NZ Management October 2012 by mediaweb

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SHARING CEO HOW TO LIFT YOUR FIRM’S PRODUCTIVITY P30

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FOOD & BEVERAGE: WHO’S CLIMBING THE VALUE CHAIN? P40 New Yorker by choice: Kea NZ’s new chair Phil Veal p19 Being good at doing good: Boosting not-for-profits p20 Smart ways to manage your cash p52

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ast month we launched the first of our Editor’s Breakfasts. Run hand-in-hand with the New Zealand Institute of Management, they’re designed to create a small-group series of conversations with business leaders. This first one was about productivity. More specifically we wanted to know if, and how, we can lift the performance of our nation’s organisations in this area. We were privileged to have, among others, NZ Productivity Commission chief Murray Sherwin at the table. I was impressed by the breadth and depth of his knowledge, and the passion with which he’s embracing the challenge to help lift New Zealand in the international productivity stakes. Let’s face it, we’re in a sorry state. We’re slipsliding down the global rankings at a time when, more than ever, we need to be hauling ourselves back up them. More specifically still, I was impressed by Murray’s ability to cover the broadest spectrum of ideas necessary to make a difference in lifting productivity. He talks knowledgeably across both big-picture macro settings and the button-down, how-to details necessary to make changes in real-life business settings. I’ve been thinking a lot recently about how easy, inspiring and even pleasurable it can be to talk only big picture stuff. In contrast, it can prove time-consuming and frustrating to then have to work out how to translate those big ideas into practical actions within organisations. The satisfaction, of course, comes from getting good results. In my interviews for this month’s cover story on boosting productivity, I’ve also

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been struck by the many examples of how successful companies focus on small incremental steps that together can add up to a giant leap forward. (See page 30 for this month’s cover story “The sharing CEO: How to lift your firm’s productivity”.) I especially enjoyed talking with independent company director and chair Kerry MacDonald whose wealth of experience gives him ample credibility to make his refreshingly blunt comments about where we’re going wrong as a nation in sorting out our productivity issues. He’s particularly scathing about productivity in New Zealand’s public sector which he sees as far too focused on ticking boxes and thereby missing both the point and the myriad opportunities available for improvement. In his opinion, too many consultants brought in to help lift public sector performance focus on cutting costs and the number of people employed. What they don’t do, is work on improving the organisation. “There’s a very good saying in this area that unless you change the systems you are not changing anything,” he says. “Anything else is a naïve and ill-informed approach to productivity improvement.” Bring on more such plain talk.

www.management.co.nz A MEDIAWEB MAGAZINE PUBLISHER Toni Myers MANAGING EDITOR Ruth Le Pla 021-266 3978, editor@management.co.nz CONTRIBUTORS Stephen Aguilar-Millan, Reg Birchfield, Bob Edlin, Nick Grant, Colin James, Vivienne McLean, Guy Spence, Peter Tynan, Phil Veal BUSINESS DEVELOPMENT MANAGER Rod Myers, 09-372 6444, 027-484 8046, bdm@management.co.nz ADVERTISING MANAGER Trish Day, 027-561 6556, trishd@mediaweb.co.nz DESIGNER Jennifer Adams COPY & WEB EDITOR Gill Prentice PRODUCTION MANAGER Fran Marshall franm@mediaweb.co.nz NEW SUBSCRIPTIONS www.management.co.nz/subscribe SUBSCRIPTION ENQUIRIES subs@mediaweb.co.nz

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NZ MANAGEMENT magazine is independently owned by Mediaweb Limited and is published 11 times a year. It is the officially recognised magazine of the New Zealand Institute of Management Incorporated. Editorial material does not necessarily reflect the views of NZIM. Copyright © 2012: Mediaweb Limited. All material appearing in NZ MANAGEMENT is copyright and cannot be reproduced without prior permission of the publisher. Editorial contributions are welcomed. Letters to the editor are also welcomed, but pen names are not acceptable. NZ MANAGEMENT is printed by PMP. Subscriptions: One-year NZ subscription (11 issues) $78.15 (GST incl). Overseas (airmail only): Australia $NZ130; rest of the world $NZ250. Enquiries: Mediaweb Limited, PO Box 5544, Wellesley Street, Auckland 1141, New Zealand. Phone: 09-529 3000, Fax 09-529 3001, enquiries@mediaweb.co.nz www.management.co.nz New Zealand Institute of Management enquiries to: NZIM Inc, Box 67, Wellington; Northern, Box 6600, Epsom; Central, Box 11781, Wellington; Southern, Box 13044, Christchurch.

Ruth Le Pla, Managing Editor Vol 59 No 9 • ISSN 1174-5339 (Print), 1179-3910 (Online)

OCTOBER 2012

| management.co.nz | 3

contents 30 COVER STORY

The Sharing CEO How to lift your firm’s productivity Why is it so hard to improve the productivity of our nation’s workplaces? Ruth Le Pla untangles the practicalities of getting more from less. Cover illustration by Fraser Williamson, Red Shark Illustration Tel: 09 419 1189, Mob: 021 239 9747, fraz@redshark.co.nz

EDITOR’S LETTER

INBOX: News and views

FOCUS: Deloitte/Management magazine Top 200 sponsors’ function; ANZ NZ & EEO Trust Work & Life Awards

AS I SEE IT: Guy Spence

MANAGERS ABROAD: Phil Veal

NZIM: Being good at doing good Reg Birchfield

EXECS ON THE MOVE

EXECUTIVE DEVELOPMENT

OPINION

POLITICS: Opening for a legacy initiative? Colin James

ECONOMICS: Stuck on job stats Bob Edlin

LEADERSHIP: When trust is a must Reg Birchfield

THOUGHT LEADER: Stephen Aguilar-Millan

BOOKCASE: The hour between wolf and dog; Making a difference Reg Birchfield

ADVICE 56

EXECUTIVE HEALTH: Grey is here to stay Peter Tynan

OCTOBER 2012 • Vol 59 No 9

features

40 Stories of NZ Enterprise Success Food & Beverages: Climbing the value chain

The food and beverages sector has long been exhorted to capture more value within NZ. Nick Grant talks with a bunch of successful business leaders about their very different routes to market.

48 White collar crime: It’s criminal

Our commercial crime rate is climbing steadily. And the cost to businesses, the insurance industry and the economy in general is climbing along with it. Reg Birchfield reports on the burgeoning business that is white collar crime. 40

52 Cash & credit management: Going with the [cash] flow

Businesses are more keenly focused than ever on prudently managing their cash position. Vivienne McLean outlines the current raft of options.

59 NZIM’s Focus On Management

Blended learning sparks exciting L&D renewal; Member comment from Lee Hare; Regional news; Upcoming management courses.

48 56

INBOX

What’s really holding you back? If you think your business is doing enough to improve productivity, think again. New Zealand’s business performance and competitiveness is in decline. Our OECD position has dropped three places to 33rd out of the 59 economies measured, and of the four competitive measures used, our business efficiency fell four places to 28th position. Either we are not hungry enough, or we’re failing somewhere. That said, according to a 2008 Global Benchmarking Network study conducted by the Centre for Organisational Excellence Research (COER), organisations regard performance and best practice benchmarking (used by 49 Michael Voss. percent and 39 percent of respondents respectively) as increasingly important tools in their improvement efforts. So where are Kiwi companies going wrong? Michael Voss, an advisor on performance excellence, sees a number of glaring mistakes that companies make when benchmarking their performance against others. He says that one of the most common is directing benchmarking projects into business-as-usual processes instead of determining the critical best practice business improvements first. Consequently many organisations waste time attempting a breakthrough change in an area where there may be an unseen barrier to achieving it, instead of applying best practice techniques and learning from others who have already found a better way. According to Voss, this a key reason why benchmarking projects fail. In many instances where the potential for improvement seems too small, companies are in fact not seeing the significant opportunities that are preventing them from achieving business improvement. To recognise these opportunities and determine which areas should be benchmarked first managers should conduct a holistic assessment of the organisation. Assessment tools are not only useful in identifying these areas, and presenting a holistic view of what a world-class sustainable organisation looks like, but also in obtaining senior management agreement. Voss says that a holistic assessment of the entire organisation will locate the blind spots, and ensure that the best practice benchmarking project will achieve the raised performance expected, quicker and more cost-effectively. If applied, our managers will be on a solid foundation from where they can begin to raise the performance level of their organisation,

6 | management.co.nz | OCTOBER 2012

Executives expect to be better off this year Some 31 percent of business decisionmakers expect their households to be financially better off in the next 12 months. This compares with 24.4 percent of adult New Zealanders as a whole, according to a Horizon Research survey of 2376 people aged 18+. Fewer decisionmakers expect to be worse off in the next year (22.8 percent) than the adult population as a whole (27.4 percent). Almost equal numbers of decisionmakers (45.1 percent) and the adult population as a whole (46.2 percent) expect their household financial position will stay the same. Those earning between $101,000 and $150,000 most expect their households to be better off (48.2 percent). By sector, those with the highest expectations are working in finance and insurance (39 percent), communications services (33 percent), cafes and restaurants (32.4 percent) and farming, forestry and fishing (30 percent). Agriculture has 30 percent expecting to be better off, manufacturing 28 percent. Those sectors with lowest numbers expecting to be better off are education (20.7 percent), home and community services (21.9 percent) and government administration and defence (24.2 percent). Do you think that the financial position of your household will be better or worse in the next 12 months? NZ

DECISION MAKERS

DIFFERENCE

Much worse

5.70%

4.90%

-0.80%

Worse

21.70%

17.90%

-3.80%

About the same

46.20%

45.10%

-1.10%

Better

19.80%

23.40%

3.60%

Much better

4.60%

7.90%

3.30%

Rather not say

1.90%

-0.90%

Source: Horizon Research, September 1-12, 2012. 2376 respondents including 515 business decisionmakers. Weighted. Margins of error ±2% on the national sample, ±4.3% on the decisionmaker sub sample. On the web: www.horizonpoll.co.nz

and New Zealand can again begin to climb back up the world competitiveness rankings. Voss, owner of PYXIS.co.nz and developer of the ‘Assessor’ assessment tool, is speaking on why benchmarking projects fail at the World Business Capability Congress in Auckland, 5-7 December. He is also running a pre-conference workshop at the University of Auckland Business School on how to conduct best practice benchmarking projects. M

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Ta NE lk W to Ta RE xi L Ch E ar AS ge E N S O W !

Kiwi workers are twice as likely to get injured at work as their Australian counterparts and almost six times more likely than people in the UK. And that is not okay according to Rob Jager chair of the Independent Taskforce on Workplace Health and Safety. His group has released a consultation document outlining the key issues it sees impacting on workplace health and safety, and seeking input from as broad a cross section of New Zealand as possible. “Workplace injuries are not an isolated issue – they affect everyone,” says Jager. “They occur as a result of a combination of many things including changing workplace practices and environments, regulatory ‘fitness’ and perhaps even our own culture.” Jager says the taskforce’s recommendations need to change New Zealand’s poor track record. “Achieving the required step-change will take the combined efforts of government, businesses, workers, unions and society as a whole.” The taskforce will make recommendations to Government on how to reduce workplace harm. The discussion document is available online at www.hstaskforce.govt.nz. Respondents can fill in an online form to make a submission or provide their own written account by email or in hard copy. Submissions close at 5pm on November 16, 2012. The taskforce will report to Government by April 30 next year. Meanwhile, Katherine Percy and Paul Jarvie argue that New Zealand’s workplace safety statistics are unlikely to improve significantly unless employers take steps to address literacy issues amongst their employees. Percy is chief executive of adult literacy, numeracy and communication support provider Workbase, while Jarvie is manager of occupational health and safety for the Employers and Manufacturers Association, and national manager for the NZ Institute of Safety Management (NZISM). They say more than 200,000 New Zealanders are seriously harmed and more than 100 killed in workplace accidents every year. They note that research has found most New Zealand adults can read and write straightforward, familiar information but around half have significant literacy and/or numeracy gaps that affect their ability to manage the more complex demands of their jobs. Jarvie says literacy issues make it difficult to reduce workplace accidents because people don’t understand written information about hazards. It

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ADDING INSULT TO INJURY?

also means that many people are unable to correctly fill in the health and safety incident forms that provide valuable information to employers and the authorities. “It’s widely agreed that more research is needed to understand where and why workplace accidents are happening and in what kinds of businesses, but getting good data requires workplaces to supply accurate information about incidents. “Achieving this requires people to fully and accurately complete workplace accident reports and return them to the Department of Labour. This is not happening at the moment.” Percy says little meaningful headway is being made to reduce workplace accidents in New Zealand “and our experience working with hundreds of businesses shows that literacy issues play a big part”. M

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West Coast & world class For Rod Quin, recognising and celebrating the talent in his organisation is one of the most rewarding parts of his role as CEO. Senior management at Westland Co-operative Dairy Company have had their collective eye on several current and future stars within their ranks for some time now, he says. Yet, even among this leading group, Shane Gordon consistently stands out. Gordon is business development manager, operations, at Westland Cooperative Dairy Company which trades as Westland Milk Products. And Quin, in nominating Gordon for this year’s NZIM/Eagle Technology southern regional Young Executive of the Year Award, reckons Gordon delivers leadership skills that are world class. “He simply loves New Zealand and, importantly the West Coast of the South Island,” he says. “Shane has consistently exceeded our expectations in the roles and projects he has undertaken.” Struggling to boil his examples down to a select few, Quin picks Gordon’s role in fronting the company’s ‘Westland Way for Excellence’ (WW4E) as a sure-fire pointer to Gordon’s leadership skills. Gordon was appointed the programme’s values stream manager – providing clear direction, resources, incentives and goals – after a 2010 strategic review project identified a need to implement a continual improvement programme. Since then, the programme has added value to the company through a variety of measures including: increased safety; improved quality, throughput and plant uptime; capital avoidance and fixed-cost reduction; rapid exposure of problems with minimal confrontation; and world-class benchmarking. By 2011 the programme had developed under Gordon’s leadership to where it could be safely passed on to a dedicated lean manufacturing specialist manager. Gordon’s skills are now focused on a wider strategic role within Westland. “Yet, although no longer directly responsible, Shane continues to communicate and celebrate the successes that this programme is bringing to the business,” says Quin. He adds that with 18 years’ experience across the organisation, Gordon brings a varied and successful track record to his current role. “He covers a wide area of the business but his main focus is on identifying strategically valuable opportunities across the operations, developing business cases based on these opportunities and then delivering value via successful projects.”

Shane Gordon.

In 2010, Gordon was a key contributor to creating Westland’s strategic plan which is designed to lift the performance of the company with a step change into producing and marketing infant formulas. Finalists for this year’s NZIM/Eagle Technology southern regional Young Executive of the Year Award were Kate Scott (managing director of BTW South), Kauahi Ngapora (chief operating officer, Whale Watch Kaikoura) and Sean Cuddihy (international business manager, Solid Energy). Held in three regional finals throughout the country, the NZIM/Eagle Technology Young Executive of the Year Award applauds and rewards the talents of New Zealand’s executives aged 35 and under. Gordon will now go forward to the final nationwide selections where he will pitch up against Wellington central region’s Glenys Powell and the northern region’s Lauren Voyce to determine who will be this year’s NZIM/Eagle Technology Young Executive of the Year. The result will be announced at the Deloitte/Management magazine Top 200 Awards on Thursday 29 November. www.management.co.nz/ top200 for more information. M

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Hayden Wilson.

