as Director, HR Business Leader – Western Region. Elaine was previously the Head of HR with Darley Australia. Catherine Wilks as Director, HR Business Leader – North Coast. Catherine’s most recent role was with Santos as Human Resources Project Manager.

Resources Manager with Sara Lee. Sally’s most recent experience was in Senior HR positions with Brookfield Multiplex and Qantas.

Isoft has appointed Theodore Samios in the role of Global Human Resources Director. Previously Theodore was with George Weston Foods as Human Resources Director.

Kate Strack joins Origin Energy as Senior People & Culture

Business Partner. Previously Kate was with Thiess as Manager HR Strategy – Australian Operations.

Pacific Brands has recently appointed David Cunneen as People and Performance Manager. Previously David held Senior Human Resources Managerial positions with Inchcape Automotive Retail and Fosters Group Limited.

Louise Perry has recently been appointed Human Resources

Manager Australia & New Zealand with Premier Farnell. Louise’s most recent role was with Australian Hearing as Executive Manager People and Performance.

Safety Specialist with Wesfarmers Insurance. Imelda recently held Senior OH&S and Workers Compensation positions with Catholic Church Insurances and David Jones.

Kay Fox has recently commenced in the role of Head of Human

Resources with Bank of New York Mellon. Most recently Kay was with Perpetual Trustees Australia Limited as General Manager People and Performance.

Nina Scillio has joined BHP Billiton as Practice Leader Graduate Resourcing and Development. Nina has a wealth of experience gained within Australia and most recently with Barclays Bank in the UK.

Ryan Willemsen-Bell has joined Origin Energy as Senior

People & Culture Business Partner. Ryan’s most recent role was Manager Operations & People with Qantas Catering Group.

By supplying Market Moves, The Next Step is not implying placement involvement in any way.

www.hcamag.com

5

issue 5.10

news If the employer suspects the employee is unfit for work, the employer may also require an employee to be medically examined (at the employer’s expense) before their return to the workplace.

Can employees refuse to attend work?

Page Legal Experts

06

Swine Flu: Business as Usual?

E

xtensive media exposure and the confirmed cases of swine flu in Australia have sparked debate among concerned employers about their ability to fulfil workplace health and safety obligations during a pandemic.

Can I direct employees not to attend work?

An employer may direct an employee not to attend work if there are reasonable grounds to believe the employee may have swine flu or any other illness which may affect the health and safety of other employees. The employee must however be paid for the period of any such absence.

How is the employee paid for time off?

As a general rule, an employer cannot require an employee to take personal sick leave if the employee has not shown any symptoms of illness. Such absences cannot be regarded as personal sick leave or otherwise offset against any of the employee’s accrued leave entitlements if the employee has been directed by the employer not to attend work as a precautionary measure.

If on the other hand the employee demonstrates symptoms of illness and is unfit for work the employee may be directed to take personal sick leave.

Can I direct employees to work from different locations or perform different functions?

Whether an employer may direct an employee to perform different functions or work from different locations will depend on the flexibility of relevant workplace agreements, the requirements of the individual business, and the additional travel time which may be required for the employee. It is recommended employers take advice in these circumstances on a case by case basis.

Can I place restrictions on employees returning to work?

An employer could make an employee’s return to work subject to a requirement that reasonable proof, such as a medical certificate, confirming the employee is fit to work and stating there is no risk the employee is carrying on infectious illness which would affect the workplace.

6

www.hcamag.com

The management of employees during a pandemic is further complicated where employees refuse to attend work because of fear caused by external factors such as media hype rather than genuine risk. In such circumstances employees should be reassured as to their health and safety at work and directed to carry on with business as usual. Employees will, however, be in a position to properly refuse work if they have ‘reasonable grounds’ to believe being at work will pose a risk to their health, safety or welfare.

Employers’ responsibilities

In order to comply with their duties to employees, contractors and visitors under occupational breach and safety (OHS) laws employers must keep informed of government health warnings, undertake risk assessments and take measures to either eliminate, minimise or control risks to health and safety which may be identified by such assessments.

It is also recommended employers take proactive measures to limit the spread of illness. As a guide, some practical steps may include: Ensuring ready access to washing facilities, antibacterial soap, hand sanitisers and workstation cleaners Adequate ventilation in the workplace Withdrawal of staff travel to virus affected regions Prohibition of staff who have been in affected regions from returning to work until proper medical examination has taken place and medical clearance is obtained.

· · · ·

Guidelines for employers

As with all OHS and employment issues, any action taken should at all times be consistent with company policies and procedures.

If the company does not have documented procedures regarding management of infectious illnesses, one should be developed for inclusion into the company’s OHS policy.

It is then imperative any issues which arise are dealt with quickly, effectively and consistently with such procedures. During times of pandemic, employers should: 1. Access all relevant health information and conduct risk assessments on the potential impacts on the business.

2. Develop and maintain communication channels with employees to ensure employees are consulted in relation to OHS issues and reassured as to their health, safety and welfare at work.

3. Review possible risks and formalise any changes through usual Risk Management procedures including risk elimination, minimisation or control procedures.

4. Frequently monitor policies and procedures and update if necessary.

Fay Calderone is a Senior Associate with MatthewsFolbigg Lawyers.

For more information call: (02) 9806 7412 or e-mail: fayc@matthewsfolbigg.com.au

issue 5.10

international

HR Insight

Page 08

The Death of the Resume

B

ack in 1997 when I entered the recruitment industry, email was only just becoming a legitimate business tool. At the time, recruiters and hiring managers were collecting resumes by fax or post and proceeded to read through every resume to determine who should advance to interview. 12 years on; sadly not all that much has changed.

While resumes are now collected electronically, the process of shortlisting candidates is still largely a manual one and relies almost exclusively on the information contained in the resume; a document 80% of candidates admit to embellishing.

Compounding this challenge is the current economic climate, where rising unemployment has led to a surge in the number of jobseekers looking for work. With competition for limited opportunities increasing, so too has the occurrence and degree of resume embellishment. Recruiters that continue to shortlist this way are being faced with the prospect of wading through a greater number of resumes containing more “BS” than ever before. Add to this the fact the many recruitment teams have been downsized in recent times and you have a recipe for higher stress levels, increased recruitment costs and an increased likelihood of selecting the wrong candidate.

Technology standardises information

If you received 100 applicants for a position, the reality is that 90 of them won’t be right for your role. In fact, 99 of them won’t end up getting the job. By manually reviewing all 100 resumes recruiters are spending valuable time, on 90 applicants, that could otherwise be invested on the 10 applicants who are most likely to fit.

By automating the collection, screening and ranking of applications, a recruiter can quickly and confidently determine the applicants that meet their minimum requirements and those who don’t. For example, if the position you’re recruiting for is only paying up to $65,000, it wouldn’t make sense to spend time reviewing the resume of someone who wants $100,000 – no matter how good they are.

That leads on to the next challenge; no two resumes are the same. Whilst you might find salary expectation listed in one applicants resume, you won’t find it in all. It is this inconsistency in both content and layout that makes using resumes an inefficient

8

www.hcamag.com

way of shortlisting candidates. Resumes contain information that the candidate wants to tell you, not what you want to know. By asking candidates to complete a structured online application form (which contains the questions you want answered) you’re able to standardise all of your applicant data, so you can compare apples with apples – quickly and cost effectively.

Psychometric testing not just a final hurdle

Earlier in this article I mentioned the increase in resume embellishment; you’re probably thinking that application forms can be just as easily embellished. This is where psychology comes in. Whilst psychometric testing has historically been used at the end of the recruitment process (usually on the final 2 or 3 candidates), online solutions are now making it possible to utilise such testing earlier in the process as a means of accurately and objectively ranking candidates. While resumes will highlight what a candidate has done in the past, psychometric testing will help predict what the candidate might do in the future. This combination of retrospective and predictive information provides recruiters with a much better indication of overall fit and potential performance. The other advantage of psychometric assessments is that they are much harder to embellish than resumes; thanks to inbuilt validity checks.

Automation doesn’t mean impersonal

Often a concern for hiring managers is that automated collection and screening processes will make the recruitment process more impersonal. But the truth is, highly automated doesn’t have to mean impersonal. Using technology, the hiring manager can effortlessly keep candidates updated throughout the recruitment process; such as when their application has been received, when they proceed to the next stage and most importantly, when they are no longer being considered for the position. Contrary to popular belief, technology can improve the candidate experience by providing a highly personalised service without having to invest a corresponding amount of time or effort.

By utilising technology and psychology to perform the initial screening and shortlisting process, recruiters and hiring managers can invest more of their time with the best applicants..

This means more time to find out about their strengths and weaknesses, more time to get to know them as a person, more time selling your company and the benefits of the role. Recruiters that continue to invest a majority of their time at the initial stages of the recruitment process to weed out unsuitable candidates will ultimately lose out to companies who can identify the most suitable candidates quickly.

Steven Dahl is the CEO of Onetest.

For more information about this topic, please call 1300 137 937, e-mail enquiries@onetest.com.au or visit www.onetest.com.au

The Culture of Development

Corporate Culture Column Evolving your Workforce

Page 09

How do great organisations maintain low levels of turnover and high levels of employee satisfaction?

D

espite fluctuating economic times and increased globalisation of jobs, most employers are finding it hard to keep good workers. The reality of today’s job market is that workers are expecting more from their employers and are not afraid to move on if their needs are not met. This is evident in a recent survey we conducted where 78% of employees indicated they were planning to move jobs in the next 6 months – despite the economic uncertainty.

Based on compelling data from the Society for Human Resource Management and others who study workforce trends, leading organisations must take time to analyse their retention realities and ensure that the key employees they currently have are not seeking greener pastures. How do great organisations maintain low levels of turnover and high levels of employee satisfaction? The answer is found in one word: culture.

Organisations with high rates of employee retention concentrate on creating three distinct cultures that keep people focused on the organisation and its goals. The purpose of this article is to explore these three cultures and to recommend practical strategies for developing them in the workplace.

The Culture of Choice

Donald N. Smith, the president of Burger King said, “The individual choice of garnishment of a burger can be an important point to the consumer in this day when individualism is an increasingly important thing to people.” Burger King recognised long ago that Americans expect to have multiple choices each day.

Workers are not an exception to this rule. Today’s employees are looking for choice in the methods they use for completing a job, in the benefits they receive from work, and in when and how they report to work.

In the last two decades, we’ve seen an explosion in the types of employee benefits offered by employers. We’ve seen an increased acceptance of telecommuting and flex-time. Choices in the tools they use, the methods they employ, and the recognition they receive are all characterised as innovations in HR management.

In short, we continue to learn more and more about employee engagement and the link between empowerment and retention.

Bestselling authors Beverly Kaye and Sharon Jordan-Evans, in their book, Love’Em or Lose’Em, say that any organisation that ignores the ambitions of good people can’t expect to keep them. High rates of retention are clearly linked to the amount of attention the employee gets in terms of their professional development and growth. When employees feel that their career goals have been acknowledged and that they are continuing to be challenged on the job, they are likely to stick around. Employees who feel stagnated, ignored or bored will likely start to look for other opportunities. A culture of development can be cultivated through a variety of tools.

Training, mentoring, and clear career paths all contribute to this culture. However, the strongest culture of development is created by the first line supervisor who works with the employee each day. Every supervisor and manager has an opportunity to show that they are interested in the employee’s growth and development by asking the right questions and by understanding where the employee wants to go professionally.

Simply by asking, managers and supervisors can begin to create a culture of development and raise levels of retention.

A Culture of Care

In a strict sense, the kind of motivation we need to be talking about in today’s environment is inspired rather than induced.

Employees will be motivated to stay put and work at higher levels if they feel that they are cared for and if they care about the work they are doing. In other words, employees must feel a sense of inspiration to fully commit to their daily activities.

In organisations where retention levels are high and turnover is low, research has found that employees find some level of inspiration from their jobs. Such inspiration might be a sense of contributing to the greater good. It might be a commitment to the team and its goals. Inspiration may be derived by following a committed and ethical leader. However the inspiration is created, employees must be lead to care about their work and about the organixation.

We have all read the ominous reports that indicate the workforce is shrinking in significant numbers due not only to the current economy, but also with the anticipated exit of the baby boomers. It is clear that despite the current day challenges, organisations that do not work on their culture during the tough times will find it difficult to attract and retain qualified and committed employees when the things start to improve. Now more than ever is the time to turn our attention internally, to the culture of the organisation.

With the national average length of employment hovering around one and a half years per job, it makes sense to explore what it takes to retain and develop a committed staff. Retention, while often considered a factor of economic times, is now being considered a long-term strategic goal for organisations that recognise its value.

About the Author: Craig McCallum is the General Manager Marketing for the Chandler Macleod Consulting Group. Email: craig.mccallum@chandlermacleod.com www.hcamag.com

9

issue 5.10

international

Mentoring

Page 10

Measuring a return on investment “

O

ver the last three years I have grown our revenues by over 30% pa and increased profits significantly, exceeding plan each year,” said the European CEO of a leading computer company. With revenues in excess of $3 billion and operations stretched across 11 countries, he had been facing significant challenges. He went on to say that the insights, wisdom and guidance gained from his Merryck & Co. mentor delivered a return far in excess of 10 times his investment.

“If the Board asked me to demonstrate where we have got a return on our investment in mentoring, I could not easily point to any one thing,” remarked another business leader who was CEO of a FTSE 100 company.

“But,” he continued, “I could put my hand on my heart and confidently attribute one third of our profit to the work and insights I gained from the relationship with my mentor.” His company had been the worst performer on the FTSE when he accepted the role and, under his leadership, went on to become one of the top performers.

Although both CEOs experienced a tangible return on their investment in Merryck Mentoring, one was able to point to specifics, while the other could only talk in generalities. This can pose a problem for people who want hard data, and invites a question about how companies engaging a mentor can measure a return on their investment.

