4
NZ MANAGEMENT SPECIAL: YOUR GUIDE TO PROFESSIONAL DEVELOPMENT PAGE 42
management.co.nz
MADE IN NEW ZEALAND
NE
ADE N ZEALAN
INNOVATION NATION Myth or reality? p24 MAY 2012 $7.10 INCL GST
MAY 2012
THE RISE AND RISE OF THE SELF-SERVING LEADER P20
Thomas Friedman: Economy lessons from America p32 Cracking the ad code p36 My MBA: Students tell it like it is p38 The Director p57
9 421902 251030
On target management drives productivity! “There are two and only two ways to grow an economy – either increase your working age population or increase productivity.” John Mauldin, Author Endgame and investment guru
“Enhanced productivity is the outcome of sustained (workplace) improvements and best practice management.” Murray Sherwin, Productivity Commission Chair
The NZIM Management Capability Index (MCI) can help you benchmark your organisation’s management capability against other New Zealand and International organisations.
Call us today to talk about running the MCI in your organisation. www.nzim.co.nz | 0800 373 700
Image: thinkstockphotos.com
MCI can help showcase areas of great performance and identify any areas for improvement.
Partnering for added oomph
H
ere on NZ Management magazine it’s part of our purpose to nail to the wall what good management and leadership is all about. Truth be told, sometimes it’s easier to point out what the bad stuff looks like. But that’s a whole other story. So we spend our days in pursuit of answers to questions like who’s good at managing and leading? What can we learn from those people and organisations who get it right? What are our collective strengths and weaknesses as Kiwi managers and leaders? How do we compare with others overseas? So, we’re proud this month to be launching this year’s campaign to find New Zealand’s Most Reputable Organisation. As with so many of our big-picture initiatives we’re partnering with a specialist provider for their added knowledge, expertise and bucket-loads of oomph. We’re teaming up with global management consulting firm Hay Group to entice business leaders the length and breadth of the country to share with us their pick of Kiwi organisations with rock-solid reputations. For the first time, too, as part of our combined nationwide survey we’re probing for additional insights into both leadership and diversity, both of which rank as significant challenges for New Zealand managers. Business leaders have until 1 June to fill out the short survey. (For more details, see the article “Have your say” on page five of this issue.) We’ll be revealing the final results in a series of exclusive
articles in our September edition. We’re also in the final throes of calling for nominations for this year’s NZIM/ Eagle Technology Young Executive of the Year Award. Now in its17th year, this award identifies new talent rising through the managerial ranks, and serve as a heartwarming celebration of current and future potential. (For more details see the article “Top young execs” on page six and the advert on page 31 of this issue.) Business leaders have until 18 May to nominate their young executives for this award. Other initiatives are underfoot: not least of which are the Deloitte/ Management magazine Top 200 Awards which will this year culminate in a gala dinner on November 29. Expect more, much more, about this in future issues. Expect, too, news of another initiative which, although still currently under wraps, will take the magazine in a bold new direction. Meanwhile, I’m just going to continue enjoying being part of a wider community of managers and leaders who care about what’s happening in our small part of the planet, who are prepared to share their ideas and inspirations, and who, most of all, love to celebrate their own and others’ achievements.
Ruth Le Pla, Managing Editor
www.management.co.nz A MEDIAWEB MAGAZINE PUBLISHER Toni Myers MANAGING EDITOR Ruth Le Pla editor@management.co.nz CONTRIBUTORS Reg Birchfield, Jo Brosnahan, Bob Edlin, Colin James, Vicki Jayne, Paul Johnson, Shaun McCarthy, Iain McCormick, Vivienne McLean, Sherry Maier, Tim Nichols, Peter Tynan, Nick Wheeler ADVERTISING MANAGERS Rod Myers, 09-372 6444, 027-484 8046, admanager@management.co.nz 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
Phone 09-529 3000, Fax 09-529 3001 enquiries@mediaweb.co.nz www.mediaweb.co.nz PO Box 5544, Wellesley Street, Auckland 1141
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.
Vol 59 No 4 • ISSN 1174-5339 (Print), 1179-3910 (Online)
MAY 2012
| management.co.nz | 1
contents New series: Stories of NZ enterprise success Vicki Jayne’s eight-part sector-by-sector review of the underlying drivers of success in key parts of the New Zealand economy. This month: manufacturing.
NE
24 COVER STORY
Made In New Zealand
ZEALAN
INNOVATION NATION
Innovation Nation – Myth or Reality? Despite capricious currencies, low-wage competition and financial crises, New Zealand’s manufacturing is learning its role as a mainstay of our economy. Can its trademark innovation also put some serious grunt behind our GDP growth? Vicki Jayne checks out the manufacturing challenge.
ADE N Myth or reality?
1
EDITOR’S LETTER
4
INBOX: News and views
12 FOCUS 14 AS I SEE IT: Paul Johnson 15 MANAGERS ABROAD: Nick Wheeler 16 NZIM: Cause for concern Reg Birchfield 54 EXECS ON THE MOVE 55 EXECUTIVE DEVELOPMENT OPINION 18 POLITICS: Lurking laws of budgets and taxes Colin James 19 ECONOMICS: Independent panel signals switch Bob Edlin
15
20 LEADERSHIP: Rise of the self-serving leader Reg Birchfield 21 THOUGHT LEADER: Manage the damage Tim Nichols 22 BOOKCASE: The Enemy of Engagement; Walmart in China Reg Birchfield, Ruth Le Pla ADVICE 53 EXEC HEALTH: Lifting our game Peter Tynan 56 TOP TIPS: How to give constructive feedback Shaun McCarthy
MAY 2012 • Vol 59 No 4
features 32 Face to Face: Thomas Friedman – lessons from the US
32
New Zealand can learn much from America’s current economic and political plight says US Pulitzer Prize winning author Thomas Friedman. He told NZ Management’s Reg Birchfield we should focus on five fundamentals.
36 Advertising: Cracking the ad code
What makes an advertising agency great? It’s much more than just the creative work. The 2012 Fairfax AdMedia Agency of the Year Awards judged the business side of agency performance. By Ruth Le Pla.
38 Professional Development: My MBA
Blood, sweat and cheers. Undertaking an MBA is a transformational process. But is it worth it? Vivienne McLean finds out.
36 16
42 Professional Development Guide
Bi-annual guide for smarter leaders.
The Director 58 Kerryn Downey: Receiving confessions Reg Birchfield 60 Building better boards Reg Birchfield 61 Director fee realities Sherry Maier 62 Design and build governance Jo Brosnahan 60
64 Better board evaluation options Iain McCormick
18
58
M
INBOX
Photo: thinkstockphotos.com
BEER BELLIES & BINGO WINGS Finally, some good news on becoming middle aged. There’s a purpose behind all that flab and sag, if we’re to believe the comforting ideas of Cambridge University’s Dr David Bainbridge. In his latest book Middle Age: A natural history Dr Bainbridge says that far from being on the slippery slope to life’s final exit door, nature has designed middle age as a distinct and purposeful time of life for humans. We’re at the “pinnacle of evolution”, designed in our 40s and 50s to pass on our accumulated skills and knowledge, and play a vital role in society. Freed from the pressures of child-bearing and relatively unencumbered by the aches and pains of old age, middle age is “a time of perfect balance between cognition and emotion”, says Bainbridge. We may lose at tennis to our kids now but we “compensate by using our brains differently to improve skills like long-term planning and managing projects”. Bainbridge is both a reproductive biologist and a veterinary surgeon, comes fully equipped with a zoology degree, and concludes in his book that middle age is a distinct stage of life rather than a gradual grey descent into saggy bottomness. It’s a “controlled and preprogrammed process not of decline but of development”. He also argues that changes happen abruptly – “certainly too fast to be part of some gradual, cumulative, senescent degeneration” – and that, biologically speaking, being middle aged is unique to humans. Presumably, there are no middle aged dogs running around? Bainbridge “provisionally” defines middle aged people as those in
4 | management.co.nz | MAY 2012
their 40s and 50s and acknowledges this is an arbitrary definition. “If you ask a doctor to define middle age they will probably talk about the menopause,” he writes. “If you ask a sociologist, he may mention empty nests and tolerating teenagers. If you ask an economist, she will explain career-peaking, maternal return to work, and provision for old age. If you ask a friend, he might tell you it was the moment he looked into the mirror and realised he was turning into a replica of his parents. But do any of these things really define middle age any more?” Pulling together strands from anthropology, neuroscience, psychology and reproductive biology, Bainbridge says that, for him, the essence of middle age is “best defined by the questions that might cross the mind of a middle-aged human in the middle of the night”. “Am I becoming biologically worthless? Am I getting ill more? Am I ageing at the same rate as other people? What did I develop that complex personality for, exactly? Have I improved my circumstances since I was a child? Should I save for my children’s inheritance or my own old age? Have I left it too late to have children? “Am I unhappier than I used to be? Why are the social rules no longer my rules? Should I want to buy a motorbike and run off with a model? What do I do now the kids have left/are leaving/won’t leave? Who is this person lying peacefully asleep next to me and why do we two not love as we used to?” Writing in New Scientist magazine he says: “The multiple roles of middle-aged people in human societies are so complex and intertwined, it could be argued that they are the most impressive living things yet produced by natural selection.” Feeling better now? Get out and sport those wrinkles. Botox be damned! M
INBOX
M
RESEARCHERS CLUB TOGETHER New Zealand’s largest custom research agency TNS New Zealand has merged with Research International. The move is the result of a global integration of the two brands that are both part of WPP, the world’s largest communications group. The Research International (RI) brand has been retired. TNS specialises in advising clients on specific growth strategies around new market entry, innovation, brand switching and stakeholder management. The company has a presence in over 80 countries and is part of Kantar, one of the world’s largest insight, information and consultancy groups. The integration process has been underway since 2009 in countries in which both TNS and RI operate. M
HAVE YOUR SAY Once again, Hay Group and NZ Management are partnering to identify what it takes to be recognised as one of New Zealand’s most reputable organisations. This year’s Most Reputable Organisations (MRO) survey is now open and, for the first time ever, respondents can share their insights into New Zealand’s leading professional services organisations. Also for the first time, New Zealand’s senior business leaders are being asked to nominate ‘companies to watch’ in the next five years. Additional quick-fire questions probe for insights into leadership and diversity, issues which have been identified as among New Zealand’s most pressing challenges. This year’s survey builds on previous work in which respondents selected New Zealand’s most reputable company, state owned enterprise, government department and not-for-profit organisation.
The survey opened on 1 May and will close on 1 June. Results will be published exclusively in the September edition of NZ Management. The survey is open solely to New Zealand senior executives. They may come from all sectors and industries. The survey provides a clear insight into what senior New Zealand business leaders consider to be our country’s most highly reputed organisations and why. Existing Hay Group research shows that a strong organisational reputation and respect from peers is a clear differentiator of financial performance and often a strong predictor of future organisational performance. Participants in the MRO survey are given the opportunity to rank organisations of their choice across a wide range of criteria including levels of innovation, organisational structure and strategic objectives. Other criteria include leadership, operating models and vision for the future. To register for the survey or for more information, contact Hay Group on 0800 429 477, or haygroup.nz@haygroup.com M
Sales Manager™ starts 11 June Our next Sales Manager performance improvement programme will be held at SIP starting 11 June. If you are serious about improving the performance of your team, this programme is the answer. To find out more, call us today or visit our website.
Helping New Zealand’s best performers go further 09 522 9409 | www.steel ip.com
MAY 2012
| management.co.nz | 5
M
INBOX
NEW DIRECTIONS Career management firm Directioneering is extending its AsiaPacific reach by opening new offices in Wellington and Singapore. Directioneering provides assistance to blue chip and top 500 companies in executive career transition, career coaching and leadership development. It already has offices in Auckland, Sydney, Melbourne, Brisbane, Adelaide, Perth and Canberra. M
Asia through Kiwi eyes A recent snapshot of public opinion surrounding New Zealand’s relationship with Asia paints a largely positive picture. When independent thinktank Asia New Zealand Foundation asked research group Colmar Brunton to test the waters once more this year, it found that more than four out of five (83 percent) of us see the Asian region as important to New Zealand’s future. The group’s report, “New Zealanders’ perceptions of Asia and Asian peoples in 2011”, shows public perceptions of the importance of Asia to New Zealand are now at an all-time high. They continue to outstrip ratings for all other regions. Europe, for example, rated as most important for just 69 percent of the survey’s 1105 respondents. North America: 59 percent. Colmar Brunton cautioned, however, that surveys reflect the wider context in which they are conducted. This latest research may have benefited from a halo effect of positive feelings towards a post-tsunami Japan and the warm glow of Rugby World Cup international attention. When asked whether they think New Zealanders feel warmer, about the same, or less warm towards Asian people compared with the previous 12 months, 21 percent went for the warm factor. Just 12 percent did the previous year. For a full copy of the report: tiny.cc/cquxcw M
Top young execs Senior business leaders have until 18th May to nominate their up-andcoming execs for this year’s NZIM/Eagle Technology Young Executive of the Year Award. Established by NZIM and NZ Management, the award celebrates young executives’ roles in influencing, growing and providing strategy and direction in their organisation. Now in their 17th year, the awards recognise stand-out individuals who are prepared to go beyond perceived limitations, and strive for personal and organisational excellence. All nominees are entered into the regional awards – Northern, Central and Southern. The winners from each region are announced at NZIM functions in Auckland, Wellington and Christchurch. The three regional winners become finalists for the NZIM/Eagle Technology of the Year Award 2012. The overall winner will be awarded the Young Executive of the Year Award for 2012 at the Deloitte/Management magazine Top 200 awards dinner on November 29. The nominator is required to write 1000 words on the nominee’s attributes and contribution to the organisation. All nominees must have New Zealand citizenship, have been employed by the nominator’s organisation for more than six months, hold a middle or senior management position, and be 35 years of age or younger as at 31st December 2012. M To register and for any more information: • Contact Nardine Sleeman, NZIM’s general manager membership and communications. Phone: 04 495 8300, nardine_sleeman@nzimcentral.co.nz Last year’s • Nomination forms from NZIM: winner Hamish tiny.cc/09owcw McBeath.
Manage your Taxi Spend with Innovation and Technology 6 | management.co.nz | MAY 2012
tel: 09 306 1790 email: enquiries@taxicharge.co.nz
INBOX
M
HAVES AND HAVE NOTS Growing income disparities threaten to undermine the economic success of developing Asia unless the benefits of growth are shared more widely, according to the Asian Development Bank’s recent annual trawl through the region’s economies. “Asian Development Outlook 2012” checks out the 45 economies in Asia and the Pacific that make up developing Asia. It says the region has made great strides in raising living standards and reducing poverty but warns that policymakers need to step up their efforts to even out incomes. The report finds that developing Asia will largely maintain its growth momentum in the next couple of years despite weak global demand. From a moderate 7.2 percent in 2011, growth in the region will ease to 6.9 percent in 2012 before picking up to 7.3 percent in 2013. “The greatest risk to the outlook is uncertainty surrounding the resolution of sovereign debt problems in the Eurozone. But in the absence of any sudden shocks, developing Asia can manage the effects on its financial markets and trade flows. “There is no clear case for policymakers in the region to pursue short-term fiscal or monetary stimulus measures.” Inflation for most regional economies subsided in the second half of
Downtown Bandar Seri Begawan, Brunei Darussalam.
2011 as international commodity price rises slackened, but threats of oil supply disruptions risk further price spikes. Volatile foreign capital flows remain a concern as investors shift their risk perceptions in response to the changing global environment. M
Deep down everybody would love to be voted best boss... Doing the right thing by your employees counts. It’s often the little things that make a difference. Fruit bowls, car parks, KiwiSaver. That’s right KiwiSaver. Do you think your employees understand how much of a contribution you are making to their future? KiwiSaver plays an important role in attracting and retaining important staff. Its flexibility, simple administration and savings incentives mean that almost everyone is better off by participating. Fisher Funds would be pleased to work with you to help your employees be more informed and make better decisions about KiwiSaver, personal finance and life in general. If you’d like to bring out the best in your employees and be recognised as the best boss contact Noah Hickey on 09 484 0354 or email noah@fisherfunds.co.nz An investment statement is available online at www.fisherfunds.co.nz Carmel Fisher Managing Director
MAY 2012
| management.co.nz | 7
M
INBOX
Letters to the editor I read with interest your story in the March edition of NZ Management magazine – “Parched Planet”. I agree with you about water. It is undoubtedly the precious resource of the future. To that end I set up a small private investment company some years ago and one of the investments we made was in a water purification technology that treated waste water streams without chemical intervention. There is no doubt that water, whether it is the contamination of water in the globe’s lakes and rivers or whether it be the need for the human body to consume quality water, is the challenge of the future. The rapid industrialisation of the modern world has caused many of our waterways to be contaminated by industrial waste. In New Zealand the adverse effects caused by our primary industry have seen a rapid deterioration in the
I read with interest Reg Birchfield’s February and March 2012 issue commentaries: “Solving NZ’s productivity puzzle”, “Simply productive... but needs managing”, and “How to boost productivity”. It’s great to see the conversation opening up. Here’s hoping plenty of managers read these articles and even more importantly – do something. Both Reg and the contributors to these articles make valuable points about increasing productivity. Yet I’m not sure if the biggest challenge has been overcome: that is, explaining what productivity is to the people who need to be involved with it (ie, everyone down to the new recruit) and how it can be achieved. The rhetoric that ‘we need to increase productivity’ continues to send the signal to the workforce that they aren’t working hard enough and that in every business/sector increased productivity has no upper limit. While you, your contributors and I understand that is not necessarily the case, that message is not getting through. We are therefore missing the opportunity to get everyone engaged and enabled. As organisations and as a nation we will fail to realise the gains urgently needed unless we (1) stop the blame-game of whose fault low productivity is, (2) there is a serious education of the marketplace of what productivity is (which the Commission says is not its job) and (3) do something. Policy advice (the commission’s role according to Murray Sherwin) is the why and the what. At a higher level this is understood. But organisations and managers are looking for a basic understanding of how productivity affects them and how they do it. In wanting to throw some practical (how) exposure into the frame, here at Lincoln, since 2011, we have been researching the link between Organisational Social Capital (OSC – the amalgam of communication, 8 | management.co.nz | MAY 2012
lakes and rivers. In recent times we have seen the establishment of the Waikato River Authority (WRA), a statutory body charged with the responsibility of cleaning up the Waikato River. A long-term funding commitment from the Government is the beginning of a raft of government initiatives aimed at cleaning up our fresh water environment. Iwi have a significant role to play in the restoration process and, significantly, they hold key positions in the WRA. I am sure that they will be searching for technologies that can improve water quality without chemical intervention. The future of our waterways is dependent on the ability to treat waterways in a way that does not add to the problem and can see to the survival of wildlife and natural habitats for they are the true barometer of ecological balance where all stakeholders can find comfort in the solution; industry, statutory bodies and the people of the land. – Brian Rankin, chairman, Converging Capital Limited (CCL) and Converging Equities Limited (CEL)
commitment, influence, trust and social relations), and increasing productivity in the service sector. We’ve been looking at hotels in particular. The service sector is a victim of the Baumol Effect, which basically says in some areas you cannot exponentially increase productivity without changing the activity’s intent. As everyone is part of NZ Inc we need to accept that some industries can’t grow productivity at the same rate of others, and that’s okay. But this is not the message that is being presented. I’m not suggesting that the service-economy (or any other Baumoleffected industry) should receive special dispensation and can’t increase
INBOX
productivity, but rather we have to accept that the rate of improvement and different productivity enhancers will be different in different sectors. Yet again, this message is not getting out there. Our research set out to benchmark where the industry is at so that it knows where it can lift from. It focuses on soft-productivity-enhancers – humans. This enabler is harder to engage (the how) than those sectors where technology can be a mainstay of productivity enhancement, for example agriculture. It shows that there is considerable room for productivity enhancement if hotels could improve their overall OSC level, but use all other enhancers as well including technology where appropriate. We are now in the middle of highlighting the how – the enablers that industry is looking for, yet
we accept that it will be up to individual organisations to take these on board as they see fit. I’m all for policy advice and ongoing discussion about productivity but time is marching on. If NZ Inc is to make a contribution to the nation’s economy soon we have to start educating and benchmarking, and use our resources to develop tools that will help organisations lift their productivity – less talk and more action is urgently needed. Again, thanks for keeping this topic in the managerial space. I look forward to reading your next commentary of this very important topic. – Dr Anthony Brien, senior lecturer business management, Department of Business Management, Law and Marketing, Faculty of Commerce, Lincoln University
I was interested to browse your July 2011 magazine. “The looming crisis” caught my attention, as did the whole tone of your magazine. I recommend you all read “Start-up nation: The story of Israel’s economic miracle” (by Dan Senor and Saul Singer). The authors investigate the how and why Israel has been able to cre-
ate very many more start-up businesses than any other nation/country. And they investigate the context (political and social) in which it happens. There is much food for thought in that book. Happy reading. – JA Yager, Gisborne
MAY 2012
M
| management.co.nz | 9
INBOX
M
THE ATTRACTION OF SATISFACTION 2011 ANNUAL AWARD WINNERS: Finance Financial Institution of the Year_____________ SBS Bank Major Bank of the Year___________________ Kiwibank Travel & Tourism Domestic Airline of the Year_ ______________ Air New Zealand International Airline of the Year_____________ Singapore Airlines Hotel of the Year_ ______________________ Novotel
Michele Levine.
Customers across a wide range of business sectors have made it abundantly clear what does, and doesn’t, impress them. Their feedback sorted out who got the gongs at the inaugural New Zealand Annual Roy Morgan Customer Satisfaction Awards held in Auckland recently. Michele Levine, CEO of Roy Morgan Research, says customer satisfaction is absolutely vital to every New Zealand business, “particularly in the new age of social media where any negative customer interaction can literally be broadcast to thousands of people virtually instantly”. She says the rankings and subsequent awards are the result of a single question – the same question across numerous categories – which asks consumers to rate products and services they have used on a five-point scale. The awards are based on Roy Morgan Single Source which surveys over 12,000 New Zealanders annually.