TOUGH CARTEL PENALTIES AHEAD Businesses would be well advised to review their arrangements with third parties in the same industry following the recent introduction of new legislation criminalising price fixing between competitors. The Commerce (Cartels and Other Matters) Amendment Bill recently passed its first reading and will go before the Commerce Select Committee later this year for consideration. The Bill replaces the current ‘price fixing’ provisions in the Commerce Act with new sections that deal expressly with cartels. While the term is often used to indicate serious illegal conduct,

Business Establishment & Business Management Wayne +64 27 514 7013 wayne@jtcconsulting.co.nz www.jtcconsulting.co.nz

such as drugs or arms dealing, the Bill’s definition of “cartel” is widereaching and will capture collusive conduct across any industry. Under the legislation, it will be an offence to enter into a contract, arrangement or understanding that may lead to price fixing, restricting the supply output, geographic market allocation between competitors or bid rigging during a tendering process. Fines will continue to be one of the penalties for breaching trade practice provisions, which could also attract up to seven years in jail – a significant deterrent. The effect of the changes will

be significant. This is the largest amendment to the Commerce Act since its introduction in 1986. The debate continues as to whether there is actually an issue with organised cartels in New Zealand that needs addressing through law reform, as very little cartel activity is detected by the Commerce Commission. This either means cartels are not widespread in New Zealand or current detection methods are not working effectively. The Bill attempts to harmonise the competition regime between New Zealand and some of our other major trading partners.

Australia, the US, Europe, and Canada all have legislation which criminalises cartel conduct. For overseas-based companies participating in New Zealand markets, the Bill will provide more reassurance that New Zealand is taking this issue seriously. The Bill also introduces some exemptions into which ‘cartel’ conduct may fall: • Collaborative activities (extending the current joint venture exception) – This includes joint ventures or other activities undertaken by businesses collectively. However, the cartel provision must be ‘reasonably necessary’ for the purpose of the activity. • Vertical supply agreements – Supply by a vertically integrated company to a person who is a competitor at another level of the supply chain is commonplace in New Zealand: for example, agreements between wholesalers and retailers for the supply and resale of goods. Therefore, contracts between suppliers and their customers are exempt. • Joint buying and promotion – There is a specific list of exempted activities which recognises the efficiencies gained in collective purchasing and negotiations. M

Source: Hayden Wilson, Kensington Swan partner specialising in commercial, competition and public law.

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Note to self

Melbourne Business School (MBS) is one of just three of the world’s top 50 business schools to have achieved 40 percent female participation in its new full-time MBA programme, which commenced in late August this year. The new 12-month MBA has 41 percent female students. It says most of the world’s leading business schools manage only 30 percent. Part of its appeal may lie in its 12-month format which reflects the reality of shorter business cycles. It also has an increased emphasis on close team work and leadership, and includes compulsory courses in both ethics and business in Asia. M

Leadership coach Jasbindar Singh challenges managers to identify the one thing that would make a real difference to them. In a recent blog she says talented executives often know the answer to this question. “But they are not practising ‘it’, whatever this happens to be for them.” Singh, who heads up SQ Executive Management Consultancy, says people often attribute the gap between “knowing” and “not doing” to a number of reasons such as not having time, not making a serious commitment or the lack of a plan. “Our default patterns are not always the best ones. Our most common everyday process is to continue to do what we’re already doing.” She says managers and leaders should pose this game-changing question to their direct reports. She has received a wide range of answers including: • Take more time for reflection. • Leave the office by 5pm two nights a week. • Work from home x number of days (or half days) a week. • Inspire and encourage more. • Show my authentic self more at work. • Speak my truth. • Get back into my fitness regime. • Let go, create a ‘not-to-do’ list, delegate more. • Not ‘lose it’ when under pressure. What is your answer, she says, and when are you taking action on it? M

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upporting Supporting alists 2010 the eaders omorrow leadersof of tomorrow NZIM/Eagle Technology Young Executiveof ofthe the Year M Eagle Techno ogy Young Executive

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SOUTHERN V25 Shane Gordon Chri t BusinessEngine Development Centre B Manager ge ealand Ch Westland Milk Products

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MATCHING VALUES

Bank on it

ANZ has been ranked the most sustainable bank globally in the 2012 The call has gone out for employers to be smarter and provide Dow Jones Sustainability Index (DJSI) for the fifth time in six years. The senior staff with innovative ways to develop their careers. report cited the bank’s “sustainable business practices, exceptional risk “Employers need to ensure their managers are better equipped and crisis management procedures, and its strong focus on sustainable with the skills and resources to lead and deliver results,” says investment products” as key factors for its leading position in the Gillian Peacock, a specialist in advising organisations on people banking supersector. M and capability best practice. “Employers are wanting and valuing real capability but there is a need to invest in individual talent at a senior level to enhance business performance. Development through coaching is a way to both reward and retain good senior employees.” within their current roles, and employers want to One key area for employers to invest is in see outcomes and real delivery on their people the government sector in Wellington where investment. departments need to change and respond to Peacock, who has been appointed to the the well-publicised Better Public Sector goals. newly-opened Wellington office of executive “Employees are certainly demanding development and coach training company development,” says Peacock. “Younger people ilume, has over 10 years’ experience in senior in particular want development earlier than management and consulting roles, most recently ever before. Careers are not linear, people as national people and capability manager, and want opportunities to develop and grow their volunteer development project manager, New skills.” Zealand Red Cross. She was also senior advisor, Peacock notes that both employers and capability and development, for Sport and employees are expected to demonstrate Recreation New Zealand. good values. When an employee performs She played a significant role as an active with integrity and delivers outcomes for an member of the taskforce team for the Red Cross organisation, the employer is more likely to response to the Canterbury earthquakes and Pike invest in programmes for the benefit of the River mine explosion. She is also currently chair employee. If the employee thinks an employer’s of Volunteering New Zealand. values do not match their own, they are more ilume’s Gillian Peacock. Peacock has advised a number of likely to move on to a better fit. organisations and individuals on recruitment, leadership development, She says job-seeking candidates are becoming more cautious coaching, and organisational and change management. M about changing roles, looking for ways to enhance their capability

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AS I SEE IT

Stepping up Guy Spence was a regional finalist for this year’s NZIM/Eagle Technology Wellington Central Young Executive of the Year. He’s the manager at Opus International Consultants’ Gisborne office. What could NZ do better? We need to strive to continually improve how effective we are. As a nation we are disadvantaged by being based so much further away from a large portion of our traditional export customers compared to our competitors. This means we need to be more attuned, and understand subtle changes, to markets, trends and customers. We need to be agile enough to modify our products and services ahead of competing organisations and countries to overcome some of the challenges our distance brings. How could our business leaders help with this? Our business leaders must understand their market very well and think about what it may look like in the future. They need to ensure that they, their company’s processes, technologies and cultures enable staff to be agile, sensitive to small changes in the market place, and have an appropriate exposure to risk. This is just as important for non-exporting businesses, to ensure that the whole supply chain can adjust to enable us as a nation to be as effective as possible. It also requires business leaders to ensure that people are working to their strengths and passions to bring about a high level of engagement and a desire to achieve. What would it take for everyone to make a difference? We all need to keep asking ourselves why we are doing things the way we do. Does it still make sense? Can we do it better? New Zealanders are pretty adaptable people and generally keen to give things a go. If we focus a bit more on getting better by strengthening ourselves and not pulling others down, I think we could step up another gear. M

18 | management.co.nz | OCTOBER 2012

MANAGERS ABROAD

No need for cold calls Kiwi by birth, New Yorker by choice and climber by inclination, Phil Veal is Kea NZ’s new chair. What prompted you to seek work out of New Zealand? I graduated into a fairly barren job market for civil engineers in 1992, so there was a career element to me leaving New Zealand. It also didn’t hurt that I had the opportunity to travel and climb in different countries around the world. On the economic front, things are a lot different now. On my frequent trips back, I see hugely encouraging changes. There are a lot more opportunities in New Zealand now, a lot more career paths available, including the rise of younger entrepreneurs. You don’t have to get a job out of university – you can start a business. How are your experiences overseas shaping your understanding of New Zealand? Geographical distance has given me a much better appreciation for our qualities, resources and characteristics – and how fortunate we are. Some of our advantages are down to our small population: because we’re relatively few in number, we’re extremely agile. We also have some pretty compelling virtues as a people – our pragmatic approach to things, the ability to innovate, for example. On the “room for improvement” side of things, I think we need to become better at selling our ideas, and commercialising offshore. How can offshore Kiwis contribute to New Zealand? The simplest way is join the conversation – at facebook. com/keanewzealand, follow @keanewzealand on twitter or join the keanewzealand LinkedIn group. If you’re part of that conversation, you’ll see opportunities to contribute in many ways – helping a New Zealand business make the right connections in global markets, helping a New Zealander find their feet in a foreign country, to name just a couple. As my fellow Kea board director Craig Donaldson says, “there shouldn’t be any ‘cold calls’ for Kiwis abroad”. M

Phil Veal is a member of Kea, New Zealand’s global talent community. www.keanewzealand.com

OCTOBER 2012

| management.co.nz | 19

NZIM

Being good at doing good

Better management and governance performance could give our not-for-profit sector a well-deserved boost. By Reg Birchfield.

he contribution that New Zealand’s approximately 113,000 non-profit organisations make to the nation’s gross domestic product (GDP) is increasing but only incrementally. Government funding to registered charities, of which there are more than 25,000, reached $4.8 billion last year. Total gross income was $14.2 billion. According to the Ministry of Social Development, our not-for-profit organisations (NFPs) account for around five percent of GDP. The sector also provides paid employment for almost 200,000 people. But 90 percent of NFPs don’t employ paid staff. They do things for the good of the cause. It means NFPs mobilise, paid or not, around one million Kiwis a year. So notfor-profits represent a significant portion of the economy. It’s a sector that successfully taps into loyalty but it couldn’t be described as taking off financially. Nor should it, you might argue. The nation needs more high-performance, profit-driven, export-oriented commercial enterprises, not more charities. On the face of it, that may ring true. But given the economy is awash with increasing

20 | management.co.nz | OCTOBER 2012

numbers of unemployed at both ends of the age spectrum for the next few years, maybe more individuals could be gainfully recruited and redeployed by NFPs. Baby boomers falling out of the employment marketplace have experience aplenty to offer. So what’s going on in the non-profit world and could it be making a better fist of what it does? According to a survey by global consultancy Grant Thornton, the country’s NFP sector is facing some pressing problems. The three most challenging ones are financing their activities, fundraising and, now here’s the point, some leadership – management and governance – skills shortages. As management guru Peter Drucker wrote in his book Managing the NonProfit Organization, an effective nonprofit manager must try to get more out of the people he or she has. The yield from the human resource really determines the organisation’s performance. According to the Thornton survey, the same could be said of the directors NFPs appoint. Our protracted economic difficulties have non-profit organisations not only battling for reluctantly donated dollars

but also looking long and hard at their cost structures, spending practices, operational efficiencies, and financial reporting and management. Don Bell is commissioner of the Salvation Army which last month was, for the third year in a row, named the Hay Group/NZ Management magazine Most Reputable Not For Profit Organisation. Acknowledging his organisation’s win, he said the current economic recession has made government contracting more challenging and constrained donations. Hard times or not, governments around the world want community organisations to deliver more services. At its best, the non-profit sector has the potential to tackle some of society’s most entrenched challenges, proclaims the Ministry of Social Development’s website. And according to a NZ Herald report last November, Gillian Peacock, people and capability manager for New Zealand Red Cross, believes the NFP sector is attracting a new breed of people. She said organisations like hers are doing more to retain staff and even increase their numbers. The world outside has changed and

we are expected to be more professional, she said. At the same time, Wellington-based management consultant Peter McLaren, who has worked with the non profit sector for some years, claimed the sector suffered from a shortage of people with business development, marketing, fundraising and donor legacy experience. Without them, NFPs run the risk of not getting sufficient funding to run their organisation. Having a sound business model was, he said, essential. And that, in significant part, is what the Grant Thornton study found and the New Zealand Institute of Management and Institute of Directors (IoD) believe could be rectified through some well directed management and governance guidance. On the skills shortage side of the Thornton survey, respondents didn’t rate their directors’ strategic thinking capabilities. On the other hand, previous surveys had shown respondents believed a board’s most important task was indeed strategic planning. This time, only 63 percent of those who responded considered their directors thought strategically. And they didn’t rate their risk-taking or entrepreneurial skills much better. More than 80 percent of them thought their board members were knowledgeable and/or experienced, and 93 percent believed they were honest and showed integrity.

They, well 74 percent of them, ranked their leadership a little more highly. The 23 percent of respondents who didn’t think their directors were great shakes as leaders thought the problem was best tackled by exposing board members to different disciplines. However, the study did confirm that many boards are now trying to educate their board members. More than half, 54 percent, thought that was best done by sending them to conferences or courses, while 42 percent thought books, magazines and journals would help develop their leadership skills. But 59 percent believed leaderships skills were best developed through on-thejob experience. However you look at it, non-profit organisations play an increasingly important role in the economy, says NZIM chief executive Kevin Gaunt. But for them to deliver effectively both for their special interest groups and for the economy as a whole, they must be competently led, directed and managed. Their operational competency and their governance must be every bit as good as the commercial sector’s. NZIM wants to work with the IoD to provide guidelines that would improve the capability of the country’s NFPs and, by so doing, help lift their productivity. M Reg Birchfield Life FNZIM is a writer on management, governance and leadership. reg@rjmedia.co.nz

The long and the short of it Back in 2006, an ASB Community Trust report into capacity building in community organisations found the majority of NFP funders limited their funding to programmes and shortterm projects. This approach, it said, effectively created disincentives to good management because the practice didn’t support either the growth or sustainability of the organisation. The ASB study identified capacity building as a long-term investment that needed strong leadership, an organisation which is ‘ready’ for sustained change, and where both the governance and programme delivery are stable and solid. The study also said trusts and foundations in the United States and United Kingdom had made a large commitment to funding NFP capacity building. Some of them were devoting up to 30 percent of their available funding to the task. Australian and New Zealand trusts had, on the other hand, given money to NFPs exclusively to provide services to the community.

INSPIRING MANAGERS Our aim is to build management capability through membership, development and research. Our focus is to: • Research leading management trends and practice and promote a constantly developing model of best management capability for New Zealand. • Enable managers and aspiring managers to participate in learning programmes, mentoring, and events that provide the information and experience they need to develop their capability. • To identify leading management role models and provide awards that recognise the career and educational achievements of managers.

NZIM Inc CEO: Kevin Gaunt FNZIM, FAIM Email kevin_gaunt@nzimnorthern.co.nz Auckland Offices Contact: Tait Grindley PO Box 6600, Wellesley St, Auckland 1141 Ph 0-9-303 9100, 0800 800 NZIM Email enquiries@nzimnorthern.co.nz Website www.nzim.co.nz Wellington Offices Contact: Shaun Sheldrake PO Box 11781, Wellington 6142 Ph 0-4-495 8300, 0800 800 NZIM Email enquiries@nzimcentral.co.nz Website www.nzim.co.nz NZIM Southern Regional Director: Michael Weusten FNZIM CEO: Joseph Thomas AFNZIM PO Box 13044, Christchurch 8141 Ph 0-3-379 2302, Fax 0-3-357 8003 Email admin@nzimsouthern.co.nz Website www.nzimsouthern.co.nz

NZIM FOUNDATION CHAIRPERSON: DAVID MOLONEY FNZIM SECRETARY: JIM THOMSON PO BOX 67 WELLINGTON, PH 0-4-473 0470 NATIONAL_OFFICE@NZIM.CO.NZ

OCTOBER 2012

| management.co.nz | 21

POLITICS COLIN JAMES

Opening for a legacy initiative?