Not all CEOs are able to readily identify measurable ROIs that could be attributed to their mentors. This is a result of an approach to mentoring which focuses on testing and challenging the business leader’s thinking, and proposing new or alternative options. As these emerge the CEO will embrace these as their own insights and integrate them into their agenda. This is the correct outcome, and indicates the executive is developing their capability.

Good mentors recognise that the value they create for the client far outweighs any personal reward or recognition. These mentors focus on helping clients to be more successful. Increasing the effectiveness of the CEO pays premium returns across the whole of the company.

The examples of success abound. As a result of his work with a mentor, one client recognised they were carrying more than eighty

10

www.hcamag.com

million dollars in excess inventory. Another realised a written down business they were carrying on their books at two million dollars could be worth much more to the right buyer, eventually selling at just under ten million dollars. Another avoided a quick-fire decision that could have easily wasted five hundred thousand dollars. Still another saved more than one hundred thousand dollars on search fees because they were able to leverage the networks of their mentor to source a key employee.

Perhaps the most important thing to do is to be very clear at the start of any engagement about what success will look like in the future, from the perspective of each party involved. The other side of this same coin is to be equally clear about the ‘way things are today’, when the assignment commences.

The HR Director may want to see a shift in the way the candidate interacts with their team, and a greater level of confidence in the way they portray themselves to their peers. The Group CEO may wish to see the candidate developing greater strategic insight and executing against the strategy whilst managing their costs to achieve forecast profit margins. The candidate themselves may want to achieve all these, plus come to a deeper understanding of the various influencers within and without the organisation, build relationships with key people, and simultaneously get some more balance in their life.

Documenting these outcomes at the start enables all parties involved to check against progress. At the same time, regular conversations around the value being created keeps a focus on the commercial nature of the relationship and ensures mentoring is more than a general discussion about life and business. This reveals the true nature of successful mentoring: optimising company profitability by optimising the leader’s performance.

Anthony Howard, Chief Executive Officer +(612) 9231 8670 anthony.howard@merryck.com www.merryck.com

news issue 7.5

NEWS The changing rules of recruitment advertising I

t is no surprise that the current economic downturn has caused a significant downturn in print job ad placements, but especially hard hit has been executive advertisements. According to the E.L Executive Demand index, these have fallen by 74% over the last two years.

In comparison, the level of executive advertising online has fallen only by 10% in the same period.

“The downturn has been the final impetus for advertisers to turn away from expensive newspaper display employment ads, and those clients using recruitment consultants are scrutinising the disbursements of the consultants more carefully,” said Grant Montgomery, managing director of the executive search firm E.L Consult.

“No doubt the continuing rise of online advertising through portals like Seek and CareerOne is affecting the revenues of traditional recruitment newspapers like The Age and The Sydney Morning Herald who are finding fewer recruiters prepared to buy the big quarter and half-page spaces they once did.”

Peter Gleeson, executive general manager for professional & executive recruitment at Chandler Macleod Group added that this decrease in overall media spending goes hand-in-hand with a questioning of the value of this process to source talent.

Newspaper advertising now appears to be more a question of company promotion and is less important in the recruitment of the best candidates.

Change the only constant in 2009

F

ifty-five per cent of Australian employers anticipate they will need to restructure or reorganise their operations this year, according to the latest Hudson Report: HR Insights.

The report was based on responses from 7,280 employers nationally and revealed 50% of those who indicated a need for restructuring cited changes in the external economy as their main driver, while 42% cited a need to drive greater efficiency or competitiveness throughout their business as their number one driver.

Simon Moylan, general manager, Hudson talent management, said reducing operating costs has become a major focus for many organisations in the current climate. “Given salaries make up the largest portion of fixed costs for most businesses, it’s understandable that over the past year we have seen a three-fold increase in the number of employers looking to reduce permanent headcount.

“While cutting staff numbers through redundancy programs allows a business to meet short-term cost reduction goals,

However, while there are obviously benefits to having a brand out in the public domain if a large organisation is attempting to draw the attention of candidates, there are also benefits in retaining some anonymity during such times. Gleeson noted that having a job advertised under a recruiter banner can actually enhance interest, as candidates can be drawn in by the appeal of a specialist recruiter and the anonymity that going through a third party provides, particularly in the current market when passive candidates are bigger targets.

“This form of advertising is also about catching people outside the usual business networks – overseas or interstate workers looking to return home or people who hadn’t previously thought of themselves having the necessary skills sets to take on a particular role. As job descriptions change, advertising becomes an important way to remind candidates of the opportunities available in the market and this is an important component in finding the right candidate,” he said.

Is it too early to sound the death knell for print advertising? Gleeson believes so. “Without a doubt, the job searching environment has evolved but newspaper advertising certainly still has an important role to play. Despite the growing popularity of online job boards, people still read newspapers as they enjoy the leisure aspect it provides. While not necessarily restricted to executives roles, newspaper advertising allows businesses to access the passive and reactive markets and those that are reluctant to move,” he said. it must be remembered that a poorly implemented program can have significant and long-lasting negative impacts on employee morale, productivity and a business’s ability to respond rapidly when the market improves.”

According to the report, employers believe the most important aspects of a restructure/reorganising program include ensuring clear communication throughout the transition process (68%), ensuring managers feel supported throughout the process (41%), ensuring impacted employees are treated with respect and dignity (39%) and minimising the effect on remaining employees (39%). www.hcamag.com

11

issue 7.5

news

‘ Depression insurance’ a sign of the times A

ustralian workers are not only enduring stress as a result of the country’s current economic climate, research shows many are suffering depression and are being forced to take time off work. With this state of affairs, the notion of ‘depression insurance’ has gained traction.

“We’re seeing a climate of fear in Aussie workplaces. People are afraid of their job being made redundant, or having their hours and pay packets scaled back,” said Edith Fink of online financial services company ARTOG.com.au Fink added that the end result has been a rise in mental health issues at work. In addition to support services like Beyond Blue, employers can take direct action. Ken Buckley, managing director of Healthworks, warned that a one-

size fits all approach often does not work as what stresses one employee may be stimulating and challenging for another.

“If there are isolated instances of burnout then maybe an individual’s ability to cope with the demands of a particular job are not balanced. However, if there is a pattern of burnout then the culture of the organisation then the management style of a supervisor may be to blame. In these instances a cultural change needs to be engineered,” he said.

Buckley said practical steps for an employer to take might include developing a high trust culture that supports work-life balance, conducting employee surveys to determine the impact of work on quality of life, providing a thorough and appropriate pre-employment process to place the right people in the right jobs, and providing

access to a confidential Employee Assistance Program (EAP).

“Income insurance, which protects holders if they cannot work due to sickness or accident, has now become a practical resource for Australians who want to feel covered and more protected during tough financial times,” Fink added. “Depression is a serious illness and it’s a shame that many sufferers ignore the signs and try to soldier on. If they need to take time off to get better, income protection insurance is there to help.”

Up-skilling techniques:

coaching new and emerging team leaders Doing more with less is a storm that HR managers across Australia and the rest of the world are presently weathering as the current economic instability takes its toll.

While these challenging times place increased pressure on HR managers, it’s the measures that are put in place now that will ensure your HR metrics are still relevant for the recovery.

Preparing emerging managers and developing their skills is one such measure, as accountability and performance are crucial to the success of managing a team in this economy.

Abi O’Neill, program director for Mt Eliza Executive Education at the Melbourne Business School, said that it is crucial for new managers and team leaders to understand different generational values and needs.

Accredited in an extensive range of diagnostic instruments, O’Neill has

12

www.hcamag.com

designed and implemented leadership and management development programs across the world and will share her expertise at the upcoming HR Summit Melbourne in July.

Hosting a specifically tailored workshop on day two, O’Neill will offer her ideas on how to support new and emerging team leaders to become competent in their roles.

She will explore a range of skills and frameworks that are fundamental for those moving into management roles.

“Assisting new managers to expand and cultivate their coaching and communication skills is a powerful way for them to develop confidence in their new role. They need to feel comfortable in their own leadership style and to be flexible to suit the occasion – thereby enhancing the performance of their team,” said O’Neill.

“It’s natural for new managers to feel awkward in getting the work done through others. They’ve often been promoted for doing good work themselves and delegating is particularly difficult for them for a number of reasons.”

To find out more about Abi O’Neill’s Executive Workshop at the HR Summit Melbourne, 16-17 July 2009 visit www.hrsummit.com.au

16-17 july 2009

Rydges hotel

melbourne

ASIA-PACIFIC’S LEADING HR and management EVENT

Melbourne

benchmarks for the new FINANCIAL year Increase performance and productivity in a challenging business environment Case studies from recognised brands: Boost Juice, Collingwood FC, AXA, Mars Foods, Hewlett-Packard, Melbourne Business School, La Trobe University New for 2009: Intense half-day executive workshop Developing skills for new and emerging managers

Implement practical HR strategies for the new year » Maintain employee morale in the downturn » Manage redundancies and terminations » Create a resilient corporate culture to take you through the recession

» Protect and develop your talent base » Ensure your HR metrics are still relevant » Prepare your workforce for economic recovery

REGISTER ONLINE NOW www.hrsummit.com.au Event partner

Strategic sponsors

Bronze sponsors

www.hrsummit.com.au

For more information Stephanie Sudzina – conference producer stephanie.sudzina@keymedia.com.au (02) 8437 4727 Sponsors

Supporting organisation

Official publication

Organised by

issue 7.5

cover story

How will your corporate culture shape up following redundancies? Iain Hopkins investigates why some organisations will thrive and others will falter

After : math

The cultural toll of redundancies

14

www.hcamag.com

cover story

issue 7.5

A

piece of academic research from the US conducted in the airline industry in the months after 9/11* provides a fascinating glimpse into the cultural aftermath of redundancies and financial turmoil. Following 9/11 the airline industry experienced a rapid decline. From a researcher’s perspective it provided a controlled experiment. There were very few external environmental factors for the organisations involved – just a sudden, sharp decrease in passenger numbers.

The researchers looked at the airlines that laid off staff verses the airlines that did not. They longitudinally studied how these companies ‘bounced’ – or showed resilience – in terms of how quickly they came back from such a dramatic fall. In particular the study examined the existence of relational reserves (the maintenance of positive employee relationships). The researchers concluded that companies are better able to cope with a crisis when they maintain strong relational reserves and have adequate financial reserves needed to avoid layoffs.

Quentin Jones, managing director of culture consultancy Human Synergistics International, says the results were hardly surprising. “It was one plus one equals two stuff – if you lay off staff, guess what? You’ve lost capability, trust, goodwill – the fundamentals of human capital management. When things picked up, those companies weren’t in a good space.”

Fast-forward eight years and that research provides an interesting insight into the current challenges facing the business world in general. Following the global financial crisis and the subsequent dip in the Australian economy, many organisations are facing the same dilemma as those airlines. Do we lay off staff? Do we have a corporate culture that can survive the external and internal turmoil?

Values and behaviours

Resilience is suddenly a buzz word: graduates should be hired if they show traits of resilience; leaders are urged to demonstrate resilience; and those corporate cultures that show resilience are deemed more likely to survive. But what does resilience mean? On one level it could simply mean that when an organisation is sideswiped from the left or right, it can bounce back without being totally derailed.

www.hcamag.com

15

issue 7.5

cover story

Justin Papps, practice leader for innovation at Mettle, says that an organisation can have a resilient culture only if it has a well defined culture to start with. Resilience is an outcome, not an output of culture. “You must have a clear definition of who you are, what’s important and what’s acceptable in the form of behaviours – in other words, what you need to do to fit in around here. If that’s really clear and it’s consistent it will lead to resilience – I don’t believe you can set out and say ‘we’re going to build a resilient culture’,” he says.

Following that definition through, Papps believes resilience applies to any business that has a core set of values and behaviours that can withstand the pressures of corporate life. “If at any time you feel those values or behaviours are being compromised, then the decision you make – ‘yes I’m willing to compromise’ or ‘no I’m not willing to compromise’ – is the difference between being resilient or not,” he says.

It’s easy for people to get caught up in the potentially glib nature of values, which are usually things like honesty, integrity, entrepreneurship – but which organisation doesn’t want those?

Papps believes the relevance comes at the next level, “which is ‘how do I need to behave here in order to fit in and to represent the brand’,” he says.

“The risk comes where you have mission statements where you could add ‘… just like everyone else’ at the end of it. For example,

you could have ‘we want to be the leaders in innovation through team-centred action and open thinking… just like everyone else’.

It’s getting something that’s true to who you are and also that’s close to you achieving your strategy,” Papps adds.

Cultural styles

Resilience aside, some cultures will withstand redundancies better than others, although Papps notes that all cultures – regardless of how strong they are – will feel some impact.

Jones questions whether redundancies cause the inevitable cultural slide of an organisation or if the negative culture is in place to start with. Corporate cultures can be broadly divided into three groups: constructive, aggressive and passive (see leadership styles graph). He cites research by Human Synergistics conducted in 2005 on 40 organisations undergoing cultural change. In 2009, five of those organisations with constructive cultures were revisited. How were they handling the economic downturn? Had the investment in building a constructive culture paid off?

“One organisation was a water utility in Melbourne. The CEO said they had already had their GFC because a couple of years ago the then Premier amalgamated all the water functions, and these organisations were forced to undertake cultural change in order to survive. The CEO’s view was that if it hadn’t been for the [constructive] culture they had developed, they wouldn’t have

Leadership/Impact®

“Research and development by Robert A. Cooke, PH.D and J. Clayton Lafferty, Ph.D. Copyright © 1987-2009 by Human Synergistics International.

Used by permission”

Source: Human Synergistics For more information on Human Synergistics visit www.human-synergistics.com.au or e-mail: info@human-synergistics.com.au

16

www.hcamag.com

cover story

survived,” Jones explains. The newlook water utility didn’t have to deal with the infighting, lack of trust, and all the other intangible costs of having a negative culture. “It’s like a relationship. If you’re married and the relationship already has some cracks, and you put pressure on it like another child or a job loss, it falls apart. But there is what we call capability in the business to bounce. That is where trust and deep relationships come into play – they Quentin Jones are all intangibles but an essential part of the outcome: resilience,” Jones says.