Retail Coffee Shop of the Year_ _________________ Clothing Store of the Year_________________ Department Store of the Year_ _____________ Furniture/Electrical Store of the Year_ ________ Hardware Store of the Year________________ Liquor Store of the Year_ _________________ Music/Book Store of the Year_ _____________ Pharmacy of the Year____________________ Quick Service Restaurant of the Year_________ Shoe Store of the Year_ __________________ Sports Store of the Year_ _________________ Supermarket of the Year__________________
Muffin Break Postie Kirkcaldie & Stains Harvey Norman Bunnings Liquorland JB Hi-Fi Unichem Subway Hannahs Hunting & Fishing Pak ’n Save
Telecommunications Home Phone Provider of the Year_ __________ Internet Service Provider of the Year_ ________ Mobile Handset of the Year________________ Mobile Service Provider of the Year__________
Vodafone Paradise Apple iPhone 2degrees
Utilities Electricity Provider of the Year______________ Energy OnLine Gas Provider of the Year__________________ Genesis Energy Automotive Car Manufacturer of the Year_ _____________ Suzuki
JUNE & JULY 2012 • The Future of NZ Enterprise: Primary Sector • Focus on Wellington • KEA World Class NZ Awards
JULY
JUNE
SPECIALFEATURES • The Future of NZ Enterprise: Construction / Engineering • Motor Vehicle Leasing • The Director
ADVERTISING BOOKING DEADLINE 5TH OF MONTH PRIOR
10 | management.co.nz | MAY 2012
For further information contact Rod Myers on 0-9-372 6444, 027 484 8046 or email admanager@management.co.nz
Always investigate the unexpected. That’s how ASB Institutional creates game-changing ideas for NZ businesses. Developing the deepest understanding of our clients and their business helps uncover unforeseen opportunities. Aiming our strategic recommendations directly at the areas of maximum potential growth accelerates business performance. While we have powerful, resourceful and enormously experienced Commonwealth Bank connections, our local structure makes sure things get done fast. So don’t be satisfied with the status quo. Be more ambitious. Talk to ASB Institutional now for total capital solutions and businesschanging ideas.
PLUS A LOT THAT IS FRACTIONALLY BETTER.
David Bell, General Manager Global Transactional Banking
ASB Institutional is an undertaking of ASB Bank Limited and Commonwealth Bank of Australia (incorporated in Australia, ABN 48 123 123 124) | asbinstitutional.co.nz
FOCUS
M
1
2
3
4 Westpac Auckland Central Business Awards launch
5
6
1 Simon Parr (Westpac), Paul Kane (Grant Thornton NZ) and Roger Partridge (Bell Gully). 2 Martin Baker and Ross Rooney (Sharp Signals). 3 John Milner (Britannia Financial Services), Kelly Marsden and Michaiah Simmons (both Deluxe Events & Promotions). 4 Diana Petrie (Diana Petrie & Associates), Praneeta Chandra, Nigel Watson and Paul Keogh (all Westpac). 5 Fiona Driver and Rod Marler (both Driven Events). 6 Gerald Delany (Auckland Advisor) and Ken Holmes (Advice First).
Spotlight on Myanmar: ASEAN NZ Combined Business Council 1 Denis Win Thein (Winmin). 2 Stuart Walbridge (ASEAN NZ Combined Business Council). 3 David Catty (ASEAN NZ Combined Business Council). 4 Parry Morarji (Magellan Asset Management) and Philip Weir. 5 Denis Win Thein (Winmin) and Stuart Walbridge (ASEAN NZ Combined Business Council).
1
2
3
4
12 | management.co.nz | MAY 2012
5
Advertorial
EXPERIENCE backed up by
MBA
A
ir New Zealand’s manager of Australasian Koru lounges has backed up more than a decade of on-the-job experience with a University of Auckland MBA. Verity Jade thrives under pressure and sought the qualification to prove to herself she could achieve it, but also to learn some “formal tools.” “The ability to spend a couple of years with some like-minded people and be in a classroom environment was really attractive. And I like do to things in a hurry, so the two-year programme really suited me.” The 33-year-old left school after sixth form, gained a diploma and made a career in travel in tourism including six years as a flight attendant. She hadn’t considered a career in management when she moved into an executive assistant role, which she says “really opened my eyes.” After moving into project and then line management, Jade now has a team of about 30, plus contract staff. She’s a natural and perceptive manager, who draws from her observations of a “high performing general management team” during her time as an EA. “I’m myself as a manager - I don’t try to be something that I’m not. And I’m lucky to be surrounded by like-minded people who want to achieve great results.” Jade is constantly benchmarking and has a passion for profit and loss accountability. “It’s good to see return on investment, and to challenge how you can develop better measures and customer metrics for marketing.” She says it’s imperative to keep close to customers and runs two inboxes to ensure she’s always accessible. Jade is also constantly in touch with her staff, sometimes joining them for shifts to test out new process. “There’s nothing like having walked in their shoes,” she says. “I won’t ask my team to do something that I wouldn’t be prepared to do myself. But one of the biggest challenges at work is to know that not everyone runs at the same pace as me, and not everyone wants to.” The MBA had an impact on Jade’s approach almost straight away, and she says the case-based learning is very useful when it can be applied to your own business. “I think the way the MBA is structured…you have to have a certain amount of business experience.” “From the first paper, I started to think about the business in a different way, from a different angle.” Her major MBA research paper is about investigating customer perceptions of the Koru brand, as it relates to lounges. And with a month to go, she has enjoyed the real-time learning and made some lifelong friends. Her cohort recently returned from its class trip to China, where they worked on business assignments with New Zealand companies – Jade’s group worked with Air New Zealand.
She says the cohort has been a key part of the learning experience, and she has some great people to call on from different perspectives, as part of her network. She’s most interested in sales and marketing, and doesn’t have a 10-year-plan for life or career, but says she will seek change every three years “to keep my skill-set fresh.” “I set really high expectations… my biggest competitor is myself.” The MBA has given her the qualification she says her CV was lacking. Jade is the first in her family to go to university, and study was a “shared learning experience” with her husband, by proxy of his support - though the high workload and time pressures of MBA study didn’t faze her. “If you’re the type of person that thrives in a high pressure environment … then it’s absolutely achievable and quite invigorating. It’s not as scary as you might think.” After two years of study, she was looking forward to having time to spend with friends and family (first stop: Fiji), walk her two dogs, and get stuck into renovating her new house. “It’s been a really amazing ride.” The University of Auckland Master of Business Administration (MBA) has intakes in January each year, and welcomes applications from business leaders. Find out more at www.gse.auckland.ac.nz/nmn
M
AS I SEE IT
Paul Johnson is a Designworks senior designer. What are New Zealand’s major challenges for 2012? First, there are challenges to what we know: what we’re used to, how we work, what we think we’re entitled to, what a career path is, what we’ll be doing at X or Y stage in life, how a city, or a house, or a business or a widget should be designed. “Massive change” has been talked about as a notion for years – we’re clearly seeing some of it now – and surely it won’t go away. “Nothing endures but change” – Heraclitus. Our second challenge is to remain optimistic and proactive in the face of the above. How well prepared are Kiwi business leaders to face these challenges? Across the board I think we’ve got a lot of people who are happy to move fast and try new things. We have a recognition that systemised corporate ways of doing things just aren’t fit for today. We’re seeing large organisations rethink the way they attack problems or opportunities, and establish small, agile teams who don’t stare at Powerpoint slides all day and are challenged to make tangible progress at a very rapid rate. What more could we do as a country to thrive in the current global economic climate? Don’t try and get things 105 percent perfect before you send them into the world. The ‘launch and learn/ permanent beta’ approach is what helped people like Google, Apple and Facebook smash so many business categories (and businesses). As an added bonus it’s good for your brand story. I watched a presentation by the CEO of one of America’s fastest growing brands whose mantra was “get tangible early”. Invest time in learning upfront to generate insight – then get ideas up on the wall fast. Be impolite, dispassionate, insensitive and challenge your businesses and people to prove why an older way of doing something is the best. For God’s sake, why not? M
14 | management.co.nz | MAY 2012
MANAGERS ABROAD
M
Nick Wheeler has been living outside of New Zealand for 22 years now. For the past 10 years he’s been general manager of communications and PR agency Ketchum Beijing. What prompted you to seek work out of New Zealand? When I left New Zealand in 1990 I originally planned to spend a couple of years studying Chinese, and then enrol at the Chinese University of Hong Kong to complete a doctorate in ethnomusicology, which was my major at Victoria University. However, after three years studying in Beijing and Yunnan I realised I’d become deeply attracted to the culture and the people and wanted to find a job that would enable me to work in China rather than study in Hong Kong. I took the first position I could find that offered me the opportunity to be based in Beijing. That was in 1994, and I’ve been working here ever since. How are your experiences overseas shaping your understanding of New Zealand? Living and working in China over the past two decades has definitely changed my perceptions of New Zealand. While there is no denying that there is much that is attractive about life in New Zealand, there are also elements of our culture that hold us back. Many New Zealanders don’t fully appreciate how insignificant we are as a country in a global context. Greater recognition of this limitation would actually help us focus on those things that make New Zealand truly special and which we should be leveraging as our key points of differentiation. New Zealand also suffers from an entitlement mentality which leads many people to believe that they are owed a living without having to make much of an effort for it. By contrast, Chinese citizens generally don’t expect the government to provide much for them at all. Consequently they take responsibility for themselves and their families and work incredibly hard to save money for their children’s education, medical expenses, old age etc. How can offshore Kiwis contribute to New Zealand? Offshore Kiwis can best contribute to New Zealand by leveraging their entrepreneurial spirit and social networks to build bridges between New Zealand and the culture in which they live. Even more importantly, perhaps they will also accept that there are better ways of doing things or organising society simply by learning from the experience of other countries. M Nick Wheeler is a member of Kea, New Zealand’s global talent community. www.keanewzealand.com
MAY 2012
| management.co.nz | 15
NZIM
Cause for
concern
Photo: thinkstockphotos.com
How skilled and competent are New Zealand managers? Reg Birchfield says new research reveals some areas for concern.
T
“
he New Zealand manager sees himself as optimistic, future-oriented, ambitious, hardworking and independent,” wrote Massey University lecturer in business administration George Hines in 1973. Hines’ 78 page booklet entitled simply The New Zealand Manager was, he wrote, based on “the objective research” of 2400 New Zealand managers. It was, so far as I can find, the first significant attempt to research and explain the state of mind, perceived status and work practices of the Kiwi manager. Hines concluded the New Zealand manager was quite “unique”. It would, therefore, be “folly to rely on overseas information alone as a means of educating and developing” him. The New Zealand manager should not, he added, “be shaped in the image of the British or American executive”. Well, that was 40 years ago. The Kiwi manager has been researched a tad more, though not much, since. She is now, it seems, quite a different beast. Hines was optimistic about his commitment to work and his “independent outlook” on life.
16 | management.co.nz | MAY 2012
Now, however, since they completed a research study for the New Zealand Institute of Management earlier this year, Dana Cumin, Dayal Talukder and Brent Hawkins of Auckland’s ICL Business School are concerned about our manager’s ability to perform to her best. ICL’s online survey asked New Zealand managers how they perceive the relative importance of their individual skills and competencies; how they would acquire those skills if needed; the relevance of these competencies to their organisations; and finally, they asked what personal attributes Kiwi managers think are important to help them do their job better. UPSKILLING Kiwi managers rate interpersonal and communication skills higher than coaching and technical skills. Similarly, they view “on the job experience” as their primary source of upskilling. Those who use training providers to upskill, prefer private to government-owned providers. The personal attributes managers rated most highly are honesty, integrity and trustworthiness. Their last place
ranking of creativity however, worried the researchers. This finding is, they said, a “cause for concern for the future development of New Zealand companies”. That managers placed so little relative value on creativity suggests company owners and directors should encourage managers to see creativity as a “necessary attribute for enhancing innovation and competitiveness”. As the study pointed out, New Zealand’s low international ranking in the global competitiveness stakes is a problem both now and, no doubt increasingly, in future. The researchers suggested the lack of importance managers ascribed to being creative might explain why New Zealand lags behind so many other countries in terms of innovation and global competitiveness. And, strangely, Kiwi managers ranked experience as the second least important attribute in their personal armoury of competencies. Their top to bottom ranking of the attributes they considered important to their managerial jobs included: • Honesty/integrity • Trustworthiness • Judgement
• Flexibility/adaptability • Self confidence • Emotional intelligence • Intelligence • Reliability • Experience • Creativity Management writers such as America’s John Kotter, author of the best seller Leading Change, consider ‘experience’ important to managing high performance organisations. Kiwi managers don’t apparently agree and this perception, according to the ICL researchers, should also concern company owners and directors. Managers also rated problem-solving skills, leadership and teamwork important. The majority of them thought that leadership’s relevance would increase in the future. They thought the relevance of technical, crisis management, team work, interpersonal and problem-solving skills would likely remain the same. NOVEL INVESTIGATION The study, initiated in partnership with NZIM, is a novel investigation. Little specifically local management research has been done since the 1970s. According to the researchers, surveys undertaken from a New Zealand perspective are lacking from contemporary management literature. It is likely, therefore, that more studies will be undertaken to tease out some of the findings which NZIM can then use to add focus to its practical and applied management development programmes. “The findings tell us a lot about how New Zealand managers think and feel about their skills and competencies and how they go about enhancing them,” says NZIM chief executive Kevin Gaunt. “Having a better and more up-to-date understanding of how managers see themselves is vital to us. It helps keep the things we do and the services we offer to New Zealand managers and organisations relevant to both now and the future.” The survey found significant differences between the specific skills and competencies New Zealand managers think are important and those that existing
management literature suggests deliver better organisational performance. The Kiwi manager’s failure to appreciate that creativity and experience are important to effective management is one, albeit critical, example according to the researchers. And respondents seemed to think that leadership skills will be more important in the future than they are now. That’s a worry too. The researchers suggest that learning providers gear up to meet an increased demand for more leadership skills development. They also need to educate managers on just how important leadership skills are to managing effectively in today’s business environment. “The critical issue for managers today is to identify the importance of leadership skills beyond merely interpersonal and communication skills to include the coaching elements of leadership,” say the researchers. Leadership skills are needed to “guide and foster creativity to enhance innovation so New Zealand will not lag behind but instead lead in excellence. “Honesty and trustworthiness are fine attributes and important to instil confidence and motivate employees.” However, the ICL team suggests that a greater emphasis on creativity is needed to encourage managers to shape their futures rather than be shaped by them. “This will enhance New Zealand’s innovation environment as well as help the country to position itself better in the globally competitive marketplace.” “This kind of research is important to us,” says Gaunt. “But it is even more important to our member and client organisations. It points up the critical importance of ongoing management and leadership development. It also identifies the areas in which attitudinal and competency priorities must change if businesses are to compete successfully both at home and abroad. “The study has provided some valuable insights but we also understand that it is not an end in itself. Rather, it is a beginning and we will work to build on it.” M Reg Birchfield FNZIM is a writer on leadership, governance & management. reg@rjmedia.co.nz
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. NATIONAL BOARD GARY STURGESS LIFE FNZIM (CHAIRMAN) LYNDA CARROLL AFNZIM DAN COWARD AFNZIM MOHS MICHAEL WEUSTEN FNZIM JOHN SANDFORD FNZIM ASH DIXON MNZIM JOANNE O’CONNOR MNZIM MARK WOODARD AFNZIM NZIM Inc Chairman: Gary Sturgess Life FNZIM Deputy Chair: Lynda Carroll AFNZIM PO Box 67, Wellington 6140 Ph 0-4-473 0470, Fax 0-4-473 0479 Email national_office@nzim.co.nz Website: www.nzim.co.nz CEO: Kevin Gaunt FNZIM, FAIM PO Box 6600, Wellesley St, Auckland 1141 Ph 0-9-303 9100, Fax 0-9-303 9109 Email kevin_gaunt@nzimnorthern.co.nz Northern Region Regional Director: John Sandford FNZIM Regional Contact: Tait Grindley PO Box 6600, Wellesley St, Auckland 1141 Ph 0-9-303 9100, Fax 0-9-303 9109 Email enquiries@nzimnorthern.co.nz Website www.nzimnorthern.co.nz Central Region Regional Director: Lynda Carroll AFNZIM Regional Contact: Stacey Coulthard PO Box 11781, Wellington 6142 Ph 0-4-495 8300, Fax 0-4-495 8301 Email enquiries@nzimcentral.co.nz Website www.nzimcentral.co.nz Southern Region Regional Director: Michael Weusten FNZIM Regional 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
MAY 2012
| management.co.nz | 17
M
POLITICS COLIN JAMES
Lurking laws of budgets and taxes
I
t’s Budget month, Bill English’s fourth. He’s back to zero net new spending, this time because of weak revenue, not an earthquake. This is a big political gamble. And it illustrates a lurking law of taxation. The gamble is that voters in 2014 will care more about a return to fiscal surplus than about service guarantees. That might be a risky call. In the 2011 election campaign John Key irreparably damaged Phil Goff with his “show me the money” taunt in the second one-on-one debate, imputing fiscal irresponsibility. Labour was already far behind. That set it back even further. But a zero-new-spending Budget (as in 2011 after the second Christchurch earthquake) will likely mean some services cuts this coming fiscal year. More with less is achievable for only so long in the short term and new methodologies that do enable it need longer to mature than National has allowed. Likewise, if English sticks to his February Budget Policy Statement track for 2013-14 and 2014-15 of $800 million and $1.2 billion net new spending, that will barely keep pace with rising health and education demand and also maintain other services before the election, which will be no later than November 2014. The priority targets announced in March might also cut into services not accorded top priority. Ministers want to parade the priority ‘results’ in the election campaign. That will put agencies under intense pressure to deliver those results, potentially at cost to others. Ministers might then find accumulated voter grudges about patchy services outweigh voter acclaim for fiscal probity.
18 | management.co.nz | MAY 2012
English’s best hope will be that the economy grows faster than the Treasury projects, growing revenues faster and giving him more leeway for new spending while still delivering his surplus. That was a good part of the motivation for the tax switch in 2010 when English traded lower income tax
under which savers could still pay 33 percent on earnings from approved savings funds. PIEs are still with us. When English upped the GST from 12.5 percent to 15 percent, the voices demanding GST be taken off fresh fruit and vegetables got more strident and persistent and the Labour party put it in its election platform. At 12.5 percent,
“Budgets are not just about numbers.” rates for higher GST. Lower income tax is supposed in economic theory to make an economy go faster and deliver higher total revenues from the lower rate. But the 2010 vote switch uncovered a lurking law of tax: that if a rate gets too high, escape hatches are demanded and appear. When the top rate of income tax was 66 percent in the early 1980s, the tax system was riddled with exemptions, concessions and loopholes. When Michael Cullen took the top income tax rate back up from 33 percent to 39 percent in 2000, making it harder to save, he introduced PIEs (portfolio investment entities)
Labour had resisted pressure for exemptions in favour of the “broad base, low rate” principle that has guided most tax policy since 1986. Back in 2010, English would not countenance broadening the base to include a land tax and/or income tax on capital gain or “green” taxes. By instead upping the GST rate, he triggered the exemption response – incidentally widening the gap with Australia’s 10 percent. Labour is likely to ditch the GST concession, having concluded that it is unlikely to get poor people to swap from bad food to good, which was one of its beliefs. Instead, Labour is likely to keep its capital gains tax and, if in coalition with the Greens, widen the range of green taxes beyond petrol and waste. But Labour still wants to raise the top income tax rate. You can lay bets now on the response of the subsequent National-led government. Budgets are not just about numbers. They are also about all-too-human behaviour. As all finance ministers eventually discover. M Colin James is New Zealand’s leading political commentator and NZ Management’s regular political columnist. ColinJames@synapsis.co.nz
BOB EDLIN ECONOMICS
M
Independent panel signals switch
T
before the 2011 general election. To win more hearts and minds the Treasury is taking a different tack this time, encouraged by the success of the tax working group whose reports presaged changes to the tax system in 2010. That group published its issues papers and invited public feedback. The Treasury will come up with fiscal projections and policy options, showing what is likely to happen over the next four decades, depending on which policy lever is pulled. The panel (Dr Cullen is among the members) will meet monthly from August to November, provide critiques, make suggestions and – along with others not on the panel – produce
Photos: thinkstockphotos.com
he Treasury is engaging in a bout of obligatory future-gazing, looking four or so decades ahead. Before its job is done we can all pitch in with our ideas, but more immediately the work involves an independent panel of experts chaired by Professor Bob Buckle from Victoria University. Officials hope the panel comes up with ideas they haven’t thought of for incorporation in a report next year. The law requires the Treasury to provide Parliament with a Statement on the Long-term Fiscal Position at least once every four years. The Statements provide 40-year projections on the Crown’s fiscal position and – perhaps more important – identify challenges that will face future governments. Most obviously, these include demands for pensions, health services and so on as the median age of the population rises and pressures are heaped on the Government’s spending, revenue and debt. The Statements provide Members of Parliament not with firm recommendations, but with evidence-based options on how to meet the challenges. Michael Cullen was Minister of Finance when the Treasury had its first crack at peering 40 years ahead. He was disappointed, finding fault with an approach that basically aimed to show where the numbers were pointing under current settings. It was a legitimate grouch. The 2009 report painted a grimmer outlook than the first because the fiscal impacts of the global financial crisis influenced the base numbers. This emphasised the importance of the macro-economic position at the start of the projection period. But that report did get more traction than the first and some of the challenges it spotlighted were reflected in political party manifestos
“Fiscal projections will depend on which policy lever is pulled.” research. Workshop minutes and papers will be published and everything will be pulled together for a public conference (over a day and a half ) in December. The Treasury has learned from the Reserve Bank’s monetary policy challenge in schools, too, and its reaching out to the public involves a competition among senior school economic students. This should trigger debate in schools and among parents and grandparents. The Treasury hopes this process will help to ensure the next Statement is robust and provides a range of viable options for managing the Crown’s financial position, all in the best interests (what else?) of taxpayers. But a greater hope is that the process will facilitate a wider debate of what New Zealand will or might have to do to keep the public debt under control while the aging population gets its hip replacements and draws on the pension system.
If all goes to plan, people should be familiar with the issues and prepared to bite the bullet when the Treasury publishes a report in March next year as a further platform for deliberations. This approach recognises that, with some things, the public needs time to absorb what’s at stake and to brace for a governmental reorganising of priorities and expectations. It’s a slower process than was appreciated in 2006 and it requires the patient moulding of public opinion, because it can take two or three electoral terms before the shifts occur. In the upshot, the need is to ensure services such as health and long-term care can be provided some 40 years hence without raising taxes too much. But it will be a long wait to see if the 2013 Statement that emerges from this is a document with 20/20 foresight. M Bob Edlin is a leading economic commentator and NZ Management’s regular economics columnist.