22 | management.co.nz | OCTOBER 2012

“The needs of children should trump those of parents and caregivers.”

are a moral as well as a fiscal failure. The economic – future workforce – dimension is what got Business New Zealand’s Phil O’Reilly into the Every Child Counts coalition and on to the Children’s Commissioner’s “expert advisory group” on child poverty, which reported in August that too much of a childhood spent in poverty is a big contributor to a poor start. The Dunedin study’s evidence – and associated research in the likes of health, nutrition and education – is that very early intervention is far more successful than trying to fix people later. To be effective, most submissions on the Green Paper argued, the needs of children should trump those of parents and caregivers, and intervention should be “as early as possible”, guided by active monitoring. It also suggests a wider definition of targeted children to something along the lines of “vulnerable to a substandard or damaging home life”. Enter the actuarial/investment process. The long-term cost of a poor start (in lost work and tax contributions, and in health, courts, prisons and collateral damage to others) can be actuarially calculated and from that the return on an investment which steers a child on to a positive path. Infometrics, not a leftwing economic consultancy, calculated in 2011 that poor

outcomes for children cost the New Zealand economy $6 billion a year. Prime Minister John Key labelled that “rubbish”. But he has also backed both the actuarial/investment approach and Bennett’s White Paper. The latter chimes with his wish for his prime ministerial legacy to be what he has done for disadvantaged children. He will get that opportunity if the White Paper reflects the thrust of most Green Paper submissions. But that poses him a big management challenge. Note, for example, that, for innovation, only in August – three years on from appointing a chief science adviser – did he get to the point where in the fine print of a report could be found an aim to work “towards” government spending slightly more than the OECD average, “as fiscal conditions allow”. Will the same “towards” and “as fiscal conditions allow” qualifiers apply to “vulnerable children” and thus to our future workforce? Or will he transubstantiate from fiscal scrooge and one-time currency trader to long-term investor? That is a legacy question. M Colin James is New Zealand’s leading political commentator and NZ Management’s regular political columnist. ColinJames@synapsis.co.nz

Photo: thinkstockphotos.com

orget asset sales. Forget fiscal consolidation. Forget cows and oil. When the Key Government is assessed at its end, its importation into some social policy of an actuarial/ investment technique might well be judged its most important policy initiative. This month Social Development Minister Paula Bennett will issue a White Paper on a topic to which that technique is particularly appropriate: “vulnerable children”, whose rescue is becoming a major public management and long-term economic issue. Bennett narrowed this wide category to “the most vulnerable” in her preface to the Green Paper on which the White Paper is based and which attracted nearly 10,000 submissions, a fifth of them from children and young people up to age 24. Bennett’s “most vulnerable” focus suggests her target is children who get badly maltreated or, worse, damaged or killed. But hard cases make bad law. There is a much wider basis for monitoring and bothering about children. The Dunedin Multidisciplinary Health and Development Study (a long-running cohort study of 1037 people born over the course of a year in Dunedin) has demonstrated strong links between very early childhood experiences and later performance in education, youth, work and adult life. A bad or poor start, which may be from causes other than maltreatment, stunts a child for life. There are strong equity and social cohesion reasons for trying to save children from such bad starts. There are also strong economic reasons. Children either grow up to be productive members of the workforce, taxpayers and positive guardians of the next generation or they fail at school and then at work, get physically and mentally ill, go off the rails and, too many, into prison. Prisons, Bill English has declared,

BOB EDLIN ECONOMICS

Stuck on job stats 44,000 of those jobs were recorded in 2010/11 (two percent growth). In the latest June year, the growth fell to 0.58 percent (and the population increased 0.63 percent). Answering a parliamentary question as Associate Finance Minister on 13 September, Joyce stood by the figure of 57,000 more people with jobs than two years earlier. He emphasised this was according to the household labour force survey, seasonally adjusted, “which is the standard internationally recognised measure of employment and unemployment”. As to the figures from the LEED set, they looked at specific PAYE jobs rather than people jobs, and, in any case, it appeared to significantly undercount the number of jobs in the economy. Furthermore the most recent figures were 15 months old. Even given those caveats, Joyce insisted, the LEED data set showed a net increase of 4870 jobs over the two most recent years from June 2009 to June 2011. Things were becoming confusing. He then was questioned as Minister of Economic Development. Labour’s David Cunliffe asked why he had said, two days earlier, that the economy was “seeing around 250,000 jobs created every year, and slightly fewer than that being lost every year” when Statistics New Zealand’s “best measure of job creation” [LEED, presumably] showed a net loss for the period 2008 to 2011? The invitation to substantiate the claim about 250,000 jobs being created every year was the more fascinating bit of that question. Joyce evaded it and took refuge by reiterating the HLFS’ 57,000 extra jobs in the past year. New Zealand First’s Andrew Williams came up with yet another measure, asking Joyce to explain why the HLFS showed 57,000 new jobs in the past two

Photo: thinkstockphotos.com

isputes about labour market statistics were triggered when the Government – defending its policies after a swathe of cut-backs in the mining, aluminium and other sectors last month – preferred to address employment growth rather than the toll of lay-offs. Labour’s David Cunliffe noted there were several recognised measures of unemployment, including the Household Labour Force Survey (HLFS) and the Linked Employer Employee Data (LEED). He favoured LEED because, he said, Statistics New Zealand regarded it as “the best measure of what’s really happening in the jobs economy”. Steven Joyce, Minister of Economic Development and Employment, preferred the HLFS. So did Finance Minister Bill English. His riposte to questions about the lay-offs was that in the past two years “this economy has created 50,000 net new jobs and over the next four years we expect about another 150,000 net new jobs”. Radio New Zealand recently reported Statistics NZ as saying the HLFS was not an appropriate measure of job creation and destruction. It used LEED data to determine how many new jobs had been created and how many existing jobs had been lost. These showed nearly 452,000 jobs created between 2008 -2011 but almost 465,000 were lost. English was unfazed and told Morning Report the HLFS had always been the official measure of employment statistics. But do they help his cause? We need around 30,000 new jobs a year to accommodate population growth. In the 2011/12 June year we fell far short of that with just 13,000 new jobs. The HLFS shows employment growth (57,000 new jobs) averaging 1.3 percent a year in the two years to June 2012. But

June years but the national employment indicator during the same period recorded only 33,245. The answer: the national employment indicator was an experimental series that leaves some matters out. Either way, Joyce accepted the number was not big enough, and the Government was looking for measures to generate stronger growth. That was why it was putting all the effort into the Business Growth Agenda, with items such as oil and gas exploration, the intensification of agriculture, international investment and the convention centre. And so on. Nobody stacked employment growth alongside population growth. Had they done so they would have found the population has increased by 3.8 percent since December 2008. Employment numbers have increased just 1.6 percent. These are HLFS numbers and they are worrying. M Bob Edlin is a leading economic commentator and NZ Management’s regular economics columnist.

OCTOBER 2012

| management.co.nz | 23

LEADERSHIP REG BIRCHFIELD

When trust is a must

24 | management.co.nz | OCTOBER 2012

index. The trust in line managers has, apparently, been “fairly static” over the past three years which, the analysts said, was a “real cause for concern”. In their opinion, trust in line managers is “even more critical to organisational performance than trust in CEOs”. Summarising this growing body of research suggests that less than 50 percent of employees trust senior management. And somewhere between 25 and 30 percent believe CEOs are a credible source of information. That’s doesn’t seem like a ringing endorsement of the top echelon of enterprise. So, fewer and fewer people trust their

Photo: thinkstockphotos.com

f all leadership enablers, none is more important than trust. Unfortunately, trust is seemingly a diminishing global and local commodity. Global surveys now consistently suggest that trust in our institutions and the individuals that lead them is falling: in some countries such as France, the United Kingdom, Russia, Spain, Brazil and Japan, alarmingly so. According to this year’s London-based Edelman Trust Barometer, people don’t trust chief executives, viewing them as the “least credible public spokesperson” for a business or organisation. Edelman, a global public relations consultancy, has published its barometer for more than 10 years. Its 2012 survey provides grim reading and suggests only 30 percent of respondents find CEOs credible. Surveys in the United States and other countries are delivering similar findings. Trust in both public and private sector organisations and the leaders of those organisations, is falling almost everywhere – at least everywhere that more or less independent and impartial surveys are undertaken. America’s best known polling company Gallup recently reported that trust and its close associate confidence, has remained flat or fallen in most of the 16 major public and private institutions it tracks. The only survey to deliver some, albeit qualified, good news on this topic is Britain’s 2011 Index of Leadership Trust, produced by its Institute of Leadership and Management Today magazine. It found UK employees trusted their CEOs more last year than at any time over the previous three years. But, it cautioned, “with trust a critical factor in effective leadership at all levels”, there was plenty of room for improvement. And the gap in trust in line managers, which previously far outstripped trust in CEOs, had narrowed according to the

“Trust is to leadership what water is to swimming.” leaders. Does it really matter? Well yes, according to the experts. And if they are right, the slip/slide in trust might explain some of the sinking feelings we have about the current scarcity of good leadership. But equally, it doesn’t bode well, at least in the short to medium term, for the prospect of finding individuals with the wherewithal to tackle some of our increasingly demanding problems. “Trust,” says Stephen Covey, US-based author and advisor on trust, leadership and organisational ethics, “makes the world go round.” Without it, individuals “cannot be effective leaders”. Or, as even higher profile management guru Warren Bennis puts it: “Leadership without mutual trust is a contradiction in terms.” I could rattle off a dozen similar sentiments from as many equally learned observers and thoughtful individuals, from Peter Drucker to Winston Churchill, but you get my drift. That ‘trust is to leadership what water is to swimming’ makes sense when you consider the consequences of an empty pool or a distrustful relationship. Covey

argues that indeed, the high cost of low trust can be quantified. For example, a 2004 estimate of the cost of complying with US federal rules and regulations – enacted to counter a lack of trust – was US$1.1 trillion, more than 10 percent of its gross domestic product. And New Zealand investors lost more than $8 billion when they entrusted their hard-earned savings to the nation’s school of scoundrel finance companies. A leader’s first job is to inspire trust. The rest of his or her career must be dedicated to maintaining it. Trust is leadership and leadership is trust. Trust underpins every organisational and personal life relationship. As Covey wrote in his best selling 2006 book of the same name: “Nothing is as fast as The Speed of Trust”. And nothing is more destructive than the lack of it. That trust is in free fall, no less, I suspect, in New Zealand than elsewhere in the world, is worrying. M Reg Birchfield is a writer on leadership, governance & management. reg@rjmedia.co.nz

STEPHEN AGUILAR-MILLAN

THOUGHT LEADER

Voting for change

Photo: thinkstockphotos.com

he world financial crisis is challenging conventional thinking. So what could, and should, organisations change to reflect todayâ&#x20AC;&#x2122;s realities? Take executive pay, for example. In many countries, a significant proportion of the population believes the metric by which executive remuneration is determined has become increasingly detached from the performance of the company. They feel corrective action needs to be taken. The question is how. Most companies have a democratic decision structure. In theory, this allows shareholders to determine company policy in general meetings. However, this democratic structure is flawed in that each share has one vote. In practice, it means institutional shareholders control general meetings. A simple institutional reform, such as limiting the voting structure to one vote per shareholder, could re-establish the connection between the wider body of shareholders and directors. It would give a harder edge to realigning company performance and executive pay. In essence, the need is to reconnect the control of the corporation with its ownership. This could represent a step along a much longer path of reform. Further along the road, it could be argued that companies need to reconnect with their workforces and with the communities they serve. Thinking around the very purpose that corporations serve is also in flux at the moment. Just as the recession has called into question the usefulness of neo-classical economics, so it also has called into question whether the primary purpose of the corporation is simply to make money. Some argue that the corporation serves a much wider social purpose and has a responsibility not only to

its customers and workforce, but also to the wider community at large. The focus of this discussion is likely to be the degree to which companies pay corporate tax. This is more of an ethical question than a purely commercial one. But it is raising debate around whether corporations of the future can have purely commercial objectives. Many people believe companies can no longer be as detached from the wider community as they appear to have become. This is what underlies the need for a new model for business. Whilst we might be unsure exactly how this new model might evolve, we can speculate upon a number of key relationships that it will contain. To start with, there is the relationship between the company and the government â&#x20AC;&#x201C; as the representative of the wider community. It is felt that business does not pay a fair share of tax and that this situation needs to be remedied.

There is also the relationship between the company and its workforce. A currently prevailing view is that a company ought to have a responsibility to its workforce, both in terms of current decision making and in terms of future employment prospects. Perhaps there is a case for worker-directors as a bridge between the company and its workforce. And there is also a case for reviewing the core management relationship within the company. There is a lot to say for the re-socialising of companies to bring the company owners back into closer proximity to those who manage the company on their behalf. If we are to see the reform of the relationships between companies and their shareholders, their workforce, and the wider community, a return to business-as-usual is unlikely to happen. M Stephen Aguilar-Millan is the director of research at the European Futures Observatory.

OCTOBER 2012

| management.co.nz | 25

BOOKCASE

Biologies with bite

body during moments of competition, risk-taking and triumph. It induces what is called the “winner effect”. I don’t have enough words available here to describe the detail of Coates’ discoveries, suffice to say that biology can equally produce depressing market moods in bad times. Before you write this off as new age neuroscience, one of the world’s most thoughtful economists, John Maynard Keynes, apparently understood the challenges non-rational decision-making could pose in both markets and in politics.

According to Coates, Keynes described how “animal spirits” drove sentiment but because he lacked training in biology he never attempted to explain these. However, he always harboured doubts about the ideal of life guided by, and public policy directed at, rational thought. And the plot thickens. The challenges identified by Coates’ revelations are not confined to financial markets. According to senior British politician and neurologist David Owen they exist equally in the political world. Owen reckons political leaders often succumb to “something like very irrational exuberance”, and their “resulting hubris often wreaks havoc” on countries. The problems caused by an excess of male hormone in powerful places can be somewhat mitigated by deploying more women and older men – they have very different biologies. There is, according to Coates, little evidence that age impairs investor judgement or the ability to take risks. This is a compelling read for a number of very sound, scientific and self-evident reasons. That Prime Minister John Key is a former Merrill Lynch foreign exchange trader simply adds to its relevance for Kiwis. – Reg Birchfield

rollick than revelation. That doesn’t mean it should be dismissed. It just means that the most valuable lessons it contains aren’t necessarily those the author intended to deliver. They are, nevertheless, equally telling about how many successful business people perceive both themselves and the value of their accomplishments. Glenn, who likes buildings, trophies and other tangible things to be

named after him, worked his butt off to become wealthy and commercially successful. Success, as he and popular mythology measure it, cost him a couple of marriages, and a few friends and colleagues, and carried some fairly drastic health repercussions. It also seems to have infected him with a desperate need to be acknowledged for what he has done. It isn’t an easy book to read, generously

THE HOUR BETWEEN DOG AND WOLF By John Coates • Harper Collins • RRP $34.99

For New Zealand readers in particular, this is a scary book. But reading this book is a risk worth taking. John Coates once worked on Wall Street trading derivatives for investment bankers Goldman Sachs, Merrill Lynch and finally Deutsche Bank. Derivative traders are, more often than not, high IQ individuals. It’s not surprising therefore that Coates is now a senior research fellow in neuroscience and finance at the University of Cambridge. His interest in what he calls “the biological side of the financial markets” dates back to the 1990s. His thesis is that two steroid hormones – testosterone and cortisol – rather than cool hard logic and an abundance of research, influence the activities of money merchants and risk takers when they are full tilt working bull and bear markets. It’s all about the upper and downer physiology of risk. Testosterone, “the molecule of irrational exuberance”, is, according to the author’s research, released into the

MAKING A DIFFERENCE

By Owen Glenn • Random House NZ • RRP $39.99

Owen Glenn, New Zealand’s financially successful freight forwarder, penned his memoirs to make a difference. They probably won’t. Making a Difference is more business 26 | management.co.nz | OCTOBER 2012

BOOKCASE

studded as it is with the first person singular pronoun. But relax into the unusually colloquial writing style and the reader breezes through it. Glenn’s story is almost classic rags to riches, making the indelible point that by working 15 plus hours a day, seven days a week, not spending much time on anything other than workplace relationships and making the most of a salesman’s occasional run of luck, you too might make millions. The question that hangs unanswered is: do these attributes and competencies breed the strain of insight that is of any particular use to anyone else, including political leaders and policy makers? Owen Glenn is now a generous philanthropist, contributing to many

worthwhile causes. And that is surely the best measure of his success. He seems genuinely committed to sharing some of the fruits of his labours. But as a business, strategic or even best practice management book, Making a Difference doesn’t really cut the mustard. But then, why should it? Glenn built a good business. Like many successful business people of the past 40 something years, he worked hard to get himself in the right place at the right time. He also had the commercial cunning to know when to flick it and turn it to account. But those lessons, while undoubtedly the stuff of a good tale, seldom come the way of managers at the coalface. – Reg Birchfield

OCTOBER 2012

| management.co.nz | 27

IT TAKES PERSERVERANCE, INNOVATION, VISION & COURAGE...