Similar feedback was received from other CEOs in the study. Most claimed that if they had aggressive, blame-ridden, competitive dog-eat-dog cultures, they would have had no compunction about cutting staff. Now, if they still have to cut staff after trying other alternatives, they are being smart about where they cut. The blanket 10% cut across the board is out; instead they will look at where productivity and innovation is low, examine the causes of that, and then make the call. “This is a big turnaround.

We actually have companies out there saying they won’t make cuts. At QBE the CEO has come out and said no cuts. I’ve talked with the HR director at Woolworths – again, no cuts,” says Jones.

The three Ts

Moving away from theoretical cultural models, Papps believes the key to an organisation that can say ‘no cuts’ with some confidence is the three Ts: truth, trust and transparency. “For whatever reason, in some organisations truth is the first victim of a downturn, followed closely by transparency. Organisations that stay true to the three Ts or try to focus on them during these times will come out the other side much stronger.”

The truth piece is critical because in the absence of real facts people make up rumours, and rumours will undermine a culture.

“The worst thing we hear is when people are told that last week’s round of redundancies was the last round, and then the following week there is another round,” says Papps. He notes that a trait of successful and sustainable business leaders is their ability to tell the truth whatever the circumstances – they explain the current situation and why cuts have to be made, and don’t make empty promises about further cuts not occurring. “People just appreciate being told the truth, which leads to the other part: trust.”

Papps cites an example of the ultimate trust breaker: a midsized company of around 100 employees that had a round of redundancies on a Tuesday and the next day the management team went to Noosa for a four day retreat. “How do you expect people to react to that? Do it in the boardroom instead!” he says.

Transparency is also crucial. Papps urges leaders to be clear on what is important and how success will be measured in the future – and if the goalposts have changed be completely transparent

issue 7.5

around that. “Take a sales organisation,” he says. “The leaders should say ‘we have upped the sales expectations for all of you because there are fewer of you but we need to keep the same numbers flowing in – so this is what it means’.”

Handling redundancies

Unfortunately many organisations are operating without trust, truth and transparency, especially when it comes to redundancies.

The way these organisations handle redundancies will be dictated by their culture. Jones cites the approach of a well-known Australian financial institution: employees were told to sit by their desk, and if they received a phone call they knew they had to exit the building. It was typical of that culture.

“The predictor of how organisations handle their redundancies will be their culture. Aggressive styles will do it the way demonstrated by that financial institution. Constructive styles will do it with real compassion but in a very strategic way and be very clear, open, rational, even caring if they have some of those humanistic values. With the passive styles, leaders will acknowledge they need to cut people but they won’t do it overtly, but rather under the table. People will just disappear,” Jones says.

Perhaps more importantly, the post-redundancy aftermath is a product of the culture. “If it’s done with fear and with people disappearing without explanation, of course that will reinforce anxiety and all those security-oriented behaviours,” says Jones.

When organisations cut staff, they tend to place emphasis on those leaving, but to ensure the people left behind remain productive Jones says it is essential for leaders to focus on culture and prioritise ways to inspire and motive remaining staff.

This is easier said than done. Many leaders – especially midlevel managers – are witnessing an economic downturn for the first time in their working lives. Papps notes there can be some survivor guilt, particularly when trust and transparency are not present.

Leaders

There are six of drivers or levers of culture. They are ‘hard wiring’ levers such as structure, systems and symbols; and ‘soft wiring’ levers including leadership, mindsets and the resulting behaviours.

By general consensus the most important lever is the leader. “A simplified model is that leaders are the primary drivers of culture at all levels, and then culture drives business performance. Those leadership norms are also embedded in the systems, processes and structures,” says Jones. “For example, if I’m a constructive leader I expect people to be constructive and I will reward constructive behaviours. If I’m an aggressive leader then I expect people to do what they’re told, follow the rules. Aggression actually produces passivity, and what do aggressive leaders complain about most?

Their staff don’t take initiative, don’t think for themselves. It’s a vicious circle.”

Papps says the most successful leaders will be the ones who continue to communicate with their people. Even if there’s no news, he says it’s still important to stress the company is tracking www.hcamag.com

17

issue 7.5

cover story

ahead and there are no changes. “That in itself is great because in the absence of fact gossip starts,” he says.

In the post-redundancy aftermath employees are searching for motivation, inspiration and the assurance that they are valued by their bosses. “Despite corporate mythology, fear is not an effective motivator,” Jones adds.

Turning it around

The positive news is that cultures can be transformed – the only catch being that it takes extraordinary leadership to do so. Jones uses Andrew Mohl at AMP as an example. Back in 2003 he was dealing with a basketcase. His company had been reduced from 27,000 to 3,000 employees, it was struggling financially and was on the brink of extinction. Mohl turned it around.

“Andrew Mohl spoke at a conference just before he retired as CEO and we listened to this cool-headed, rational, but in his own way incredibly people-oriented leader. He did some smart things financially and technically but also smart things in terms of communicating to all staff. He used open e-mails and always responded to queries. He shared with us his e-mail from when they were in the thick of it, saying ‘it’s tough but we’ll see this through’. It was leadership of a different calibre. We don’t have too many of those leaders, but Andrew Mohl knew it was through the people that he would get to the bottom line.”

The rebuilding and reinforcing of a culture needs to start the moment redundancies are being considered, not the day after people leave the organisation. “How you plan it, how you go through the Matt Hewitson process for the employee and organisation, and those messages people receive from that process are vitally important. The culture is built through that process, not the day after it’s happened. If leaders wait and do the cleanout and then start thinking about the culture, you’re already starting two steps behind everyone else,” says Papps.

Unity = strength

Ironically, it is during these times that corporate reputations can actually be enhanced. “Organisations that behave in a way that is consistent with their espoused values, even if they are making people redundant, will build and maintain their employment brand. Whilst the wordings of the values are different, typically they are centred on integrity and respect for the individual,” says Matt Hewitson, lead talent manager, Harrier.

Organisations taking an employee-centric approach to dealing with the current crisis will also benefit from employee goodwill.

18

www.hcamag.com

Human Synergistic’s top culture tips 1. Be honest about the situation; you don’t know the future 2. Be accessible – open door policy is a must, walk the corridors – employees need to voice their concerns and feelings in order to deal with them.

3. Be empathetic – acknowledge the loss and how people might be feeling.

4. Focus on the big picture and purpose and remind people about core values.

5. Keep language positive and action driven.

6. Reset goals and share them amongst the organisation – maintain a long-term focus.

7. Make sure the focus is on ‘working together’ – this will ensure motivation levels are maintained.

8. Show that you are responding effectively to the current situation – staff will be more forgiving if they know redundancies were the last resort.

There are countless examples of employees making suggestions that management teams would not be able to introduce without employee support.

“We’ve seen employees volunteer to drop their hours or change rosters to prevent the company having to make colleagues redundant. This approach shows that the organisation is inclusive, respects the opinions of their employees and is open to change. It also says to the workforce that management don’t necessarily have all the answers in dealing with these unprecedented economic conditions, but they value the thoughts and insights of employees,” Hewitson adds.

The broader picture

The fictional Gordon Gekko once said that greed is good; indeed, greed perhaps best summed up the 1980s. How will the last decade be summed up? Jones believes the corporate cultures of passivity and aggression have brought the world’s economies to the current crisis point. Fortunately, he says, the landscape is changing. “The raison d’être for organisations by the community is being renegotiated as we speak and that’s exciting to witness.

We can’t do this again but there’s an environmental crisis that will make this economic crisis pale into insignificance.”

Papps believes that truth may make a comeback. “We’ve seen the results of not having truth in the current GFC – yet there’s great liberation for companies that have it. CEOs can say, ‘we’re not doing as well as we thought we would, but here’s what we’re doing about it. We’ll do our best to keep the company going if you put your trust in us and stick with us’. If you are truthful with your people they will understand why the tough decisions are being made.” HC *Relationships, Layoffs and Organizational Resilience: Airline Industry Responses to September 11 by Judy Hoffer Gittell, Brandeis University; Kim Cameron, University of Michigan; Sandy G.P Lim, University of Michigan

issue 7.5

expert insight

The rise of the resilient graduate Australian organisations must identify and secure ‘resilient’ graduates to ensure their businesses continue to perform during the current economic downturn, writes Eric Wilson

C

urrent economic conditions are tightening budgets and shrinking job opportunities.

Job security is fast becoming a thing of the past with the trend now moving towards declining numbwers of graduate positions.

The 2009 graduate season will see an overwhelming number of graduates chasing fewer program places, dramatically intensifying competition and making the top graduates harder to identify. A graduate that can accept, overcome and cope with change such as mergers and acquisitions, and staff cutbacks is the type of employee that you want on your side now.

These ‘resilient’ graduates are tough minded, calm under pressure, and able to recover quickly from setbacks. While some may believe Gen Y does not hold these attributes, such generalisations are a myth and often an excuse for poor management or poor hiring decisions.

Gen Y, the same as Gen X and Baby Boomers, will have its heroes; those remarkable individuals in a business who grow from strength to strength and embrace change in times of adversity. In fact, Gen Y has the potential to produce some of the most formidable business leaders of our time.

As HR department budgets are cut and HR professionals are pushed to the limit, organisations may end up hiring lower performers as they are unable to effectively cope with the sheer volume of applications. Therefore, after years of growth, organisations need to re-think

20

www.hcamag.com

how they will secure the graduates who display resilience and will be able to hit the ground running.

While ‘resilient’ employees are valuable at all stages of the business life cycle, they are essential in times of economic downturn.

Taking on resilient graduates who demonstrate strong initiative and

leadership potential will help build a ‘can-do’ attitude in the work environment.

Employees with the ability to manage stressful situations positively are also in a better position to take on greater responsibility and inspire their peers to do the same.

The major difficulty now facing employers is identifying and securing these

Top five graduate recruitment tips 1. Be objective: In times of slowing demand, organisations cannot afford to make hiring decisions based only on gut instinct or academic results.

Objective assessment tools must be incorporated to ensure employers can identify high potential candidates that are best suited to the position and will become a productive contributor to the business faster.

2. Go online: Having all application materials, tests and touch points of a graduate recruitment process online will save organisations time and money.

It will also overcome any issues with geography or time zones, so the pool of potential candidates is not restricted to one city.

3. Speed it up: Processing times can make or break an organisation’s chances of securing the best graduates.

Organisations must ensure processes are smooth and

speedy from the moment a graduate application is received to make sure they get the graduates they want before their competitors.

4. Practise makes perfect: To ensure they don’t miss out on top talent, organisations should provide graduates with helpful links to practice tests, such as those at www.shldirect.com. This will allow graduates to better prepare themselves.

5. Candidate care: The downturn may mean graduates aren’t going to hold as much power as in the past – but the cream of the crop will still be hotly contested. Organisations need to communicate with candidates at every step of the process to ensure they feel comfortable and are more responsive to the interview and selection process.

A positive experience greatly impacts the graduate’s decision to accept an offer.

expert insight

graduate superstars before the competition.

As such, an organisation needs to invest in a recruitment process that identifies a candidate’s potential, resilience and evidence of past performance.

Specific characteristics that can identify resilient graduates include optimism, composure, tough mindedness, the ability to cope with negative happenings, and a natural tendency to be calm and relaxed.

The recruitment process should include objective tools such as ability tests, personality assessments and competencybased interviewing. This will help employers identify a candidate’s future potential to be resilient and capture the best graduate talent.

It has become clear to all but the most optimistic that the Australian employment market is changing. With the cost of a bad

issue 7.5

graduate hiring decision adding up to 1.5 times a graduate’s salary, organisations can no longer afford to ignore the situation.

Given the economic climate, organisations must re-think their recruitment strategies in order to survive and stay ahead of the bottom line.

Hiring resilient graduates will improve staff retention, generate better business performance and also make sure the organisation is in great shape once the good times return. HC

About the author Eric Wilson is the SHL director of professional services for Australia and New Zealand.

www.hcamag.com

21

issue 7.5

culture

Culture: Organisational culture can grow and mutate, and can be a company killer or the differentiator that provides competitive advantage. It is the leaders who will determine which way the chips fall

22

www.hcamag.com

culture

T

he past decade has borne witness to a string of corporate scandals, from human rights abuses and environmental pollution to fraudulent accounting practices. Several of the world’s largest companies collapsed, while those that survived paid the cost with a sizable dent in profits and an even greater battle to turn a tide of negative public opinion back in their favour.

It has been a lesson in corporate culpability, a measure of the need for companies to clean up their act and demonstrate moral credentials to a new breed of discerning consumers, meet growing demand for ethical investment, and to attract talented employees in a skills-short market.

Within a governance context, the need to understand the mechanics of organisational culture is vital and, as recent cases demonstrate, the design of organisational policy frameworks and processes must pay heed to the values and underlying culture that exists among the people responsible for following them.

“Most people would view corporate governance as being about control, a set of rules, systems and processes, but you can’t manage all these policies and procedures without acknowledging that culture really defines how things are done around here,” says David Edwards, strategic manager at Drake International, and former CEO of the Victorian Employers’ Chamber of Commerce and Industry (VECCI), CEDA and CPA Australia explains.

Edwards believes that the recent

disintegration of the US banking system is attributable to a combination of regulatory flaws and a subversive element among the ranks of people working within it.

“Our first thought about the failure of the banking system is that it wasn’t regulated properly in the US. In other words, the policies, procedures and processes weren’t effective. However, I believe that culture is equally important and if those responsible for governance and corporate reputation don’t pay equal attention to culture then it doesn’t matter what procedures you have in place because people will break the rules,” he says.