MAY 2012
| management.co.nz | 19
M
LEADERSHIP REG BIRCHFIELD
Rise of the self-serving leader
I
20 | management.co.nz | MAY 2012
Photo: thinkstockphotos.com
f it weren’t so infuriatingly destructive, how delicious might the irony seem? Just as chief executives and directors of our largest public and private sector enterprises trot out new reasons for ramping up their remuneration and fee packages, so we learn that the leadership capabilities for which they so generously reward themselves are make-believe. The honest among them probably know that. For the self-delusional, the revelations of American leadership expert Barbara Kellerman as revealed in her latest book, The End of Leadership, may come as something of a surprise. For those of us forced to grin and bear the boardroom bunkum about market comparability and so on, it’s yet more evidence of a transformational swell that threatens to overturn existing organisational and political leadership models. Reflect momentarily on New Zealand’s shortage of leaders, particularly business and political. Sure some individuals, like our richest man Graeme Hart, make heaps of money but that particular capability does not necessarily, or even often, equate with either desirable or inspirational leadership. Exploitive or opportunistic perhaps? No, as James S Rosebush, a former advisor to US president Ronald Reagan and now a leadership writer and author, said recently: “... we are experiencing a dearth of leadership in society”. Kellerman argues that followers no longer believe in their leaders, and with good reason. The way in which an increasing number of organisational leaders reward themselves or are rewarded by their director cohort, does little to ameliorate feelings of discontent and disillusionment. And the disparity in reward between leader and led is the first and most compelling step toward undermining leadership authenticity. There is a growing disconnect
between what leaders “earn” and what they think they are entitled to. No argument, genuine leadership is hard, demanding work. But it is not all about the individual. Leaders who believe they “deserve” their unfair and unreasonable remuneration because they are somehow special aren’t very special at all. The reward processes now adopted by many boards and their recruitment consultants run counter to the principles of motivational leadership. It is, in fact, leadership hypocrisy. To dress it in any other guise, no matter how cleverly designed, is deceit. As an aside, it was Warren Buffet’s offsider Charlie Munger who said he would “rather throw a viper down his shirtfront than hire a compensation consultant”. Leaders who believe they deserve, or are entitled to, dispensation from the laws of fair play, effectively threaten leadership principles and practices. The self-focused individual cedes the right to influence because they take themselves out of the community of interest. They don’t, as one commentator put it, “lead for the cause but only as a means to serve themselves”. The outcomes of that process include distrust, cynicism, the wrong kind of competition and isolated thinking. Leaders should connect life’s dots, make meaning out of chaos and, either avoid disconnections or make them
right. Something serious has gone wrong with the concept of servant leadership. Self-serving leadership is more prevalent. Leadership is a role not a position. Are the principles of leadership redundant in today’s more grasping world? Perhaps that is why Kellerman thinks leadership is over. “Humankind writ large is suffering from a crisis of confidence in those who are charged with leading wisely… and from a surfeit of most well-intentioned but finally false promises made by those supposed to make things better,” she says. I like the idea that leadership is about “channeling all that we are for the benefit of others”. I don’t see much of that about and, with the recent death of scientist and 2011 New Zealander of the Year, Sir Paul Callaghan, the ranks of true Kiwi leaders are further reduced. Another leadership writer, Glenn Llopis, wrote recently that “successful leadership is something that happens organically when a leader focuses on the true impact of his or her actions”. Available evidence suggests that too few of our organisational leaders care much about either the impact or the context of their actions when it comes to rewarding themselves. M Reg Birchfield is a writer on leadership, governance & management. reg@rjmedia.co.nz
TIM NICHOLS
THOUGHT LEADER
M
Manage the damage
I
f you work for a big organisation, there’s a better-than-average chance that your network security defences have been breached somewhere. Or they will be. For organisations with valuable data, this is the new reality. The bad guys are getting better at what they do and enterprise has historically had a hard time catching up. For a large listed corporation, a security breach is arguably one of your public relations department’s worst, although inevitable, nightmares. PR 101 says that in the event of a disaster you should fess up as fast as possible, beg forgiveness, hope that it’s not a quiet news day and front up with a plan to make it right. As a textbook strategy, that’s all well and good, but it does presuppose that organisations actually know what happened. Here’s the kicker: More often than not, they don’t. So it stands to reason that the effort an organisation puts into preventing a breach should be equalled by the effort it puts into knowing what happened after a breach has occurred. If you’re lucky, you’ll find the broken window pane, a brick on the floor and have a good idea of where the compromised data resides. But depending on your monitoring hardware, you may have little or no idea what stock was stolen because your shelves are virtual. Sure, your log files are useful to a point, but they will never give you the whole story. To manage the damage, you have to be 100 percent certain of what was stolen, and you have to find out quickly. The public wants answers immediately and they are not a particularly patient bunch. The vacuum of public knowledge will be filled with answers to very specific questions from the media: How many of your records were stolen? How sensitive were they? How long has it been going
on? If you wait to provide the answers to those questions, the tweeting public will pontificate at will, essentially taking away your role in shaping the organisation’s message. Seeing where the breach occurred and what areas were affected will put your organisation in a position to offer the truth, as opposed to planting the seeds for rumors. So for all the arguments made for state-of-the-art network security – and these arguments are completely valid – what may be the barrier between an embarrassing situation and reputationcrushing mishandling is network visibility. Yes, you were breached. It happens.
Tim Nichols.
“In 2012, Nortel, NASDAQ and the Vatican have fallen victim to breaches.” In 2011 well-known entities such as Zappos, Epsilon and RSA were each victims of attacks. In Q1 of 2012, Nortel, NASDAQ and the Vatican have fallen victim to breaches. There is a lot less shame in being breached these days, but not knowing what has been breached is the precursor to the kind of media coverage that can sabotage all of your best efforts. Knowing exactly what is going on inside your network in real time is more important than ever. Network recording solutions have historically had a bad rap: “Unreliable” and “expensive” are criticisms that have been leveled, but the case for pervasive, full packet capture is changing as fast as the technology that enables it. The technology reshaping that opinion could very well be your PR department’s best friend. As networks expand to 10G, it is becoming more and more difficult to just “pop open the hood” and pinpoint exactly where network anomalies lie.
Organisations on the front foot are responding by investing in a wide range of IT tools to stop network intruders from getting inside in the first place, but they have also come to the conclusion that those investments will fall victim to an unwelcomed visitor at some point. Furthermore, they are considering the kinds of solutions that not only address speeds of today, but the speeds that will no doubt be integrated into the landscape of tomorrow’s networks. So, if you subscribe to the view that you’re already breached – and the smart money says that you should – what’s your answer going to be when you’re asked, “What did you lose?” If your answer is, “We don’t know,” then maybe it’s time that you reconsider how you are monitoring and recording your network data. And then hope the story gets buried. M Tim Nichols is VP of marketing at Endace.
MAY 2012
| management.co.nz | 21
M
BOOKCASE
THE ENEMY OF ENGAGEMENT By Mark Royal and Tom Agnew • Amacom • RRP $35.95
Hay Group researchers Mark Royal and Tom Agnew think workplace frustration is a killer organisational disease. They have used the findings from about eight years of research to prove their case. Hay Group is a global business consultancy that has, since 1997, partnered with Fortune magazine in the United States to identify America’s Most Admired Companies. Work undertaken in that study contributed to these two researchers’ appreciation of just how crippling workplace frustration can be. They call it a “silent epidemic” that creeps through every organisation. It is, they argue, rarely confronted or even recognised. Consequently, even the most motivated and dedicated individuals get worn down battling it. What causes workplace frustration?
WALMART IN CHINA
Edited by Anita Chan • Cornell University Press • RRP $49.95
What happens when the world’s largest organisation meets the world’s most populous country? It sounds like the script for a blockbuster movie. In Walmart in China Anita Chan, a research professor at the University of Technology’s China Research Centre in Sydney, has woven a fascinating series of perspectives on the theme. Chan divides the book into three main sections variously addressing Walmart’s supply chain, its outlet stores in China, and that oxymoronic concept of a Walmart trade union. The chapters are authored by different writers from a wide 22 | management.co.nz | MAY 2012
Organisational obstacles that prevent even the most committed employees from doing their job, say the authors. The book is therefore designed to identify this “root cause of frustration” and provide advice on how to grapple with it. “What’s needed are informed, targeted management practices that enable employees to do their jobs.” Specifically, it identifies the organisational priorities needed to get employees focusing on high value tasks, then suggests teamwork approaches to help cope with work demands; training, development and empowerment opportunities to build the skills and authority employees need to get the job done; and some tools, information and other resources they need to work efficiently and effectively. The book is timely for New Zealand readers because of the current preoccupation with lifting our laggardly
productivity performance. “Having highly engaged and enabled employees leads to dramatically better productivity, improved financial results and more loyal customers,” suggest the authors. The book is strongly researchbased but it’s accessible and interesting. It also touches on topics like the role of managers versus leaders, work-life balance and a host of other contemporary management and performance-related issues. Its argument is logical and compelling. Its fictionalised case study approach fused with thorough research and sound reasoning make it eminently useable. Royal and Agnew’s conclusion that only engaged employees can deliver high performance makes sense. That far too many organisations, wittingly or otherwise, create barriers over which employees must stumble to accomplish that for which they turn up to do each day seems nonsensical but has that ring of authenticity about it. – Reg Birchfield
variety of backgrounds and perspectives including both American and Chinese. The end result is a magnificently multifaceted example of globalisation’s race to the bottom as Walmart’s drive to cut costs and squeeze schedules meets a nation of suppliers keen to “enter the global market, make money and expand their horizons”. Much has been written before of sweat shop labour in developing countries. Chan’s writers document the accusations and realities of “hazardous or unhealthy working conditions, forced overtime, long working hours, child labour, illegally low wages and abusive labour discipline” as suppliers endeavour to churn out product and make a living in their attempts to be part of the giant Walmart supply chain. As for the intriguing idea of whether Walmart can ‘Walmartise” China, or China
successfully push back with its own insistence on Sinification, Chan’s book points out that the two cultures had much in common right from the get-go. “Walmart culture bears the hallmark of rural American Bible Belt of the 1950s and preaches the virtues of frugality, selfcultivation, obedience and diligence… By happenstance… these share much in common with Maoist and Confucian teachings. The culture and methods of implementation are not that alien to the Chinese populace.” Chan and fellow authors conclude that the higher the rank, the easier it is for a Chinese employee to accept the Walmart culture: in part because it is their job to Walmartise people further down the line. However these two cultures will continue to bed down together, Walmart in China makes for a thought-provoking, if frequently disturbing, exploration. – Ruth Le Pla
2011’s agle E NZIM/ logy Young Techno ve of the ExecuƟ mish a Year H h (Pacic t McBea ters) with a o c il o (Eagle C Eagle Corallie logy) and Techno urgess (NZIM t Gary S Inc). d le an aluab a�ng v a een par�cip nd o has b ta 2011 leaders als ssessmen rs in in d e r a g h a t n e w o u h t m yo d in from ear A ape the Y eople - fro n involve and learn helped sh gs I f o e e p v k e e in r c � v b h o � a t u e s c nta hav Exe mal w ple who h about the chieve me fa oung s who y nor the Y I’ve met so nd leader ck from m many peo and think ore I can a in d e by ala step ba op much m ce involv raged me st erien ew Ze Being while exp senior N en great to en encou has made bout how e a o h wort Awards, t s It has be s I have b e process pira�onal h s s in the w proce d industrie Overall t e to be a ilcoaters ie m g o n interv nt roles a nd thinkin couraged , Pacic C r e n differ perience a s well as e l Manage a my ex chieved, a th, Gener a a have ish McBe – Ham
Will you be
New Zealand’s
gle Technology
Young Executive of the Year
Are you 35 years of age or younger as at 31 December 2012, and a New Zealand citizen? Have you been employed by your organisation for more than 6 months, and hold a middle or senior management position?
2012?
Now in its 17th year, the Young Executive of the Year was established by NZIM and NZ Management magazine to recognise standout individuals who are prepared to go beyond perceived limitations and strive for personal and organisational excellence. Regional winners – Southern, Central and Northern – are announced at New Zealand Institute of Management functions in July. The three regional winners then become finalists for the NZIM / Eagle Technology Young Executive of the Year Award, announced in Auckland on November 29.
Entry details, including the prize package, may be found at: www.nzim.co.nz or www.management.co.nz/ top200/youngexec.asp Contact Nardine Sleeman at NZIM on 0-4-495 8300, nardine_sleeman@nzimcentral.co.nz
IN ASSOCIATION WITH: PRINCIPAL SPONSORS:
COVER STORY
NE
ADE N ZEALAN
INNOVATION NATION Myth or reality?
Despite capricious currencies, low-wage competition and financial crises, New Zealand’s manufacturing is earning its role as a mainstay of our economy. Can its trademark innovation also put some serious grunt behind our GDP growth? Vicki Jayne checks out the manufacturing challenge.
COVER STORY
I
t accounts for nearly half our exports and around 12 percent of our GDP but New Zealand’s manufacturing sector is no place for the faint hearted. An ability to make stuff – even good and useful stuff – barely gets you to the start line when investment capital is in short supply. Scaling up to compete globally is a whole other level of challenge. Entrepreneurial flair is paramount – but it ain’t enough, notes business leader Sir Ken Stevens. “It’s not just about coming up with a better mousetrap but better marketing, branding, R&D – the whole ball of cheese. There’s a lot of competition out there.” As founder and chair of baggage-handling equipment specialist Glidepath, he’s had decades of experience competing globally, chairs Export NZ and is a board member and trustee of the Asia New Zealand Foundation. And he reckons it’s tougher than ever. “Markets are depressed. There are some glimmers of optimism in the software industry but manufacturing is dead – and that’s the case even in China, comparatively speaking. So that’s a challenge.” Kiwi companies are up against countries with bigger populations, deeper pockets and centuries of tough trading knowhow – and that’s before they start to deal with depressed markets and margin-decimating currency fluctuations.
Stories of NZ enterprise success This is the second article in a major new eight-part NZ Management series: Stories of NZ enterprise success. Leading New Zealand business journalist Vicki Jayne conducts a sector-by-sector review of the underlying drivers of success in key parts of New Zealand’s economy. Next month: The primary sector.
But it’s not all bad. Against the odds, local manufacturers are adapting, evolving, building market share in global niches and growing exciting new business opportunities. As Deloitte/Management magazine’s Top 200 data reveals, our more established manufacturers are global players whose product expertise ranges from food and fertiliser to resins and rubber. While it’s a sector still playing to traditional strengths in land-based industries – food, drink, wool, wood – it also embraces high-tech, value-add offerings from frequency control solutions (Rakon) to health products (Fisher & Paykel Healthcare). Some Kiwi manufacturers are dominant players in their global niche. And coming up fast behind the more established players are a bunch of rapid growth operators whose expertise ranges from radio equipment and electromagnets to plastic containers. But is that all enough to put “a bit of welly” behind this country’s languishing GDP growth? Is the sector functioning in top gear or could it do better? What are some of the secrets to manufacturing success? FLEEING THE FORTRESS Innovation often born from necessity was a trademark of early manufacturing in New Zealand. People like Henry Shacklock (stoves) and Thomas Edmond (baking powder) shifted the market game with new inventions. Factories were mostly small, though Chelsea Sugar – established in 1884 and still thriving in the same site on Auckland’s North Shore – employed more than 200 workers. By the mid-1900s, import substitution ruled and a fortress New Zealand mentality helped featherbed local manufacturing by whacking hefty tariffs on imported goods. But when protectionist policies were lopped from geopolitical lexicons in the last two decades of the 1900s, the sector took a major hit. Under a regime of economic liberalism, New Zealand rapidly opened its doors to offshore competition – and factories started closing. Some regions were particularly hard MAY 2012 management.co.nz | 25
COVER STORY
hit – Wairarapa lost 25 percent of its manufacturing capacity, Central Otago 35 percent. A wide range of cheap imported goods appeared; jobs disappeared. Big chunks of our manufacturing capacity moved offshore to take advantage of cheaper labour in places like Fiji, Vietnam and China. There were fears core manufacturing skills were also being lost. But many companies continued to thrive. Fisher & Paykel Appliances has successfully morphed from a local to global player. The company that started life in retail before gaining a kick-start in manufacturing during the 1940s’ import substitution heydays now has manufacturing sites in Italy,
Sistema’s $7.5 million facility.
Boxing champions “We’re steered by customer relationships and market trends, not Sistema co-founder Allin Russell reckons New Zealand undersells itself looking at what others are doing. We’re great travellers and our focus as a manufacturer. has always been to deal with the best reputation retailers in every “There are so many clever people out there – they just need to market,” says Russell. believe in themselves. I guess the initial thing is having the courage to This now includes Macy’s in the US, Coles in Australia and Costco in take the first step and learn from there. The other is identifying markets the UK. that suit the product, where the opportunities are.” Getting to grips with how different markets work is a constant The company he founded with business partner Brendan Lindsay learning curve. functions as a marketer that makes stuff rather than the other way “Managing over 20 countries on a daily basis is a huge challenge round and the product it takes to the world is one familiar in every because we’re in different time zones, cullocal kitchen – plastic storage containers. Not tures, import regimes, rules and regulations. just any old container – these are pitched to That is a major for any emerging company if the lifestyle rather than food storage category they are doing well and growing quickly. But and customised for specific use from microget it half right and the rewards are there.” wave cooking to salad storage. After initially concentrating expansion in Sistema’s first colourful range of lunchEnglish-speaking countries, Sistema is now boxes and drink bottles came off the utilising in-market expertise as it continues to production line in 1993 and although its spread its reach in Asia, South America and distinctive products now sell in 22 countries, Europe. their manufacture is firmly based in AuckManaging foreign exchange is an ongoing land where Sistema has just opened a new challenge given it competes for raw materials $7.5 million facility. A focused embrace of on the world markets but it’s a swings-andhigh-tech robotics helps to keep on top of roundabouts cost of doing business offshore. burgeoning orders and make most efficient Allin Russell and Brendan Lindsay. “You never feel you’re on the winning end use of its labour input. of it but you just have to forge ahead,” says Russell. “We don’t make A leading force in a market segment dominated by Chinese and use of financial tools because for us the growth in business is explosive Korean manufacturers, Sistema was the first in its category to move so we have to be able to move and not lock ourselves in.” to 100 percent BPA-free materials. Russell says Sistema’s strengths Keeping ahead of competition is also a constant challenge. include design innovation (top of the list), staying in front of its cus“Yes, we have copiers so we have to run to stay ahead. We accept tomers (in-market, face-to-face research is the norm), responsiveness that and enjoy the challenge. It would be fair to say we don’t rest on to market need, and flexibility. our laurels. We’re always out there looking for the next opportunities. The ability to keep close control over production possibility to meet You’ve got to want to do it because different customer needs or changing market demand is why the comit’s hard work.” pany made a conscious decision not to move manufacturing offshore – even though more than 85 percent of its $65 million sales revenue last year was earned overseas. Russell and Lindsay keep close to overseas customers.
26 | management.co.nz | MAY 2012
COVER STORY
ade is often neither fast nor steady. After splitting from separately listed F&P Healthcare in 2001, F&P Appliances’ after-tax profits have generally fluctuated around the $50-$70 million mark on revenues peaking at around $1.5 billion in 2007. It seems a case of running hard out just to stay in much the same place. CHALLENGES Added to New Zealand’s natural disadvantages of size and distance over the past decade have been volatile exchange rates – and an inflating Kiwi dollar. Adapting to the vagaries of foreign exchange has been a big learning curve. But the squeals of terror once heard as an inflating Kiwi hit the
Industry snapshot
Photo: thinkstockphotos.com
Manufacturing produces the second largest share of Kiwi GDP and is also the country’s second largest employer. The lion’s share of its 22,700 operations – more than a third of all manufacturing employment and manufacturing businesses – can be found in Auckland and provide the bulk of the region’s jobs. These, as the industry points out, are fairly productive jobs. Statistics NZ’s Annual Enterprise report shows that, on average, total income per worker in manufacturing is $404,000, which is highly favourable when compared to tourism’s $82,800 revenue per employee. Food, beverage and tobacco comprise 36 percent of GDP input ($5.874 billion in 2009), followed by machinery and equipment manufacturing (14 percent, $2.226 billion), wood and paper product manufacturing (13 percent, $2.182 billion), and petroleum, chemical, plastic and rubber product manufacturing (nine percent, $1.528 billion). Recent manufacturing surveys reveal a sector in relative stasis with manufacturing volumes fluctuating around the same level for nearly three years (Statistics NZ). However the BNZ-Business NZ Performance of Manufacturing Index (PMI) showed a sizeable lift in activity for February with a reading of 57.7 – the highest February value since the survey started in 2002. A shift in market focus is evident in food and beverage exports with Asia now taking 40 percent compared to Britain’s five percent. The Government has set a target of tripling the country’s food and beverage exports in the next 15 years.
Thailand and Mexico as well as Auckland. The early embrace of R&D as a driver for expansion paid off in terms of market penetration and by the time the company celebrated 70 years in business in 2004, appliance exports comprised 71 percent of total revenue. “It has been impressive in terms of how it has internationalised itself in the past five years,” notes business commentator Rod Oram. However, as our Top 200 stats over the past decade highlight, growth for many of our larger manufacturers over the past dec-
US$0.60 mark are now reduced to muted moans as it seesaws around the US$0.80 mark. Numbed to the pain, perhaps – but local manufacturers are not only more au fait with financial instruments that help hedge against the vagaries of currency movements, they’ve also adapted their business models. The sector has learned how to tough it out, says BusinessNZ’s executive director for manufacturing Catherine Beard. She talks about building exchange rate resilience – not through financial tools but by moving up the value chain to MAY 2012 management.co.nz | 27
COVER STORY
Bright prospects New Zealand manufacturers have to really understand what their niche is and have something of value to offer that is a bit out of the ordinary. That’s according to Chris Mardon, co-founder and CEO of Energy Mad, whose Christchurch-based company recently picked up the 2012 NZ International Business Award for Most Innovative Model in International Business. His company goal is quite clear: “To make lives better by saving enough electricity to power Europe” and at just eight years old, it’s well on route – selling its Ecobulbs in New Zealand, Australia, the US, Germany, Ireland and Spain. Over the past three years, it has grown its offshore revenue 8622 percent to over $8 million. Market entry is through involvement in large-scale multi-year projects with power companies and government energy-efficiency agencies. “We were very conscious that if we just tried to copy what any other lightbulb supplier did, we would not have competitive advantage,” says Mardon. The company makes all of its product in China because that’s
Energy Mad founders Chris Mardon (left) and Tom Mackenzie.
where the expertise, workforce and materials are. It is, says Mardon, the “right sort of product to be made in China”. Others are best made here and he cites the ability to be responsive to markets as a big plus for local manufacture. Also recognised for design and R&D, the company focuses on designing to market niche, says Mardon. They spotted a compelling market need for energy efficient lightbulbs to replace incandescent and halogen bulbs. “So we designed product to hit that sweet spot rather than make something really sexy and sell it afterwards.”