Book now to meet the people who have what it takes. Top 200, SKYCITY, Auckland, 6:30pm, Thursday 29 November. Visit www.management.co.nz/top200 for more information

Perserverance

Innovation

TOP 200

Vision

Courage

...TO BE A

GREAT

COVER STORY

The

SHARING CEO HOW TO LIFT YOUR FIRM’S PRODUCTIVITY Why is it so hard to improve the productivity of

our nation’s workplaces? Ruth Le Pla untangles the practicalities of getting more from less.

Illustration: Fraser Williamson

COVER STORY

orkplace productivity has the power to lift our nation’s wealth and turn management thinking on its head. So why does it languish in the too-hard basket? Maybe because it’s tricky to even define what we’re talking about. Few workplace conversations centre round the word productivity. And any talk that does take place frequently comes cloaked in the language of lean manufacturing, Kaizen or continuous improvement. Many conversations about productivity sound wonk-ish, dated and deeply unsexy. They appear to employ a language inherited from a push-button, form-ticking manufacturing past which fails to grasp the new realities of our high-connect, chaos-theory, organic, digital world. And if we don’t really know what we’re talking about it’s pretty hard to work out what to measure and how to improve it. Productivity, it seems, can easily fall between the cracks of conversations that swirl around innovation, employee engagement and just cranking out stuff on time in order to live another day as an organisation. In tough economic times, plain old survival is a powerful instinct. In an earlier NZ Management magazine article by Reg Birchfield (February 2012, “Solving NZ’s productivity puzzle”), Hay Group general manager Pacific Henriette Rothschild likens the problem of getting to grips with workplace

Westland farm.

32 | management.co.nz | OCTOBER 2012

Westland whole milk powder.

Go fish

Westland Milk Products Hokitika.

Westland’s Rod Quin.

Rod Quin is adapting the “give a man a fish” philosophy to Hokitikabased Westland Co-operative Dairy Company. Such thinking underpins an ongoing series of productivity initiatives designed to perk up performance through sharing information and empowering staff. Quin sees his CEO role as giving people the tools to solve workplace problems on a daily basis. Once they get it, he reckons most of them go away “able to deal with a whole bunch of different challenges”. The Westland Way for Excellence (WW4E) project is just one of a number of such productivity initiatives at the company, which trades as Westland Milk Products. A continuous improvement project drawing on lean principles, WW4E is a companywide initiative anchored around earlier learning that focused on the operational side of the business. Westland launched the project just a few years ago after a review identified continual improvement as a key pillar of the company’s strategic platform. It was championed by Shane Gordon who was recently selected as the 2012 southern region’s finalist for the NZIM/ Eagle Technology Young Executive of the Year. (See article “West Coast & world class” on page 8 of this issue.) WW4E has been chalking up some serious runs on the board ever since. Gordon set up weekly focus group meetings in each department to review with all stakeholders factors such as quality, throughput and uptime. “The quality results in one area alone increased from 95 percent in spec to more than 98.5 percent,” says Quin. “Available capacity on site with improvements to throughput and uptime has allowed 15 percent additional milk to be processed at peak while still producing our high value products.” And according to Quin, by standardising measurement systems across site Gordon has enabled everyone to speak the same language and therefore make more informed decisions around safety. “Our lost time injury frequency rate dropped from 32 down to 13.8 in 2011 due to the improved behaviours resulting from better measurements,” says Quin. Similarly, the probe into productivity has allowed Westland to expose issues quickly with minimal confrontation and without fear of blame. Then there are “tens of millions” of dollars worth of savings from finding alternatives to capital purchases and fixed cost increases. All in all, that’s not a bad haul from a fishing trip.

OCTOBER 2012 management.co.nz | 33

COVER STORY

Dining in, speaking out NZ Management magazine has teamed up with the New Zealand Institute of Management (NZIM) for a series of breakfast conversations. At the first session in Wellington last month guests and invited panelists discussed New Zealand’s ongoing concerns around workplace productivity. Part of that discussion formed the basis for this article. The Editor’s Breakfasts provide a setting for senior executives to examine trends and innovations, and together address issues affecting everyday business. Breakfast guests are invited to openly share their own experiences, ideas and solutions. The next Editor’s Breakfast, in Auckland on October 3, examines remuneration. “CEO pay soars while worker pay stalls. Is that fair?”

productivity to a leadership equivalent of a Rubik’s cube. “Clear direction, organisational design, reward, leadership, performance management, engagement and diversity,” she says, are all interlinked. Swivel one piece around and you find you probably have to change all the others as well. No wonder, then, that for many business leaders productivity issues remain at the bottom of the most distant to-do list. Yet a growing body of evidence suggests this must change: and fast. Much has been said about productivity at the macro-economic level. The writing is clearly on the wall as our GDP trails forlornly behind that of competitor nations. There’s also an interesting, and very valid, side argument that GDP-based productivity measures do not factor in the “good stuff ” such as environmental or social metrics, anyway. The Government signalled its seriousness to tackle how we can lift output per worker back in April last year by establishing a NZ Productivity Commission: whose Maori name 34 | management.co.nz | OCTOBER 2012

Te Komihana Whai Hua o Aotearoa translates into the far more poetic ‘commission that pursues abundance for New Zealand’. It also gave us a national champion for productivity in the energetic form of its chairman Murray Sherwin. Steeped in 35 years’ worth of public policy roles – including deputy governor of the Reserve Bank of New Zealand and a two-year secondment to the executive board of the World

Productivity is the pathway by which societies prosper. Murray Sherwin

Bank in Washington DC – Sherwin’s job is to identify and support measures to remove roadblocks to productivity progress. He’s the natural spearhead for big-picture debate. At the firm level, he’s charged with handing over the productivity baton to organisational chiefs. It’s their job to implement changes that will make a difference. Productivity, says Sherwin, is the pathway by which societies prosper. He told guests at a recent NZIM/NZ Management magazine Editor’s Breakfast in Wellington (see box story “Dining in, speaking out”) that firm level productivity is about making the right choices. Crucially, he says it’s about the nature of leadership within any organisation, how clear it is about where it’s going, why it’s heading in that direction, and how it’s going to get there. “It’s about how good leaders are at bringing other stakeholders – most particularly employees – along with them

COVER STORY

Spreading the load Downer EDI may have only been full steam ahead on a new productivity drive for the past six months but its focus is already paying dividends. Out on the streets around the country, its paving crews are lifting their game in response to more open sharing of information and ideas. Business development manager, transportation, Dave Adams links lifted productivity to simple stuff such as talking face-to-face with crews about the work they’re about to do. “We do budgets and forecasts around the amount of tonnes of material that we’re going to lay in a day, a week or a month. So it’s just a case of talking with the guys at the beginning of each week.” Adams says talks may run through upcoming jobs, expectations and any specific challenges such as approaching bad weather. “So if we can make more progress at the start of the week and hit our tonnage targets in, say, the first three days then any bad weather is not the end of the world. And if the bad weather doesn’t come that’s absolutely fantastic.” It’s all about inclusion, he says. And while some things are easier than others to target and record in terms of productivity on a daily basis, “the easy stuff really has been easy”. The simple stuff includes techniques such as debriefing at the end of shifts so other people know what has happened. “We want to know what went well, what didn’t go quite so well and what we can do differently tomorrow to improve the output.” Within the company Downer talks about “productivity in the workforce” in those terms, he says. There’s an inhouse understanding that the guys at the coalface make a big difference to productivity. “If you give people the right information, productivity is gained by the people doing the work rather than by other people telling them how to do it.” Many of the ideas are relayed through face-to-face sessions: both large-scale depot meetings and daily “toolbox” sessions with small crews. Downer also employs benchmarking as another key part of its productivity drive, homing in on a few metrics that measure what drives its business. “We’ve got a very strong zero-harm focus, for instance,” says Adams. “And we like to focus on lead, rather than lag, indicators. Everyone measures lost time injuries, injury frequency rates and things like that. But they are obviously after something has happened.” Adams says Downer likes to concentrate on safety behavioural observations, with managers and members of staff having “positive conversations” in which they look at preventing accidents and injuries happening rather than counting when they do. As a consequence, the number of incidents has fallen. “This kind of thing can have quite a big ripple effect when we get it right,” says Adams. “It’s more about how people behave and the culture of an organisation.”

Downer EDI’s Dave Adams.

The key lies in sharing information. and providing the supporting infrastructure.” Looking back on his own management roles, Sherwin suggests the key to workplace productivity lies in sharing information, ideas and challenges throughout organisations so everyone can understand and contribute in their own way. That, in turn, forces managers and directors to rethink their role, and perhaps their worth or value, in the organisation. OCTOBER 2012 management.co.nz | 35

COVER STORY

So, if productive leadership is about He tells the story of the smelter cell creating more equal, adult relationships operators who sussed out a way to shift between leaders and workers, who in the process from a hard-to-divine “black business gets it? And what can we learn art” to delivering more accurate output by from them? more precisely setting the distance between Kerry MacDonald has been working at anodes and cathodes. the coalface of implementing productivThe results, he says, were nothing short ity initiatives for over 30 years. He’s held of spectacular. The more accurately the leadership roles at, among other places, anodes were set, the higher the purity of the Rio Tinto, Carter Holt Harvey, the National metal produced. Productivity increased. Australia Bank, Oceana Gold, Ports of The better quality metal attracted higher Auckland, Opus and the BNZ. prices in the market and this eventually led He knows his comments can sound to the smelter being selected to provide the blunt, but says most chairs and directors aluminium for the A380 airbuses. in New Zealand just don’t get productivity. Throughout the company, as manageKerry MacDonald. “They’ve never been ment shared previously in a circumstance where withheld data with opproductivity, or the comerational teams, workers petitiveness of the firm, is shared their own ideas the essence of the busion what could be done ness and even if it has differently. They, in turn, been, they haven’t underwere given free access to stood it.” technical specialists to Kerry MacDonald In his exper ience, help them test out their workplace productivity ideas. is less about big wham-bam moments and more about joinTrust rose. Contracts changed. And workers took home ing a series of tiny dots in minute incremental steps. much fatter pay cheques based on their individual performIn the hard-muscle world of Rio Tinto’s Tiwai Point alu- ance. minium smelters, for example, he talks of the cosy concept Many other changes carried a deeper symbolism. Everyof trusting workers to be smart, find solutions and to care. one, including the GM, switched to wearing the same-style His is the language of sharing information and empower- uniform and coloured hard hat on site. Name plates were ing people. ripped from company car parks. Everyone had equal dibs to He draws on experiences and data built up at the plant a space on a first-in, first-served basis. from the early 1980s right through to 2005 during what he The management-only cafeteria was shut down. Workers says was a time of “very determined focus on productivity”. no longer had their bags checked at the company gates. And “An essential element was the empowerment of the everyone – literally everyone – on site had an unquestioned workforce, and changing the way they were treated and right to stop any act, action or process if they thought safety managed so that they thought as managers did,” he says. was at risk. “People didn’t just work with their hands. They thought This is just one of a number of examples from MacDonald deeply about the job they were doing and how things could whose hands-on experience in lifting workplace productivity be improved. They were trained to do that and rewarded also spans banking (“BNZ adopted Kaizen”) and manufacturfor their successes.” ing. “The company was broke. After two years it was sold for

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All good Marxists Stephen Hay reckons he knows why measuring and managing productivity is such a mystery to so many business leaders. It boils down to Marx and the Austrians: well their schools of economic thought, anyway. A consultant, facilitator and educator, Hay is the man behind People and Process which works with organisations in the services sector. To Hay, productivity is about creating value. He reckons these two major schools of thought around how we define value are tearing us apart. “The labour theory of value, which is essentially Marx, says that while anyone can have a bright idea: it’s the people who bring it to fruition who actually create the value,” he says. “On the other hand, the Austrian School is the subjective theory of value. This essentially says the amount of time or labour or whatever it takes to produce a certain amount of value is irrelevant. Value is measured by the receiver.” And it’s this, second, fundamental customer focus that makes a world of difference, he says. “Most of us, inadvertently, use the labour theory of value. Whether we admit it or not, we’re all good Marxists at heart. We measure the creation of our value, or increase in productivity, by the unit: per hour worked, per dollar spent, per maintenance cycle, per whatever.” Most importantly, he says, we remunerate on that basis too. And that means we’re constantly trying to get more for less. Leaders try to get as much out of workers as they possibly can in the eight hours they’re available. According to Hay, the only measure of productivity that is necessary is timeliness and relevance in the eyes of a satisfied customer. It’s easiest, he says, to see these distinctions at work in examples where they have tried and failed. When hospital emergency departments set targets to get everyone sorted within a set timeframe they can end up either biffing out people in need or admitting those who could best be treated with other forms of care. The stats can take over at the expense of the person who needs the service. Similarly, call centres hell bent on “helping” customers within a set timeframe can whiz them through regardless of whether or not problems have been resolved. So what can managers do about this? Well, for a start, there’s the standard marketing advice to check out your own organisation as though you were a customer. And try taking the focus off just cutting costs. Taichi Ono, the father of Just in Time thinking, said if you do process improvement during economic downtimes you will do it with a poverty mentality, says Hay. “So the best time to improve things is when times are good.” Anyway, as Hay says, “No organisation ever cut its way to growth.”

Stephen Hay.

many millions of dollars. And all we had done was work with the way people worked.” Basically, says MacDonald, productivity is what people should be doing every day. “If you’re on a board or if you’re an executive or an adviser, unless you’re adding value you shouldn’t be there. And, generally, adding value is through improving productivity.” Put like that, maybe lifting our nation’s workplace productivity is neither as wonk-ish nor as difficult as it has sometimes seemed. M NZ Management magazine published a three-part series on productivity by Reg Birchfield earlier this year. Search the archives at www.management.co.nz for Solving NZ’s productivity puzzle; How to boost productivity; Better ways to measure NZ’s productivity.

OCTOBER 2012 management.co.nz | 37

Design trans the way com culture Work

Designworks.co.nz

forms pany s. 1 of 3

Climbing the

value chain I

The food and beverage sector has long been exhorted to capture more value within NZ. Nick Grant talks with a bunch of successful business leaders about their very different routes to market.

n May this year, the then-Ministry of Economic Development released a report on the New Zealand food and beverage industry that, among other things, urged the industry to process more of its produce prior to export. “The industry exports $25 billion in food and beverages each year,” said Minister for Economic Development Steven Joyce at the time. “Much of this is ingredients which others use to make finished products. The report estimates

40 | management.co.nz | OCTOBER 2012

that international consumers pay from $140-$200 billion at the checkout counter for food products that are primarily of New Zealand origin. It’s not all about producing more. It’s also about capturing more of that value for New Zealand.” Coriolis, the strategic management consulting and market research firm behind the report, is at pains to point out many of its figures are “directional” rather than right on the money. It attributes this to conflicting data from various agencies.