Conversely, he says rigid conformity to processes, and a willingness to take responsibility and address culture, were root causes of the breakdown of National Australia Bank’s compliance systems in 2004 – the result of a framework that refused to acknowledge mistakes.

“In the end a significant cultural problem was identified; the management at the time had become arrogant and would not accept failure, and bad news was suppressed, even when there were clear warning signs. PricewaterhouseCoopers identified that there was a clear cultural failure of the organisation and new NAB management have made it a priority to rectify this issue,” he says.

Understanding organisational culture

Many of the world’s leading management theorists have attempted to present a

issue 7.5

precise definition of corporate culture.

These provide an initial point of reference for corporate leaders brave enough to take a long, hard and objective look at the reality gap that often exists between carefully crafted corporate mission statements and the real deal happening at the organisation’s sharp end. While the exercise might be uncomfortable for some, the consequences of complacency are too significant to be ignored.

Charles WL Hill and Gareth R Jones describe corporate culture as “the specific collection of values and norms that are shared by people and groups in an organisation, and that control the way they interact with each other and with stakeholders outside the organisation”.

While this definition implies that shared philosophy is controlled by the organisation itself, it does not address the power of what has been called the ‘invisible cultural force’, an environment far more difficult to define and to a greater extent, control.

Organisational culture is an amalgam of potentially unsanctioned personal values, beliefs and practices, often passed down through the years by a succession of incumbents. Left unchecked, particularly when misaligned with strategic mission, it is unlikely that the organisation that supports or ignores an alternative and unorthodox culture will achieve sustainable competitive advantage. Low productivity, restricted growth and reduced profitability are symptomatic of poorly managed organisational culture.

Harnessing the invisible force www.hcamag.com

23

issue 7.5

culture

The effects of culture on employee acquisition and retention

Organisations that have invested in cultural change are reaping the rewards. Employers of choice score higher levels of employee engagement, productivity and stakeholder support, which according to a 2006 ISR Global Engagement study, translated into up to 13.7% net income growth and 27.8% rise in earnings per share.

On a global scale, surveys such as Fortune’s Top 100 Best Companies to Work For, place companies like Fedex and Google as leaders of the cultural pack, while the annual Hewitt Best Employers in Australia and New Zealand survey identified ANZ, Deakin University and Seek among the country’s most admired employer brands.

The Hewitt survey selects customerfocused organisations which successfully align strategy, structure and systems around people as a primary source of sustainable competitive advantage. “The current and emergent successful organisations [in the study] will be those who focus on creating a value proposition for their people that attracts, retains and develops their talent at a time when we are experiencing major changes in people’s expectations of work, jobs, careers, and the interface with other parts of their lives,” the study says.

Today’s jobseekers can afford to be choosy and a critical examination of employer brand, within which, corporate governance, ethics and corporate responsibility are intrinsically linked, forms part of their selection criteria in a employment market in which they, to a large extent, maintain the upper hand.

Simply put, an attractive employer brand will exhibit values which a potential employee can relate or aspire to. As one recent survey found, 61% of job seekers would not apply for a job at a company with vision, values and culture they did not agree with, while 86% would not work for a company with a poor employer reputation, even if they offered a higher salary than a company with a good reputation.

For brands that fail to deliver employee proposition promises, retribution will be swift, courtesy of the internet and its use as a channel for resentful employees to vent their spleen to networked peer groups at the touch of a button. Blogs, MySpace, Facebook and professional networks such as LinkedIn are not only the domain of demanding Gen Y employees; they represent a PR nightmare and the damage caused through word of mouth between online peer groups is recognised as perhaps the most powerful of decision making influences and one which is almost impossible to control.

Culture vs competency

Building and maintaining an employer brand to attract the best talent is just the beginning. Ironically, from an employer perspective it can sometimes be necessary to make a difficult choice between selecting a candidate on their cultural fit, rather than exemplary competency and skills.

Edwards, who led many successful change programs during his tenure at VECCI, describes an experience that led him to reassess recruitment decisionmaking on a deeper emotional level. “We had a team culture in VECCI and the worst thing I could do was hire someone who didn’t agree with that type of culture,” he says. “I had employed a real star performer in a senior position; he had great knowledge, worked well with stakeholders, and companies liked him, but it became clear he was not a team player. He was there for six months before I found that other staff were beginning to copy him because he was so successful. After that I learned that it doesn’t matter how good someone is, if their culture and values are incompatible with the organisations values then you have to make a tough decision, because it is very difficult to change someone’s values.”

Today he uses a Drake matrix model to demonstrate cultural and competency matching, and is an advocate of psychometric testing as part of the hiring process; a system which Drake has successfully developed to help to remove selection subjectivity and reduce hiring risk for clients.

Assessing, developing and maintaining organisational culture

Edwards summarises the steps that organisations must take in order to build or nurture a strategically advantageous organisational culture.

To build a strategically aligned organisational culture: 1. Formulate a clear strategic vision that includes a definition of the shared values and behaviours that will drive the organisation toward achieving its goals 2. Gain commitment for change from the top down 3. Define and benchmark where the

24

www.hcamag.com

culture

organisation is now, including staff engagement levels and what employees consider to be important, using employee engagement surveys, focus groups and exit interview information 4. Assess the cultural impact of current structure, processes, policies and procedures 5. Conduct workshops to identify the strategic/cultural gap 6. Implement change programs – people, process and policies supported by champions and ambassadors throughout the organisation 7. Adapt HR policies to support the desired cultural direction, for example, employee incentives, recruitment practices, performance management, training and diversity strategies 8. Celebrate success to maintain momentum 9. Continual assessment and monitoring 10. Communicate, communicate, communicate Once you do embark on the path to cultural enlightenment, Edwards stresses the importance of implementing an effective monitoring program to measure success. “You have to take a systematic and ongoing approach to managing culture.

From a Drake perspective that means linking culture to the employer brand to communicate it outside of the organisation to help attract the people you want and make it easier to recruit,” he say. “From an internal retention aspect it means consistently communicating the brand and regularly surveying staff to ensure that the right culture is at work in the organisation.

It’s a journey rather than a destination.”

Just like any tangible brand symbol, from logo to office design; leadership behaviour and even appearance, are extensions of organisational brand values.

Jobs and his ‘corporate casual’ dress code, for example, supports a culture where traditional corporate rules are relaxed to inspire innovation. This style, emulated by contemporaries in the technology, music and entertainment industries, removes creative boundaries and demonstrates belonging within this creative ‘inside’ clique.

“It can be more difficult in public companies for a paid executive to influence culture in the same kind of way as the owner can. But what leaders talk about and what they find important will have a great impact on organisational culture,” Edwards says, using occupational health and safety as an example. “I think the breakthrough occurred when others became something that leaders wanted to discuss and the board started to look at.

I don’t think it changed the policies that were in place, but it did impact culture in that everyone realised the issue was important because the boss was interested.”

Edwards warns of the dangers of leaders failing to live the brand, and mentions a top female executive who, though publicly extolling the virtues of a corporate culture that embraced work-life balance, was viewed as a workaholic by employees who were expected to show the same level of commitment. “The more upfront you are in the public arena when talking about culture the better. If your message is not consistent with your practices, then you will be found out very quickly,” he says.

Leading from the top

Tighter control and regulation of the financial industry, and even greater environmental concerns will shape the way corporate governance is implemented and reported in the future. ASIC has warned public companies that it will be closely scrutinising green reports, indicating that companies can no longer hide behind corporate rhetoric and empty mission statements and will be asked to provide evidence that they practice what they preach.

Fostering a culture that gains support from all staff should be the goal of every

The charismatic qualities of Bill Gates, Richard Branson and Steve Jobs are intrinsically linked to the success of their respective organisations, all of which display positive cultures nurtured through the strength and conviction of their leaders’ personal values and beliefs. Although they might be considered exceptions to the norm, they do illustrate the value of guiding culture from the top down, by leaders who authentically ‘walk the talk’ of their chosen strategic and cultural direction.

The culture of the future

issue 7.5

David Edwards

company. “It’s not just a job for the HR department to manage culture or the marketing department to manage communications. Individuals from all over… will be responsible for driving change and maintaining the organisation’s desired cultural dimension,” Edwards explains.

Drake Executive has recently focused its energies on delivering recruitment services into the environmental and carbon markets.

This is to meet the rising demand for ‘green’ skills and in recognition of the need for recruiters to attract ‘cultural change agents’ within their organisation.

According to Edwards, it is a strategy that has already been adopted by many mining companies. “Smart companies realise that to change they will have to bring in people from different cultures. The mining companies were early in recruiting people from a conservation background, but what they said to them is that we are hiring you not to comply with our current culture, but to help us to change it,” he says. “Rio Tinto was a leader in recruiting people to help them embrace culture change, but if you go out and recruit a ‘green’ expert and tell them: ‘This is the way we work’, then you are going to have serious problems.”

Organisational culture can grow and mutate, and can be a company killer or the differentiator that provides competitive advantage. What is clear is that management can and must influence culture to ensure strategic alignment. HC www.hcamag.com

25

issue 7.5

motivation

Motivation on a budget...

26

www.hcamag.com

motivation

Gloom, doom and even more gloom.

Is it any wonder the motivation of your employees is slipping?

Iain Hopkins talks to one HR professional providing cost effective motivational boosters to her employees

L

ike any organisation associated with the recruitment industry, the fortunes of online job board SEEK are closely aligned with the fortunes of the broader employment market. Unlike some of those other organisations, SEEK’s employees remain motivated and engaged with their work despite the economic environment. How? To some extent, Meahan Callaghan, SEEK’s HR director, puts this down to the corporate culture of the organisation. Although hesitant to call it ‘resilient’, she has no doubt the foundations of the culture will hold strong regardless of the economic climate.

“We’d classify our culture as being highly professional and lots of fun. We like working with each other, we have a good time while we’re here, but we also really value the contribution we make and what we can achieve by working at SEEK. Maybe resilient is not quite the word – but our culture is something that can continue regardless of the economic climate because it consists of fundamental building blocks,” she says.

Callaghan has been with the company for three-and-a-half years and she notes the culture was very much in place before she arrived, having been established by the founders – brothers Paul and Andrew Bassat, and Matthew Rockman.

“It was part of what attracted me to the job and company, and it’s something I make my daily business to maintain and uphold while I’m here,” she says.

While Callaghan does not see HR’s role as being the cultural ambassadors or flame-keepers, she does acknowledge it has an important role to play. “Because we manage the employee survey process – which we do every six months – we are responsible for advising people on how it’s going. We can give feedback to everybody in the company – what people are feeling, how true to the culture we’re being and how well we’re living the values,” she says.

Callaghan believes everyone who joins the company is responsible for the culture and this is something that is stressed in the recruitment process. “I don’t want that to sound flippant, but we do say you need to understand the culture, it needs to be something you will thrive in and contribute to while you are here.

It’s very much a whole company mandate and it’s part of our goal

issue 7.5

across the whole company to be the best employer across Australia and New Zealand,” she says.

Big and bold or small but effective?

There’s a perception that keeping staff motivated in tough times requires significant financial outlay. Not so, Callaghan says, although she feels that both the ‘big events’ like dedicated teambuilding days and the smaller initiatives like celebrating birthdays have their place.

“I think you can do either and there’s a place for both. We’ve achieved a fair amount in the last six months in doing quite inexpensive things,” she says.

Callaghan and her team have focused on two points over the past six months: »» Managers have looked at individual goals for each employee and ensured they make sense and are realistic in the current economy

What drives your staff?

Psychometric consulting firm SHL provides some tips on motivating staff and increasing productivity in a downturn 1. No ‘one size fits all’ approacH Remember that motivation is an individual preference.

What motivates you will not necessarily motivate others.

Consider the work environment your employees operate within and whether circumstances have changed.

Everyone will react to change differently.

2. Get the real picture Asking ‘what motivates you?’ won’t pinpoint the factors that will improve performance. Use objective tools and methods of identifying motivation to make sure you have the most accurate information to address the needs of your people.

3. Knowledge is power Equip your managers with the right tools and resources to understand how to drive different types of employees to perform, particularly in times of change.

4. Potential versus performance Remember that an individual’s potential needs to be tapped into by their manager in order to perform. Twoway communication is essential to ensure managers and staff are on the same page.

5. Swing into the upswing Having a motivated workforce will ensure your organisation is well-prepared for the upswing. Focus on the survivors so that they are ready to hit the ground running when the good times return.

www.hcamag.com

27

issue 7.5

motivation

“When things tightened up we obviously looked at all expenses, but anything we felt had a good positive impact on our culture was a no-go area” – Meahan Callaghan »» Managers and employees have worked together to ensure that everybody feels motivated by their goals “We continue to do work on goal design and goal formation.

The other thing we’ve done is stay true to the culture and understood the long-term journey that we’re on,” she says. “We’ve tried not to make any short-term decisions that would impact on our culture long-term.”

As such, the company still holds events – a recent example was a tennis competition before Easter where the whole Melbourne office participated (around 200 people). The families of employees attended and it was a valuable networking and bonding opportunity. A football event – the sales team vs the rest of the company – is scheduled for later in the year. “It’s fairly inexpensive to run these events and we would not consider cutting them because it’s still really important to the culture of the organisation,” Callaghan says.

She goes straight to the source to ascertain what’s important and what’s not by surveying SEEK’s 400 employees every six months. “We get a lot of feedback on what we’re doing well and what we’re not doing well. We get feedback on what we should keep doing and what we should stop. We also have a culture team, which is a group of people across the organisation who come up with a lot of ideas. They came up with the tennis tournament and they are very connected with what people want,” Callaghan says.

The culture team sets up and runs events themselves, and getting their involvement guarantees interest. “We just had a brainstorming session about our Christmas party this year. We asked what sort of event and theme people want. Engaging people and seeking their opinion helps to make them feel valued and appreciated,” she adds.