28 | management.co.nz | MAY 2012
the premium end of the market where price point matters a lot less than design flair, innovation and quality. “Talking to different manufacturers, I think there is a reasonable resilience in the sector. With tariffs phased out, they have to compete in a global marketplace and the ones that are surviving and thriving have figured out the recipe for success.” That recipe, she says, tends to be focusing on “short-run, bespoke, tailor-made solutions for clients”. Flexibility and customer responsiveness offer a useful hedge against the world’s long-run mass producers. “The companies investing in R&D to keep ahead of competition are doing best and there are some that actually dominate their global niche.” She points to Gallagher Group, which started from farming roots with its electric fencing then diversified into security and high-tech farming systems to help build its dominant role in a specialised market. Ballance Agri-Nutrients offers another example of building offshore clout from Kiwi farmer needs. The bent for innovation that has trademarked Kiwi products from the early days of manufacturing is today also being realised in unexpected areas – like plastic storage boxes (see “Boxing champions” on page 26) But ongoing, well-targeted investment in R&D is something Kiwi companies don’t do as well as they could. INNOVATION “Powering Innovation”, a report commissioned by the Ministry of Science and Technology and released last year, points out that our overall expenditure on R&D as a percentage of GDP in 2010 was just 1.30 percent – well behind the OECD average of 2.33 percent and considerably less than in economies similar to New Zealand. Not only are we not investing enough but the links between industry and research establishments are patchy both in terms of information and personnel flow. There is no overarching vision or direction and we lag behind OECD countries such as Finland or Denmark in terms of improving coordination and integration of R&D effort and investment. That is a glaring capability gap given clear evidence of a link between R&D and company profitability. As IRL’s CEO Shaun Coffey has pointed out, there are “key international studies [that] demonstrate persuasively the positive correlation between the level of R&D spend by a company and their sales growth, productivity and market value”. The report has a series of recommendations that could help achieve this (see story “Powering innovation” on facing page) and it’s an issue business leaders are keen to address. But is it too little, too late? Sir Ken Stevens sees hope in a stronger emphasis on science in schools and a new generation of budding engineers and technologists, but points out that we are neither the first nor fastest movers in this area. “We are making these changes but so are other countries.
COVER STORY
Powering innovation Photo: thinkstockphotos.com
If New Zealand’s manufacturing sector is to build its contribution to GDP, we need to make some changes to the fragmented nature of our R&D efforts. Countries now dominating global manufacturing haven’t left it to chance, says the recent Ministry of Science and Technology report “Powering Innovation”. They pursue specific strategies to increase investment in science, innovation, technology transfer and intellectual property protection. They also focus on developing a skilled, well-educated workforce and have a cohesive national policy on manufacturing competitiveness. Its recommendations for how we might do this range from greater connectivity between R&D providers and the high-tech manufacturing services sector to a re-jig of secondary and tertiary education to churn out more science and engineering skills. It has 20 quite specific recommendations for how to proceed. These involve morphing IRL into a new “platform for industry” organisation, Advanced Technology NZ, focusing primarily on demand-led R&D contract work. It also suggests greater targeting of research efforts, stronger collaboration between research providers, both at home and offshore; stronger links and personnel movement between research providers and industry; identifying talent gaps and putting coordinated effort into filling them – including a “bring back our brains” programme to attract high-flying Kiwis back home. The report notes that the “landscape of R&D capability across the sector is by no means uniform”. Small start-ups that spin out of university research may be R&D intensive to the exclusion of other skills needed for successful entrepreneurial growth. “Large companies, such as Fisher & Paykel Healthcare and Rakon, have embedded inhouse R&D capability but have difficulty meeting the demand for additional skilled professionals for specialist research needs.” However, it says the sector has many firms that are achieving global leadership in niche markets and that these are increasing. The full report is at www.msi.govt.nz.
We credit ourselves with being an enlightened, intelligent community but why didn’t we think of this years ago and get there before everyone else?” MANAGEMENT That applies to the sector’s other Achilles’ heel – management standards. These have to be raised, says Sir Ken and, again, changes are not happening fast enough. Business commentator Rod Oram refers to the now twoyear old study of management capability in manufacturing carried out by the London School of Economics and McKinsey – Management Matters. “It sums up what you find in a lot of New Zealand businesses generally – not just manufacturers. Our main skill is running stuff and we’re quite efficient at that but we are less capable at setting long-term goals and managing performance towards them and we’re really badly off in terms of how we develop people.” His own studies of what he terms a new class of “vanguard companies” have turned up shared traits. As he elaborated in a recent presentation to business folk in Christchurch, they are characterised by: inspired products and services offering unique value; originality born of New Zealand roots; smart strategies for international markets; astute management skills to acquire and develop human and technology skills; and confidence and skills to collaborate with partners, suppliers and customers abroad. MAY 2012 management.co.nz | 29
COVER STORY
Photo: thinkstockphotos.com
Scaling up to compete What areas do manufacturing companies need to embrace to successfully scale up to compete globally? Business commentator Rod Oram has been studying what he calls our “vanguard” companies and has come up with 10 stages of transformation. It’s formulaic and doesn’t apply to every business, says Oram. But it helps highlight how “improvements in cashflow, technology skills and management sophistication flow through”. The transformation see companies moving from: cost-plus to free cash flow; tacit knowledge to protected knowledge; own equity to external equity; labour intensive to capital intensive; low technology to high technology; skilled generalists to expert specialists; value-based to value chain; generic goods to power brand; insecurity to security; and poverty to wealth.
He has also come up with a list of required transformations (see “Scaling up to compete” above) but worries that we don’t seem to be developing business models that enable Kiwi companies to gain the sophistication, relationships and scale they need at sufficient pace to foot it in global markets. “That question of speed and scale is crucial. It doesn’t mean we have to build very big companies here but what worries me is seeing companies that seem to be doing well but in global terms are growing only slowly. So they lack the speed and scale to really make the most of their opportunities or to engage with the right sort of partners overseas.” As to whether you make your widgets at home or offshore, it seems there are as many pluses as minuses. The lure of cheaper production has a chimeric quality – as standards of living and wages lift, the cost benefits shift across borders and in any case have to be viewed against the difficulties of dealing with different regulatory or cultural dimensions and loss of direct control. 30 | management.co.nz | MAY 2012
Oram reckons there are no hard and fast rules. “It all depends on how the economics of a particular product or manufacturing process stack up versus overseas competition. There are some basic themes – for it to work from New Zealand it has to be customised and high value.” BACK TO THE FUTURE Meanwhile the gameplan for manufacturing continues to evolve – with one New Zealand company helping pioneer a whole new DIY approach to just-in-time production. Wellington-based Ponoko is carving its own global niche in the “factory of the future” – offering an internet portal to rapid laser-cutter fabricators sited here and in the US. These enable anyone, from their own desktop, to either make stuff they have designed themselves, order from a library of digital design files or set up a virtual manufacturing business that links production directly to market demand – made only when a customer orders it. Could mass production follow information dissemination and retail back through the magic web portal to a place where personalised, made-to-order manufacture rules again – but on a whole new global scale? Sounds like a world in which Kiwi innovation could thrive. M Vicki Jayne, a former editor of NZ Management, is a freelance business journalist. vjayne@xtra.co.nz
IN CHINA, A BUSINESS EXECUTIVE MAY CONSULT THE STARS, OR WAIT FOR A ‘LUCKY’ DAY BEFORE MAKING A DECISION. TRUE
FALSE
If you’re thinking about exporting to China, there’s no room for guesswork. New Zealand Trade and Enterprise can give you the tips and tools you need to move your business into this market; from country overviews and language and culture, to sales and marketing suggestions. That way, you’ll know that the executive you’re dealing with hasn’t left for an impromptu holiday, he’s just waiting for the right time to make his decision.
Get the answers here. Succeed over there.
T&E0028/B
Visit www.nzte.govt.nz/answershere or call us on 0800 555 888.
Photo: Jan-Michael David
FACE TO FACE
Thomas Friedman Lessons from the US
New Zealand can learn much from America’s current economic and political plight says US Pulitzer Prize winning author Thomas Friedman. He told NZ Management’s Reg Birchfield we should focus on five fundamentals.
T
homas L Friedman, American journalist, columnist and author, is a contentious commentator. He is, like any opinionated personality, both loved and loathed at home and abroad. He’s the author of bestselling books The Lexus and the Olive Tree; Hot, Flat and Crowded; The World is Flat and, most recently That Used to be Us, which he coauthored with his rather more academic friend and foreign policy analyst Michael Mandelbaum. Friedman is worth around US$25 million, according to Wikipedia. Not bad for a wordsmith. He came to New Zealand as the wrap guest speaker for Wellington’s Writers & Readers Week at the capital city’s International Arts Festival. As part of
32 | management.co.nz | MAY 2012
the package, he spent a couple of weeks “thoroughly enjoying himself ” travelling around the country. What he found “impressed” him. “If New Zealand were a stock I’d buy it,” he said. The title of That Used to be Us includes the sub phrase What went wrong with America and how it can come back. A rash of introspective US literature, examining the nation’s recent stumbling economic, social and political performance, has hit the market lately. Friedman and Mandelbaum’s contribution will, in all probability, sell more than most despite some piercingly barbed and cogently argued media criticism. So how serious are America’s problems? “They are so large they can only be addressed through collective action,”
says Friedman. “They require the kind of collective action we exhibited in our best days – such as the years after the Second World War. We have lost the ability to do big, hard things together.” He blames “a leadership deficit” for the lost focus. “We are short of leaders both ready and able to frame the issue and explain why it is so important,” he says. “Our leaders are unwilling or unable to convey the hard truths” which, if they did, would get people “up out of their chairs” and “declare a willingness” to follow. “We don’t have leadership in America right now. We have what a former US comptroller general, Dave Walker, calls ‘laggardship’. That approach involves waiting to see which way the wind blows before trying to catch up with it.”
STARVED Friedman thinks Americans are “starved” for a plan. The plan he advocates would comprise three components. “First we need to address the problem, economic or whatever, and the true scale of that problem,” he says. “In the case of the economy, it requires a 10-year plan to put our fiscal house in order. “Second, the plan must be fair. It must be one in which the rich pay more but everyone would pay something. We are all in this together. People need to know that if they are going to feel the pain, so is everyone else. No one gets a free pass. “Finally, they want something that is aspirational. Everyone must be sold on the need to make our country great again and be proud to pass it on to our kids. Americans want a plan for the future that is honest, fair and aspirational. The leadership required to rise to this challenge is missing,” he asserts. If America’s political leadership has gone to the dogs, so too have the values of its baby boomers. “We have gone from our greatest generation – one that
believed in saving and investing and in sustainable values, to a generation of borrow and spend,” says Friedman. He concedes baby boomers have done some impressive things but, sadly, their values are more situational. In other words, do whatever the situation allows. “If the situation allows you to take out a million-dollar sub-prime mortgage on just $10,000 of income and a United Airlines ID card, just do it because the situation allows it,” he offers. “Sustainable values would tell me I never should.” Presumably, that same situational value set is responsible for executives and directors stripping billions of dollars in cash, bonuses and stock options out of their enterprises. The governance situation allowed it. According to Friedman, the “generational shift” coincided with the end of the Cold War between the US and the Soviet Union. “The Cold War was a huge disciplining force for America. It made us serious. Can you even imagine Americans thinking about defaulting on their debt during the Cold War? It would
be unthinkable. But we just did that. We almost defaulted on our debt,” he says incredulously. FORGED The previous generation was serious because, he says, “they were born in the depression, steeled by World War Two and hardened by the Cold War. The baby boomer generation simply hasn’t had those forging experiences.” He agrees that turning this state of affairs around won’t be easy. He suggests starting with leadership. He thinks Americans need to see their political leaders taking some personal risks. “If individuals are going to take on pain, take on personal risk, they need leaders who show they are equally willing to share that risk. “If [President] Barack Obama had come out after the financial failure and declared his willingness to cut spending – on medicaid, social security and the like – and simultaneously imposed tax hikes on higher incomes and by so doing show a willingness to pay the political MAY 2012 management.co.nz | 33
FACE TO FACE
price for clear leadership, he would have stolen the [moral] high ground. But he didn’t do that,” he adds. There are, he says, a couple of disciplining forces still out there – the market and mother nature. “Unfortunately we are now taunting both of these. And we can only taunt these two realities for so long.” Friedman believes that at some point in the not-too-distant future, the market will turn on its abusers, punishing them for their lack of economic discipline. When that happens, the market will presumably collapse. Similarly, nature will respond catastrophically to repeated environmental disrespect. “We are taunting and tempting both these forces to do their worst.” So on what grounds are both he and Mandelbaum optimistic that the US can find its way back to greatness? Again, it’s about leadership. “Strong leadership that must come from the centre,” he says. The centre will, he believes, declare that it is going to assert its interests over the special interests that currently hold sway in both the economy and society. “As I said before, the only way to solve our problem is collectively,” he says, returning to his theme. “We have to tell the oil lobby or the banking lobby or whatever, that their actions are not okay any more. That is difficult, if not impossible, to do without acting collectively.” HEAD STANDS Despite his personal and the book’s articulation and cataloguing of America’s problems, Friedman insists that Americans are still motivated to excel. “If you want to be an optimist in America, stand on your head. The country looks so much better from the bottom up than from the top down,” he says without a hint of irony. “If, as I do, you go around the country you will see innovation exploding everywhere. Washington DC is the outlier. And it is an outlier because of the unique way in which special interests, money and politics have collectively gummed up the works there. They aren’t able to do that in the rest of the country.” 34 | management.co.nz | MAY 2012
America, he insists, is not in fact defined by its gaps. “The gaps are unquestionably there, but what has distinguished us historically was not dwelling on the gaps but rather on doing things about them. That is what I hunger for right now.” He agrees the discipline of the Cold War has, to some extent, been replaced by the emergence of China as a global foil. “What we also see in China is the sense of focus, discipline and ability to do big hard things together that used to be us. These are things we now miss in ourselves. China has become a mirror for that. “There are segments of the political spectrum that try to use China’s growing influence as a disciplining argument, but not very effectively.” Affluence has shaped the American character according to US historian David Potter. And, says Friedman, that’s part of the reason for the baby boomer generation being the way it is. “We are the product of good times. That has made us more slothful. We can’t afford to be that way any more otherwise we’ll be the first generation to fail to pass on to our kids the American dream of a higher standard of living.” His confidence in the future is fueled by his enthusiasm for the state of innovative enterprises like Apple, Google, Amazon, Facebook, Twitter and Microsoft. “They are still knocking everyone else out of the park,” he says. “There is no one in the world who can touch them [for performance]. They are good companies doing good things and setting global standards. They are doing good things for their shareholders and producing outstanding products.” RAINDROPS FALLING He is almost dismissive of the failings of the financial sector repeating simply that “friends don’t let friends go into finance”. Young people should, he adds, be encouraged to use their brainpower and not spend time betting on whether “one raindrop will descend a window pane faster than another”.
“Finance is the heart that pumps blood to the [corporate] muscle. If the heart is defective there’s a problem that needs to be fixed. We had a heart attack and now we are witnessing a slow repair.” Public opinion and shareholder activism are, he says, driving better practices. “We’re not out of the woods yet and we need to be vigilant, but more companies are moving to a model of being too good to fail rather than too big to fail.” So it’s not too late to recover? Friedman quotes an environmental expert at Dartmouth University, Dana Meadows, who when skeptics suggest it is too late to save the world from climate change responds by saying: ‘We have exactly enough time starting now.’ “That’s how I feel about America’s current predicament and why I feel optimistic about the future,” he says. Friedman was impressed by his two weeks in New Zealand. The takeaway he offers from the American condition is to get our fundamentals right. “There is nothing like good infrastructure, good governance, good regulation, good investment rules, good immigration policies that make a country attractive to the world’s best brains and, a good educational foundation to deliver success,” he says. “America drifted away from its fundamentals – on education, on infrastructure, on government-funded research, on regulation and on immigration. These things make up the five pillars that made us successful and I think they would apply to New Zealand just as well. “Get education, infrastructure, immigration, rules to attract investment and prevent recklessness and governmentfunded research to push out the boundaries of knowledge so venture capitalists and investors can pluck the best flowers whether it is in ag-science or ag-business or software and you’ll be fine. I’m impressed with the way the fundamentals seem to be in place here.” M Reg Birchfield is a writer on leadership, governance and management. reg@rjmedia.co.nz
rly
2012
bir
n be i
to
dr
d
eg
Ju ist
rat
ion
to
22 n ea
ot
’ ve u o y g
ne sc
los
w i n!
Step up to the challenge.
sponsored by
$20,000 PRIZE POOL Pit your skills against some of New Zealand’s best business minds... and you could
REGISTER ONLINE
WIN!
www.businesschallenge.co.nz
e
ADVERTISING
Cracking the
ad code
What makes an advertising agency great? It’s much more than just the creative work. The 2012 Fairfax AdMedia Agency of the Year Awards judged the business side of agency performance. By Ruth Le Pla.
N
ot all the glamour and hype of advertising can dissuade DDB’s Sandy Moore from his belief that an advertising agency is a simple beast. As DDB’s New Zealand CEO it’s his role to perform to six basic KPIs that keep the company booming. It’s a surprisingly mechanistic line of thought from someone whose agency gathers gongs with regular ease and whose company website says it values awards because DDB was founded on the belief that creativity is the most powerful force in business. “Creativity is in our DNA,” it says. “It is the most important contribution we can make to our clients’ success.” And DDB sure has stacked up a pile of awards. It netted its most recent group of golds at the Fairfax AdMedia Agency of the Year Awards which, held this year in association with CAANZ for the first time, celebrate the rubber-meets-the-road end of the spectrum. This is the bit where clients are happy and bottom lines droop under the weight of dollars well won. This year, DDB Group won the Advertising Agency of the Year Award and went on to take out the top prize as Supreme Agency of the Year. Moore was named CEO of the Year.
36 | management.co.nz | MAY 2012
And yet, to Moore, an ad agency is “just a simple business. There are just a few things to get right and if you get them right, you’re fine.” As one of the DDB Group’s worldwide CEOs, he’s assessed every year on six KPIs, all of which start with a ‘P’ and “are in no particular order apart from the first one – which is the first one”. He means “people”: the engine room of his group’s success. Get that one right, he reckons, and many of the others ‘Ps’ produce a positive impact that cascades down throughout the organisation. For after people, in Moore’s book, come product, partnerships, performance, positioning and prospecting. “All of those KPIs have an impact on each other and several of them help each other,” he says. “A couple of them really impact the company’s business performance: those are people, then partnerships and product.” His agency’s performance, he says, stems from getting those right. The mantra de jour is, of course, that hiring the best people makes strong business sense. In Moore’s case he’s gone out on a limb, “investing ahead of the curve” by seeking out and snapping up the best talent even before he could reasonably
pin them to bottom line dollar returns for DDB. “It’s been risky in the [economic] environment of the past few years, as you can imagine,” he says. “Really good people cost more money… In our case, it’s worked. But it does take a CEO with a bit more internal fortitude to do that.” Moore’s theory, and probably DDB’s too, is that better people make for better partnerships. DDB, for instance, has held the McDonald’s account ever since those Golden Arches first opened for burgerflipping business in their first store in Porirua in the mid-1970s. Moore reckons the impact of such strong partnerships cascades further down the business emboldening clients to do “better and more exciting things”. And this, in turn, enables DDB’s strategic and creative departments to create a better product which produces better performance. He mans up that this “virtuous or positive circle” can be unravelled pretty quickly too. Even the best people may move on to further their career elsewhere, for example. He jokes that as CEO, it’s his job to make it difficult for people to leave. A couple of initiatives are likely to be doing just that. DDB commits two
ADVERTISING
percent of revenue to staff training each year. Its inhouse training programme, Learn, includes a tailor-made prospectus from which all staff can hand-pick their own opportunities to learn: everything from Photoshop design, to digital skills or presentation techniques. Senior and up-and-coming staff get a chance to turbo-charge their careers with Harvard courses. Less conventionally, in December last year Moore introduced ‘summer hours’ to DDB, allowing anyone to leave work after lunch on a Friday on full pay as long as their work is sorted. That one move has gifted staff a precious commodity. “I don’t think we’ve done anything else in my time with the company that has received as many plaudits as this,” he says. “I can’t believe the joy and ecstasy that went through people when they found they could leave then.” Ross Goldsack is all too aware of the ecstasy of advertising. The former Y&R executive chairman helped judge this year’s Fairfax AdMedia Agency of the Year Awards alongside former Colenso BBDO chairman Roger MacDonnell and DB Breweries MD Brian Blake. First published in NZ Management magazine’s sister publication AdMedia,
Goldsack’s “personal observations from a humble judge” trace his belief that agencies should be judged on three simple criteria – business performance; vision, innovation and strategy; and awards. JustONE is one such Agency of the Year winner, having pipped runners-up Catch!Media and Fuse Network to take out this year’s Specialist Agency of the Year Award. MD and founder Ben Goodale remains mindful that, critical as it is, his company’s expertise is just one part of any client’s success. “I say to my team that what they are doing at any one time may not be the most important thing in a client’s day. They have to recognise that the dynamics in a client’s organisation are many and varied.” In a way, Goodale’s approach simply embodies his company’s offering to clients. He describes justONE as a very focused, specialist one-to-one agency providing CRM and loyalty expertise. In an industry selling ideas and opinions, justONE layers in an additional focus on its customers. “We find out about client companies’ procedures and processes, and try
to fit in with them as best as possible. We aim to be responsive,” says Goodale. “You’d think that would be a hygiene factor and you wouldn’t need to even say it,” he says, “but being easy to deal with is very important. We always try to follow up on phone calls and emails, and do what we say we’re going to do. We send estimates and invoices on time... It’s an attitude thing.” The same might be said about Special Group, a joint winner alongside Shine of this year’s Wildcard Award. Special Group managing partner Michael Redwood says the agency’s flat structure means it can buck the “typical” hierarchy of multiple layers of service. Its senior partners get up close and personal with the head honchos in client organisations. And its flexible structure also ensures Special Group can apply creative thinking to a business problem rather than assume the problem can be solved by any one preconceived approach. As the leaders of all good agencies know, an advertising company plays to the same rules as any other good business. It needs to provide a good product and then shout – in this case, creatively – from the rooftops until everyone knows about it. M MAY 2012 management.co.nz | 37
PROFESSIONAL DEVELOPMENT
My MBA Blood, sweat and cheers. Undertaking an MBA is a transformational process. But is it worth it? Vivienne McLean finds out.