Yet, even if one assumes the lower end of international consumers’ estimated spend on food with NZ ingredients, there’s clearly an enormous opportunity for NZ Inc waiting to be exploited in that yawning $115 billion gap. This is no newsflash. The clarion call to stop shipping raw carcasses, logs and the like offshore has regularly rung out. Before he ascended to the role of earthquake czar, previous MED minister Gerry Brownlee made much the

ENTERPRISE SUCCESS

Yealands Wine Group’s Peter Yealands.

our total F&B exports, for example), it is underway and there are many excellent examples of local processed food and beverage enterprises that are already making progress in global markets.

Yealands Wine Group.

same comments when issuing an earlier Coriolis report on the food and beverage sector in 2010. “The maths is pretty simple,” he said. “A kilo of infant formula is worth 10 times the value of a kilo of milk powder – so we know which one New Zealand should be selling.” It’s not as though these regular calls have gone unheeded, either – as covered in NZ Management’s June issue enterprise success story, our primary sector is slowly but relatively surely shifting from “from pure commodity to higher added-value diversity”, a point echoed in the latest Coriolis report (see box story “A perishing nuisance”). While this transformation still has a long way to go (processed food still accounts for only around 16 percent of

UPWARDLY MOBILE Wine is the leader in NZ’s beverage exports in terms of both revenue and growth (see box story “Drink to success”), and it’s the global thirst for Marlborough sauvignon blanc that’s driving 90 percent of that performance Winner of the World’s Best Sauvignon Blanc for its Single Block S1 vintage at this year’s International Wine Challenge, Yealands Wine Group is a prime example of why it’s desirable to pull your business up the value chain from primary to valueadded producer and just how successful such upward mobility can be. The company, which launched in 2008, has its literal roots in serial entrepreneurial enthusiast Peter Yealands’ decision to

try his hand at viticulture 10 years earlier. In short order he’d established Yealands Estate in Marlborough’s Awatere Valley, and was doing a roaring trade selling his grapes to the spot market. However, a business based on trading commodities is only an attractive one to be in when there’s a shortage in the market. By 2006 Yealands could see the signs of a coming surplus, thanks in part to others adopting methods he’d pioneered in converting Awatere Valley hill country into land fit for growing grapes. “So I sat down with the bank and, although I didn’t know anything about wine making and hadn’t been interested in getting into it, we decided the only way to solve this was to build a winery that would use our grapes.” Built in 2007, Yealands Estate Wines was launched, along with its first vintage, on 8 August 2008. That’s an auspicious date in Chinese numerology, Yealands notes, wryly observing he needed all the help he could get: “We had 3.5 million litres of wine in our winery and not one customer,” he laughs. “Christ almighty, a recipe for disaster.” Four years later the company is exporting to around 70 countries and, although it’s now producing 12 million litres annually, is on the verge of having to allocate its wine – an almost-overnight success obviously not entirely down to trusting in magical numbers. “We’ve always produced a high quality wine at an affordable price,” says Yealands. “I suppose the things around the sides of that are: we are NZ, we are family and we are sustainable. We’re the only company in the world that’s been carbon zero since start up.”

Stories of NZ enterprise success This is the seventh article in a major eight-part NZ Management series: Stories of NZ enterprise success. Senior business journalists Nick Grant and Vicki Jayne draw on insights from the Deloitte/Management magazine Top 200 Awards and associated lists of the country’s leading companies to conduct a sector-by-sector review of the underlying drivers of success in key parts of New Zealand’s economy. Next month: The tourism and entertainment sector.

OCTOBER 2012 management.co.nz | 41

ENTERPRISE SUCCESS

Yealands is at pains to point out his commitment to sustainability is born of something of a personal revelation while previously living on a remote property in the Marlborough Sounds, rather than cold-blooded commercial calculation. Still, sustainability is touted as something that’s increasingly attractive to discerning consumers, so surely such well-publicised, environmentally-friendly initiatives as grazing Babydoll miniature sheep in the vineyards to cut down on tractor use and the attendant diesel emissions provides a competitively advantageous marketing story? “You’d like to think so,” he says, “and when you’re talking about getting your

new websites for its three key brands; the printing of QR codes on all the 2012 vintage labels that direct customers to brand specific mobile sites with food and wine matches, tasting notes and a tour video; and the hiring of a data manager to exploit the customer information gathered as a result. PERSONAL TOUCH Auntsfield Estate is an example of the success a small-scale enterprise can enjoy by identifying and servicing a niche market appropriate to its capacity. A family owned and operated boutique vineyard and winery located in Marlborough’s Wairau Valley, it’s been producing fruit

A perishing nuisance An F&B Industry Snapshot released in May this year is part of The Food and Beverage Information Project, a five-year-long, comprehensive overview analysing the main F&B sectors, with the regularly updated information intended as “a vital tool for companies looking to expand and export”. The report observes that, broadly speaking, 50 percent of what is sold in a supermarket anywhere in the world is fresh perishables (eg, meat, seafood, dairy) and 50 percent is consumer-ready packaged shelf-stable products. While the export mix of peer group countries match these proportions, New Zealand’s exports are 80 percent weighted toward perishables and only 20 percent shelf-stable. The Government’s Economic Growth Agenda (EGA) has set a target of tripling New Zealand’s F&B exports over the next 15 years, which will theoretically require close to a tripling of the amount of capital in the F&B industry. The full report – as well as other project resources – is available at www.med.govt.nz.

product into Sainsbury’s and Tesco and Marks & Spencer, I think it does help. But at the end of the day, the thing that sells the most wine is the lowest price – it’s got to be someone with really strong views to pay $3 more for a bottle of wine because it’s organic or sustainable.” That said, as it’s moving into a period of limited quantities of grapes, the company – now called Yealands Wine Group following last year’s merger with Ager Sectus Wine Estates – is “looking at the premiumisation of the product and trying to recover our growth out of higher prices. So we’re doing all the sorts of things you need to do to get higher prices.” That includes: the recent launch of 42 | management.co.nz | OCTOBER 2012

Auntsfield Estate’s Luc Cowley and Ben Cowley.

since 2001 and wine under its own label since 2002. Supplying grapes to other winemakers remains a core part of its business, with approximately half of the 500 tonnes it produces annually used for this purpose and the other turned into Auntsfield wine. Having these two income streams is important, reckons Ben Cowley, Auntsfield’s general manager and viticulturist, as it allows the company to grow at a sustainable rate. “It means we’re not being held to supplying lots of wine into the market and then having to lower our price, but we have access to more fruit if we have the opportunities to expand.” Around 80 percent of Auntsfield’s wine is exported, with volumes “pretty evenly split” between Australia, the UK, the US, mainland Europe, and Asia (where the company has one distributor which supplies their product to a number of countries in the region). “We’ve been very strong internationally right from the get-go,” says Cowley. “An important part of our approach has been making sure that members of the

ENTERPRISE SUCCESS

Drink to success In 2010, the value in US$ of NZ-produced beverage exports was:

$774 million Soft drinks – $67 million Spirits – $58 million Juice – $38 million Beer – $26 million Water – $8 million. Wine –

Source: F&B Industry Snapshot, 2012

family go into those overseas marketplaces and attend the various wine events New Zealand Winegrowers and Trade and Enterprise are involved with, as well as more generic events like Pro Wein in Dusseldorf, Germany. Those events have been very successful for us in terms of finding distributors, who often end up supplying a good amount of wine into those markets.” Cowley says that personal touch is “really, really important to start up the business relationship. We’re generally working with the smaller distributors and importers, who in turn have personal relationships with who they supply the wine to.” In keeping with positioning its product in “the premium, high price end of the market”, Auntsfield has eschewed the retail route, supplying mainly to the onpremise market. “There’s always the temptation to go into retail because that’s where they can move large volumes of wine,” says Cowley, “but generally your independent restaurant market doesn’t like to see your wine discounted down in supermarkets. Our focus is on staying true to small amounts

Tasman Food Group.

of high price wine in lots of different markets.” With the company “just starting to move into a point of limited supply, we’re looking to supply more into markets that can return us more value”, notes Cowley, “while still maintaining a presence in the other markets that don’t return so much value due to currency fluctuations”. ON TREND Like Auntsfield, Tasman Food Group has a focus on quality and serving specific niches. In the case of this Nelson-based food-processing company, those niches are diverse, the result of a conscious strategy to mitigate risk. School canteens in New Zealand and Australian represent a significant slice of the enterprise’s business: “It’s a niche in which we’re a market leader,” says marketing manager Marina Hirst-Tristram. Under its futurefoods brand, Tasman supplies the canteens with a wide range of products – such as Juicies, Moosies and Hot Bites – that are designed to meet the Ministry of Health’s food and beverage classification criteria for healthier nutritional options for kids, with many also earning the Heart Foundation’s Tick of Approval. It also produces a range of products for the grocery retail market, both domestically and across the ditch – including Nature’s Harvest Organic Fruit Bars and Zesti Biscotti – that are aimed at health conscious consumers. “We see a big trend

Tasman Food Group’s Marina Hirst-Tristram.

globally towards healthier and more natural products,” says Hirst-Tristram. “In NZ we’re in a good position to capitalise on that, and we’ve really focused in the past few years on developing products that meet that demand.” A third part of Tasman’s business – about 30 percent of its total, and growing – is contract manufacturing, for multinationals and military organisations. Of the former, Hirst-Tristram notes that “another trend on a global level is that supermarkets are looking at producing more of their own private label products. At the same time multinational companies are trying to reduce their risk so they’re looking more and more at contract manufacturing products. As a result we have more and more businesses approaching us about contract manufacturing, and we see that and private label as a real opportunity.” A compelling reason for pursuing such business, she says, is that “unless you’re a big operator in the global grocery retail scene, like Unilever or Nestlé, it’s become really, really difficult to get products into grocery retailers. So it increasingly makes sense to look at the dual tracking strategy of getting your own brands into more niche areas where they work, and then OCTOBER 2012 management.co.nz | 43

ENTERPRISE SUCCESS

do private label manufacturing for the big guys.” The bars Tasman produces for the military are a particularly niche product. The company has just created a new Oat Energy range for this highly specialised

EasiYo’s Paul O’Brien.

Owning the story

EasiYo.

clientele. Destined for ration packs, “they have a 24-month shelf life with no added preservatives”, says Hirst-Tristram. “They are also high in energy and meet the various vitamin levels required. It’s quite a challenge to make a product that does this and still looks and tastes appealing.” Even the wrappers are specifically tailored, coming in “special ‘jungle green’ or ‘sand’ coloured film so the soldiers don’t get spotted while eating a snack”. These military bars are almost exclusively manufactured for offshore customers, contributing to the 20 percent of Tasman’s output that’s exported. “The export market is still a smallish part of our business,” acknowledges HirstTristram, “but it’s increasing and certainly where we see future growth.” FAST BUS TO YOGHURT-LAND EasiYo is another Kiwi processed food manufacturer that’s benefitting from growing global demand for healthy food and beverages, though the proportion of its product range that’s sold overseas versus domestically is the exact opposite 44 | management.co.nz | OCTOBER 2012

While the F&B Industry Snapshot released in May this year notes that the New Zealand food and beverage industry is still owned by New Zealanders, with four of the top five New Zealand F&B firms owned by Kiwi farmers, it’s a rather different story when primary producers are taking out of the equation. A perusal of the 2011 Deloitte/Management magazine Top 200 results in the food (processed)/beverages category starkly sets the scene: of the top 16 performers by profit, only Delegat’s Group is New Zealand owned. With a profit of $31.9 million the familyowned and -managed winemaker was ranked third in its category, while it placed 48th by profit within the Top 200 as a whole and 134th by revenue.

of that of Tasman Food Group, with 80 percent of the North Shore-based enterprise’s made-at-home yoghurt exported. And the rise in demand is explosive, with EasiYo currently growing at 40 percent per annum, something that CEO Paul O’Brien says presents him with his main challenge. “When we’re growing at the rate we are, it puts pressure on people – some people love the cut and thrust of change and other people are just terrified by it. You need to bring everybody along but many people come at different speeds. So you need to apply a mixture of leadership – to inspire and energise people, show the vision and value – and management – to encourage those who can do it and then go and find the laggards and give them a hurry up.” Still, he readily admits it’s a good problem to have. “Yeah, I love change and I love this growth, and in the end you’ve

just got to say to people, ‘we’re on a bus and we’re going pretty fast, so hang on, it should be fun’.” Originally a garden-shed invention by a keen homebrewer who thought he’d give making his own yoghurt a swerve, EasiYo yoghurt’s secret formula is based on a blend of unique probiotic cultures and premium milk from Westland Milk Products, which now owns the company. Since its product range of milk powderbased yoghurt mixes and yoghurt makers were launched in 1992 and began exporting the following year, EasiYo has become the world’s leading homemade yoghurt brand, with a current turnover of $40 million. “We’re lucky that we’re in a sweet spot with a unique product that ticks a number of boxes for mums, kids and baby boomers looking for more of a wellness product and nutritional solutions,” says O’Brien. An additional reason for EasiYo’s

ENTERPRISE SUCCESS

Food for thought In 2010, the value in US$ of NZ-produced processed food exports was: Infant formula/foods –

$476 million

$186 million Oil and fats – $125 million Soups/Condiments – $123 million Biscuits – $106 million Pet food –

Processed fruit and veges (excluding French

$93 million $70 million Frozen French fries – $60 million. fries) –

Honey –

Source: F&B Industry Snapshot, 2012

success is, like Yealands and Tasman, the company has representatives in key export markets. Having feet on the ground in Europe, for example, meant that in 18 months Italy went from an unproven

territory to providing around 13 percent of total turnover. On the other hand, the strength of the Kiwi against the Euro means EasiYo has now put pushing into other EU countries on hold, in favour of focusing on Asia, where demand has “really gone mad” in the past year and a half. That’s due to a number of factors, including the huge popularity of Japanese drinking yoghurt Yakult, which has given probiotic products great cut-through with consumers, the rapid growth of the Asian middle class (“by about 100 million a year”, reckons O’Brien), and the “outstandingly good” reputation enjoyed by the NZ dairy industry (“every time there’s an embarrassment involving Chinese food, our stakes go up”.) Like the other companies profiled, EasiYo is constantly seeking to innovate its product range – a recent example is combining Greek yoghurt with coconut bits – and O’Brien says NZ is an excellent test-bed: “It’s cheap and it’s not embar-

rassing if you stuff up, whereas if you have a failure in the UK or Oz, everyone knows, and it’s expensive to get out of it.” A focus on continual improvement has seen EasiYo invest in upskilling its workers to both ensure quality control and engender greater loyalty and motivation, and at the suggestion of NZ Trade & Enterprise it is engaging directly with its consumers on a regular basis via “inside-kitchen interviews”, which aids with product development and marketing. O’Brien, it seems, couldn’t be happier. “I love buying boring old sacks of milk powder and turning them into something exciting – that’s a real passion for me,” he says. “Another thing is, one of the ways NZ can grow out of recession is to feed Asia. We need to take that role seriously; produce premium value-added, exciting food and beverages that Asians want to buy, and really propel NZ forward.” M Nick Grant is a freelance journalist. nof.grant@gmail.com

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IT’S CRIMINAL How to tackle NZ’s booming white collar crime. By Reg Birchfield.

hite collar crime is a burgeoning business. New Zealand’s fraudsters lifted their annual take by $79 million to $279 million in the second half of last year, according to global accounting firm KPMG’s fraud barometer. And competing accounting consultancy PricewaterhouseCoopers’ latest Global Economic Crime Survey placed us fourth out of 78 countries for reported internal organisational fraud and theft.