Mentoring

Callaghan has also introduced a number of cost effective strategies to keep employees motivated and keen to work. She introduced a mentor program that is open to all employees, which she believes

28

www.hcamag.com

costs little except time and the price of a coffee. “The critical part is there are very few rules. Anyone can be a mentor and anybody can be mentored. There are no restrictions on who can participate.

The only requirement is you need to be clear about what your goal is,” she explains. “Your goal could be ‘I want to be in marketing one day, so I’d like to learn from someone in marketing’. It could be ‘I want to be the CEO of the company one day so I’d like to learn from the CEO’. Or it could be ‘I want to feel more connected and regularly catch up with people who I would not normally interact with’. It can be pretty broad, there just needs to be a goal.”

Employees are matched with a mentor based on that goal, and the mentor and mentee meet regularly over a four-month period.

Callaghan manages this on an exception basis – if someone is unsure about how to have a meeting or how to be a mentor the person will be coached individually. After four months the parties assess if they want to keep going, or decide if another mentor might work more effectively, or if there’s a new goal to work towards. There are currently 120 employees participating, including the whole executive team and the two CEOs. “It’s very inexpensive and we’ve had fantastic feedback. It is a great career development initiative and keeps people connected to the business,” she says.

Easy motivation tips

Sometimes the simple things really do make a difference. In line with the ‘inexpensive but effective’ initiatives, Callaghan speaks highly of the simple act of celebrating everyone’s birthday.

“When things tightened up we obviously looked at all expenses, but anything we felt had a good positive impact on our culture was a no-go area. The birthday cakes were one of those areas. It’s really exciting when everyone comes round and celebrates your birthday. The email goes out every morning telling people whose birthday it is, and at some point during the day there will be a cake to celebrate,” she says.

SEEK also provides all employees with breakfast each morning. Not only is this a pleasant start to the day, Callaghan believes it’s a valuable networking opportunity. “It’s surprising the people you bump into and the conversations you have while you’re waiting for your toast to pop up,” she says.

Employees are also offered volunteer leave, which is one day each year that provides an opportunity to give something back to other people and the community. A number of employees volunteered during the Victorian bushfires and Callaghan was buoyed by the feedback she received from this. “We received lots of emails saying how they appreciated working for a company that allowed them to have a paid day to go and do that,” she says Callaghan strongly believes in collaborating with employees to inform the decision-making process. She wants the initiatives the

motivation

company puts in place to be the ones employees actually value. “I personally read through every comment in our Employee Survey and make notes about the themes that are coming out, so that helps us know what things we are doing are having an impact.

Some things we do just because we know it’s a great idea – the free breakfast for example. For other larger initiatives we go into a consultative process and put out a call to people who want to

Make work fun!

Running your own team building activities may take no more than 15 minutes a week and can have a profound impact on staff morale, while saving you thousands of dollars. Here are five quick tips to help you energise your staff with team based activities.

1. Use team meetings Meetings are a great way to not only review business objectives, but to also generate a sense of team, passion and excitement. Allow five–10 minutes during each team meeting to run a fun team-based game and watch the energy, interaction and sense of team grow.

issue 7.5

contribute. If you consult on everything, particularly when you know it’s a positive initiative, you can get bogged down,” she says.

Final tips

Callaghan has two tips to impart for other HR professionals facing uncertain times. First, she urges them to take a long-term focus. “We go to a lot of trouble to hire the right people to work here so we don’t want them leaving under any circumstances – so we need to look at how to keep all these great people,” she says.

The second tip is to operate with honesty and integrity. “We’ve had to deliver some tough messages internally but the way you do that is to be very honest and transparent about what you’re doing.

As soon as we know something we communicate it straight away.

When we knew about what was happening in the external market and what it was going to mean to clients and our business, we communicated that straight away. We would never resort to spin or withholding information. That open communication can be motivating – just to know you’re being treated with respect and as part of a team,” Callaghan concludes. HC

2. Make sure the games are team-based Working in teams is the fastest way of building relationships. Get a little strategic – place staff in teams with people they don’t normally interact with.

3. Keep the games light, fun and interactive The focus should only ever be about fun. Avoid games that ‘eliminate’ people and discourage any overcompetitiveness. The objective is to create stronger relationships between staff/management through fun and laughter.

4. Management needs to participate If that is you, find someone else to run the activity.

Having management participate helps build stronger relationships between staff and management, which then assists with building staff loyalty.

5. Practice, Practice, Practice If you are not familiar with running team-based games, practice with family and friends. This will give you confidence in the activity and your ability to deliver it so it works every time.

About the author: Mike Symonds is the managing director of Interactive Events and has been developing and running team building activities for almost 10 years. He is the creator of FUNergizers, a DIY resource library of fun team based games. www.funergizers.com

www.hcamag.com

29

issue 7.5

leadership development

The ‘being’ of leadership Some leadership traits are easier to develop than others. While many L&D vendors concentrate solely on the doing of leadership, others concentrate on the self awareness, personal values and mental toughness required to be a leader

T

he average reign of the CEO in medium to large Australian organisations is getting shorter each year.

Many have either not been at the helm during previous economic downturns or have not been successful in effectively energising their talent to play their part in turning the corner and leading the way as competition for limited economic demand intensifies.

It is a damning summation – and certainly a generalisation – but the good news is that the situation in many organisations can be turned around. “Leadership agility is the key,” says Adam Kreuzer, manager of human capital and strategic change at BearingPoint. “It is those leaders who remain true to the cause, with the support of their shareholders and board of management, who are able to take a longer term view, outplay the doom and gloom and deliver on their growth strategies.”

Not surprisingly, Kreuzer believes that some leaders are coping better than others, depending on their leadership skills, resilience, experiences and attributes. Many leaders have been caught by surprise in terms of the intensity and speed of the

30

www.hcamag.com

economic downturn and it is not always the leaders who have decades of experience who are most effective in troubled economic times. “Some of our veteran senior executives have been jaded by the Gordon Gekko-like excesses of the 1980s and are under increasing pressure to pull a ‘rabbit out of a hat’ to fix the terrible performance of their industry or target markets,” he says.

What is required?

The skills required in a contracting economic environment are certainly different to those required in boom times, even through the central core of what is required – the critical competency DNA – will remain the same. This central core relates to the very essence of human endeavour – leadership strength, depth and motivation. The focus for the leader may also need to shift; time frames may shrink and goals will need to be adjusted.

“None of this is rocket science,” says Kreuzer. “However, what will differentiate leaders at all levels of an organisation in the current economic climate are those who can build the motivation to demonstrate leadership agility, creativity and innovation to

leadership development

issue 7.5

www.hcamag.com

31

issue 7.5

leadership development

What’s their spike?

Match the famous person with their spike (answers at end of article) Sir Richard Branson

Oprah Winfrey

Nelson Mandela

Margaret Thatcher

Albert Einstein

Cathy Freeman

Madonna

Ghandi

(a) An ability to see the humanity in every person, empathising with all sectors of society – even those in complete opposition to him

(b) Spotting market opportunities and having the deep-seated belief to make them happen

(c) Ability to see beyond current market trends, and use continual personal re-invention to shape the industry

(d) Uses their own resource of courage and drive to change the world, to help others to contribute and fight challenges in society

(e) The ability to convert her convictions into actions, choose her battles and the courage to be unpopular

(f) The courage to battle the odds coupled with resilience, tenacity and dedication to pursue a dream

(g) Inspires a sense of selfrespect and self-confidence to empower individual decision-making and cultivate social awareness

(h) Asking questions no one though to ask to invent theories that no one ever dreamed of

Source: YSC

support the inward pressure they will be feeling to batten down the hatches and reduce all elements of risk in their decisions, behaviours and outcomes.”

HR professionals should be looking to unleash the leadership potential lying within their ranks, and to develop those skills to optimum levels. It’s easier said than done – the range of leadership development options is daunting. Human Capital provides a few tips.

How to develop it

Leadership development specialists LIW3 take an organisational approach to leadership, which means looking at leaders at every level of the organisation and equipping them with the same skills – it is merely the level of complexity that changes depending on where the participant sits.

“For many years the market said the executive team must perform differently to supervisors and mid-level managers. To a certain extent that is true, but in our view less is more, so if we

“The being of leadership is around self awareness, personal values, mental toughness. We encourage leaders to reflect upon those and reap the benefits of doing so” – Rob Metcalfe 32

www.hcamag.com

have a common language for leadership at every level, that is a good thing. We’re seeing an appetite for common decision making processes and common planning processes, particularly where those processes take account of a rapidly changing situation. We’re seeing an appetite for setting relationships up for success as well as for coaching people during the relationship,” says Rob Metcalfe, managing director of LIW3.

Given the current economy it is hardly surprising that organisations are looking at different ways of developing their people. Rather than learning events like all-day training sessions, development activities are being embedded in the real world.

Metcalfe cites a major property construction development organisation as an example: “They want to work in small groups with a dedicated leadership coach on particular infrastructure projects. We’ll embed toolkits for leadership within the team using the real projects as the case study,” he explains.

Alongside action learning is the ongoing development of blended learning solutions. Metcalfe believes face-to-face interaction will never be phased out – indeed, it will be brought together with learning through projects, mentoring, and e-learning. “It’s an opportunity for us as leadership development professionals to capitalise on that need in the market – to deliver things differently, more cheaply, with the use of technology,” Metcalfe says.

Ultimately the goal is to develop ‘internal champions’ who are trained to deliver learning opportunities inhouse. “We’ll work with clients so they can start to develop these skills in their own people,” says Metcalfe.

leadership development

Getting down to fundamentals

The three fundamental questions of leadership – and also the key behind LIW3’s name and service offerings – are the following: Where are you going? Where are you now? What are you going to do next?

“It’s the common framework for leadership. The development piece is really a way to close the gap,” says Metcalfe.

Metcalfe believes development can be further broken down to two elements: the ‘doing’ of leadership including decision making, planning, briefing, coaching, developing relationships; and the ‘being’ of leadership. “The being of leadership is around self awareness, personal values, mental toughness. We encourage leaders to reflect upon those and reap the benefits of doing so,” he says.

There is a fundamental piece of inner strength that leaders gain from thinking about who they are – people can be good leaders if they haven’t done that thinking, but Metcalfe believes they would be far more effective if they have come to a sense of peace with themselves. “If you’ve done some reflection on who you are, where you’re heading, what you value, what are your beliefs are, and what triggers your emotions you’re also likely to be giving your undivided attention to the people you are leading,” he says.

issue 7.5

executive development for many years, one company has taken this to the next level. YSC offers in-depth profiling sessions with senior leaders with the objective of identifying that leader’s ‘spike’. The spike notion maintains that people who are successful have built their success on a unique combination of strengths.

As an example, a brilliant deal maker is someone who can see opportunities where others can’t. They have interpersonal skills that help them to influence others, and they probably have a high level of drive. A combination of elements will come together to mean their spike is to make deals that other people would struggle to identify or close.

Through a deep biographical one-on-one interview with the participant, as well as some psychometric exercises, the YSC team produces a report for the individual and the organisation, followed by a feedback session for the individual. Coaching and further development opportunities may follow.

“Essentially we identify someone’s spike through a process that takes the participant through the journey of their life, from school, through to university and onto career and life outside of work.

Developing self-awareness

That inner strength can be tough to get a handle on. While psychological and personality profiling has been a mainstay of

Leadership dashboard How can a leader create the conditions for success in tough times? Rob Metcalfe of LIW3 recommends a basic model to assess business complexity.

“Most people live in a complex world and it’s going to get more complicated. We believe that to navigate our way through that world the leader creates three conditions for themselves and those around them. These three conditions are around clarity, climate and competence.” »» Clarity: do we know where we’re going and why we’re going there, and have we translated that into objective goals for the whole organisation? »» Climate: the systems, resources, culture – all the things we need to be successful »» Competencies: the skills and the knowledge, but also the behaviour and attitude required to be successful. www.hcamag.com

33

issue 7.5

leadership development

By identifying your spike you’re also identifying where you might have a blind spot – Carmel Pelunsky Through exploring how this person reacted and felt through each of those contexts and environments what is assembled is their recipe for success. We learn how this has served them well, what they may need to do differently, and how they might need to use it differently going forward,” explains Carmel Pelunsky, director of YSC. There are a range of scenarios where this knowledge can be invaluable. It may be that the participant is on the brink of a promotion into a more senior role so they need to think about how they can use their spike differently; it might be that if they expand their spike they would have more impact in the organisation; or it might be because in a recessionary period they need to use their spike differently from a growth period.

“People have multiple strengths but if you get to the right spike it’s really one distinctive thing that stands out about that person,” says Pelunsky.

For every mountain peak or spike there is also a valley, and the YSC process also allows leaders identify their weaknesses, or “blind spots” as Pelunsky refers to them. “Once you’ve identified the spike we then look at what some of the associated blind spots might be. For example, if you are incredibly visionary and forward thinking and creative you’re unlikely to be looking at how the organisation is running currently and making sure all the operational things are looked after and ensuring people are doing what they are meant to be doing. By identifying your spike you’re also identifying where you might have a blind spot,” Pelunsky says.

Another example would be someone who is incredibly good at engaging people and bringing people along with them but they might spend less time looking at the data and analysing whether they are heading in the right direction. They may end up taking everyone with them, but taking them to the wrong place.

Pelunsky firmly believes that a leader will be more effective if they can not only leverage their spike but also create an executive team to compensate for blind spots. If everyone in the team is playing to their spikes, Pelunksy says there are two benefits: »» you reduce your level of unhealthy competitiveness because you recognise what each person is contributing and each team member feels valued for what they are bringing that is distinctive »» you realise what you need to bring into that team when you recruit “You don’t want to replicate what people already have in your team and the temptation is always to hire people who are like

34

www.hcamag.com

yourself. This helps to remove that temptation. The notion of the spike is identifying your own and then helping people play to their own,” she says.