F
or many it’s seen as the passport to advancement, dangling the prize of more challenging roles, better money and the cachet that goes with completing a course of study notorious for pushing students beyond their comfort zones. Two years of juggling study and work, social life flying out the window, and trading heavily on the support and understanding of family and friends – is it all worth it? We asked a cross section of MBA students and graduates about their motivations and expectations, challenges and achievements – and what they’d do differently if starting over. What shines through is that the MBA programme is not only an investment in your career, but becomes a life-changing investment in yourself. See the Professional Development Guide on page 42 for key information about MBA programmes available in New Zealand.
ADRIAN HENDRY Final year student, Victoria University
I have an IT background, to CIO level, with substantial project and programme management experience. I thought the MBA programme would enable me to better understand C-level executive risks and requirements, helping me to add value and to be more effective as an IT leader, and giving me a springboard to the next level. Although I now have a rhythm to what I do, initially I found it quite difficult and tiring to do a further 16-20 hours a week on top of work, as well as balancing family and social life. My wife has been extremely supportive. A second challenge was to understand and apply subjects in areas where
I’ve had minimal contact – organisational behaviour, HR and change management. These definitely helped me to better understand myself as an employee in a large organisation, with change going on all around me, and the reflections and experiences have already made me a better manager. With the benefit of hindsight I would relax more quickly and interact sooner and more confidently with my fellow students and lecturers. Many of the people who have travelled with me along the MBA journey have been outstanding. They have challenged me, encouraged me and laughed with me. Without them my studying would have been much less. Without exception, the academic staff have been passionate and knowledgeable – very approachable, and always ready to defend their own position or to challenge a student’s, while showing great respect.
Nothing draws an employer’s eye like an MBA from Victoria University of Wellington. To find out more call 04-463 5367, visit www.victoria.ac.nz/mba or email mba@vuw.ac.nz
amongst
Get the
best.
38 | management.co.nz | MAY 2012
PROFESSIONAL DEVELOPMENT
Find the right balance with a Postgraduate Business Degree
• Master of Human Resources and Organisational Development (MHROD) • Master of Professional Accounting (MPA) • Doctor of Business Administration (DBA)
JACQUELINE MOORE Currently studying, University of Canterbury
I wanted to challenge myself. I felt I’d hit a glass ceiling at work and hoped this would open up further opportunities. The main challenges for me were loss of income as a full-time student, and fear of failure. I’ve met a really great group of people and am being taught by extraordinary teachers. I’ve learnt more than I ever expected about business management. It has given me confidence in my abilities and opened my eyes to the opportunities around me. I have passed all my papers so far, nearly achieved a Master’s, and it has encouraged me to continue my university studies. The course and the outcomes ab-
If you want to get ahead in your career and maintain your lifestyle, our postgraduate business degrees are a great way to invest in your future. These degrees from Southern Cross University, Australia have been specifically designed to work around you and your lifestyle. Call MIT on 0800 MBA DBA (0800 622 322), visit us online at www.manukau.ac.nz/postgraduate or email mbadba@manukau.ac.nz for an information pack on our supported distance learning programmes.
solutely met my expectations, probably more than I expected. I also realised that I knew more than I’d thought. The opportunity to share experiences with other students and lecturers was most satisfying, and coming from the not-for-profit sector there were plenty of hearty debates. I feel ready for the next step in my career. DANA RALPH-SMITH Final paper, Southern Cross University MBA, MIT
I have a clinical degree in physiotherapy but over time have taken on more managerial roles in the healthcare system. I wanted to ensure I had the theoretical skills to lead and manage teams and services efficiently and effectively, and move up to a more senior management role. With the skills
University CRICOS: 01241G 03135E
0518
• Master of Business Administration (MBA)
I’ve learned I was promoted to a general manager position. I was only able to manage one paper per term and had to be quite disciplined balancing my full-time role as a healthcare manager, time with my husband and two young children, and getting the most out of the programme. Initially, I tried to read everything but the programme taught me to become more discerning – and more succinct with my writing. The study required to produce the work does become an achievable routine. One of the main achievements has been the ability to study theoretical information and directly apply my learning at work. Every single paper has provided an opportunity to look at what I was doing as a leader and manager and improve on it, to the benefit of my skills, my staff and the organisation. I have also improved my ability to research and synthesise information. The MBA has given me
MAY 2012 management.co.nz | 39
PROFESSIONAL DEVELOPMENT
the confidence and skills to look at the business from any perspective, plan and articulate where and how we can improve, and lead effective change within very tight timeframes. KIRSTEN MCDONALD Graduates in May, University of Auckland
My background had been teacher training abroad. On returning to New Zealand I wanted to study further and the MBA seemed the logical choice to give me a broad picture of business and management, and its application to education. As well as maintaining work, study and life balance, it was also a challenge overcoming my own (mis)perception of the irrelevance of my international teacher training background, also speak-
ing in and about new contexts. In terms of major outcomes and achievements, the main difference has been confidence in the transferability of skills and in my own ability to learn, research and apply new knowledge quickly. I have gained a large toolkit of models to use in the workplace, a global picture of business and an awareness of the key questions to ask in a variety of situations. My role has now changed from teacher training to business development and international marketing. In addition, I was delighted to be invited to the Beta Gamma Sigma society at the completion of my MBA. Those core achievements were what I expected to get out of the course and my expectations were met. Every paper I learnt a great deal that I apply to my current working situation wherever possible. With the benefit of hindsight I would be stricter with my life balance, and also convince myself sooner that my own context and experience are relevant.
PATRICK HUNT Completing final major research project, University of Waikato
I did the MBA to gain a deeper understanding of the various business functions and be recognised in the market for having this knowledge – also, to better understand and develop my strengths so I can concentrate on what I do best and thereby contribute at a higher level. Balancing family and work commitments with the rigours of study was a challenge. I have a very supportive, understanding wife and her belief in the value of the programme enabled me to fully commit to the hours needed. The biggest difference is in my selfknowledge. I entered the programme wanting to understand more about business and have come out with a deeper knowledge of myself, not only in business
ARE YOU STUDYING AT NEW ZEALAND’S LEADING BUSINESS SCHOOL? Triple Crown accredited, Waikato Management School is where applied industry meets technology. Corporate & Executive Education is taking programme enrolments now.
The Waikato MBA Focuses on leadership, value creation, sustainability, global experience, expert learning, collaborative partnerships, and communication. This is an international qualification. Starts: April 2013. We are about you. Your life. Your career. Your organisation.
There’s no stopping you
Corporate & Executive Education. For more information phone 0800 800 891, email execed@waikato.ac.nz or visit www.execed.ac.nz
40 | management.co.nz | MAY 2012
KTD2325/04/12
E kore e taea te aukati i a koe
PROFESSIONAL DEVELOPMENT
but in a wider context. How I interact with others, the way I communicate and my view of life have all improved and expanded. Major outcomes certainly include improved interpersonal skills, time management, and dealing with stress and ambiguity. The MBA has added a valuable academic dimension to my practical experience and I am pleased that I have done it in my 40s. The course and outcomes far exceeded my initial expectations. I come away with so much more than I planned... tangible outcomes including the knowledge and practical experience gained from working on projects with other motivated people, and intangible outcomes including a deeper appreciation of others, a better understanding of the value relationships bring to business, and the confidence to try new approaches and accept that failure is sometimes a necessary part of success. Enjoyment for me was a really impor-
tant aspect of the MBA and even when it didn’t feel enjoyable at times I consoled myself that I knew more than when I first started, so was still progressing. PAMINA PRASAD Graduate (2011), AUT
I undertook the challenge of an MBA for a variety of personal reasons. After the breakdown of my marriage it was a way to personally heal, as well as to boost a career in business management. I stretched the programme over four years so that I could care for my daughter and work full time, so whilst I had a lot to handle, I was able to focus on my goals and utilised every moment when I was studying. The lecturers were very supportive and always approachable. The MBA has been the best thing that I have ever done. I have greater confidence
in myself. I can confidently communicate with senior management and the CEO. I can prepare strategic documentation, plan meetings with ease and as a result have received an increase in remuneration for my performance at work. The course was excellent and delivered on the intent of the programme. There is a clear structure and expectations were made very clear at orientation and at the start of each paper. The group work and presentation requirements were a great learning experience. I learnt much more about group interaction, dynamics and assimilating views to reach an end result. My experience shows that nothing is impossible as long as you have the drive, ambition and the determination. M For more My MBA stories see management.co.nz/specialreport.asp Vivienne McLean is a freelance business writer.
Developing leaders who make a difference. University of Canterbury’s internationally accredited MBA, Graduate Diploma in Business Administration and Postgraduate Certificate in Strategic Leadership will help you to: • develop your career • increase your earning potential, and • make a lasting contribution to your organisation and community.
www.canterbury.ac.nz
BUSINESS & ECONOMICS MAY 2012 management.co.nz | 41
GUIDE EMPLOYERS AND MANUFACTURERS ASSOCIATION (NORTHERN) At EMA Learning we strive to help you and your people succeed and believe that our relationships are built on experience, excellence and innovation. We take pride in working closely with our community and we continue to invest in interactive programmes that bring new skills and opportunities. EMA Learning offers courses of excellent quality in a wide range of topics covering Management, HR, Health and Safety, National Certificates, Personal Development and Leadership. Our trainers are all highly knowledgeable in their fields of expertise and are skilled in presenting the course information. For those with unique requirements, we are able to deliver Tailored Training at your premises, with guaranteed relevance and reward – a programme is written specifically for your business needs and situation, and delivered at your place of business. With over 10,000 attendees on our courses, conference, events, e-learning and tailored training, we are New Zealand’s business trainer of choice. Train with us today, use what you learn tomorrow and see your business grow. Private Bag 92066, Victoria Street West, Auckland 1142 159 Khyber Pass Road, Grafton, Auckland 1023 Other campus address: Hamilton (See website) Email: learn@ema.co.nz, Website: www.ema.co.nz Ph: 0800-800 362
KEY PERSONNEL • Deborah Law-Carruthers (Portfolio Manager), Management, Business Productivity, Legislation and HR, 0-9-367 0947, deborah.lawcarruthers@ema.co.nz 42 | management.co.nz | MAY 2012
MAY 2012
PROFESSIONAL DEVELOPMENT
EDUCATION & PROFESSIONAL DEVELOPMENT PROGRAMMES
• Kevin Chambers (Portfolio Manager), Tertiary 0-9-367 0958, kevin.chambers@ema.co.nz • Craig Garner (Portfolio Manager), Legislation and HR – Health and Safety, Employment Law 0-9-367 0907, craig.garner@ema.co.nz • Lotta Bryant (Portfolio Manager), Business Expansion, 0-7-839 2710, lotta.bryant@ema.co.nz
COURSES National Certificate in Business (First Line Management) Level 3 SUITABLE FOR: Supervisors, Team Leaders, Managers, HR Staff. COST: Member: $2500+gst, Non-Member 3000+gst QUALIFICATION: National Certificate NZQA REGISTERED: Yes DURATION/ENROLMENT: Taught over 4 blocks of 2-day workshops over 4 months. Block one starts either 28-29 May | 3-4 September. AVAILABLE: Four blocks of 2 days each. SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate. KEY TUTORS: An EMA learning tutor. FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: This programme covers the fundamentals of first line management and emphasises the one-on-one communications skills required for workplace leadership. The ideas and practical applications learned allow you to build and develop strong and united teams.
National Certificate in Business (First Line Management) Level 4 SUITABLE FOR: Supervisors, Team Leaders, Managers, HR Staff. COST: Member: $2500+gst, Non-Member $3000+gst QUALIFICATION: National Certificate NZQA REGISTERED: Yes DURATION/ENROLMENT: Taught over 4 blocks of 2-day workshops over 4 months. Block one starts 30 July. AVAILABLE: Four blocks of 2 days each.
SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate. KEY TUTORS: An EMA learning tutor. FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: Discover how your company is put together from the development of its mission, vision, values and organisational goals to recruitment and staff selection, developing staff teamwork and team building.
Creating and Maintaining High Performing Teams SUITABLE FOR: Supervisors, Team Leaders, Managers, HR Staff. COST: Member: $850+gst, Non-Member $1600+gst NZQA REGISTERED: Yes DURATION/ENROLMENT: 2 day course offered either: 19-20 June | 26-27 September. AVAILABLE: 2 full days | 9am-4pm. SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate. KEY TUTORS: Haddo D’Audney. FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: This interactive course will teach you a selection of practical management techniques and approaches to lead, encourage, cajole and demand performance from your team.
Managing Change – Leading in Times of Uncertainty SUITABLE FOR: Team Leaders, Managers, Business Owners. COST: Member: $500+gst, Non-Member $850+gst NZQA REGISTERED: Yes DURATION/ENROLMENT: 1 day course offered either 4 July | 12 November. AVAILABLE: 1 full day | 9am-4pm. SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate.
KEY TUTORS: Vivienne Tobin. FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: Proper management of the human side of change may be the critical missing link in change initiatives. Enhance your knowledge of ways to best lead teams during times of uncertainty.
Lean Thinking – Continually Improving Your Business SUITABLE FOR: Anyone who wants to learn to Think Lean. COST: Member: $500+gst, Non-Member $850+gst NZQA REGISTERED: Yes DURATION/ENROLMENT: 1 day course offered either 24 August | 23 October. AVAILABLE: 1 full day | 9am-4pm SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate. KEY TUTORS: Clint Yeats. FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: Learn to Think Lean by mapping your business process and understanding the difference between ‘value adding’ and ‘non-value adding’ activities within the process. Productive business processes are achieved through the elimination of these wastes!
Strategic Planning SUITABLE FOR: Managers, Directors and Business Owners. COST: Member: $500+gst, Non-Member $850+gst NZQA REGISTERED: Yes DURATION/ENROLMENT: 1 day course offered either 8 June | 14 September. AVAILABLE: 1 full day | 9am-4pm SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate. KEY TUTORS: Lisa Mandic, Principal Consultant, River Empowerment Ltd FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: This programme uses a step-by-step approach enabling you to design and implement a clear, robust strategy to ensure the future success of your business.
Management – An Introduction SUITABLE FOR: Newly appointed Managers, Managers of teams or units. COST: Member: $850+gst, Non-Member $1600+gst NZQA REGISTERED: Yes DURATION/ENROLMENT: 2 day course offered either 7-8 June | 3-4 September (Hamilton) | 25-16 October. AVAILABLE: 2 full days | 9am-4pm SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate. KEY TUTORS: An EMA learning tutor. FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: Discover what it takes to become an effective manager in today’s business climate. This
intensive course deals with people and management issues with clear guidelines given every step of the way.
Improving Workplace Relationships SUITABLE FOR: Team Leaders, Managers, Business Owners. COST: Member: $500+gst, Non-Member $850+gst NZQA registered: Yes DURATION/ENROLMENT: 1 day course offered either 25 June | 31 August | 5 November. Available: 1 full day | 9am-4pm SPACES AVAILABLE: Maximum 18 per class – we can add another class if numbers dictate. KEY TUTORS: Deborah Law-Carruthers. FORMAT: On-site at EMA. Excellent classroom facilities. Registration includes morning tea, lunch and afternoon tea. DESCRIPTION: Expand your knowledge of the business impact of relationships and your skill repertoire so you can nurture productive relationships and foster a positive workplace through completing the Strength Deployment Inventory.
Leadership Programme for High Potentials SUITABLE FOR: Level 3 & 4 high potential executives COST: NZ$8,900 +GST (plus food & accommodation package) DURATION/ENROLMENT: 6-day residential programme at Nugget Point, Queenstown SPACES AVAILABLE: 20 per programme KEY TUTORS: Director, programme manager and executive coaches FORMAT: On-campus, experiential DESCRIPTION: This 6-day intensive residential programme invites you to reflect on your current leadership style and learn how to reflect on your strategic leadership capabilities for more senior roles.
MBA General Management Programme SUITABLE FOR: Directors, CEOs and General Managers DURATION/ENROLMENT: 3 modules of 5 days over 3 months SPACES AVAILABLE: 15 per programme KEY TUTORS: Director, Programme Manager and subject specialists FORMAT: Auckland CBD, residential, experiential DESCRIPTION: Module 1: Strategy & Change, Module 2: Accounting & Finance, Module 3: Marketing & People. Rigorous & intensive.
INSTITUTE FOR STRATEGIC LEADERSHIP The Institute for Strategic Leadership specialises in developing strategic leaders at the director, chief executive and general manager levels. It also supports these executives develop their high potential middle managers (level 3). Level 27, PWC Tower, 188 Quay Street PO Box 105 538, Auckland 1143 Ph: +64 9 366 1560 Fax: +64 9 336 1474 Email: enquiries@leadership.ac.nz Website: www.leadership.ac.nz
KEY PERSONNEL • Geoff Lorigan (Director) +64 21 337 643, g.lorigan@leadership.ac.nz • Lindsay Somerville (Programme Manager) +64 21 848 159, l.somerville@leadership.ac.nz
COURSES Strategic Leadership Programme SUITABLE FOR: Directors, chief executives and general managers COST: NZ$15,900 +GST (plus food & accommodation package) DURATION/ENROLMENT: 7-day residential programme at Millbrook, Queenstown SPACES AVAILABLE: 20 per programme KEY TUTORS: Director, programme manager, executive coaches and lifestyle coaches FORMAT: On-campus, experiential DESCRIPTION: The 7-day intensive residential programme blends team-based learning with focused, one-on-one executive coaching. As a result you’re able to hone your own innate leadership abilities and potentially deliver a vastly more effective style of leadership.
INSTITUTE OF DIRECTORS IN NEW ZEALAND (INC) The Institute of Directors delivers best practice learning which can help good directors become even better, no matter what stage of their career. Our Director Development programme is designed to meet the needs of today’s directors in today’s environments, to maximise the opportunity to interact with peers while learning from presenters who are top in their field. PO Box 25253, Wellington 6146 Tower Building, 50 Customhouse Quay, Wellington Ph: 0-4-499 0076 Email: mail@iod.org.nz, Website: www.iod.org.nz
KEY PERSONNEL • Linda Cohen (Director Development Manager), directordevelopment@iod.org.nz • Jodi Percy (Director Development Advisor – Northern), jodi.percy@iod.org.nz • Andrea Broad (Director Development Advisor – Southern), andrea.broad@iod.org.nz
COURSES Governance Essentials SUITABLE FOR: Senior managers, aspiring and new directors Continued on page 44
MAY 2012
| management.co.nz | 43
Continued from page 43
COST: $785-$940 DURATION/ENROLMENT: 1-day course 14 May, 20 June, 11 July, 31 July, 14 Aug, 12 Sept, 30 Oct, 29 Nov SPACES AVAILABLE: 20 per course DESCRIPTION: Designed as a practical introduction to governance, IoD’s Governance Essentials gives participants an understanding of the role and fundamental responsibilities of the board and individual directors.
essential. This week-long residential course provides a comprehensive understanding of what it takes to be a competent director. It provides excellent networking opportunities and ample occasion for participation, discussion and debate.
MANUKAU INSTITUTE OF TECHNOLOGY FACULTY OF BUSINESS
Finance Essentials SUITABLE FOR: Senior managers, aspiring and new directors COST: $785-$940 DURATION/ENROLMENT: 1-day course 14 June, 24 July, 30 July, 15 Aug, 26 Sept, 31 Oct, 13 Nov SPACES AVAILABLE: 20 per course DESCRIPTION: Every director at the board table must be financially proficient and both read and understand an organisation’s financial statements. Finance Essentials examines the director’s role in relation to financial reporting, demystifies financial terminology and enables you to understand financial reporting and analysis.
Strategy Essentials SUITABLE FOR: Senior managers, aspiring and new directors COST: $785-$940 DURATION/ENROLMENT: 1-day course 16 May, 25 July, 27 Sept SPACES AVAILABLE: 20 per course DESCRIPTION: A board of directors takes a longterm view of the business, considers where the business is going and how it’s going to get there. Strategy Essentials will help participants understand the fundamentals of strategy development and how they can add value as they participate in the strategy development process.
Not-for-Profit Governance Essentials SUITABLE FOR: Senior managers, aspiring and new directors who work with not-for-profit boards COST: $785-$940 DURATION/ENROLMENT: 1-day course 9 May, 17 July, 6 Sept, 9 Oct SPACES AVAILABLE: 20 per course DESCRIPTION: There are some key differences in the not-for-profit (NFP) sector which impact the governance of these organisations. Not-for-Profit Governance Essentials outlines these differences while providing a full framework for governance and how a board works.