48 | management.co.nz | OCTOBER 2012

White collar crime is, according to PwC, now a persistent fact of New Zealand business life. Just shy of 50 percent of respondents to PwC’s New Zealand survey said they had experienced some form of economic crime in the past year. This level of criminal activity means we rank a significant 16 percent above the global incidence average of 34 percent. Australia isn’t far behind on 47 percent which, ironically, provides one of the few trans-Tasman performance indicators

on which we outrank them. Our commercial crime rate is climbing steadily. And the cost to businesses, the insurance industry and the economy in general is climbing along with it. Interestingly, many Kiwi companies are either not well insured, or not at all insured against criminal activities. Most organisational theft is committed by employees, 71 percent of whom are male. And in most cases they do it by manipulating accounting systems to divert funds from the enterprise.

WHITE COLLAR CRIME

So what’s driving our booming white collar crime industry? The parlous state of the economy and the repercussions of that reality is a major factor. Staff reductions, poor financial performance, mergers and acquisitions, and increased employee workloads are more often than not at the heart of the problem. According to AIG chief executive Cris Knell, surges in criminal activity such as the one recorded in 2011, most often happen during tough economic times. Given the current state of the economy, business owners and managers should be “very concerned”, he says. BAD APPLES Oddly, despite the millions stolen businesses are reluctant to buy insurances that cover fraud or other similar theft. “Despite numerous annual global studies on fraud and white collar crime, business owners still view their staff as the most honest and upstanding community,” says Knell. They optimistically think other companies employ the bad apples. New Zealand businesses seem to relate better to the need for natural disaster property insurance and other production or distribution related covers. Company directors relate to the need for management liability protections and professionals, like solicitors, are quick to insure themselves against personal liability claims. Crime insurance isn’t always afforded the same importance. “KPMG’s latest survey puts a disturbingly high figure on the cost of commercial crime,” says Ace Insurance New Zealand president Paul Martin. “And the insurance industry has an important role to play in providing risk management solutions to the problem.” According to Knell, an organisation’s good reputation can seriously be compromised by fraudulent employees. Their activities can erode the company’s core values and put the key qualities upon which a business depends at risk. A serious internal fraud can kill an enterprise that has taken years to build. It is not always easy to manage the internal risk of white collar crime. Even

technically sophisticated and large enterprises that have no trouble measuring data-rich exposures such as credit, market and regulatory risk, stumble when it comes to measuring fraud risk, says Knell. That’s because the data used to measure the potential for internal crime is harder to mine and so the risk becomes more difficult to assess. This finding was highlighted with financial institutions, pre the global financial collapse (GFC), when PwC and Britain’s Economist magazine revealed in a collaborative paper that organisations frequently fail to act if they can’t find the numbers with which to measure a risk or set of risks. KPMG’s 2010 Fraud and Misconduct survey suggested that two thirds of all frauds remain undetected. Insurers, therefore, are looking for companies to adopt steps that can detect, deter and prevent fraud. “We want companies to be proactively engaged in preventative measures and to avoid the difficulties associated with responding after the event,” says Knell. “If you think about the repercussions a major fraud can have on a company’s reputation, staff morale and external business relationships, taking early action [to prevent internal crime] is an obviously more sensible strategy.” MITIGATE THE RISKS According to Paul Martin, insurers need to work closely with brokers to make businesses aware of the risks they face and to help them mitigate these risks. There are, he says, six categories of potential fraud or risk that businesses should be vigilant about to prevent losses. They include stock theft, supplier collusion, excessive IT management access, funds transfer authorisation losses, contract allocation kickbacks and personal expense abuse. Only one third of frauds are actually discovered. And, says Knell, most of those are uncovered by ‘chance’ such as an employee discovering something ‘odd’ in the workplace, overhearing something strange or management following up on a tip-off. Martin thinks more businesses should

re-assess their commercial crime insurance cover. “There are new optional extras available that may be relevant in individual cases,” he says. “For example, companies with a high reliance on outsourcing arrangements could cover for losses suffered through fraud committed by outsourced company employees. And higher profile brands might cover for public relations expenses to manage adverse publicity following a loss.” AIG takes a hands-on, managementcentric approach to helping clients counter internal fraud. It works with clients to clarify the issues and ensure that each business is better equipped to identify and manage fraud and corruption. Knell suggests companies adopt a risk management framework and use pre-loss consultancy services – such as those offered by Ernst &

White collar crime check list Understand and review high risk and key operations such as – Management; employees; third parties; and – Procurement; finance; sales Implement key lines of defence – Segregation of duties – Recruitment – Pre-employment screening – Due diligence – Post-employment monitoring Ethics policy – Ensure staff know what constitutes fraud – Whistleblower programme Fraud response plan – Communicate procedures and guidelines Implement systems and controls to mitigate risk, particularly in the following areas – IT – Security – People management – Workflow systems and processes – Authorisation – Audit trails

OCTOBER 2012 management.co.nz | 49

WHITE COLLAR CRIME

Young – to provide forensic data analysis, mending a more effective risk manage- Government to ramp up the mandate anti-fraud health assessments and fraud- ment framework. It often results in higher and manning of the Serious Fraud Office. awareness training. The company then claims volumes and some significant And while the directors and management meets the client’s management team to monetary losses. Why? “As insurers work of the nation’s finance companies have suggest procedures and techniques to with customers to implement better served up the SFO’s fattest fish to fry, the manage the risk more effectively. regimes, they often replace weak internal emergence of new varieties of fraud is a “Sadly, the very person that a busi- controls and then detect previously un- worrying trend. “Despite the public attenness owner or chief executive might discovered frauds. As most fraud policies tion on finance companies, the scale and trust could well turn out to be the most operate on a losses-discovered basis, they breadth of our work is much more than damaging fraudster,” says Knell. “The notify us of an insurance claim.” this,” SFO chief executive Adam Feeley ideal fraudster profile is a long-serving, Crime insurance policies also improve said in his 2011 annual report. The 34 inmiddle-aged, reliable, vestigations it undertook committed and trusted in the year involved more employee.” than $1 billion in losses. The fraudster’s abilCorruption is surfacing at ity to deceive is often every level of enterprise. enhanced by the modFraud and white colern organisation’s abillar crime is becoming ity to transact business increasingly pervasive across a variety of new and both socially and technology platforms, commercially corrosive. says Knell. ManagePrevention is difficult ment therefore must but best practice manmake certain that all agement, diligent attenemployees take at least tion to upgrading and two weeks unbroken implementing failsafe holiday and be allowed Ace Insurance NZ president Paul Martin. AIG chief executive Cris Knell. systems and processes, only limited connectivand prudent insurance ity to the company’s systems while they the chances of asset recovery. Almost 60 practices to cover the gaps when things are absent. All members of staff should percent of recovered fraud losses come still go wrong, are increasingly essential. be subject to the same rigorous checking, from insurance. On the other hand, the “Companies need to be rigorous about regardless of service or seniority. chances of loss recovery are reduced when enforcing their anti-fraud measures,” Adopting internal controls that involve there is no insurance policy. “Using an says Martin, who offers a checklist of peer reviews, clear escalation processes, insurer’s resources and contacts to chase guidelines and a framework for developdefined authority levels, dual signature down recovery is good for the client’s ing a fraud prevention and mitigation signoff, and both regular and ad hoc business and signals our intention to seek plan. (See box story “White collar crime audit checks invariably coalesces into restitution. That acts as an additional check list”.) rudimentary risk management processes, deterrent,” says Knell. Knell thinks the success New Zealand says Knell. Managing through the aftermath of a has in preventing and deterring corporate serious fraud is a debilitating process. Ac- crime, the extent to which it is vigilant WHISTLE BLOWERS cording to Knell, everyone feels the breach about detecting fraud-type activities, and Employees must also be able to safely of organisational trust. It also places a our commercial and regulatory response “blow the whistle” on poor internal prac- burden on the business that distracts it to dealing with white collar crime will tices. They must have access to a free and from normal business activities. Man- either enhance or detract from our repuopen forum, without fear of unfair reper- agement must then scour the business’ tation as a desirable economy in which to cussions, to discuss transparent processes. systems, check employees and stress test invest and do business. “And a solid crime “Then, if internal measures and con- systems and processes. “It is a complex insurance policy is certainly a significant trols are insufficient to prevent and detect and time-consuming procedure that part of the solution to a very difficult all frauds, there is clearly a role for insur- pre-planning and establishing a robust problem,” he adds. M ance to compensate for the inevitable risk management procedure can help to This article first appeared in Covernote, published by losses,” says Knell. “Internal controls are alleviate,” he says. not, however, a substitute for insurance.” The explosive growth of white collar Mediaweb for the Insurance Brokers Association of There is an irony in insurers recom- crime in New Zealand has prompted the New Zealand. 50 | management.co.nz | OCTOBER 2012

CASH & CREDIT MANAGEMENT

Going with the

[cash] flow Businesses are more keenly focused than ever on prudently managing their cash position. Vivienne McLean outlines the current raft of options.

ash is the oxygen of business – vital for survival and growth, fatal if absent. So companies looking to survive and thrive in our post-GFC economy can’t afford to take a casual approach to cash flow and credit management. Life has been tough for most businesses, and Craig Brown, senior lending manager, Lock Finance, says while a lot of businesses used to make good money almost by default, today’s business owners and managers need better strategies and far greater understanding of cash flow and credit management. The good news is there are signs most are doing better at managing their cash flow cycle. “It’s still not great, but it’s better than it used to be,” he says. Traditionally, cash flow funding has been provided via overdraft facilities, term debt funding or leveraging against fixed assets. While banks still dominate commercial loans, there’s a growing sense that these traditional products do not always meet the needs of the changing business environment. The stigma attached to factoring and invoice financing, once erroneously perceived as ‘last gasp’ options, is fading as companies realise the flexibility they offer. “Internationally, invoice finance is a very established method of funding a

52 | management.co.nz | OCTOBER 2012

Peter Hattaway, Hattaway & Associates.

Chris Reid, The Interface Financial Group.

business’ cash flow requirements,” says James Mitchell, head of business, Heartland. “New Zealand has significantly lagged behind this trend. Banks and business owners have all too often relied on securing company debt requirements against personal assets. “However, this is changing as business owners seek to protect their personal assets. The demise of the finance company sector has also left a partial void for fixed asset finance. Perhaps most tellingly though, traditional bank business lending products just aren’t suited in many cases for the environ-

Andrew McKerrow, national manager cashflow solutions, BNZ.

ment we now find ourselves in.” This need for flexibility in a dynamic business environment is driving growth in factoring and invoice financing. With full service factoring a company hands over its debtors’ ledger to a factoring company, which then provides a line of credit equal to an agreed percentage of the ledger, normally 80 percent, and also carries out all the debtor collection activities. Debtors know that the invoices have been factored, but Mitchell says many businesses do not want a third party involved, perceiving this as interfering with

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unaware of the discounter’s involvement and the client company retains full control over their debtors’ ledger. BNZ is still the only New Zealand bank offering invoice financing. Andrew McKerrow, national manager cashflow soDave Allen, director, Bruce Cross, CEO and operations lutions, sees invoice financing Vantage Consulting Group. director, Debtworks NZ. as a positive force for business growth. “It’s about enabling companies to their client relationships. For this reason he believes factoring is likely to remain a grow, to springboard faster than traditional products, and invoice discounting niche product. Craig Brown thinks full service factor- works in good times and bad. We’re in ing is generally more suited to smaller a tight business environment, but there businesses, possibly new or undercapi- are opportunities for companies to talised. With credit management skills, merge, or perhaps to buy out an owner resources and processes that “may not be who’s retiring. Baby boomers are setting that flash”, and with the owner too busy themselves up for retirement and it is providing the product or service, a lot estimated 10,000 businesses will come of them will benefit from having a third up for sale in the next 10 years. When times are tough, or flat like they are now, party handling the collection. Invoice finance, whilst similar to fac- we can still help. “A board likes the fact we bring discitoring in many respects, is seen as having the advantage that debtors remain plines [to the process]... we de-risk their

business. You can secure to a certain level with an overdraft, but if you want to leverage for a particular event you don’t always have tangible assets to that level of specific need. You need to offset the fees against the time value of the money. “We will give 80 percent of the invoice the day the goods go out the door, and having the cash immediately may, for example, allow a company to do another $1 million worth of business for $100,000 additional profit.” Invoice finance is not for everyone. McKerrow says it is not suitable for highly contractual sales, or progress payments. There also a minimum turnover of credit sales required, typically around $1 million. “We’re flexible, but around $3 to $30 million turnover is where most of our customers are. We judge each case individually but the company must demonstrate good capabilities for credit handling. We can help where there’s lower equity but invoice financing is not for declining or unprofitable companies.” OCTOBER 2012 management.co.nz | 53

CASH & CREDIT MANAGEMENT

Chris Reid of the Interface Financial Group (IFG) says his firm generally deals with smaller companies, in particular owner-operators whose turnover is nowhere near the thresholds of larger lenders. “Our set-up is ideal for small busi-

Businesses should carefully assess what debtors are costing them in interest, time chasing, management and bond enforcing costs. nesses, as we advance on an invoice-byinvoice basis, so there’s no commitment past that invoice. It’s easier for companies to control costs, less stressful for them and they don’t need to wait until [the account] is past due.” Rounding out the transaction will often be a trade credit insurance policy. Chris Murphy, general manager of Trade Credit, says trade credit insurance is often used by factoring and trade credit companies to “seal the deal”. “Over the last few years a lot of the factoring companies have become more sophisticated. They’re not only looking at ways to get the deal over the line – if they see there’s risk they’ll often ask me to write a policy to protect their client long term as opposed to simply getting a deal over the line.” While invoice financing helps the immediate cash flow, companies are still responsible for ensuring their clients pay their bills, and having sound credit management policies is absolutely vital. Bruce Cross, CEO and operations director, Debtworks NZ, stresses that a good credit policy starts well before an account becomes due. Sadly, resourcing credit management and providing more training often only starts to happen when sales fall away. “The smart business makes sure everyone is involved in credit manage54 | management.co.nz | OCTOBER 2012

ment including the sales force, which often sees credit as the ‘sales prevention department’,” he says. Dave Allen, director, Vantage Consulting Group, urges businesses to carefully assess what debtors are costing them in interest, time chasing, management and bond enforcing costs – what losses have arisen where they haven’t been paid. “Firstly, look at your current debtors’ position. How far are they overdue? What’s your mark-up? Do you have large numbers of customers [each generating] small dollars or fewer, larger customers? If 50 percent of your business is with a single client you are very reliant on that one customer. “Second, having the right processes is critical. Are contracts in place? What are the terms? What about retention of title where goods are old? Clear communication with your customer is vital, and you need to have a process in the case of any dispute. A full contract will clearly define payment terms, warranty provisions, agreements re ongoing service – everything that reduces the ability of your client to argue and delay payment. All this is Business 101.” While outsourcing credit management can free up the business to focus on core functions, Peter Hattaway, of consultancy Hattaway & Associates, believes in-house credit management will always achieve

the best results. However, one problem is that people tend to fall into the credit management role, and often it’s left to the receptionist or accounts staff. There are currently two NZQA credit management qualifications – the National Certificate in Credit Administration (Credit Control) Level 3 and the National Certificate in Credit Management Level 4 – both of which can be undertaken online through training provider Rapid Results, but managing director Derek Good says generally the qualifications aren’t well known. “What tends to happen is that new credit control staff only get a couple of weeks learning on the job.” In any case, training is only part of the solution. Peter Hattaway says a lot comes down to basic people skills. “It’s not just about collecting the money – it’s about collecting the money and keeping your customers. Training your credit staff will help them feel it’s not so hard. Hire people with a few grey hairs, who have a degree of sensitivity. Another thing that helps people pick up the phone is realising that it’s all about customer service and solving problems. The skill of the person on the phone is the key thing.” New Zealand credit management staff are sometimes seen as too soft, says Hattaway. “Your most effective collector might make three times the calls of the least effective person who sends letters or texts instead. And if you set a boundary, when people cross it you must take the action.” In the end, he says, it’s just like parenting. M Disclaimer: The information and recommendations in this article are provided for general information purposes only. To the extent that any such information or recommendations constitute financial advice, they do not take into account any person’s particular financial situation or goals. We recommend that you seek advice specific to your circumstances from your financial adviser. Vivienne McLean is a freelance business writer.