It can be a challenging process. “It’s a deep and profound process and it does require a certain amount of courage to explore yourself at that level,” says Pelunsky. “For example, one person’s strength may contain an element of intense drive. That person may need to really own up to the level of competitiveness they have with peers and learn how to turn that competitiveness into real strengths rather than alienating those around them.”

Pelunsky believes that psychometric testing is only useful when it has perceptive discussions around it. She also believes people like to be the authors of their own stories, so even while undertaking a profiling session the YSC team value the way the individual tells their own story. “We believe we can gain a lot about how they see the world, what their drivers are, how they engage with people and what their emotions are by the way they tell their story. The feedback we receive about our process is that participants feel very dignified and feel their narrative has been taken into account, and they haven’t been put into a box. We’re able to create a narrative that they feel they have co-created and yet also challenges them and highlights areas they need to be stronger in,” she says.

The more things change…

As a final tip on this journey towards leadership self-awareness, Metcalfe urges leaders to concentrate not on what has changed around them but rather what remains the same. “Organisations that care about their purpose, that care about their values, will have a solid platform against which they can make good decisions.

We encourage people to say, ‘what is the platform, what is the permanence from which everything else can be managed to provide stability not only for my people but for myself?’

“Probably the most intensely personal tip I would give is this: do not underestimate the power of having a business plan just for you that goes beyond the results of the 360 that really explores what motivates you and why, and what you will you do about it, in all areas of your life. How can you get a stable rudder for your own leadership practice that enables you to be at peace with the world and the people you deal with, no matter whether we’re in recession or not?,” he concludes. HC

Answers Sir Richard Branson (b); Oprah Winfrey (g); Nelson Mandela (d); Margaret Thatcher (e); Albert Einstein (h); Cathy Freeman (f); Madonna (c); Ghandi (a)

advertorial – AIM

issue 7.5

Australian Institute of Management

Leadership during difficult times

W

ith cutbacks and uncertainty, staff morale is low. Unlike cosmetic spending, training spending indicates commitment to those who remain and can raise morale. Employees feel more confident that your organisation will weather a crisis if it demonstrates a longer term perspective by keeping up training that will help people do their work better.

Training shows that the organisation thinks there is a future, and that employees will be part of it.

An effective organisation will be using downtime or shifts in resources to prepare for recovery and the longer term.

Training is the way to develop people who already have valuable information and background experience in the organisation and help them into new roles, or give them the next generation of skills they will need to help the organisation recover and flourish. The cost of training or retraining existing staff is far smaller than the cost of recruiting and training people who have no experience in your organisation, and your organisation will be a step ahead of the competition and able to take advantage of opportunities more quickly than others.

Today’s successful organisations must reflect a commitment to learning if they are to retain people who remain mobile even in bad times, or those who because of uncertainty may be looking for other

David Wakeley CEO, AIM NSW & ACT

opportunities that appear more secure.

Engagement and retention will be two key themes for HR over the coming year.

Focusing on engagement and retention is important because both can add value to your organisation in a way that deals with the current reality of managing costs in tough times.

Engagement and retention will be two key themes for HR over the coming year Similarly, workforce planning and talent management will be of critical importance as companies come to grips with workforce requirements through these difficult times.

Business needs to understand the important roles in an organisation and the skill sets required for them, as well as the talent in the organisation.

Never has there been a more important time for leadership than now. There will be a strong focus on leadership and communication in trying to maintain the morale and spirit of the workforce and keeping focus on key goals and objectives of an organisation.

The Australian Institute of Management has been helping managers and organisations improve their development capability for more than 65 years by providing the very latest in management information and professional development opportunities.

AIM Membership recognises contribution to management with continued development and knowledge.

Becoming a member provides continual professional development support, recognition, leading management knowledge and networking opportunities.

As experts in the development and delivery of practical learning programs, AIM’s highly qualified consultants can provide expertise and support in the area

of tailored learning solutions. AIM will work with your organisation to create strategies to maximise your organisational capability. The Australian Institute of Management’s learning solutions are flexible enough to suit organisations of all sizes, both public and private, and can be delivered locally or nationally, on a client’s premises or in our purpose built training rooms.

“In this market, savvy employers are looking at creative ways to attract, retain and motivate people. This may include putting in place a career development plan, complete with a formal training program, to give employees the skills they need to progress to the next level within the organisation. In this way employees get that sense of a great career move, while employers get to engage and retain high-performing individuals,” said AIM’s chief executive NSW/ACT Mr David Wakeley.

Now in its 45th year, the AIM National Salary was based on the responses of 759 companies, comprising large companies (548 contributors) and small companies (211 contributors).

The survey revealed signs of further negative fallout from the global economic downturn, with annual salaries rising by 4.6 per cent in the 2008/2009 year (down from 5.2 per cent in the previous year).

This downward trend is set to continue into the foreseeable future, with small companies forecasting wage movements for 2009/2010 at only 4.1 per cent (drawn from the Small Companies Survey).

Further information Australian Institute of Management NSW & ACT Ph: 1300 651 811 www.aimnsw.com.au

www.hcamag.com

35

issue 7.5

storytelling

Tell me a story…

Why do some leaders inspire action while others are mostly forgettable? Shawn Callahan explores the vital role of business storytelling

J

ust the other day my business partner, Mark Schenk, surprised himself and in the process learned a valuable lesson. Mark had developed a strong belief that people don’t leave companies, they leave bad managers. Even in a poorly run company, if the employee has an excellent manager, they are likely to stay. He was expounding this point of view at a leadership development program that he was facilitating, when one of the participants said: “I don’t buy it.” This challenge made Mark bristle inside. He knew the speaker was wrong and was ready to argue with him, but rather than lose his cool, Mark said: “Can you give me an example of what you mean?”

“Sure,” he said. “I was working at [large utility company] and it was one of the worst companies I’ve worked for – ruled by fear, with too many incompetent executives who were unclear about where the company was headed. And at the same time I had the very best manager anyone could hope for. She did her best to shield us from all the terrible stuff that was going on and also gave me plenty of scope to do

36

www.hcamag.com

my job in the way I knew it needed to be done. She had been with this company for 12 years and was doing everything she could to make a change, but to no avail.

In the end I left the company to seek out a more productive working environment.”

Immediately Mark realised he had to rethink his point of view. His mind was changed by a simple story describing someone’s real-life experience.

Successful leaders are game changers: they can help people change their minds, feelings and ultimately their actions in ways that convey the meaning and significance of what needs to be done.

So, by this definition, anyone in an organisation can be a leader. The man in Mark’s workshop is one. It’s about getting things done with the support and help of your colleagues.

But changing people’s minds and actions takes more than just persuasive argument. In fact, argument alone can often merely result in people digging in their heels.

Changing minds and actions also involves empathy, listening, questioning

and, in particular, stories. Harvard professor and author of Changing Minds, Howard Gardner, puts it this way: "The principal vehicle of leadership is the story: the leader affects individual behaviour, thought, and feelings through the stories that he and she tells.”

How leaders use stories and why they are effective

Leaders can tell stories to paint a vision or strategic direction, share a lesson, convey values or illustrate desired behaviours.

Stories also have an ability to forge deeper connections between people, inspiring them to focus their attention and take action. As Terrence Gargiulo said: “The shortest distance between two people is a story.”

Stories work for leaders as a successful communication and engagement technique for several reasons.

Firstly, stories convey emotion effectively, and emotion united with a strong idea is persuasive. We remember what we feel and our emotions inspire us to take action.

storytelling

issue 7.5

www.hcamag.com

37

issue 7.5

storytelling

Leaders can tell stories to paint a vision or strategic direction, share a lesson, convey values or illustrate desired behaviours Secondly, stories are concrete and have the ability to transport us imaginatively to a place where we can visualise the events being recounted.

Thirdly, stories are memorable: we are up to 22 times more likely to remember a story than a set of disconnected facts (such as presentation dot-points).

Lastly, stories represent a pull strategy, unlike the push strategy used when we argue in a more traditional way. Stories engage the listener, pulling them into the story to participate in the conversation, rather than telling them what to think.

What is a story?

At this point you might be thinking: ‘So what do you really mean by a story?’ In business, a story is simply the recounting of an event that happened to you or to someone you know, or even a story from another source, such as a movie or book.

An effective story is surprising, emotional, but most importantly it must be credible. For example, you might be the leader of a business unit facing a terrific opportunity to launch a new major product, but you’re unable to raise enough capital to fund the venture into profitability. To get your sponsors on board, you could recount this story about Ted Turner and the launch of CNN. When Ted Turner was planning to launch CNN in 1979, he knew he didn't have enough funds to see it through to profitability, but at the same time he knew he had to move quickly, although

38

www.hcamag.com

no-one was going to lend him the money because of his inexperience in delivering TV news. So he drew on his knowledge of military history and likened the CNN launch strategy to Irwin Rommel’s desert campaign during World War II. On several occasions, the German general had launched an attack despite having too little fuel to conduct an entire offensive: he intended to strike when the British weren’t expecting it, overrun their lines, and then capture their fuel dumps in order to refuel his Panzers and continue the offensive.

Turner’s vision for financing CNN was similar: if they had enough cash to get on the air and could somehow survive their first year of broadcasting, people would see it was a viable and valuable service.

Once the concept was proven, he would have easier access to capital. Even in the worst case, Turner figured that if he ran out of money after launching the channel and getting some distribution, he would have created a valuable asset that he could sell to a competitor.

Our stories, collectively and individually, have a profound effect on what we believe is possible. Therefore the challenge for leaders is both to understand the stories affecting individuals and groups, and to know how to define and tell (ideally through wide participation) new stories that set the direction for the company. But that’s not all. The vital element in this challenge is to help people hear, remember and believe where the company is headed, and then to inspire people to act in line with that belief.

Aligning everyone’s actions to the company’s strategy is equivalent to finding the corporate Shangri-la. Yet it can be done. Take IBM’s turnaround, for example. Lou Gerstner arrived as the new CEO in 1993 at a time when IBM was on the endangered species list.

Gerstner had been CEO at Nabisco and American Express, and before that he was

a director of McKinsey Consulting. He’d seen hundreds of strategies and knew that most are the same – it’s extremely difficult to have a unique strategy. What makes the difference, however, is the execution of the strategy.

Gerstner set about turning around IBM by telling new stories about their direction, such as the new emphasis on services and the growth that would come from software. And of course he didn’t do this alone. He worked hard to develop a strong team who understood the stories and could act in ways that created new ones that reinforced the strategy.

Finding your own

The first step to becoming a storytelling leader is to develop an awareness of the stories that swirl around you every day.

Whenever a set of events strikes you as remarkable, take notice of what happened and ask yourself, ‘What does that set events say about the behaviours I want to instil or dispel in my group?’ Say, for example, you are a leader at FedEx, the company that promises to deliver your package “absolutely, positively” overnight, and you hear the following: “In St Vincent, a tractor trailer accident blocked the main road going into the airport. Together a FedEx driver and ramp agent tried every possible alternate route to the airport but were stymied by traffic jams. They eventually struck out on foot, shuttling every package the last mile to the airport for an on-time departure.”

This story is packed with the behaviours you want everyone in your company to exhibit. So instead of merely pleading for people to be persistent, innovative, collaborative, tell this story as an example of what can be done.

The second step is to move your style of speaking away from being predominantly rational and argument-based to being a good mixture of stories and argument. But here’s the secret, we humans are afflicted

storytelling

by what psychologists call the confirmation bias, which results in us digging in our heels whenever someone tries to convince us to change our minds with sophisticated rationale. In fact, we often come away from these exchanges doubly convinced of our own opinions. Think about how most presentations normally flow: we outline our argument, and then follow on with examples, having already unwittingly activated that pesky confirmation bias.

We can avoid triggering this bias by starting our presentations with examples instead. Specifically, it’s beneficial to start with a negative story to grab their attention. We are hardwired to notice negative stories, but negativity rarely changes our minds. So we follow that with a positive story of what’s possible.

These two examples give the listener the opportunity to gain a new perspective and shift their position, without telling them what to think. At this point, a rational argument can now be effective.

Finally, where possible, ask for feedback about what people infer about you from your stories. Each time you recount an experience you’re conveying your values, whether you like it or not.

Sometimes it’s hard for you to detect what’s really being conveyed. You might think your story conveys the importance of persistence and attention to detail, but your listeners could infer you’re inflexible and a nitpicker. You need trusted advisors to give you this frank feedback.

Good leaders are good storytellers. For the lucky few it is a skill that has stayed

issue 7.5

with them despite organisational cultures favouring rational argument. Everyone is inherently a storyteller, though some get it beaten out of them. Consequently, storytelling is not the exclusive domain of a naturally gifted few. Rather, it is a skill that every leader can, and should, rediscover and develop. HC

About the author Shawn Callahan is the founding director of Anecdote. For more information email: shawn@anecdote. com.au or phone: 03 8300 0747 or 0410 346 343

www.hcamag.com

39

issue 7.5

pre-employment screening

Caught

red handed 40

www.hcamag.com

pre-employment screening

issue 7.5

Despite the temptation to cut corners in the recruitment process, employers that cut pre-employment screening and background checks do so at their own risk

A

nyone who doubts the important role pre-employment screening and background checks plays in hiring the best talent need look no further than one headlinemaking case in 2008 when the Sydney District Court convicted a QANTAS engineer who used fake documentation to dupe his employers. By claiming to have qualifications he did not possess, the man put people’s lives at risk.

Other horror stories abound. Take the pharmaceutical firm on the verge of appointing a head of its warehouse. A last minute criminal check revealed the man held an eight-and-a-half-page criminal record. When confronted as to why he allowed the record check to be done, he maintained that if he hadn’t agreed he wouldn’t have been employed; if he agreed he figured he wouldn’t be checked.

Or take the CEO who refused to sign the privacy release forms in order for background checks to be done. Disregarding this, the company hired him for the $450,000 a year role anyway.

A week later they ran into trouble when they discovered their new employee could not get a passport because he did not have any proof of identity.