Company Directors’ Course SUITABLE FOR: Senior executives and directors of all levels who wish to advance their competency in the governance environment. COST: $6560-$7875 DURATION/ENROLMENT: 5-day, 6 night – residential course 20-25 May, 10-15 June, 15-20 July, 5-10 Aug, 26-31 Aug, 16-21 Sept, 14-19 Oct, 18-23 Nov SPACES AVAILABLE: 25 per course DESCRIPTION: For anyone serious about their career as a director, IoD’s Company Directors’ Course is
44 | management.co.nz | MAY 2012
LEADERSHIP NEW ZEALAND TRUST Leadership New Zealand develops high quality leadership throughout New Zealand by connecting the many sectors of our diverse society with quality conversation, challenging learning, and real action. We provide a unique and unparalleled leadership development experience by harnessing diverse perspectives and conversation to develop better leaders who engage effectively with salient issues in our society today and into the future. PO Box 5061, Wellesley St, Auckland 1141 Ground floor, Princes Court, 2 Princes St, Auckland Ph: 0-9-309 3749 Email: info@leadershipnz.co.nz Website: www.leadershipnz.co.nz
KEY PERSONNEL • Russell Little (CEO), 027 272 0993, russell.little@leadershipnz.co.nz • Manu Keung (Programme Leader), 027 291 2052, manu.keung@leadershipnz.co.nz • Jo Brosnahan (Chair), 021 576 595, jo.brosnahan@gmail.com
COURSES Leadership Programme SUITABLE FOR: Senior leaders across all sectors of New Zealand society COST: $13,000 + GST DURATION/ENROLMENT: 10-month programme with ongoing involvement in community leadership. AVAILABLE: Part time PREREQUISITES: Holding a senior position of leadership in your organisation or community SPACES AVAILABLE: 35 FORMAT: A full year programme involving 9 monthly sessions across a range of locations in New Zealand. DESCRIPTION: Each session involves presentations from and discussions with prominent leaders and guest speakers, debates, and full day seminars. The diversity of participants, speakers, topics and locations give a variety of perspective that creates challenge, real learning and transformation above and beyond standard leadership development.
The Faculty of Business has a comprehensive portfolio of study options relating to management and business education with an applied focus and commitment to industry engagement. Postgraduate courses relating to executive education are offered in collaboration with Southern Cross University (Australia) via supported distance learning mode of delivery. Private Bag 94006, Manukau 2241 North Campus, Otara Road, Manukau, Auckland Freephone: 0800 MBA DBA (622 322) Fax: 0-9-968 7783 Email: mbadba@manukau.ac.nz Website: www.manukau.ac.nz/postgraduate
KEY PERSONNEL • Dr Christopher Theunissen (Associate Dean Postgraduate) christopher.theunissen@manukau.ac.nz • Mrs Elly Forsyth (Programme Coordinator) mbadba@manukau.ac.nz
COURSES SOUTHERN CROSS UNIVERSITY (SCU) PROGRAMMES Master of Business Administration (MBA) SUITABLE FOR: Middle to senior managers QUALIFICATION: Southern Cross University MBA COST: $2100 per unit (2012) including GST. 12 units (schedule and number of units subject to change in 2013) DURATION: Two to four years. Start in January, May or September AVAILABLE: Part-time, supported distance learning PREREQUISITES: Degree or equivalent and relevant professional experience SPACES AVAILABLE: Unlimited KEY TUTORS: Dr Christopher Theunissen, Associate Dean Postgraduate, plus SCU approved Faculty staff FORMAT: Distance learning with supported workshops and tele-tutorials DESCRIPTION: This programme enables students to develop and enhance their individual management skills and critical thinking abilities with a focus on the application of knowledge in business. It is particularly relevant for those individuals who have an existing leadership role within an organisation or for those aspiring to such a role.
Master of Human Resources and Organisational Development (MHROD) SUITABLE FOR: Middle to senior managers Continued on page 46
Continued from page 44
QUALIFICATION: Southern Cross University Master of Human Resources and Organisational Development (MHROD) COST: $2100 per unit (2012) including GST. 12 units (schedule and number of units subject to change in 2013) DURATION: Two to four years. Start in January, May or September AVAILABLE: Part-time, supported distance learning PREREQUISITES: Degree or equivalent and relevant professional experience SPACES AVAILABLE: Unlimited KEY TUTORS: Dr Christopher Theunissen, Associate Dean Postgraduate, plus SCU approved Faculty staff FORMAT: Distance learning with supported workshops and tele-tutorials DESCRIPTION: The Master of Human Resources and Organisational Development offers a thorough grounding in the areas of human resources management and development with an emphasis on strategies in organisational development and business leadership.
Master of Professional Accounting (MPA) SUITABLE FOR: Middle to senior managers QUALIFICATION: Southern Cross University Master of Professional Accounting (MPA) COST: $2100 per unit (2012) including GST. 16 units (schedule of units subject to change in 2013) DURATION: Two to four years. Start in January, May or September AVAILABLE: Part-time, supported distance learning PREREQUISITES: Degree or equivalent and relevant professional experience SPACES AVAILABLE: Unlimited KEY TUTORS: Dr Christopher Theunissen, Associate Dean Postgraduate, plus SCU approved Faculty staff FORMAT: Distance learning with supported workshops and tele-tutorials DESCRIPTION: The Master of Professional Accounting (MPA) programme is designed for non-accounting business professionals looking for a career change and planning to move into the fields of accounting, taxation, economics, law and management.
Doctor of Business Administration (DBA) SUITABLE FOR: Senior executives QUALIFICATION: Southern Cross University DBA COST: $2150 per unit (2012) including GST. Up to 24 units (with potential consideration of advanced standing for some coursework units) DURATION: 6 years maximum part-time. Start in January, May or September AVAILABLE: Part-time, supported distance learning PREREQUISITES: MBA or a Masters Degree level research or coursework qualification acceptable to Southern Cross University; AND have appropriate executive managerial experience in the public or private sector SPACES AVAILABLE: Maximum of 15 per year KEY TUTORS: Dr Christopher Theunissen, Associate Dean Postgraduate, plus SCU approved Faculty staff FORMAT: Distance learning with supported workshops for initial research units. The DBA thesis consists of an approved programme of supervised research. DESCRIPTION: This professional Doctorate
46 | management.co.nz | MAY 2012
programme offers senior executives doctoral level study opportunities relating to business. It develops high-level research abilities and competencies in key areas of management as well as allowing for the communication of associated research results to peer groups and society as a whole.
New Zealand Institute of Management Inc INSPIRING MANAGERS
• Qualifications registered on the NZ Qualifications Framework • Work with ITOs to gain funding.
PHILOSOPHY NZIM training and development programmes are at the forefront of management development today, developing the leaders and managers of tomorrow. NZIM can offer learning opportunities to people wanting to acquire new skills and knowledge in a world with no guaranteed career paths and emphasis on self-development and selfdirection. NZIM studies overseas trends, monitors research and keeps a watchful eye on business development and techniques in order to offer a range of diverse programmes and services.
SNAPSHOT OF COURSES NZIM Diploma in Front Line Management
PO Box 67, Wellington 6140 Level 9, Lumley House, 3-11 Hunter Street, Wellington Freephone: 0800-373 700 Phone: 0-4-495 8300, Fax: 0-4-495 8301 • Kevin Gaunt (CEO NZIM Inc) kevin_gaunt@nzimnorthern.co.nz
SUITABLE FOR: Co-ordinators, team leaders, supervisors. AVAILABLE: Full-time, part-time. All NZIM regions. SPACES AVAILABLE: 16 FORMAT: Workshops and post workshop assessment. DESCRIPTION: This Diploma is designed to enhance your overall business and management acumen and ability. NZIM Dip.FLM – Superior business results.
NORTHERN REGION
NZIM Diploma in Project Management
PO Box 6600, Wellesley Street, Auckland 1141 DLA Phillips Fox Tower Level 4, 209 Queen Street, Auckland 1010 Freephone: 0800-800 694 Ph: 0-9-303 9100, Fax: 0-9-303 9109 Email: enquiries@nzimnorthern.co.nz • Tait Grindley, tait_grindley@nzimnorthern.co.nz
CENTRAL REGION PO Box 11781, Manners Street, Wellington 6142 Level 7, Lumley House, 3-11 Hunter Street, Wellington Freephone: 0800-373 700 Ph: 0-4-495 8300, Fax: 0-4-495 8301 Email: enquiries@nzimcentral.co.nz • Shaun Sheldrake shaun_sheldrake@nzimcentral.co.nz
SOUTHERN REGION PO Box 13044, Armagh, Christchurch 8141 Unit 4, 303 Blenheim Road, Christchurch Ph: 0-3-379 2302, Fax: 0-3-357 8033 Email: admin@nzimsouthern.co.nz • Joseph Thomas, joseph@nzimsouthern.co.nz
WHAT SETS NZIM APART? NZIM is a registered Private Training Establishment and a not-for-profit organisation with a proud history dating back to 1946. • Facilitated by experienced practitioners • “Learning by doing” is the philosophy • Workshop participant numbers are restricted to ensure individual learning • An interactive environment where participant input is encouraged and welcomed • Up-to-date workshop content and comprehensive workbooks and reference manuals provided
SUITABLE FOR: Individuals who are involved in project management and want a qualification. DURATION: 9 days over 9 months. AVAILABLE: Full-time, part-time. SPACES AVAILABLE: 16 FORMAT: Workshops and post workshop assessments. DESCRIPTION: NZIM Diploma in Project Management (Level 5) will provide you with the skills and applied knowledge for effective management of projects in a wide range of contexts.
Advanced Management Programme SUITABLE FOR: Those in senior leadership or management or aspiring to move into senior positions. DURATION: Two x 2 week segments commencing 19 June 2011 AVAILABLE: Full-time SPACES AVAILABLE: 25 FORMAT: Seminar style in hotel setting. DESCRIPTION: AMP takes a holistic view of leadership offering an invaluable opportunity to spend time with an international faculty exploring individual and organisational excellence.
NZIM Diploma in Management Advanced (Level 6) SUITABLE FOR: Managers preparing for senior roles. DURATION: 12 months AVAILABLE: Part-time, Independent study PREREQUISITES: More than five years management experience. SPACES AVAILABLE: 16 FORMAT: Workshops and post workshop assessment DESCRIPTION: The NZIM Diploma in Management Continued on page 48
Continued from page 46
Advanced programme is an innovative, comprehensive programme designed to extend and develop the potential of key managers and leaders within an organisation.
teaching and learning best practices, supported by leading-edge learning technologies, and designed and delivered by subject experts who are professional educators.
NZIM PUBLIC PROGRAMMES AND CUSTOMISED TRAINING & CONSULTANCY
PO Box 20395, Bishopdale, Christchurch 8453 Unit 3a, 41 Sir William Pickering Drive Burnside, Christchurch Ph: 0-3-943 2373, Fax: 0-3-943 2375 Email: info@development.org.nz Website: www.development.org.nz
NZIM offers over 1000 workshops nationally and has over 60 years of experience in building management capability in New Zealand. NZIM regional training centres cover the whole country and offer training programmes to cater for the broad spectrum of managers – from Directors and CEOs to team leaders and frontline managers. Programmes range from half-day seminars to one-month residential. These include NZQA approved qualifications from level 4 to level 6 including courses such as the Diploma in Health and Safety Management (Level 6), NZIM Diploma in Management Advanced (Level 6) and National Certificate (Level 4). NZIM also offers 1, 2, or 3-day programmes covering a wide range of requirements including executive development, operational management, sales and marketing, financial fundamentals and a wide range of essential business skills. NZIM develops customised learning solutions which support organisational development and change. We partner with some of New Zealand’s leading organisations, to deliver high quality learning programmes, designed to meet specific organisational needs; these range from 2-hour learning sessions to half-day seminars to year-long qualifications.
DESCRIPTION: Multi-workshop, multi-presenter leadership development programmes at operational, tactical and/or strategic leader levels that address client organisation competencies frameworks or the Institute’s Leadership Competencies Framework; customised workshops leveraged off our short courses content and supported by other learning elements; design and delivery of new content to client specifications.
KEY PERSONNEL • Kyran Newell (Director) 021 688 966, kyran.newell@development.org.nz • Nicky Trainor (Director) 021 133 1201, nicky.trainor@development.org.nz
PROJECT PLUS LTD
PROGRAMMES Short Courses
For over 20 years Project Plus has maintained a passionate focus on our clients’ strategic success. Our training & certification options encompass all aspects of modern, global standard based portfolio, programme and project management. Our range and diversity of learning options is one of the largest in the world and is delivered globally. We continue to develop our product range to meet market needs. Our facilitators are highly experienced business leaders, seasoned practitioners as well as adult training faciltators and thus provide learning and education that betters global smart practice.
SUITABLE FOR: Managers and professionals seeking research-informed content and best practice tools for application at work, in the domains of leadership behaviours and task management skills. COST: $668.50 to $2675 DURATION/ENROLMENT: 1-3 day workshops SPACES AVAILABLE: Up to 20 per occurrence KEY TUTORS: A portfolio of 35 subject-expert professional educators. FORMAT: Experiential workshops DESCRIPTION: Workshops in Self-Awareness for Leadership, Team Leadership, Interpersonal Communication, Negotiation, Personal Resilience, Coaching, Recruitment and Selection, Written and Oral Presentation, Accounting, Marketing, Strategic Management, Risk Management, Project Management, Contract Management, Maintenance Management, Construction Contracts Management, and others.
All these courses and other relevant information can be found on our website www.nzim.co.nz
PO Box 10515, Wellington 6143 L5, 44 Victoria Street, Wellington 6035 Ph: 0-4-495 9100, Fax: 0-4-495 9109 Email: training@projectplusgroup.co.nz Website: www.projectplusgroup.co.nz
KEY PERSONNEL • Karen Clarke (GM, NZ Operations), 021 790 790, karen.clarke@projectplusgroup.co.nz • Abby Leota (Training & Certification Manager), 021 271 5716, abby.leota@projectplusgroup.co.nz • Iain Fraser (Group Managing Director), 021 479 301, iain.fraser@projectplusgroup.com
Custom Programmes SUITABLE FOR: Managers and professionals seeking research-informed content and best practice tools for application at work, in the domains of leadership behaviours and task management skills. COST: By quotation. DURATION/ENROLMENT: As required by client SPACES AVAILABLE: Up to 20 per occurrence KEY TUTORS: A portfolio of 35 subject-expert professional educators. FORMAT: Experiential workshops, supported by preworkshop and post-workshop learning elements, coaching, workplace projects and assessment, all as required by the client.
ORGANISATION DEVELOPMENT INSTITUTE The Organisation Development Institute aims to build capable organisations through growing the capability of their people, by designing and delivering research-informed learning solutions for tertiary educated managers and professionals. The Institute offers scheduled short courses and custom programmes that are based on adult
CERTIFICATION Rating: ISO 9001, Certification agency: BVQI • NZQA Registered as a Private Training Establishment (PTE). Continued on page 50
Looking for fresh leadership learning solutions? Try us for developing leadership behaviours and task management skills for your organisation leaders, managers, team leaders and technical specialists. Short Courses | Custom Workshops and Programmes | Leadership Development Programme Phone Kyran Newell or Nicky Trainor on 03 943 2373
48 | management.co.nz | MAY 2012
See us on the web at www.development.org.nz
To Darren Levy Director of Executive Development The University of Auckland Business School each We have seen a real shift in the way our managers and staf f interact with you for Thank School. Business d other since working with The University of Aucklan and tailoring a leadership programme that inspired thinking so that new insights nd values.
skills were gained that are closely aligned with our business strategies a
a programme The presenters were able to quickly understand our business and create who took part that was based on the real life experiences of course participants. Those have now created really enjoyed the lively debates and interactions during class time and ongoing Peer Groups to keep the learning alive. Thank you Darren, you and your team have really motivated and engaged
Michelle McBride Head of People & Development Southern Cross Health Society
Make a REAL difference to your organisation Short Courses available for individuals, teams and organisations
0800 800 875 www.shortcourses.ac.nz
our people.
Continued from page 48
• Registered Education Provider (global status) with the Project Management Institute (PMI®). • Preferred Supplier to many organisations in NZ and UK. • Accredited PRINCE2 Provider by APMG International. • Public Training Schedule available at www.projectplusgroup.com • Range of formal project management certification programmes also conducted including our successful NZQA based Certificate Series. • All workshops and study programmes can be run in-house and be customised to meet your organisational needs.
FORMAT: Mostly classroom and facilitated dialogue. Some online learning available also. DESCRIPTION: These options represent the world’s leading project-based credentials and cover global standards, methodologies and pragmatic application that provides an unsurpassed choice. Only our very best facilitators are used to make sure that a successful attainment of your chosen credential is achieved.
COURSES Executive Skills Programme SUITABLE FOR: Level 1-3 leaders DURATION/ENROLMENT: Refer to website NZQA REGISTERED PREREQUISITES: Interest in governance of projectbased initiatives and in management of change. FORMAT: Facilitated dialogue in classroom setting. Some online elements. DESCRIPTION: Designed for busy executives and senior leaders that require oversight on portfolio and/or programme management. Choose from 4 distinct workshops that are business-based and designed to allow for optimal learning.
Specialist Skills Programme SUITABLE FOR: Level 2-4 leaders DURATION/ENROLMENT: Refer to website NZQA REGISTERED PREREQUISITES: An understanding of benefits that a project-based approach provides to the achievement of strategic objectives. FORMAT: All classroom and facilitated dialogue. DESCRIPTION: This programme provides a wide range of options that allows for advanced knowledge and skills to be gained. Allows individuals to increase their contribution to their organisation through increased benefit.
Core Skills Programme SUITABLE FOR: Level 4-5 leaders DURATION/ENROLMENT: Refer to website NZQA REGISTERED PREREQUISITES: An understanding of modern project management and how it contributes towards modern business plan execution. FORMAT: All classroom and facilitated dialogue. DESCRIPTION: This programme provides a selection of options that allow participants to acquire core skills in modern project management. Perfect for those in an early career development stage and that recognise the need for skills development. Allows individuals to enhance their contribution to their team and organisation.
Global Credentials SUITABLE FOR: Level 2-4 leaders/managers NZQA REGISTERED PREREQUISITES: Some prerequisites are required depending on credential option being pursued. 50 | management.co.nz | MAY 2012
STEEL INSTITUTE OF PERFORMANCE The Steel Institute of Performance (SIP) specialises in equipping managers with the tools to improve the performance capability of themselves and their workforce using the unique technology we developed for professional coaches. SIP offers both ‘in-house’ and ‘group enrolment’ programmes to help Level 1, 2 and 3 Managers. SIP’s clients include multinational corporations, government agencies and privately owned companies. The one common factor our clients share is their commitment to build more competent and effective ‘people’ leaders. Level 2, 139 Carlton Gore Road, Newmarket PO Box 9471, Newmarket, Auckland, 1149 Ph +64 9 522 9409 Email: info@steel-ip.com Website: www.steel-ip.com
KEY PERSONNEL • Craig Steel (Principal and Head Performance Specialist) + 64 27 242 5840, c.steel@steel-ip.com • Jo Dickson (General Manager) + 64 275 425 354, j.dickson@steel-ip.com
COURSES Strategic Performance Template™ (SPT) SUITABLE FOR: Executive Leadership Teams and National Management Teams. COST: $8,500 + GST (for an ‘in-house’ leadership team of up to 12 participants) DURATION: 2-day Strategic Planning workshop that can be completed either ‘in-house’ or at SIP. DESCRIPTION: The SPT is a unique strategic planning process designed to help organisations identify and articulate their strategic aspirations and operational objectives to their workforce to ensure all KPIs are directly linked to their strategic vision. The advantage the SPT has over other strategic planning tools is that it acts as a performance management and development framework thereby negating the need for companies to manage multiple performance improvement processes.
Executive Performance™ (EP) SUITABLE FOR: Executive Leaders and/or Senior Leadership Teams.
COST: $22,500 + GST (for an ‘in-house’ leadership team of up to 12 participants) $5,500 + GST (for a ‘One-on-one’ programme with Craig Steel at SIP) DURATION: 9-week programme consisting of one full day’s strategic preparation followed by one 90 minute ‘team’ session per week for eight consecutive weeks. EP and its 3-day ‘compact’ equivalent EP cp ($18,500 + GST) can be completed either ‘in-house’ or at SIP. DESCRIPTION: EP is our flagship performance improvement programme for leadership teams. EP is designed to equip senior managers with the tools to 1) excel as an individual leader and 2) engineer a step-change in the performance capability of their organisation using the unique technology we developed for professional coaches.
Leadership Performance™ (LP) SUITABLE FOR: 2nd and 3rd tier Managers and/or Management Teams. COST: $18,500 + GST (for an ‘in-house’ Management Team of up to 12 participants) DURATION: 8-week programme consisting of one 90 minute ‘team’ session per week for eight consecutive weeks. LP and its 2-day ‘compact’ equivalent LP cp ($16,500 + GST) can be completed either ‘in-house’ or at SIP. DESCRIPTION: LP is our premier performance improvement programme for 2nd and 3rd tier managers. LP and LP cp are designed to equip managers with the tools to step up to the next level of performance in order to improve the performance capability of their workforce. LP and LP cp can be completed ‘in-house’ by a management team or they can be completed by individual managers via our scheduled ‘group enrolment’ programmes held twice yearly at SIP ($2,500 + GST per person). Please refer to our website for further details.
Sales Manager™ (SM) SUITABLE FOR: National and/or Regional Sales Managers. COST: $18,500 + GST (for an ‘in-house’ team of up to 12 participants) DURATION: 8-week programme consisting of one 90 minute ‘team’ session per week for eight consecutive weeks. SM and its 2-day ‘compact’ equivalent SM cp ($16,500 + GST) can be completed either ‘in-house’ or at SIP. DESCRIPTION: SM is our premier performance improvement programme for Sales Managers. SM and SM cp are designed to equip sales managers with the tools to improve their and their team’s performance using the unique technology we developed for professional coaches. SM and SM cp can be completed ‘in-house’ by sales managers (or a sales team) or they can be completed by individual sales managers via our scheduled ‘group enrolment’ programmes held twice yearly at SIP ($2,500 + GST per person). Please refer to our website for further details.
Principal Responsibilities of Leadership™ (PRL) SUITABLE FOR: Level 1, 2 & 3 Managers.
COST: $12,500 + GST (for an ‘in-house’ team of up to 12 participants) DURATION: 4-month leadership programme consisting of one half day workshop per month for four consecutive months. The PRL can be completed either ‘in-house’ or at SIP. DESCRIPTION: PRL is a unique leadership framework designed to equip people leaders (managers) with the tools to 1) Increase Staff Engagement 2) Improve Performance Standards 3) Increase the Performance Capability of a Workforce and 4) Build a High Performance Culture.