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EXECUTIVE HEALTH PETER TYNAN

few decades ago, reaching your 60s was a time to start putting serious thought into spending more time with friends and relatives, tending to the garden and working on your golf swing. Today, this notion has gone the way of the fax machine. There’s a growing gap between the official pension age of 65 and the actual age at which people decide it’s time to down tools. According to OECD figures, New Zealand’s effective retirement age in 2009 was just over 67 for men and 65 for women, an increase of 4.8 years for men and 4.4 years for women since 1999. As New Zealand’s population ages, older people are forming a larger proportion of the workforce. This will have significant implications for New Zealand employers. Research by the Ministry of Social Development projects that by 2051, seven to10 percent of the labour force could be aged 65 and over, up from three to four percent in 2011. In 2006 (the last official census), 17.1 percent of Kiwis aged 65 plus were involved in at least one hour of paid work per week – up from just 6.4 percent of that age group in 1986. Of that 2006 workforce aged 65 plus, 52 percent were working at least 30 hours a week. Businesses have a huge amount to gain from the experience, organisational knowledge and interpersonal skills of older workers. However, this group will

have different needs and motivations to their younger colleagues. Smart businesses will put strategies in place to get the very best out of their older demographic. Accommodating the increased healthcare needs of older workers will be a major consideration. As we age, we are naturally more prone to illness and injury. People aged over 65 account for about a third of all public health spending in New Zealand. The good news for employers is that a number of this cohort are in good health. Once life-limiting conditions can now be overcome. We can have new hips, knees, heart valves and be back to our best quickly. Older people are also more active than ever before. Enter any cycling event in New Zealand and don’t be surprised if a 70 plus year old whizzes past you with ease. Despite this, even the healthiest of us will not be immune to the effects of ageing. From a business perspective, strategies to support older workers to stay in good health will be vital to enhancing productivity and employee engagement. Low investment, prevention-focused initiatives that can help to significantly reduce the potential for illness-related absence can include flu vaccinations, onsite GP clinics and annual health checks. Consider checks for blood pressure, cholesterol, BMI and glucose levels, for example. Other initiatives can include

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Grey is here to stay team-building exercise programmes such as walking challenges, yoga/pilates or even dance. Older people are also much more likely to need elective surgery. Employersubsidised health insurance is a popular way to help employees get the surgeries they need without delay, and is likely to be a very attractive retention tool for this age group. When it comes to retention, older workers’ reasons for staying in the workforce will be diverse. However a 2009 Ministry of Social Development survey into older people’s attitudes to work found that work-life balance was highly valued. Factors that would encourage them to stay in work included: variable hours of work, more unpaid leave and an option to work from home. Westpac Australia introduced an ‘Age Balance’ initiative in 2002, which included the option for all mature-age employees to work flexibly and take “grandparental leave”. The so-called “grey tsunami” is on its way. But with good planning, your business will already be on its way to higher ground. M Peter Tynan is chief executive of Southern Cross Health Society.

Healthy staff means higher productivity Covering staff with Southern Cross health insurance means less sick days, quicker return to work1 and it’s an attractive incentive for retaining and recruiting employees. It all adds up to a more

productive and profitable business. Your profits, not ours. Because we’re not for profit, we’re for you. To find out more, call Southern Cross Health Society on 0800 323 555 or visit our website healthybusiness.co.nz

1 TNS research 2004

Healthy people healthy business Southern Cross Medical Care Society, Level 1, Ernst & Young Building, 2 Takutai Square, Auckland 1010

56 | management.co.nz | OCTOBER 2012

EXECS ON THE MOVE

Kea New Zealand has announced its new board. Incoming chairman Phil Veal (pictured) is also cochair of Kea North America, and a partner at middlemarket advisory firm Growfire, based in New York City. Global board members are: Nicky Bell, CEO of Saatchi & Saatchi; Rob Cameron, executive chairman of Cameron Partners; Craig Donaldson, former head of Royal Bank of Scotland’s North America FX Global Financial Institutions; John Lumsden, chair of the New Zealand Standards Council, Moxie Communications, and Virtual Expos New Zealand; and Stefan Preston, co-founder and director of Ingenio. The KEA board also includes three ex-officio board members: Scott Brown, chair of Kea China; Richard Dellabarca, chair of Kea UK; and Mark Smith, a director of Kea in Australia.

Waterfront Auckland, one of seven council-controlled organisations, which came into fruition following the formation of the Auckland supercity. Financial Services Complaints (FSCL) has appointed Roger J Kerr as the new industry director of the FSCL board. Kerr is a director of Asia-Pacific Risk Management and has over 30 years’ merchant and investment banking experience. The board of Cerno International New Zealand has appointed Dean Garrod as CEO. He has been interim CEO since June this year, has a total of 23 years’ insurance experience and has been a practising loss adjuster since 1995.

ASB has two new managers. Greg Beehre has been appointed to the newly-created role of general manager, industry specialisation leading a team across a number of key market segments including franchising, professionals, Maori business and transaction banking. Mark Heer is the bank’s new general manager, rural. He has been with ASB for five years, and was most recently in a role focusing on the development of the rural corporate area within the bank. Former Waitakere mayor Bob Harvey has been reappointed as chairman of

Risk management solutions provider Wynyard Group has appointed Saya Wahrlich as its vice president of global marketing with a brief to further position the company at the forefront of the global technology fight to combat growing crime, corruption and threat. Wahrlich joins from 3M NZ where she has held management and marketing roles, the most recent being ANZ strategic business development manager.

Transfield Services has appointed John Brockies as executive director New Zealand, effective late October. During the past 10 years Brockies has been in senior management roles at United Networks, Siemens Energy Services, the North Shore Council and Regional Facilities Auckland. Most recently his interim management roles have included that of chief operating officer at Watercare. Global engineering and strategic consulting firm MWH Global has appointed Anthony Byett as its senior economist. Based in Auckland, Byett will further expand the company’s economic advisory services in New Zealand and across the Asia Pacific region. He was previously chief economist for the ASB Bank in New Zealand, and has over 30 years’ experience in economic research, financial and economic analysis and financial risk management. Debitsuccess has appointed Dr Craig Marshall as its new CEO. Marshall has served on the billing solutions provider’s board since 2007 and now joins the company following three years as CEO of pathology company Labtests. He is also one of the founding directors of the White Cross Group and is currently the chairman of Corporate Cabs.

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58 | management.co.nz | OCTOBER 2012

OCTOBER 2012 VOL 07 NUMBER 05

ISSN 1177-5815

ON MANAGEMENT

NEW ZEALAND INSTITUTE OF MANAGEMENT IN ACTION

Blended learning sparks

exciting L&D renewal N

ZIM is adopting blended learning, revolutionising the way short courses are delivered, in a move to meet emerging managers’ need for relevant, up to date, technology-supported learning in a timeconstrained world, and adding value for employers by delivering real performance gains on the job. The process will also see closer, more enduring partnerships forged between NZIM and programme participants. “Blended learning is about using a mix of new and traditional media to achieve learning outcomes and help people make the transition to where they want to be,” says Shaun Sheldrake, NZIM general manager business development in Wellington. “NZIM currently has a very traditional approach to learning experiences, in that all our courses are classroom-based. There are benefits to classroom learning, particularly in terms of interaction with others, and the ability to disconnect from work and immerse yourself in the learning experience. However, it doesn’t provide the support needed to embed learning back in the workplace. “What we’re developing is a blended and extended learning experience based on the 70/20/10 model which is increasingly underpinning organisations’ learning strategies. This model derives from research showing we learn 70% of what we do on the job, 20% through mentoring, coaching, and support from managers or peers, and 10% through formal learning. “NZIM’s learning has been almost entirely pitched around that 10%, and in order to remain relevant and current we need to have an offering that reflects our customers’ desires and wishes. “Our target market is 25-40 year-old emerging managers, most likely in their first or second people leadership role, who lead their lives in a technology supported way. “Some things in the learning experience, particularly the knowledge component, can be developed without needing to be in a room with people. “But there is real value in being in a group, sharing and learning from others. So we won’t turn everything into e-learning as some others

have attempted, because this does not work on its own. “The experience we’re crafting is based on a four-phase approach. Instead of enrolling in a three-day classroom-based course, you will be engaging in a four-week programme at the same price.” In Phase 1 participants get a welcoming email from the facilitator, and access to the online workspace and forum. This not only hosts course pre-work but also acts as a virtual “meet and greet” as everyone introduces themselves and breaks the ice before anyone sets foot in the classroom. In Phase 2, because the pre-work phase has already developed participants’ foundation knowledge of the topic and group bonding, classroom time can be a shorter but richer, more intense experience, enabling a three-day programme to be shortened to 1½ or two days depending on the particular topic. Phase 3 is all about the transition back into the workplace, with participants using the online environment to continue accessing pre-work, as well as extra resources or material used in the classroom. In Phase 3 the facilitator sends emails, teasers, case studies and support tools to the group almost daily. “You don’t just get dumped back into the workplace – you are expected to deliver something,” says Sheldrake. “For that week you’ve still got the cohort supporting each other as they transfer the new skills into the job. “In Phase 4 we move to a one-on-one mode where the facilitator follows up with individuals to make sure the skills are being put into practice on the job and offer help where needed. This comes right back to the fact that people are being funded by their organisation and the on-the-job component is delivering value back to that organisation. “At an individual level we can give learners a more relevant and up to date learning experience that meets their expectations and integrates with the way they live their lives. “From their funder’s point of view we can offer a learning experience designed to not just give them skills but change their performance on the job. From the NZIM perspective we build an enduring

Shaun Sheldrake.

relationship... get connected and we’ll help you develop your career.” NZIM has been testing the concept with customers in recent months, with the response described as overwhelmingly positive. Sheldrake and Tait Grindley, NZIM general manager business development, Auckland, have completed an extensive review of 2013 short course offerings and modified the programme to make way for new blending learning based courses. Three pilot courses will be run next month – Introduction to Management, Project Management and Dealing with Difficult Behaviours, selected for their different styles and content. An important part of the pilot will be working with a team of six facilitators. Sheldrake says far from driving down facilitation time, the blended learning model potentially does the opposite, and facilitators are a key part of the journey. “We will ensure these pilot courses deliver on all of the promise they’re showing at the moment,” says Sheldrake. “Through December-January we will analyse what elements worked and, all going to plan, will set up a schedule to migrate all of our short course content and experience into blended models over 2013-14. “We’ve got a lot of hard work ahead of us over the next two years to, in effect, reinvent ourselves.”

Focus on Management

NZIM A PARTNERSHIP TO EMBRACE ETHNIC DIVERSITY A

Ramon Booth.

NZIM welcomes

Ramon Booth R

amon Booth has joined NZIM as the capability development consultant. His areas of expertise include people skills development, needs analysis, facilitation and instructional design including over five years of experience as a learning and development trainer and consultant in both the public and private sectors. As well as utilising traditional methodologies, Ramon enjoys incorporating technology and social media to bring training to life in blended learning solutions. He is based in NZIM’s Wellington offices and we are excited to leverage the skills and knowledge that he brings to the organisation. Contact Ramon on 04 495 8295, or email ramon.booth@nzim.co.nz.

s NZIM continues to evolve as New Zealand’s leading management membership, development and research organisation, key partnerships are being formed to grow and enhance the management capability of the diverse cultures and ethnicities New Zealand has to offer. Diversity in general is one of the most talked about issues in this country at the moment, with questions about the impact of diversity on the economy and the growth of New Zealand business prevalent amongst our business communities. In fact the question was asked by Reg Birchfield in the August edition of NZ Management magazine, whether diversity is actually fact or fad. Whatever your point of view, the reality is that the population of New Zealand is growing, and so is the diversity of the many nationalities that live and work in Aotearoa. With this in mind, NZIM has taken the initiative to work closely in partnership with the Office of Ethnic Affairs to

The rise of NZIM’s Ascent of Management T

his year has seen a record number of local and international students studying towards NZIM management certificates and diplomas through NZIM’s Ascent of Management Programme. The Ascent of Management is a range of NZIM management qualifications delivered through a wide network of New Zealand business schools and polytechnics that offer students fulltime and parttime flexible learning options. These range from traditional face-to-face classroom delivery to online learning and distance learning options. NZIM is proud to celebrate the achievement of hundreds of students who will make New Zealand their permanent home and enter into the country’s workforce in a variety of industries and roles with a nationally recognised qualification. For more information on the Ascent of Management and its providers visit www.nzim.co.nz.

LEADERSHIP FOR THE FUTURE T he September event in Wellington’s Women in Business series addressed the topic of Leadership for the Future. In complex times more is demanded of leadership. Looking at the trends we need to be aware of if we are to be successful in the future, Dr Cheryl Doig discussed the implications for women in leadership. Stretching our thinking about leadership, the role of technology and the growing importance of collaboration, she challenged us to explore new ideas and to move into our ‘challenge zones’. Dr Doig is the director of Think Beyond, a company focused on growing leadership for the future. She follows leadership trends

Focus on Management

see how both organisations can add value for one another in enhancing NZIM’s offering to a wider and more culturally diverse audience. NZIM will assist the Office of Ethnic Affairs to provide a suite of customised management training programmes, networking events and market research specifically to enable and engage ethnic communities and provide links into the established New Zealand business landscape. NZIM is excited to be providing this innovative new approach towards building a more culturally inclusive environment and we welcome any involvement from members, clients and participants to contribute to making this partnership a success. Stay tuned for launch events and a press release over the coming months. For more information contact Tait Grindley or Nardine Sleeman on 0800 800 694 (NZIM) or check our updates on www.nzim.co.nz.

and research closely, and translates these into practice, working internationally and virtually. She combines experience as a successful principal, businesswoman and board director with the use of research and a healthy dose of realism to facilitate leadership needs. With more than 10 years of board experience, including two years as chair, she is a Fellow of the New Zealand Institute of Management and a member of the Institute of Directors in New Zealand. The Women in Business series is presented by NZIM and the Wellington Employers’ Chamber of Commerce. For more information phone 04 495 8300.

NZIM BY POPULAR DEMAND – OSH DIPLOMA BACK IN 2013 A

professionals assist in presenting this programme with OSH expert and principal facilitator Gavin Johnson leading the daily proceedings and assessment work over the 14-day period. Wellington will host the first programme in 2013 from 28 April to 11 May at the Mercure Hotel on The Terrace, with a second programme to be hosted in Auckland later in the year. All accommodation, meals and programme resources are included as part of the programme fee and upon completion of all course work and assessments participants will graduate with the NZIM Diploma in Health and Safety Management. For more details go to www.nzim.co.nz or call Tait Grindley, programme manager on 0800 800 694 for a prospectus.