“We pick up around one in 10 candidates who have issues sufficient that the employer will want to take it up with the candidate. We usually come back with anomalies – a date here or a query about a qualification. But for that one in 10, the employer has the option of searching or probing further or not proceeding with the appointment,” says Greg Newton, MD of Verify.

With more candidates entering the job market every day, the need for thorough checks has never been higher, yet knowing where to start can be daunting. Verification vendors now offer more than 30 background checks; a year ago it was around 15.

Newton says that some employers play a dangerous game – they place candidate verification in the same basket as outplacement services. In other words, it is nice to have but not essential. “Sometimes they think: ‘We should be doing that, it’s the right thing to do.’ It opens them up for all sorts of trouble if they don’t follow through,” he adds.

Fortunately there are other drivers, not least of which fear of litigation. Another is the need to comply with legislation.

Those people working in health care or aged care must have a criminal record check, as do many government employees. People working with children must have a work with children check.

Risk mitigation

Background verification used to be the province of banks and other corporate giants. Today it’s not uncommon to find companies turning over $100–$500 million acknowledging that these checks are an integral part of their recruitment process.

Reference check tips 1. Always endeavour to talk to the previous manager 2. Never ring a mobile number, ring the switchboard and ask the receptionist to confirm the job title of the referee 3. Ask probing questions. Probe into reasons for leaving, performance on the job, teamwork ability, supervision/management style – whatever is relevant to the job. Closed yes/no responses should be avoided www.hcamag.com

41

issue 7.5

pre-employment screening

Financial services employees must have an AFS licence check, and so on.

“Sometimes it’s external legislation that governs your industry, or sometimes it’s for auditing purposes like the US SarbanesOxley Act. Finally, at the end of the day, employers are also realising they can’t take a CV at face value,” Newton says.

First steps

The verification process now encompasses traditional qualification and employment history checks all the way through to audiometry testing, drug and alcohol testing, medical checks, driver’s licence checks and visa or right to work checks – and everything in between.

The first step is usually telephone screening. With rising unemployment, Newton believes that many employers are struggling with the volume of applicants. Even using the best e-recruitment technology that can pull competencies out of resumes, shortlisted candidates still need to be contacted and interviewed. A company like Verify can conduct phone interviews concentrating on key competencies for the job.

Liar, liar Do candidates deliberately set out to lie on their CVs? Human Capital gauges Greg Newton’s thoughts.

Lie is a strong word but people design their resume to reflect the image they want to convey. If you’re 55 you will not put on your resume your first job from 1970.

You will be trained from recruiters to start your resume around the 1990s.

Equally you’ll find many people who started a qualification and never completed it – that will be on the CV as a completed course.

It’s also common to leave out short-term jobs. If you were at NAB from 1999 to 2004, then you spent four months at Westpac, and then went to CBA, you may leave out the four-month job. Yet that could be the critical job that proved you were incompetent or sacked.

A work history check, which is different to a reference check, chronologically pieces together where a person was on a certain date, what their job title was, and to whom they reported. If there was one area that is most commonly falsified it would be work history. These people aren’t stating the facts – and there’s good reason. If they state the facts they won’t get to the interview.

42

www.hcamag.com

“If the key competency is leadership we’ll explore how many people they’ve supervised, their method of leadership, how they went about reviewing people, training people, and so on. The aim of the competency-based telephone screening is to make sure they meet the first line criteria. In many cases there will be ratings, so from high to low, and candidates must score a minimum. It’s a simple process of competency checks through a five minute phone conversation. If they pass that we’ll put them into the bundle to send to the client,” Newton explains.

The next step for many organisations is psych testing, which can now be done online. This offers three distinct advantages: »» An external vendor can do it directly with the candidate so it doesn’t require involvement with the employer »» The candidate can do it at their own leisure in their own premises – they go online, log into a secure log in and undertake the tests when it suits »» It speeds up the process – when a high-calibre candidate applies the employer needs to move quickly

Screening

From there, final applicants will be thoroughly screened. The list of screening methods is becoming both more expansive and sophisticated. Verify recently upgraded its identity checks to include 140 points of identity verification (passport, driver’s licence, utility bill) and the company also offers fingerprint verification – iris and DNA checks are just around the corner.

“We won’t go to iris checks yet because few people have been iris tested but anyone with a criminal record has been fingerprinted.

Over time, as iris testing and DNA testing becomes more common in Australia, those are the technologies we’ll use,” Newton says.

Medical checks remain popular, but Newton notes that these are usually undertaken by operational staff handling machinery rather than executives (although this does occur). Driver’s licence checks are also a growth area. “It’s not uncommon to find sales reps without a driver’s licences. Reps tend to be younger these days – they can get into that environment where they have alcohol or recreational drugs and it’s quite common to find a conviction in the past for DUI or similar offence,” Newton says.

In an age of internet diplomas, qualification checks are also becoming more prevalent. There are two sides to this. Firstly, if the organisation desires a certain qualification in the job then employees should have it. Secondly, in order to fulfill some jobs employees are mandated to have a qualification. For example, in

pre-employment screening

Background checks would be virtually impossible without assistance from external specialists, as there are multiple agencies and authorities to deal with to get this information some finance roles an employee may need to have a degree and also be an ACA member.

Increased licensing requirements, especially when it comes to jobs involving the provision of financial advice or loans, means there is thorough probing of APRA records or AFS disqualification checks.

“It’s essential the organisation protects itself against litigation by ensuring that the individual in that job has the qualification required under the law to practice that job. It’s just like driving a vehicle. You have a rep on the road and you haven’t checked if they have a current driver’s licence and they kill or injure someone – you very well may have substantial liability,” Newton warns.

issue 7.5

instance, with a search on MSN, Google or Google Academic.

Sometimes that yields results, as Newton explains. “There was a case earlier this year where the Australian Financial Review reported on a CEO who had been dismissed from a pervious job and had been frogmarched off the premises by two policemen.

That was the person we were checking.”

Whichever way checks are done, Newton believes there is peace of mind for employers when they know the candidate is who they say they are, that they are fit to do the job and have the qualifications and skills required to do it well.

“Irrespective of how good the behavioural interview is, there are things you cannot ascertain. You cannot ascertain whether or not they missed out on the degree, or have a botched credit rating or even a criminal record – that’s where we come in,” he says. HC

Further checks

There are several unique offerings on the market. Verify can do audiometry (hearing) checks, which are ideal for noisy work environments. Workers comp checks are also new. “If you employ someone with an outstanding claim, you inherit that workers comp and you’re liable for it. It’s wise to ensure you are not liable for that and the previous employer or the individual themselves carries that liability,” Newton explains.

These background checks would be virtually impossible without assistance from external specialists, as there are multiple agencies and authorities to deal with to get this information. Newton lists Crimtrack, ASIC and the Attorney General’s Department as just a few examples. “If internal HR teams had to arrange all these checks they’d have to build these relationships, pay fees and be tied up for hours trying to get the work done. For $200 we can do driver’s licence and identity checks, criminal record and reference checks for a fraction of the cost of a wrong hire,” Newton says.

Be careful

Prior to undertaking background checks, Australian privacy laws require consent from the person being investigated. If they do not agree the only option is to go digging in the public domain – for www.hcamag.com

43

issue 7.5

executive remuneration

golden opportunity Current market volatility provides an excellent chance to improve and re-evaluate executive reward programs, writes Yolande Foord

T

he combination of falling shareholder returns, market volatility and recessionary economic conditions, and some very public examples of controversial CEO termination payments, has fuelled uproar among shareholders, government and the public regarding the level of executive remuneration in failing companies.

These recent events put executive

44

www.hcamag.com

remuneration back in the spotlight – and not only on the front pages of the newspapers. We may well expect to see stricter regulation of executive remuneration in several countries and we are certainly seeing heightened shareholder interest and companies, particularly those who will downgrade performance expectations, will need to adjust their executive award programs.

With more volatile times ahead it will be increasingly difficult to set targets, evaluate performance results and share prices may continue to fall. These factors will increase the challenge of designing effective and responsible reward, and retention programs for senior executives and the broader employee population.

For some companies, recent economic and stock market turmoil will force them to review, and address the immediate issues

of short-term incentive payments and fixed salary increases for the year ahead.

Many executive incentive plans for 2008 were not funded, because unpredictable external market factors prevented organisations from achieving their incentive goals. While this may cause concern within the company, Mercer’s view is that targets set for 2008 should not be changed retrospectively nor should discretion be applied to pay bonuses to senior executives if performance targets were not achieved.

Having said that, at levels below senior executive, organisations may find that applying discretion is appropriate to assist talent retention. In these instances, decision makers should review their company performance relative to that of industry peers: discretion may be more defensible if the company has outperformed peers in this tough economic climate.

executive remuneration

Remuneration checklist 1. Develop leadership talent from within 2. Align remuneration programs with business strategy 3. Differentiate performance 4. Balance incentives for short-term, mid-term and long-term performance 5. Examine role of different long term incentive vehicles 6. Review the level of risk in programs 7. Ownership guidelines and deferral mechanisms 8. Engage shareholders For the new financial year a review of targets and incentive plans will be required. There are few organisations that could exceed or match their 2007 or early 2008 performance and goals should be adjusted accordingly. They need to be realistic so that employees believe they have the opportunity to earn the incentive and the incentive program retains credibility. But rather than just lower the bar companies should consider: »» Broadening the target range »» Adjusting the levels of payment so that incentive payments correspond to varying levels of performance »» Using relative rather than absolute measures. For example, performance above the median of a peer group or index rather than 10 per cent revenue growth Recent events also act as a timely reminder for companies to assess the appropriateness and effectiveness of all their remuneration and leadership development programs.

There is a very good financial argument for continuing to invest in talent development and retention, and increasing the focus on succession planning. Mercer did a study of Australia’s top listed companies and found that external CEO hires are paid much more than the previous CEO incumbent, in some cases up to 23%

more. External hires are also more likely to receive short and long-term incentive sign-on grants. This highlights the significant financial implication for those companies not actively identifying executive and leadership talent in their organisation, and not establishing succession plans for critical roles.

With fewer resources available for rewards, differentiation of key contributors through reward and career opportunities will be even more critical. Companies will also have to consider segmenting the broader employee population as a means of maximising the reward budget they have available.

While there have been some high profile and controversial cases of executive pay deemed excessive, it is important to remember that the media headlines refer to the outliers, and that the majority of companies are effectively aligning performance and reward.

Mercer’s study also assessed the performance of Australia’s top listed companies and found that the lowest performing third of the companies paid incentives well below target levels, while 30% did not pay incentives at all.

While performance against financial measures such as revenue growth and EBITDA have been largely consistent over the past three years, total shareholder return (TSR) dropped significantly over the same period. This highlights a potential disconnect between share price and the underlying financial performance of the company, increasing the likelihood that shareholders and other stakeholders may perceive a mismatch between pay and performance when the share price is declining yet the financial performance of the company may be on track. A solution is to diversify performance metrics – many companies use only one – to cover a range of dimensions, such as growth, profitability, returns and shareholder experience.

Market volatility also invites a discussion on whether the overall program appropriately covers different

issue 7.5

performance time-horizons. Companies need to balance incentives for short-term, mid-term and long-term performance to reward sustained performance, not just outstanding short-term results.

Long-term incentive (LTI) vehiclesalso require review – in particular equity based pay. The steep decline in share values creates a serious problem for companies who are targeting a LTI award value, as the number of shares required to deliver the same value as in 2008 will increase dramatically. There are a number of approaches that companies could consider to manage the dilution, such as granting the same number of shares as last year, reducing the value by a fixed percentage, and using an average share price to smooth the impact.

Companies could also revisit the mix of vehicles, decrease options in favour of shares or revert to a cash-based longterm incentive.

The tumultuous environment has highlighted an impetus for a review of executive remuneration. We believe that as companies plan for 2009 and beyond, a balanced approach will be prudent: a reward program that provides a mix of measures, performance metrics, pay vehicles and rewards over a range of time horizons will help mitigate the biases in any single compensation plan or measurement approach and discourage excessive risk taking. This will ensure that companies establish and maintain responsible executive remuneration programs that are aligned with business objectives, attract and retain executive talent, but most importantly, stand up to external scrutiny over time. HC

About the author Yolande Foord, is the head of executive remuneration at Mercer, a global consulting, outsourcing and investments firm www.hcamag.com

45

issue 7.5

profile

Engagement Journey

46

www.hcamag.com

profile

issue 7.5

Despite the shaky economy, this month’s profiled HR professional is working for an iconic company that is going from strength to strength. Human Capital talks with Chris Disley, P&O director for Mars Food Australia

“

W

e don’t get siloed very easily,” says Chris Disley, P&O director for Mars Food Australia. Truer words were never said. Disley’s career has taken him from the UK to Australia via the Middle East and Asia in multiple roles – all with the one company.

Disley is the first to admit he has an odd background for an HR professional.

He started with an engineering degree in the UK and subsequently joined the R&D team at British Aerospace in the UK defence industry. In 1994 he joined Mars UK in process engineering – “similar to process management but basically trying to get the engineers and production team to work together more effectively”, he says.

He then moved with Mars in purchasing/supplier management to the Middle East for two and a half years in Dubai and Saudi Arabia. From there Disley worked in IT project management on an HR SAP rollout across Europe, which he admits was his first real HR touchpoint.

There was a slight break with Mars at this point – he left the company and joined an internet start-up in London as head of development, working with teams in the UK and Poland. However, he found the appeal of Mars – which remains a family owned company – too strong to resist and he rejoined to rollout the HR system across Asia on the process & resource side.

From there the HR elements came together: he worked in OD for two years managing a period of restructuring across Mars Australia/New Zealand in 2004/05.

He was then talent manager for Aust/NZ

and did a brief stint as a generalist before landing his current role as HR director, while also retaining the A/NZ talent role.