THE GRADUATE SCHOOL OF ENTERPRISE The Graduate School of Enterprise (GSE) at The University of Auckland Business School offers you the advanced postgraduate education expected of New Zealand’s leading university. It prepares you to think at advanced levels and then challenges you to apply such advanced thinking. It does so in the company of other high-achieving business and professional people; a peer network that will benefit you throughout your career. Private Bag 92019, Auckland, 1142 Owen G Glenn Building, 12 Grafton Road, Auckland Freephone: 0800-227 337 Email: gse@auckland.ac.nz Websites: www.gse.auckland.ac.nz www.gse.auckland.ac.nz, www.mba.auckland.ac.nz
KEY PERSONNEL • Peter Withers (Director of Academic Programmes) • Donovan Breunig (Programme Manager) • Alison Craig (Programme Manager)
COURSES
Postgraduate Diploma in Business SUITABLE FOR: Those seeking a general management qualification, business ownermanagers and entrepreneurs. COST: Approx $15,000 QUALIFICATION: Postgraduate Diploma in Business DURATION/ENROLMENT: Two years part time (evenings) PREREQUISITES: Ideally an approved bachelor’s degree or have completed the requirements for a professional qualification in a relevant discipline, and have gained relevant fulltime employment experience at managerial level. If no degree or equivalent, then at least five years’ fulltime relevant work experience. SPACES AVAILABLE: 100 per intake FORMAT: Classroom DESCRIPTION: The Postgraduate Diploma in Business (PGDipBus) is specifically designed as a gateway to the Master of Business Administration (MBA) or Master of Management (MMgt) programmes. Can be studied as a stand-alone programme.
The University of Auckland Business School Short Courses Private Bag 92019, Auckland 1142 Freephone: 0800-800 875 Email: shortcourses@auckland.ac.nz Website: www.shortcourses.ac.nz
KEY PERSONNEL • Darren Levy (Director), dl.levy@auckland.ac.nz • Dean Withers (Course Advisor), d.withers@auckland.ac.nz • Lisa Hosker (Course Advisor) l.hosker@auckland.ac.nz • Emma Sullivan (Operations Co-ordinator) e.sullivan@auckland.ac.nz
The Master of Management
COURSES
SUITABLE FOR: Builds onto a Postgraduate Diploma in Business and appeals to those seeking to design and develop advanced knowledge in business competencies. COST: Approx $25,000 QUALIFICATION: Master of Management DURATION/ENROLMENT: Two year part-time research degree; one year full-time research option. PREREQUISITES: PGDipBus with an average grade of at least B+, or an equivalent specialised postgraduate qualification relevant to your business experience with a similar level of achievement. At least five years’ fulltime relevant work experience is also required. SPACES AVAILABLE: 25 per intake FORMAT: Classroom and individually supervised research. DESCRIPTION: The core of this degree is the research dissertation where a significant organisational or strategic issue is confronted. Supported in this through coursework in research methods and supervision by an experienced researcher.
Project Management COST: $1895 + GST DURATION/ENROLMENT: 2 days PRESENTER: Rob Verkerk On campus or in-house
Negotiation Skills COST: $1995 + GST DURATION/ENROLMENT: 2 days PRESENTER: Doug Robertson On campus or in-house
Managing People COST: $1995 + GST DURATION/ENROLMENT: 2 days PRESENTER: Nick Read On campus or in-house
Marketing Management COST: $1995 + GST DURATION/ENROLMENT: 2 days KEY TUTORS: Steve Bridges On campus or in-house
The Master of Business Administration (MBA) SUITABLE FOR: Managers and Senior Executives. COST: Approx $45,000 QUALIFICATION: MBA OTHER ACCREDITATIONS: AACSB International, EQUIS, and Association of MBAs (the Triple Crown of accreditations). DURATION/ENROLMENT: Two years part-time (evenings and weekend). PREREQUISITES: A good first degree or a professional qualification and at least three years’ relevant management experience. SPACES AVAILABLE: 35 per intake FORMAT: Combination of classroom, consultancy, international business trip. DESCRIPTION: The MBA programme is designed to help managers and senior executives grow and succeed in their chosen fields. It recognises that the MBA experience embraces both professional and personal development.
tomised Programmes which are delivered specifically for an organisation, when they want and where they want, with the option to have the courses tailored specifically for that organisation. Please note that pricing indicated is at 2012 rates. For more information and to book your place now, please contact our course advisors.
Influencing and Persuading Skills COST: $2095 + GST DURATION/ENROLMENT: 2 days PRESENTER: Roseann Gedye On campus or in-house
SHORT COURSES The University of Auckland Business School offers nearly 200 2-day practical business and management Short Courses each year as part of its commitment to “lifting the competency of the nation”. These Short Courses provide business and professional people from all walks of life opportunities to up-skill and re-skill. With over 40,000 people having attended a Short Course since 1996, they are well proven. Short Courses also deliver an ever-growing number of In-house courses and Cus-
Strategic Planning COST: $1995 + GST DURATION/ENROLMENT: 2 days KEY TUTORS: Brian Travers On campus or in-house
Motivation and Leadership COST: $1995 + GST DURATION/ENROLMENT: 2 days PRESENTER: Dr Lester Levy On campus or in-house
Continued on page 52
MAY 2012
| management.co.nz | 51
Continued from page 51
Business Skills for New Managers COST: $1995 + GST DURATION/ENROLMENT: 2 days PRESENTER: Doug Robertson On campus or in-house
Finance for Non-Financial Managers COST: $1995 + GST DURATION/ENROLMENT: 2 days KEY TUTORS: Susan Hansen On campus or in-house
Mental Toughness COST: $1995 + GST DURATION/ENROLMENT: 2 days PRESENTER: Jamie Ford On campus or in-house
Presentation Skills COST: $2295 + GST DURATION/ENROLMENT: 2 days PRESENTER: Roseann Gedye On campus or in-house
THE UNIVERSITY OF OTAGO’S BUSINESS SCHOOL The University of Otago’s Business School offers a range of courses and qualifications from undergraduate level right through to executive education. The School is EQUIS and AACSB accredited which ensures qualifications are of an international standard and globally portable. Otago Business School, University of Otago P O Box 56, Dunedin 9054 60 Clyde Street, Dunedin 9016 Phone: 0-3-479 8149 Email: business@otago.ac.nz Website: www.otago.ac.nz/business
KEY PERSONNEL • Professor George Benwell (Dean, Otago Business School), dean@business.otago.ac.nz • Mark Wilesmith (Academic Manager, Otago Business School), mark.wilesmith@otago.ac.nz
POSTGRADUATE COURSES Master of Entrepreneurship www.otago.ac.nz/entrepreneurship SUITABLE FOR: Recent graduates and professionals who aspire to become entrepreneurs. QUALIFICATION: MEntr DURATION: 15 months – seven three day block courses run over 12 months, and a 20 week business project.
52 | management.co.nz | MAY 2012
LOCATION: Dunedin - February intake (applications close in January), Queenstown - July intake (applications close in June). PREREQUISITES: Undergraduate degree or relevant work experience/qualifications. SPACES AVAILABLE: 35 KEY PERSONNEL: Victoria Jameson (Programme Director), victoria.jameson@otago.ac.nz FORMAT: The programme consists of seven modules. Each module consists of an intensive three-day block course with additional projectbased assignments. The programme concludes with a five-month practical project based on the student’s or local entrepreneur’s new venture.
Executive Education Open Courses www.execedotago.co.nz SUITABLE FOR: Middle to senior managers with developed functional and industry skills who wish to enhance their managerial skill base. QUALIFICATION: Can lead towards Postgraduate Certificate in Executive Management (PGCertEM), or Postgraduate Diploma in Executive Management (PGDipEM). DURATION: Series of five-day courses covering various managerial and organisational topics or tailored to an individual organisation’s requirements. AVAILABLE: On-campus or onsite (customised courses for organisations). SPACES AVAILABLE: Participants to each course are limited to ensure an interactive learning environment. KEY PERSONNEL: Jessie Luxton (Business Development Manager), jessie.luxton@otago.ac.nz FORMAT: Executive Education open courses are designed to give you maximum return for your time and money. Unlike other courses which provide a completely prescribed set of topics for study, the Executive Education course options allow individuals to select areas for their own personal development – all of which can be studied independently and can lead towards either the PGCertEM or PGDipEM.
VICTORIA BUSINESS SCHOOL Victoria University’s Business School offers a world-class MBA Programme and short Executive Development programmes designed for business professionals. They will transform your thinking, change the way you make decisions and develop your leadership skills – taking your career in business to the next level. The MBA and short courses are taught at our Pipitea campus, a stone’s throw from Parliament and Wellington CBD. Our location gives you unlimited access to the latest business research and thinking. PO Box 600, Wellington Level 2, Rutherford House, 23 Lambton Quay, Wellington
Other Campus address: Kelburn Parade, Kelburn Ph: 0-4-463 6556, Fax: 0-4-463 6550 profdev@vuw.ac.nz www.victoria.ac.nz/profdev
KEY PERSONNEL • Tania McGowan (Senior Advisor), Professional and Executive Development, 0-4-463 6561, tania.mcgowan@vuw.ac.nz • Natalie Stevens (MBA Director), Victoria Business School, natalie.stevens@vuw.ac.nz ISO CERTIFICATION: In progress
COURSES Victoria Masters in Business Administration (MBA) SUITABLE FOR: Business Professionals COST: Price on enquiry QUALIFICATION: MBA NZQA REGISTERED: Yes OTHER ACCREDITATION: Association of MBAs (AMBA); EQUIS; AACSB DURATION/ENROLMENT: 32 months part time or 18 months full time (starts Feb/Mar) PREREQUISITES: Personal commitment, business work experience, strong written and oral communication skills and academic competence. SPACES AVAILABLE: Variable KEY TUTORS: Victoria Business School academic staff, business leaders and visiting experts. FORMAT: On campus DESCRIPTION: The Victoria MBA gives business professionals the skills to take on leadership roles in commerce, the public sector and society. It enhances lateral thinking, expands critical thinking skills, and develops conceptual capabilities and communication style.
Victoria Executive Development Short Courses SUITABLE FOR: Business and Public Sector professionals COST: $500 to $800/day DURATION/ENROLMENT: 1 day to 1 week (courses run throughout the year) PREREQUISITES: Various SPACES AVAILABLE: 16 participants/ course KEY TUTORS: Victoria Business School academic staff, business leaders and visiting experts. FORMAT: On campus, interactive workshop style. DESCRIPTION: Victoria’s Executive Development short courses give professionals an opportunity to learn from the best without enrolling in a university qualification. Courses cover: Management, Leadership, Personal Effectiveness, Business and Innovation, Communication, Finance, Accounting and Economics.
PETER TYNAN EXECUTIVE HEALTH
M
Lifting our game
W
e’re all meant to be improving productivity, but just how exactly? Making health and wellbeing a priority is a good place to start. It’s the one thing on which political parties, commentators and interest groups from across the spectrum can agree. For New Zealand to thrive, we need to lift our productivity. It’s one thing to talk, and fret, about a problem. It’s quite another to come up with tangible solutions. Lifting productivity is about making the most out of what we’ve got. It’s about finding efficiencies, innovations, upskilling, consolidating and creating the right environment for business to flourish – as acknowledged by the creation of the Government’s Productivity Commission. Unfortunately business, industry or policy change doesn’t happen overnight. So, what can businesses do to lift productivity starting now? In the average workplace, you’ve got around 1800 hours of each employee’s time per year. Having your people on the job, fit and well, and fully engaged in their role is a good place to start getting more out of your business. Research shows that health and wellness initiatives can very quickly start paying productivity dividends. A 2008 study by Synergy Health showed that implementing influenza vaccinations resulted in a saving of $60 per person vaccinated by reducing the level of
The big picture Based in Hamilton, Canary Enterprises manufactures specialised food products for airline caterers, hotels, bakeries, restaurants and supermarkets in New Zealand, Australia, the Pacific Islands and a number of Asian and Middle Eastern countries. In 2011 the company decided to offer its 20 staff a choice: a pay rise to match the annual inflation rate, or a fully subsidised Southern Cross health insurance package that included discounted premiums for family members. “We offered the insurance because we understand the importance of having a healthy workforce – particularly given our ultra-hygienic working environment. We also saw it as part of our responsibility as a good employer,” says accountant Nic Wetere. “For the business, it’s a key tool for attracting and retaining good talent.” Sixteen employees took up the company’s offer of health insurance. Says Wetere, “We were pleased to see them look beyond a one-off pay rise to their and their families’ long-term health and wellbeing.”
sickness absence (based on employees on an average $55,000 salary). In 2011, Southern Cross had research house TNS conduct an independent survey of over 2000 New Zealand
employees into the impact of health insurance on employee behaviour. It found that employees with health insurance took on average 2.2 fewer days off work for medical reasons per year than those without health insurance. This was after factoring in variances across industry, age and gender. When you dig down, the gains from reducing lost work hours are just the beginning. Temporary staff hire, client inconvenience, stress on other employees, project delays and other productivity losses are just a few of the other costs that can result from ill health. Health benefits have also been found to have a positive effect on another major productivity drain – recruitment and retention. All things being equal, the TNS study found that those with health insurance were more satisfied in their job, and less likely to leave in the next year. It’s interesting to note the Productivity Commission’s vision statement is “Productivity growth for maximum wellbeing”. It’s an important acknowledgement that prosperity is not just about dollars and cents. Enhancing productivity is good for the bottom line. But if we’re getting more from, and asking more of, our people, health benefits are also a way that businesses can give something back. 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
MAY 2012
| management.co.nz | 53
M
EXECS ON THE MOVE
TVNZ has appointed Kevin Kenrick as its new CEO, replacing Rick Ellis, who joined Telstra Australia in January. Kenrick is a Kiwi, whose most recent position was as CEO at House of Travel. Before that, he held executive roles with Telecom (including Xtra sales & marketing manager, GM marketing, GM mobile, and chief operating officer for the mass market retail business division). Auckland Tourism, Events and Economic Development (ATEED) has appointed Brett O’Riley as its chief executive, effective May 7. Currently the deputy chief executive, Business Innovation and Investments for the Ministry of Science + Innovation, O’Riley has also held senior executive positions with a number of private and public sector companies including NZICT Group, Telecom New Zealand and Gen-i. Roger Partridge and Tony Carter, respectively the former chairs of the Business Roundtable and the New Zealand Institute, are co-chairing newly-formed think tank The New Zealand Initiative following the merger of their two organisations on 1 April. Dr Oliver Hartwich, previously chief economist of the British think tank Policy Exchange, has been appointed executive director. He takes up his position on 1 May.
NZBIO has a new chief executive. Dr Suzanne Bertrand, previously director, international linkages at the Ministry for Science and Innovation, will take over from Dr Michelle Sullivan who is stepping down for family reasons on May 21. Brendon Urlich has taken up the new role of executive general manager of L’Oréal New Zealand and general manager of its consumer products division. The newly created role of executive general manager will represent the L’Oréal Group in NZ and reports to the L’Oréal Australia & NZ managing director, Johan Berg. Tim Baxter is the newly appointed country manager, responsible for DHL Express operations in New Zealand, Fiji and the Pacific Islands. Most recently he was the country manager for DHL Express in Vietnam and rolled out the operating platform for a joint venture with Vietnam Post. Rugby World Cup 2011 chief Martin Snedden has been appointed as the new chief executive of the Tourism Industry Association, effective June. Dr Philippa Reed has announced her intention to resign as chief executive of the Equal Employment Opportunity Trust effective from the end of May. Reed has been the chief executive of the Trust for nine years, and has made a significant contribution promoting greater diversity across our workplaces.
Colenso BBDO has promoted Andy McLeish to the position of head of planning. Joining Colenso in October 2010 from TBWA Auckland, McLeish has also spent time on the client side in various marketing roles, including six years with NZ Lotteries. Dr Edwin Ng, a leader in healthcare information technology, has joined Atlantis Healthcare, as its chief information officer. Chief technology officer at Australasian company Healthlink for the past 10 year, Ng will spearhead Atlantis’ ongoing development of scalable and real world health technologies. International payments software and services company GFG Group has appointed Wayne Robinson to the new position of senior vice president – sales and marketing, based in Auckland. Robinson will continue to manage GFG’s growth in the Middle East/Africa region while actively recruiting for his replacement. PwC has admitted Scott Mitchell as a consulting partner, based in the firm’s Auckland office. He was previously the Sydney managing partner at Litmus Group and before that, the chief operating officer of Jones Lang LaSalle in Australia.
Understanding the Big Picture Our highly skilled and experienced resources always see the big picture. Irrespective of your needs we have the talent to drive your change or project initiative forward. We even do project turnaround and rescue. Get in touch to discuss your needs.
www.projectplusgroup.co.nz
54 | management.co.nz | MAY 2012
EXECUTIVE DEVELOPMENT Sponsored by The University of Auckland Business School Short Courses www.shortcourses.ac.nz 0800 800 875
May 9 High Performing Boards. Christchurch. Organisation Development Institute. development.org.nz 9-10 Project Management Masterclass. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
18 Not-For-Profit Governance Essentials. Wellington. Institute of Directors. iod.org.nz 21-22 Building Sustainable Relationships with Maori Organisations. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
SHORT COURSES smarter faster
29-30 How to Manage + Lead Successfully. Invercargill. NZIM Southern. nzimsouthern.co.nz 29-30 Creating Change Capability – Change and Innovation. Talent Strategies Limited/HRINZ. hrinz.org.nz
9-10 Problem Solving & Decision Making. NZIM Northern. nzimnorthern.co.nz
21-22 Change Management. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
30-31 Influencing & Persuading Skills. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
9-11 Interpersonal Skills for Leaders: Building Productive Work Relationships. Christchurch. Organisation Development Institute. development.org.nz
21-22 Developing Influencing and Motivation Skills. NZIM Central. nzimcentral.co.nz
30-31 Assertive Behaviour Strategies. Christchurch. NZIM Southern. nzimsouthern.co.nz
10 Project Risk Management. Project Plus. projectplusgroup.co.nz
21-23 Four Quadrant Leadership. Christchurch. NZIM Southern. nzimsouthern.co.nz
31 Governance Essentials. Auckland. Institute of Directors. iod.org.nz
11 Effective Audit Committees. Auckland. Institute of Directors. iod.org.nz
22-27 Company Director’s Course. Wellington. Institute of Directors. iod.org.nz
11 Project Cost Management. Project Plus. projectplusgroup.co.nz
1-2 Chairing the Board. Auckland. Institute of Directors. iod.org.nz
23-24 Managing People. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
14 Social Media 101. Auckland. University of Auckland Short Courses. shortcourses.ac.nz 14 Introduction to Lean Thinking. Dunedin. Organisation Development Institute. development.org.nz 15 Managing Multiple Priorities. Project Plus. projectplusgroup.co.nz 15-16 HR for Non HR People. Christchurch. NZIM Southern. nzimsouthern.co.nz 16-17 Finance for Non-Financial Managers. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
June 4-5 Applied Management (Dip Mgt Advanced). NZIM Central. nzimcentral.co.nz
24-25 Strategic Planning. Christchurch. NZIM Southern. nzimsouthern.co.nz
5-6 Leading Change in Challenging Times. Christchurch. NZIM Southern. nzimsouthern.co.nz
24-25 Linking Strategy to Corporate Success. Wellington. Bright*Star Training. brightstar.co.nz
5-7 Team Leader – Understanding New Zealand Employment Law. Christchurch. NZIM Southern. nzimsouthern.co.nz
24-25 Negotiation Skills. NZIM Central. nzimcentral.co.nz
6-7 Management for Experienced Managers. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
24-25 Project Management: Advanced. Christchurch. Organisation Development Institute. development.org.nz
16-18 Leadership, Motivation and Team Building. NZIM Central. nzimcentral.co.nz
28-29 Project Management. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
17 Finance Essentials. Wellington. Institute of Directors. iod.org.nz
28-30 Building Effective Teams (Team Leader 2). NZIM Northern. nzimnorthern.co.nz
17-18 Strategic Negotiation. Auckland. University of Auckland Short Courses. shortcourses.ac.nz
29 Functions and Roles of the Board. Christchurch. Organisational Development Institute. development.org.nz
M
6-7 Essential Leadership Skills for Women in Business. Wellington. Bright*Star Training. brightstar.co.nz 7-8 Business Finance (Dip in Mgt Advanced). NZIM Central. nzimcentral.co.nz 7-8 Advanced Management Programme (Post Graduate). Christchurch. NZIM Southern. nzimsouthern.co.nz 9 Strategy Essentials. Dunedin. Institute of Directors. iod.org.nz
To Darren Levy, The University of Auckland Business School Thank you for tailoring a leadership programme for our organisation. New insights were gained that are closely aligned with our business strategies and values. Your team have motivated and engaged our people. Michelle McBride, Southern Cross Health Society
Make a REAL difference to your organisation 0800 800 875 | www.shortcourses.ac.nz
MAY 2012
| management.co.nz | 55
M
TOP TIPS
SHAUN MCCARTHY
Giving constructive feedback 1
Have a goal in mind
What do you want to achieve? With that in mind, plan out how you should best go about providing the feedback. Generally there are four possible desirable outcomes from providing feedback: a) Resolving problems – helping the individual solve a problem related to their work – this is often referred to in leadership as task facilitation. b) Supporting performance – often referred to as ‘mentoring’, this involves providing guidance and assistance in ‘how best to get something done’. c) Teaching – helping the individual learn how best to achieve something. d) Adjusting performance – confronting a performance issue.
2
Have a forward focus
Whilst feedback, by its very definition, involves looking at the past, feedback is only helpful when it is used to determine what needs to be done differently in the future. A ‘future orientation’ (what can we do about this?) is much more constructive than a ‘past orientation’ (you did this) one. Focus on what can be done better rather than what is wrong. The past is just that, it’s gone, but the future is what can change.
3
Be specific and descriptive
All too often, feedback and ideas for the future are too vague. A classic example is when a manager says to an employee “you’ve got to show more commitment”. For the individual to be able to do something with this information, they need to know what commitment actually looks like. Ask yourself the question (in this example) “what will I want to see this 56 | management.co.nz | MAY 2012
person doing for me to think that they have greater commitment?” This is particularly important if providing feedback about ‘attitudes’ or ‘behaving to the organisation’s core values’. If you want the person to be ‘a better team player’, then describe what this actually looks like and make sure the individual understands this.