YOUNG MANAGERS PROGRAMME

SCHOLARSHIP WINNERS Y

oung managers have always needed to face not only the challenges of today, but also to prepare for the challenges of tomorrow. Today’s young managers must learn faster than ever as the pace of change accelerates and pressures on the management role intensifies. In 2011, the Young Managers Programme (YMP) successfully organised for 21 young managers to explore their leadership on an experience-based trip to Macau and South China. The participants had the opportunity to learn from the experiences of companies such as Amway and Colgate on topics including employee engagement, market strategy and building a successful corporate culture. This year two young managers Amit Prasad, accounting manager, University of Auckland, and Sarah McDonald, managing associate, Allen + Clark Wellington, have been selected and awarded a scholarship to visit various organisations in Macau and South China, including a stateowned enterprise. These organisations will share their experiences in areas such as employee engagement and innovation. “I am extremely delighted and very excited with the prospect of the learning and professional development this programme has to offer. This is an excellent opportunity to capitalise on the great minds of Asia, in particular what China has to offer on leadership, management and general business acumen. I see this as a brilliant way to network with like-minded mid-career professionals to share ideas, concepts and knowledge,” says Amit Prased. Sarah McDonald also says she is very excited about the opportunity to travel to South China and learn from others across the Asia region about leadership and management. “As a young manager in a New Zealand business I feel it is really important to be building our organisations in tune with what is happening in Asia. I am looking forward to networking with the other young managers in the study group.”

Sarah McDonald.

Amit Prasad.

Are you a

leader on the land? L

andcorp and the New Zealand Institute of Management invite you to be part of the 2012 Agricultural Leadership Programme (ALP). ALP is a programme specifically designed to prepare and develop future leaders of New Zealand’s vibrant agricultural sector. This 7-day residential programme will be held at Margrain Vineyard in Martinborough in November 2012. A $5000 NZIM scholarship will be awarded during the course. To find out more and to book your place, call 0800 800 NZIM.

Photo: thinkstockphotos.com

fter receiving overwhelmingly positive feedback from participants who attended the NZIM Diploma in Health and Safety Management programme in 2012, NZIM has made the commitment to run this popular programme twice in 2013 at two locations. The programme is delivered residential style over two intense weeks that enable participants to really ‘get into the zone’ and not only challenge themselves but challenge each other to connect with the industry’s most relevant and current OSH content and issues. A range of industry

Focus on Management

Caroline Johnson – Membership & Marketing Manager W

Southern Members Theatre Evening

ZIM Southern members enjoyed an excellent mid-winter get-together at The Court Theatre, which presented a classic Kiwi comedy by Dave Armstrong. The party was welcomed on arrival with drinks and nibbles hosted by NZIM Southern and the scene was set for some welcome escapism. Many of us were reminded of our own family holidays in ‘the great outdoors’ with gales of laughter from the outset at the all-too-familiar behaviours and rituals that characterise the average Kiwi camping holiday. We all welcomed this opportunity to take a lighter look at our frailties, celebrate our huntergatherer instincts and add a few new cocktails to our repertoire!

e welcome Caroline Johnson as our new membership and marketing manager. She joins the team at NZIM Southern at an exciting stage in the organisation’s planning and development, as we work collaboratively on new opportunities to support and provide quality service to our diverse membership and client base. An experienced and skilled marketing and business development manager, with a track record of achievement through building sound professional relationships, Caroline brings a diverse range of skills, knowledge and experience to the role and a strong interest in enhancing the value provided to NZIM Southern’s membership. Caroline’s strengths in strategy and communication will support marketing initiatives to lift the profile and brand of NZIM Southern as the provider of choice for the delivery of leadership and management programmes. Her experience in supporting the delivery of innovative solutions that produce lasting benefits for organisations and communities has been honed through participation at an executive level throughout the corporate, notfor-profit and arts sectors. Caroline, her husband and two daughters have lived in Christchurch for 17 years and the

Caroline Johnson.

family has put down strong roots in the South Island, she says. To contact Caroline email caroline@ nzimsouthern.co.nz or phone 03 341 7707 029 770 9668.

NZIM/EAGLE TECHNOLOGY YOUNG EXECUTIVE OF THE YEAR SOUTHERN REGION 2012

he NZIM/Eagle Technology Young Executive of the Year Award has been a signature event for aspiring young leaders throughout its 17year history. We are grateful for the ongoing commitment made by our generous partners at Eagle Technology. The 2012 event was memorable for the quality of our nominees and for the pithy and amusing insights they shared with us on the night. Each amply demonstrated their worthy nomination for the award, which is designed to recognise outstanding individuals and showcase the impact their management skills and their dedicated leadership has had on the organisations and communities they serve. We were delighted to present the trophy to our 2012 Southern regional winner – Shane Gordon, business development manager for Westland Milk Products. Shane is an experienced business development manager who is consistently realising personal, operational and commercial growth potential throughout his organisation and boasts a wealth of strategic operational management and transformational leadership skills. Our congratulations also go to all our regional finalists, Kauahi Ngapora, chief operating officer for Whale Watch Kaikoura, Kate Scott, managing director for BTW South and Sean Cuddihy, international business manager for Solid Energy. We were proud to present a field of this calibre for selection on behalf of the Southern Region. We are confident that Shane will demonstrate the same confidence and expertise that secured his regional success when he meets his counterparts for the national award during the Deloitte/Management magazine TOP 200 Awards in November. Focus on Management

NZIM Southern CEO Joseph Thomas (left) congratulates Shane Gordon.

Our sincere thanks to our judges Bill Tate, Cathy Hemsworth and Gordon Richards for their talent selection and to our enlightening guest speakers – Dan Coward, (2009 regional award winner and Deputy Chair of NZIM Inc) and Matt Carter (2011 regional award winner).

AUCKLAND

WELLINGTON

For more information phone 0800 800 694 or visit www.nzim.co.nz

For more information phone 0800 373 700 or visit www.nzim.co.nz

OCTOBER

Think on your Feet Project Management Advanced TetraMap: The Nature of Behaviour Assertiveness Skills Project Management Fundamentals Manage Effective Workplace Relationships (DFM) Effective Business Writing 12 15 Conducting Effective Meetings 15-16 Advanced Leadership (Dip Mgt Adv) 16-17 Interpersonal Communication Skills 16-17 Managing Performance (HR2) 18-19 Management Through the Lens of Gender 20-21 Essential Sales Fundamentals 29-30 Marketing Planning & Control (Dip Mgt Adv) 31-2/11 Building Effective Teams (Team Leader 2) 8-9 8-9 9 10-11 10-12 11

NOVEMBER Starts National Certificate in Business, L3 Starts National Certificate in Adult Education and Training, L4 Facilitation Skills 1-2 1-2 Problem Solving & Decision Making 6-7 Needs Analysis & Programme Design Accounting for Non-Accountants 7-9 8-9 Corporate Storytelling with Wade Jackson Effective Business Writing 12 12-13 Change Management (Dip Mgt Adv) 12-13 Introduction to Supply Chain Management 14-15 Negotiating for Results 14-16 Leadership, Motivation and Team Building Lean Six Sigma: Yellow Belt 16 19-20 Operations Management (Dip Mgt Adv) 19-20 Implementing Aligned People Strategies (HR3) 20-21 Dealing with Difficult Behaviours 21 Emotional Intelligence 21-22 Business Finance (Dip Mgt Adv) 26-27 Coaching and Mentoring DECEMBER 3-4 3-5 3-5 5-7

10-11 10-11 12

Sales Management Introduction to Management Project Management Fundamentals Operational Management (Team Leader 3) Presentation Skills Human Resource Management (HR4) Facilitate Continuous Improvement (DFM) Facilitate and Capitalise on Change and Innovation (DFM)

8 Managing Your Time

SOUTHERN

For more information phone 03 379 2302 (Christchurch C), 03 455 5165 (Dunedin D) or 03 218 7451 (Invercargill I & Queenstown Q) or visit www.nzimsouthern.co.nz

OCTOBER

10 Winsborough Series, Part 2 â&#x20AC;&#x201C; Good Managers

15-17 Four Quadrant Leadership C

11 Customer Service Skills

18-19 Accounting for Non Accountants Stage 1 C

15 Memory and Mind Mapping

18 Managing Stress I

16 Social Media: Big 4 Overview

19 Courageous Conversations Q

16-17 Building a Business Case

24-26 Team Leader: Building Effective Teams C

Ensure Team Effectiveness (DFM Modular)

25-26 Building Relationship Versatility I

18-19 Change Management (Dip Mgt Adv)

25-26 Presentation Skills C

23-24 Business Finance (Dip Mgt Adv)

29 Problem Solving and Decision Making C

23-24 Developing Influencing and Motivation Skills 29-30 Presentation Skills 29-30 Strategic Management (Dip Mgt Adv) 31 Emotional Intelligence

NOVEMBER 1-2 Developing a High Performing Team 5-6 Assertiveness Techniques 6-7 Introduction to Marketing (Cert in Management) 8-9 Interpersonal Communication Skills 12-13 Human Resource Management (Dip Mgt Adv) 12-14 Project Management 15 DFM Project Day 15 Advanced Training and Facilitation Skills 15 Diploma in Frontline Management (Starts) 16 Manage Personal Work Priorities & Professional Development 19 Manage Risk (DFM Modular) 19-20 Key Account Management 20 Training Evaluation (NCAET) 21-22 Problem Solving and Decision Making 23 Lean Six Sigma: Yellow Belt 26-27 Marketing, Planning & Control (Dip Mgt Adv) 28 TetraMap: The Nature of Behaviour 28

Introduction to Management (Starts)

29 Process Mapping & Continuous Improvement I 30 Project Management I

NOVEMBER

1 Project Risk Management I 2 Report & Proposal Writing I 5-7 Team Leader: The Essential Skills C 6-7 How to Manage and Lead Successfully I 7 Delivering Great Customer Care D 7 How to Handle Difficult Customers D 7-8 Negotiation Skills I 8 How to Manage Your Manager & Your Office D 8 Effective Delegation C 9 Interpersonal Communication skills C 12-13 Introduction to Performance Management C 14-15 Building Relationship Versatility C 15 Audit Training I 15-16 Strategic Planning C 19-20 Negotiation Skills C 20 Effective Use of Time I 20-22 Four Quadrant Leadership D 21-23 Four Quadrant Leadership with Wilf Jarvis C 26-27 Business Finance I 27-29 Team Leader: Understanding NZ Employment Law C 28-29 Practical Project Management C

29-30 Facilitation Skills

29-30 Corporate Finance C

DECEMBER

3-5 Team Leader Skills: Build Effective Teams (Cert in Business) 10-11 Advanced Negotiation Skills 13-14 Leadership (Dip Mgt Adv) 13-14 Applied Management (Dip Mgt Adv) 16 Develop a Workplace Learning Environment (DFM Modular)

5 Effective Use of Time C 6-7 Coaching for Performance C 10-11 Accounting for Non Accountants Stage 2 C 10-12 Team Leader: Building Effective Teams C 14 Business Ethics C

Focus on Management

INSPIRING MANAGERS Our aim is to build management capability through membership, development and research.

OUR FOCUS IS TO: • Research leading management trends and practice and promote a constantly developing model of best management capability for New Zealand. • Enable managers and aspiring managers to participate in learning programmes, mentoring, and events that provide the information and experience they need to develop their capability. • Identify leading management role models and provide awards that recognise the career and educational achievements of managers.

MEMBER PROFILE:

Lee Hare

Lee Hare ANZIM is the franchise director of the Quest Hamilton Serviced Apartments.

y background is in strategic management and marketing. With strategic management you can fit into any industry. My first job was with PwC – I went there to do marketing but got more and more involved in tax and finance. From there I went on to work for an event management company in New Plymouth,and then was the marketing specialist for IT company Panztel in Tauranga. I did that for three years before taking on the opportunity to buy the Quest franchise in Hamilton last year. After three years with Panztel I was looking for the next step in my career, tossing up between operations management or buying my own business. I was pregnant with twins when I bought the Quest, people thought I was crazy! But my partner Damian and I worked it all out – I stayed at home (on site at Quest Hamilton) working on the business until January and then Damian stayed home while I ran the business. We’re both working now but it’s definitely full on. I’m also doing a postgraduate Diploma in Business Administration and a Masters in marketing extramurally. I liked the idea of the Quest being a new rather than an established business, even though it’s more challenging. When it’s your own business you give it 110% that’s for sure! I love procedures and processes and that sort of thing, and I had six months to do a lot of that before we opened. As well as the business side I’ve worked very hard to secure good clients, and we’ve also done quite well with corporate events. I first got involved with NZIM after I finished at university, and became an Associate Member in 2009. I thought it would be really beneficial to develop professionally and to develop my skills, knowledge and experience, particularly in the area of people and personnel management. The only reason I’m not doing any NZIM courses is because I’m still studying extramurally, but I definitely will study through NZIM – I think I’ll be studying forever, because I love learning and new knowledge, particularly outside strategic management and marketing. I also wanted to take advantage of NZIM’s mentoring. I did a 12-month mentoring programme through NZIM Northern last year, when I was trying to decide whether to move to another company in a similar role or tackle something quite different. It was really good to get opinions, feedback, and advice about my role and directions from my mentor Darius Singh. I met him once a month and it was really helpful because through that time I was working on resolving issues between the company’s marketing team and the IT team.

Darius also nominated me for this year’s Young Executive of the Year Award and I was a Northern region finalist. Going through the questionnaires and the judging process enabled me to reflect and gain more insight into what I’ve been doing and where I’m going, and getting the feedback from the judges is really beneficial. I love getting feedback, particularly things to improve on, and YEOY was a really good experience from that point of view – also listening and hearing about the other finalists. There are so many talented individuals out there doing such good work. I definitely would recommend entering YEOY from the point of view of building your self-knowledge, and getting to meet and hear the stories of the other impressive people. It all helps in what you want to do next, your personal and professional development. Another thing I did in Tauranga was develop Bay Young Professionals Inc (www.byp.co.nz), which we launched last year. I like going to events, seminars, conferences and networking and there didn’t seem to be anything in Tauranga like that, so I got together a committee, and we worked together, pulled together sponsors – ASB is the major sponsor, Mediaworks and other companies were all keen to jump on board too. The difference with BYP is that it’s aimed at 100% of the market, no matter what your job. There are a lot of networking organisations that are focused on the corporate sector. I felt it would be more beneficial if it worked for everybody, including non-corporate industries likebuilding, beauty therapy, farmers, that would normally never go to those events. We also focused on polytechs and school leavers entering the workforce. There’s no alumni organisation for polytechs when they’ve finished, so BoP Polytech became one of our partners. It’s somewhere school leavers can network and maybe get jobs as well. An important focus for BYP is the fact that everybody does the training for their trade but this only covers technical skills, not how to run your own business, or management and people skills. So by the time they get the opportunity to be managers they have to turn around and start studying again. Everybody wants to move up the ladder and become managers, or business owners, so they should be doing some sort of business studies, including management and marketing skills right at the start, on their trade course, whether it’s hairdressing, building or whatever. That’s where New Zealand is falling behind – we need successful managers, but we need to encourage them from the beginning, so that by the time people come to be management they already have some knowledge behind them. That’s why BYP is aimed at running events focusing on those areas for people in trades. The Waikato Chamber of Commerce has approached me about getting involved with their Young Professional group in Hamilton which I’m definitely going to do. There’re always opportunities out there. I think people can do whatever they want to do, if you put your mind to it. It’s never too late to change what you’re doing but you have to have the right mindset, and there has to be an action plan to get where you want to go!

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