Nearly two years on, he can look back on the diverse range of roles he has held, and how these roles have shaped his own HR experiences. “I think the biggest benefit is that I worked in various parts of the business prior to coming to HR so I understand how each area will have different expectations of what HR can do,” he says.

“The other piece is having business acumen, a broader understanding of how a business works. That’s something Mars does really well – this ability to move people across functions. They are very willing to give people a chance to work in different areas.”

P&O director

Disley’s current focus is setting the strategy for the business around people and organisation. “We changed the name around 30 years ago as it’s not just about the people side. The structure within which people work has to be right as well,” he says.

Disley sits on the management team and has a direct input into the strategy of the business, which employs 350 people in Australia. He also has a “guardian of culture” role, with a particular focus on the company’s five principals: Quality, Responsibility, Mutuality, Efficiency and Freedom. “A lot of businesses have values or principles and they can be somewhat empty; we’ve had ours for 50 or 60 years and we’re passionate about staying true to them,” he says.

HR’s top priority

Globally, Mars commenced an engagement journey with Gallup Consulting in 2004. In Australia the company initially scored low on the list, falling into the 31st percentile. Steady progress was made. Gallup’s experts talk about a ‘tipping point’ occurring when an employer gets a ratio of 6:1 engaged to disengaged employees. Mars Foods hit that in September 2007.

“In 2008 we realised that there was a huge opportunity to unlock the full potential of the business. Early in the year we went through a fairly significant restructure to make sure we had the people and organisation we needed for long-term profitability. By September the business results started to improve, and by the end of the year we hit our planned growth for the first time in many years,” Disley explains.

The correlation with engaged workers was startling. In September 2008 the Gallup survey was redone and the engaged to disengaged ratio had grown to 20:1, placing the company in the 87th percentile.

Not surprisingly, Disley has been quizzed by colleagues over the relationship between engagement and financial results.

Which comes first? “Something that was very clear was the 6:1 trigger point happened two to three periods before our results started to turn around. Similarly, when we got to 20:1, the business was improving. However, after we got to 20:1 the business results have exceeded our targets month on month since September 2008,” he says. www.hcamag.com

47

issue 7.5

profile

In his own words…

What has been the biggest challenge you have faced in your career?

I’ve had a very broad career from both a functional and geographic perspective. When I started this role, compared to a lot of my peers, I didn’t have the most extensive HR background. I’m less experienced from a purely functional standpoint than someone who has spent 20 years in HR. So making sure I had the functional capability to operate at the right level was initially a challenge and part of that was having a great team around me.

What do you consider to be your biggest career achievement so far?

I’m very proud of the employee engagement turnaround at Mars but I couldn’t say I’m totally responsible for it. I’ve helped the business head in the right direction but engagement is always a team effort and it’s been very rewarding to have been part of the team.

Where do you see HR as a profession heading?

If people and culture are going to be the only business differentiators I think HR will become increasingly important. We call it HR but I wonder if it might morph into something broader than just human resources.

People, organisation and culture is where I see it going, with HR being much more intentional around the assessing the culture needed for the business to be successful in the future. Being more strategic and visionary – helping create a culture that will attract ever decreasing talent resources, and building an organisation that’s agile enough to react to the turbulence that we’ll increasingly see in the market.

48

www.hcamag.com

“We call it HR but I wonder if it might morph into something broader than just human resources.

People, organisation and culture is where I see it going”– Chris Disley How was this turnaround in engagement achieved? Disley says a number of initiatives helped, but “there was no silver bullet”. Among the initiatives was an exercise in goal clarity. “We wanted to be clear about the things we do really well and to ensure that everyone in the organisation understood what we’re going after. We call it ‘business on a page’, so on one page everyone can see exactly what we’re trying to achieve,” Disley explains.

Disley also put a communications manager in place. The company had been without one for several years, but Disley saw that clear communication was missing between leadership and all other employees. Regular newsletters, updates and face-to-face discussions now keep employees informed on where the business is heading, what they are doing well and what they need to improve.

The company has also worked on the development of mid level managers through an initiative called Middle Integration. Working with an external vendor, all employees who report into the management team are taken offsite for two days each quarter. One day is given over to strategy: this is ‘where we want to go; how do we get there?’ The next day is a development opportunity, including business simulations and training.

“We developed the leadership of our senior manager group and built strong alignment and engagement across functions; and secondly we now have a team of business managers at the next level who are engaged in helping find solutions to business challenges and committed to better ways of working,” says Disley.

The final piece gets back to the nuts and bolts of HRM: getting the right people in and the wrong people out. “We made some hard decisions last year with people who had been in the business for a long time, but they just weren’t the right people. For example, in one department we had to part ways with the majority of the team and then start again with a new director down. When you have a department that isn’t functioning well, other departments see that and it really impacts on the effectiveness of the business. The minute you start to get the department operating at the same level, it’s amazing what a difference it makes,” Disley says.

New challenges

Although Mars is renowned for its iconic consumer brands, including Mars, M&Ms, Masterfoods, Uncle Bens, Dolmio, Whiskas and Pedigree, the organisation has always struggled with employer branding. This is something Disley and his team will be working to remedy in coming years.

“We have strong consumer brands that are well-known globally. We opted to change the name of the business around the world to Mars because we were called Masterfoods in some places, Uncle Bens in others. We’ve now changed so that globally we are Mars: Mars Food, Mars Sugar, Mars Chocolate, Mars Petcare.

We need to tie our employer brand to that corporate brand and our consumer brands more effectively,” says Disley. ”We also have a huge opportunity to better utilise the talent within our

profile

organisation to build awareness of Mars as an employer of choice. We can run as many job advertisements as we like in the paper but it won’t have nearly as much impact as if some of the great leaders we have in our business start giving interviews and talking at seminars and conferences,” he says.

2009 and beyond

In many ways the Mars team is fortunate that the efforts put in by the management team in 2008 to reposition the company are now paying dividends – not least because they can now focus on longterm strategy rather than worrying about external economic pressures. “We didn’t know this [downturn] was going to happen

but we positioned ourselves well last year to make sure we could be successful during this time,” says Disley. “It gives us a platform to think much longer term.”

There are major plans for the business in the next three years. Mars Australia is investing in new technology and manufacturing capability. This has obvious implications for workforce requirements.

“If we are growing over the next three years, which skills do we need to have in place to accommodate that growth? We’re doing careful analysis of that element,” Disley says.

Another focus is to continually build a rich talent pipeline so his team are working to ensure all managers across the business have clear successors with

issue 7.5

excellent development plans in place.

Whatever the future, Mars is one of the few companies that can confidently look to the past for inspiration. In the 1930s, Forrest Mars Snr, son of the company’s founder, said “great brands plus great people equals great business”. “It really is true,” says Disley. “At Mars, P&O has been on the management team for decades and we have an equal seat at the table. It’s part of the culture here.” HC

See Chris Disley talk at HR Summit Melbourne, 16–17 July www.hrsummit.com.au

www.hcamag.com

49

??????? issue 4.11

www.hcamag.com

51

issue 7.5

teambuilder

The

ultimate

multi tasker In 2008 insurance giant Bupa made dramatic inroads into the Australian market. Human Capital talks to the HR director working tirelessly behind the scenes to make the move as smooth as possible

T

he Bupa brand is a household name in the UK and other parts of the world. In the health insurance and heath care sector the Bupa Group covers over 10 million people in over 190 countries, and provides other health and financial services to many more millions of customers around the globe.

In Australia, Bupa is best known for the brands HBA, MBF, Clearview, Mutual Community (in SA), and aged care homes Bupa Care Services (recently rebranded from the Amity Group). Bupa Australia is the largest private health and care provider in the country.

52

www.hcamag.com

Penny Lovett, director of human resources at Bupa Asia-Pacific, has had her fair share of local challenges in recent years. In 2008, Bupa Australia effected the largest merger the local health market had ever seen with the purchase of Australian health insurer MBF. Tasked with significant change management challenges and the merging of two distinct corporate cultures, Lovett admits it has been a challenging but rewarding experience.

“Without a doubt the merger is something that I’m proud of,” she says. “I’m proud of what HR achieved throughout the merger. We were able

to bring two organisations together and basically redesign the whole organisational culture, open up the top 300 roles for applications, fill those roles equitably and fairly and create stability – giving our people certainty in a period of just three months. To be able to do that so rapidly was a fantastic achievement.”

Early focus

Lovett knew early in her career that HR was where she wanted to be. She started her career as a graduate accountant with Arthur Anderson where she had the opportunity to participate in their

teambuilder

graduate recruitment program. “It was that experience that made me realise that the world of HR was a lot more interesting to me than the world of accounting – and certainly auditing,” she laughs. “I commenced a graduate diploma in HRM and built my career in HR from there.

That was almost 20 years ago.”

For Lovett the attraction of HR is obvious: she feels it is a profession that enables people to “get across” all the issues of the business. “In order to be really effective in an HR role you need to know a little about everything that’s going on in the business so you can assess the people

implications and ensure decisions are being made that take into consideration the impact on people. That reach and variation is incredibly interesting to me.

Someone once said to me that HR is an organisation’s great multi-tasker, and I think in many ways that’s true,” she says.

Before joining Bupa in 2002, Lovett honed her skills in HR roles in the banking, professional services and insurance industries. As the HR director at Bupa, Lovett is a member of the executive leadership team. Her role is to help achieve strategic and operational goals by developing Bupa’s people capability.

issue 7.5

Major upheavals

Somewhat unusually for an HR professional – but perhaps to be expected in a service-driven industry – Lovett always has the end customers in mind through any initiative she works on. The major task on her agenda for the past 12 months has been change management – helping the business to change effectively so that customers see a seamless transition.

Tied in with change management is the second major task: shaping the culture of the organisation. “We recently undertook a large merger and being clear about the culture we want to have as an www.hcamag.com

53

issue 7.5

teambuilder

organisation was an important element in that merger’s success. It was crucial to put in place strategies and tools that will help us over time to create the right culture – a single culture for our business – and one that importantly allows us to deliver on the promises we make to our customers. It’s not just creating any culture; it’s creating a culture that’s right for both customers and the business,” she says.

In some ways Lovett and her team are fortunate that they have a clear end goal to work towards. The Bupa culture globally helps to lead the way. “We’re part of an organisation that is very clear about its vision and values. Around the world every part of Bupa shares the same vision and values. In our health insurance business we also have a promise we make to our customers and we need a values-based culture that enables us to deliver on that promise. Essentially the culture has its

one we were able to communicate openly and directly with all our people. We will continue to do that in a structured and deliberate way all the way through the restructuring process. We’ve also created forums to allow people to give feedback and ask questions. This enabled our people to very quickly focus on the main game, not get lost in uncertainty and most importantly focus on the main game – looking after our customers,” Lovett says.

People form the centre of the company’s business strategy. Lovett aims to get that element right so that everything flows from there. “We need to get it right with our people. I don’t mean we need to be benevolent, but making sure that we get the right people onboard, that we manage them appropriately and we motivate and reward them appropriately so that they look after our customers really well, and that drives business results,” she says.

“Someone once said to me that HR are the organisation’s great multi-taskers and I think in many ways that’s true” – Penny Lovett roots in our global vision and values, and is also shaped for our customers here in Australia,” she explains.

It’s an unfortunate fact that many M&As flounder because the ‘people’ element is left out of the equation. In a service-oriented organisation this can be a death knell, which Lovett knows only too well. “If your people become inwardly focused – by that I mean if they become uncertain about their own personal future, if they become negative about the organisation, if you’re allowing gossip and the wrong messages to creep into the business – that will affect your customers.

Good people leave, customer service standards drop and then you’re letting your customers down which impacts on business results. That can’t happen.”

Bupa navigated the minefield by concentrating on open, honest and regular communication with employees. Before the merger the leadership team developed a robust communications plan and on the first day of the merger a new intranet for the organisation was launched. “From day

54

www.hcamag.com

Teamwork

It’s no surprise that creating the right environment for customers is also the driving force behind the creation of winning teams at Bupa.

The company has clearly defined behaviours that each employee is encouraged to demonstrate. These behaviours are determined by the desired culture and have been hardwired into performance management systems and also into recruitment processes. “We’re recruiting people who like being part of a team, and we recognise and reward our people for displaying the right behaviours.

We also run workshops for individual teams to explore and embed teamwork into how teams operate.”

More importantly, teams are assessed on how effectively they work together.

One of areas explored in staff surveys is whether teams feel they are working well individually as well as across other teams.

“We’re able to identify where individual teams feel it’s not working and then put in measures to improve that,” she explains.

Bouquets

Lovett and her team are clearly doing something right – amid the headaches of the merger Bupa Australia was awarded an employer of choice for women citation by the EOWA. Lovett notes the award came about not for any particular HR policy but rather a raft of policies that cross into every area of the business and benefit all employees. She highlights mentoring and coaching programs for high potentials, childcare referral services, health and wellness programs (naturally including free health insurance) and lifestyle initiatives to help employees check and manage their health, which extends into financial wellness.

There is also a range of family friendly and flexible working policies including paid parental leave, opportunities to purchase additional leave, job sharing, emergency leave provisions, and kids at work days. More than 70% of Bupa’s employees take one or more of the flexible work practices on offer. “These are things that create an environment that’s both friendly to women and people generally.”

Outlook

Despite the tough economy, Lovett notes that people are generally reluctant to give up their health insurance. Hence the financial outlook for the business is positive. Lovett does not anticipate having to cut back on staff numbers, yet she will pursue a conservative HR strategy.

“We don’t have any recruitment freezes on at the moment but we are assessing every vacancy that becomes available and asking if there are more creative ways to fill roles than going out to the external marketplace. Our strategy at the moment is focused on emerging from the recession stronger and in good shape for the future.

Attracting and retaining talented people is central to that,” she says.

Over the next year there will also be continuing work on merging the organisation. Next on the list is the IT system and the product suites. “Being able to ensure that strong and robust change management is in place is a significant area of focus for us – helping our people know what’s happening and making sure they have the skills they need.” HC