4
Listen to the other person’s agenda
When confronting a performance issue, it is inevitable that the employee will see the issue from a different perspective to the manager. Whilst the manager might see these as ‘excuses’ or ‘irrelevancies’, they are real to the employee. Ignoring them simply results in compliance rather than commitment, with no subsequent real improvement. Genuinely listening to the other person’s agenda opens up the conversation for potential problemsolving discussion, which is far more likely to actively involve the other person as opposed to them feeling being ‘lectured to’ about some deficiency. If you can solve the problem from the employee’s perspective, you have a very elegant solution. If, however, once you have discussed the issue in this way and see that your agenda is not being met, carefully reintroduce the issue from your perspective. As you now have the employee actively involved in a discussion, and he/she has seen that you are interested in his/her perspective, you are more likely to arrive at a workable solution.
5
Use feedback to build positive relationships
Even in an adjusting performance discussion, the goal should always be
Shaun McCarthy.
to ensure that a positive relationship is maintained between the manager and the employee. Any feedback discussion that results in a lessening of this is a failure. This begins with the manager’s attitude. It ends with the manager ensuring that the individual involved has been listened to and involved, rather than lectured to or told off. ‘Confronting performance’ is different to ‘being confrontational’ and ‘giving feedback’ is different to ‘telling someone off’. Remember the goal of giving feedback is improved performance and that requires commitment, rather than compliance, on the part of the employee. He or she needs to walk away thinking “that was helpful to me”. M Shaun McCarthy is chairman and director of Human Synergistics International. www.human-synergistics.com.au
MAY 2012
Vol 10 No 2
Kerryn Downey
Director fee 61 realities Design and build 62 governance Better board 64 evaluation options
Kerryn Downey
Receiving confessions p58 EDITOR: Reg Birchfield reg@rjmedia.co.nz CONTRIBUTORS: Jo Brosnahan, Iain McCormick, Sherry Maier ADVERTISING MANAGER: Rod Myers 09 372 6444, 027 484 8046 admanager@management.co.nz DESIGNER: Jennifer Adams PRODUCTION MANAGER: Fran Marshall franm@mediaweb.co.nz PRINTING & PREPRESS: PMP Print
A MEDIAWEB PUBLICATION
Copyright @ 2012: Mediaweb Limited. All material appearing in The Director 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.
Phone 09 529 3000 Fax 09 529 3001 enquiries@mediaweb.co.nz www.mediaweb.co.nz
The Director is published bimonthly in NZ Management magazine and
PO Box 5544,Wellesley Street, Auckland 1141
distributed to selected directors and leaders. Articles are archived on NZ Management’s website www.management.co.nz/archives. The Director is written for readers who need to know about governance in action.
COVERSTORY
Kerryn Downey
Receiving confessions Governance and organisational leadership so bad that it drove enterprises into receivership and liquidation have kept Kerryn Downey busy for 30 years reconstructing or rubbish-binning them. Now he wants to share some of the lessons he has learned. By Reg Birchfield
A
receiver’s lot might not, on the face of it, seem like a particularly happy one. But Kerryn Downey, retiring senior partner of McGrathNicol, receivers of high-profile busts like South Canterbury Finance (SCF) and HIH Insurance, doesn’t see it that way. On the contrary, he considers the governance and management lessons his almost 40 years of tidying up after lazy, incompetent, bent and sometimes just unlucky business leaders taught him were invaluable and often fun to grapple with. Bad governance kills companies. But Downey believes that management is more often than not most responsible for laying enterprises to waste. Between them managers and directors drove 252 companies into receivership last year – down from 296 in 2010. “Businesses fail for a combination of reasons,” says Downey. But in 90 percent of cases incompetent or fraudulent management sits at the core. And directors are invariably ill equipped or unable to deal with management or the problem. “One management failing or another pre-
58 |
THE DIRECTOR | MAY 2012
cipitates a collapse. It is rarely the actions of a competitor, employee or even a single bad business decision that brings a business down,” he adds. Poor governance in New Zealand is, in Downey’s experience, usually linked to director longevity – not age so much as years spent in the same boardroom. Under-motivated, under-equipped but handily connected individuals – not that Downey would express it this way – serve time and take director fees and leave shareholders with inadequate investment returns. Companies like, for example, Rubicon, which Weekend Herald columnist Brian Gaynor suggests retained directors whose many years of tenure were inverse to the marginal measure of company performance. There is, according to Downey, too much cronyism in Kiwi governance. Directors shield each other from criticism and keep underperformers at the board table. There are, he adds, too few independent directors or, if independents are appointed they are too often incapable of doing the job. “Board composition, invariably lacking in diversity of experience, is
a significant problem. We saw it clearly in the finance sector where directors couldn’t contribute because they did not understand the business sufficiently,” he says. And then there are directors who fail to put enough time and effort into the job to arm themselves with the right questions to ask at board meetings. Directors don’t need all the answers, but they must ask the right questions. Failure to ask good questions is, Downey thinks, a consequence of directors being un-schooled in accounting and financial reporting skills. “They must also understand the regulatory requirements of governance. Too few directors understand the fundamentals and affairs of the businesses they govern,” he adds. Successful companies, on the other hand, “generally have good directors”. New Zealand’s pool of competent directors may be too small, but there is, to Downey’s mind, a direct relationship between good directors and a good company. “A good board comprises a mix of individuals who know the business, include independents and display a diversity of understanding. They are seasoned,” he says. New Zealand companies frequently lack clearly defined strategies, particularly ones for difficult economic times. “Poor strategies understate what is really happening in the world economy,” says Downey. “Both directors and managers invariably fail to comprehend the full implications of events like the global financial collapse (GFC). They ignore the fact New Zealand is increasingly and directly exposed to world events.” Downey’s on the side of those calling for more director accountability. “Managers are subject to the spotlight through performance reviews,” he says. “Directors should be too. Governance in New Zealand has been too cosy for too long. It’s been like a club.” But he also thinks things are changing. “There is more focus on director education and on finding good independent directors.” Fell, not pushed Downey fell into the receivership or “corporate recovery” business when he worked as a young auditor in Canada 30 something years ago. He worked on a receivership and enjoyed it. “I enjoyed the cut and thrust, running a business and dealing with real people. It was
rewarding to rebuild the company,” he says, reflecting on his first salvage operation. He returned to auditing work in New Zealand, but it wasn’t the same. Back to Canada in 1982 he joined global accounting firm KPMG in Toronto to resume salvaging sick enterprises. He stayed until 1998 when he returned to New Zealand to lead KPMG’s Auckland recovery practice, a business McGrathNicol acquired in 2004 and of which he became senior partner. What made corporate salvage so attractive? “I liked problem solving,” he says. And there was something “exciting” about getting a call to report immediately to a business about to implode. So how did Downey become an instant industry expert in order to deal with the specific problems of a collapsing enterprise. He is, after all, critical of directors whose understanding of the business they govern is not up to scratch. The first rule is not to fire everyone at the top. “Keep the capable managers,” he says. “Then assemble a management team and empower them to do what they were doing before, with some guidance. Then get alongside them to learn as much about the business as possible as quickly as possible. Walk around and ask questions.” It’s important to find out what the problem is, to understand why it occurred and to then search for the fix. If it can’t be fixed, then get ready to sell up and realise the best possible return. Depending on the circumstances of their appointment, receivers like Downey are viewed as both satan and saviour. “In the case of SCF, management was worn out by the time we were appointed. They’d had advisors and government all over them for months,” he says. “We identified the right individuals and then got alongside them to work together on the problem. They were motivated to find solutions.” Downey believes his empathy with people differentiates him as a receiver. “You have to help people head in the right direction. I have always enjoyed that part of my job. Working with management was the plan we took to Government for SCF and they liked the approach. I believe the outcomes we achieved are evidence that our approach worked.” Downey’s receivership style is, he says, col-
laborative. “Receivers used to be more dictatorial and heavy handed, but that’s changed. Banks don’t like desk thumping receivers any more. They tend to attract law suits and litigation. I have a style which, if the banks didn’t like it, they wouldn’t use me,” he adds. “I like to lead from the front. I talk and confer with others, but I don’t hold back from making decisions. Good judgement and being collaborative and decisive have been fundamental to my career successes.” So how does a receiver or liquidator measure success? “Meeting the expectations of the stakeholders that put you in place,” he says, after a moment’s reflection. Those expectations can vary markedly. In the case of SCF for example, he thinks resolving the issue in 18 months at a cost which, while high, was probably not as high as it might have been, was success enough. Perserverance Downey is not afraid to fix problems. “I enjoy identifying problems and finding solutions. Then I persevere with providing the solution. I’m like a dog with a bone when it comes to getting a result.” The characteristic has, it seems, worked well for him. He doesn’t suffer fools gladly and respects intelligence, he admits somewhat reluctantly. “In this business you soon get to know when someone is trying to snow you. Equally, you soon realise when someone knows what he or she is talking about.” The lessons New Zealand can take from the finance sector’s rash of collapses are, to Downey’s mind, as significant as they are obvious. “You can’t put them down to any one thing, but what happened is indisputable.” Opportunistic enterprises were thrown together with little thought for the calibre or competency of either the directors or the management teams. The outcome of getting it so wrong at both leadership levels was, therefore, inevitable, he says. Lump in an inadequate regulatory regime poorly administered and New Zealand, with political and statutory compliance, created the ideal environment for a perfect financial storm which blew away millions upon millions of hard-won investor dollars. “Questions still have to be asked about the quality of the regulatory oversight from everyone involved, MAY 2012 | THE DIRECTOR |
59
COVERSTORY
from government agencies to auditors,” says Downey. The GFC and its aftermath caused a spike in business for receivers and liquidators, but Downey doesn’t expect the corporate death rate to change much. Receivers will still be appointed when, for whatever reason, lenders are taken by surprise. On the other hand, banks are now recruiting employees from the recovery companies to enhance their in-house recovery skills. “Banks are putting more effort into working through problems with their customers,” he adds. “It’s a trend.” CRO trend Another trend, one he expects to capitalise on after leaving McGrathNicol this month, is the emergence of the CRO, or chief restructuring officer. CROs work with financially underperforming companies, or
ones that may be in breach of their bank covenant, to get them back on track. “The CRO is an independent consultant who joins the management team and reports to the board through the CEO to deliver a restructuring plan.” After 40 years of rebuilding businesses, Downey now plans to offer his CRO services. It’s a role he thinks an increasing number of banks and enterprises will appreciate. “It’s already common practice in North America and it’s emerging in Australia,” he adds. CROs are sometimes called in by banks but appointed by the company. They are, therefore, accountable to the company not the bank. “The CRO works as an intermediary between the board and the lenders – bank, debenture holders and whatever,” says Downey. He’s also looking for some “quality” direc-
torships post-partnership. He’s not rushing into these however. He’s seen “too many successful professionals leap into directorships without doing proper due diligence”, and ending up on dysfunctional boards. “The world has changed for boards over the past year or two,” says Downey. “Court decisions on companies like Feltex, Nathans, Lombard and others have changed the focus on board activity and the role and responsibilities of directors.” Directors have been told they have an obligation to understand the issues before them. If they don’t understand, they need to ask questions until they do. “The inability to rely on outside advice is quite a concern,” he adds. “Director liability remains out there, stronger than ever.” He hopes legally enshrined pressure to perform will, in time, attract better directors.
Building better boards
S
imon Telfer wants better boards. Who doesn’t? The difference is, he’s working seriously hard to build them. One of the founders of Springboard, a not-for-profit (NFP) designed to enthuse and mould young talent to become director material, he last month launched an online director dating service called Appoint. Auckland-based Telfer is a strategy and succession planning consultant. His consultancy, Stimulus, encourages enterprises to focus on the importance of governance. “If we want New Zealand to be a great place to work and live we need robust, vibrant and ambitious commercial and social enterprises,” he says. “Strong governance, through better boards, is key to making this happen.” His Appoint website is designed to connect director-hungry organisations, particularly small to medium enterprises (SMEs) and NFPs, with a diverse pool of willing governance workers. Businesses pay $495 plus gst and NFPs $245 for every board vacancy listed. Aspiring directors list themselves for free. Telfer believes in the effectiveness of board diversity. His pool of potential directors re-
60 |
THE DIRECTOR | MAY 2012
flects the make-up of New Zealand’s increasingly changing community. “And we believe it’s in an organisation’s best interests to be transparent and promote its governance roles to a broad pool of potential directors,” he adds. He launched the site because he needed to help his business clients find directors to establish effective governance programmes. “I was exhausting my personal network and some of my clients didn’t have a broad enough contact base.” What’s wrong with existing director recruitment agencies and the Institute of Directors? “Nothing, but the market is very fragmented,” he says. “We offer a more competitive price point that will suit smaller and not-for-profit organisations. We’ll also have a more diverse pool of potential directors given the way we market this initiative.” He thinks Appoint will also appeal to organisations of whatever size that are serious about building Simon a more balanced board. Telfer.
By Reg Birchfield Telfer hopes Appoint will help organisations cast their director net more widely. For that reason, he’s against imposing “subjective criteria” on what does or does not make a great trustee or director. “It is not up to us to determine that,” he says. “This differs manifestly from organisation to organisation. “Sometimes experience isn’t relevant, it’s about bringing a different way of thinking that is best for a board,” he adds. “Minimum requirements is a dated way of making governance appointments. It should be more about what backgrounds, skills or ways of thinking do we need at our board table to ensure the strongest possible decisions. If we keep framing governance requirement questions in the same language we will keep getting the same answers. That is not healthy for growing New Zealand.” • www.appointbetterboards.co.nz.
Director fee realities By Sherry Maier
W
hen it comes to advising clients undertaking board fee reviews, public relations experts may be as valuable as we, the remuneration consultants, are. Pay issues are always and universally emotive. Executive pay has long, and increasingly, prompted market and public outcry. Remember when the media translated former Telecom chief executive Theresa Gattung’s annual pay package into a corresponding number of hip replacements? More recently, triggered by the Contact Energy board fee debacle in late 2008, director pay has become equally controversial. Let’s take a look at what is really happening. Since board fees are typically reviewed only every two or three years, there is often ground to “catch up” with the general market. So, proposed pay boosts look high when compared to a single year’s market pay movements. And, while proposed increases may seem large in percentage terms – and often are in double digits – these increases are usually calculated on small base fee amounts. The dollar impact, therefore, is often insignificant. Let me illustrate. For a CEO earning a $300,000 base salary, a one percent pay increase represents $3000. That same $3000 represents a 10 percent increase for a director on a $30,000 base annual board fee. The median New Zealand market non-executive director (NED) fee calculated in the 2011 Moyle Consulting Director Survey is $34,429. The median CEO pay package is $305,000, according to the Moyle 2011 CEO Survey. This is a realistic example. And remember, the CEO’s pay is usually annually adjusted. Moyle Consulting’s seventh annual Director Survey published last December, shows a market for director fees rising modestly. In the preceding year, 48 percent of 260-plus companies raised fees. In some cases, fees had not been adjusted since 2006 or 2007,
reflecting the market “freeze” in 2009 and into 2010 triggered by the global financial collapse (GFC). When approved, median fee increases ranged from 11 to 12 percent. The actual impact of all increases during the prior year was a shift in the median NED fee from $32,297 to $34,429. Hardly a runaway market. The New Zealand market for director fees is, on the whole, low both relatively and absolutely. Do we overlook the fact that as a director of a same-size business in Australia, a director is paid two to five times more than his or her Kiwi counterpart? Do we overlook the fact that faced with a difficult and uncertain economic environment, boards are grappling with escalating demands and complexity? The great majority of participants in the Moyle Director Survey every year report heavier workloads and greater time commitments. Do we overlook the fact that recent court cases in New Zealand and Australia underscore the personal legal liability inherent in board membership? Not to mention reputational risk. Shareholder and stakeholder expectations for board members regarding duty of care and strict liability are rising steadily. Do we overlook the fact that when a business struggles or share price drops, its board is blamed first? “Where is the board?” These are invariably situations where boards are expected to step up, commit more time and effort, and face a wider array of business and personal risks. These are times to remember that directors do not directly control business results as company executives do. Boards are appointed to monitor strategy, compliance and performance. Indeed, boards are sometimes criticised for being too hands-on in a business. And finally, do Australian director fee levels even matter? I think they do. New Zealand-based companies large and small, private or listed, operate and/or sell into
Australia, hire Australian executives, and appoint Australians or individuals with Australian market experience to their boards to gain connectivity and insight into the market. When New Zealand and Australian directors sit side-by-side at a board table – with identical responsibilities and risks – what are the right fees? Can a New Zealand company realistically attract Australian-based directors when the fees offered are a fraction of what that director earns across the ditch? Should there be a two-tiered fee system? We don’t advocate paying Australian-level fees. However, we think it is inequitable to pay local directors only half or even a quarter of fees paid to like-sized Australian companies. To do so undervalues good governance, encourages individuals to serve on too many boards, and is at odds with attracting a highly qualified and engaged board of directors. Board fee increases have always been controversial, as has CEO pay. The Moyle Survey identifies a trend toward paying separate committee fees that is in part, a reaction to this environment. Some 42 percent of companies in the 2011 Survey do this. Several factors drive this trend. First, as directors’ workloads rise, more work is allocated to committees. Committees bear more responsibility, and meet more frequently. And there are more committees established every year. Some are permanent, while special purpose committees are established temporarily for one-time projects or important transactions. This “unbundled” approach more closely tracks and rewards responsibility and contribution. It also creates greater transparency into how boards function and gives shareholders a clearer picture of what a board is doing. Sherry Maier is a senior consultant at Moyle Consulting/Strategic Pay.
MAY 2012 | THE DIRECTOR |
61
THE DRAWINGBOARD
Design and build governance
Directors and trustees should, from time to time, ask themselves whether the way in which their organisation is governed is appropriate for its size and stage of life. By Jo Brosnahan
G
overnance is about translating owners’, shareholders’ and stakeholders’ expectations into performance while, at the same time, ensuring trusteeship for the capital and resources they provide. The clear leadership role of directors and trustees is to overview the strategic and visionary side of the business and, the appointment, support and monitoring of the chief executive’s performance. But board focus and activity varies, and no one governance model fits all. Boards that try to shoehorn their mode of operation into a particular governance format without taking account of the organisation’s stage of growth and circumstance can cause stress and unintended consequences. Ljiljana Erakivic and Judith McMorland of the University of Auckland Business School have completed some interesting work on governance in the not-for-profit sector. They looked at five different levels of management and governance required as an organisation
62 |
THE DIRECTOR | MAY 2012
grows; from hands on and direct involvement at start-up (level one), through to the strategic governance of a large complex and level five organisation. Different types of governance, from a working committee through to the establishment of a board, and the eventual creation of a chief executive role, occupy levels two to four of their scale. Different skills (and possibly different people) are required as the organisation progresses through its various stages, and governance and management separate. As an organisation grows, the vision and mission and strategic direction needed to determine its long-term sustainability become the focus. Appropriate skills are then needed around the board table. At the executive level, volunteers give way to a paid executive, and the remaining volunteers (who can be on the board) are responsible to the CEO. It’s important to maintain the passion for the purpose of the organisation through this process. Premature governance structures can
inhibit a growing organisation. The need to service a board at an early stage of development can consume time and resource that the organisation doesn’t have, and shift focus away from the strategic and operational sides of the business. David Irving, co-founder of the Icehouse and honorary professor of the Auckland University Business School, and Darl Kilb, Deborah Shepherd and Christine Woods, also of the Business School, talk of a similar process in the governance of small to medium enterprises (SMEs) in their book Changing Gears. The founder takes the business from kitchen table, through part-time adviser/mentor, to full-time adviser/director to a board of directors. The growing business needs wisdom to complement growth. The characteristics of wise advisers are, the authors say, knowledge, judgement, empathy and influence. The new model requires the founder to accommodate the advisers and simultaneously change his or her role.
ONBOARD
Whether it’s a business or a not-for-profit, there is a gradual demarcation between governance and management designed to ensure clear accountability and responsibility. It is not so much a line as an interface which varies according to the age and stage of the organisation. Growing organisations change and morph, like a living entity, while retaining purpose and values at the core. This transition only occurs if the right leaders, doing the right things, are securely in place. Initially the founders are vital. However, the successful transition from one phase to the next requires open and trusting conversations, and a measure of humility as people take on new roles and step aside for others with the expertise and skills needed to grow the enterprise. The most successful level four and five boards are anchored by a strong partnership between the chair and the CEO, the organisation’s two key leaders. When this works well, they jointly set the tone and underpin the organisation’s culture. Ideally, they model the positive interaction needed between the board and executive team. They should be clear about the mission, vision and values of the organisation and be focused on achieving them. The chair and CEO must be clear about their respective roles and work together where there is overlap. They should jointly ensure there is: • a succession plan • continuous learning at both executive and board level • diversity on both the executive team and the board, thereby encouraging new lenses and creativity. They should both master the art of listening, not judging, to ensure open, positive and, when necessary tough, conversations. The chair should mentor and support the CEO, particularly when he or she is new and inexperienced. Later in the relationship, honest two-way feedback is important. The relationship must be underpinned by professionalism, integrity and trust. Governance models change to reflect the evolution of the enterprise. But whatever an organisation’s life stage, its progress depends on the skills and personal qualities of its leaders and their ability to lead change while ensuring ongoing success. People, not structures, make organisations successful. While I have focused on the traditional concept of governance and management, Irving and his co-authors suggest the benefit of a board lies in the wisdom that its members bring to achieve the organisation’s mission. There are other models. A less formal advisory board can be used to provide expertise, advice and access to relationships. A group of young Australian entrepreneurs have, they told me, established a “board of mentors”, allowing “wise heads” to provide wisdom while remaining free of any responsibility for business outcomes. Governance is a challenging and dynamic environment, and all organisations have slightly different governance needs. There is, however, one common requirement whatever the model. Good leaders must create and work together in a trusting environment to drive success. If your governance model isn’t working, start changing it now. Jo Brosnahan is chair of Leadership New Zealand and a professional director.
Jasons Travel Media founder John Sandford is back at the helm as chairman of Jasons’ board following a governance re-shuffle of the NZAX-listed company. Sandford replaced former chairman Geoff Burns who stepped down last month after nine years in the job. Burns remains as deputy chair. And Jamie Hall, former global executive chairman of UK-based market research company Taylor Nelson Sofres (TNS), has joined Jasons’ board after buying a 10 percent stake in the business from Sandford’s family interests. Sandford (FNZIM) is a member of the NZIM National board. Meanwhile, TNS New Zealand has appointed formerly UK-based business strategist Bindi Norwell to its board to drive client growth. New Zealand Affordable Arts Trust has appointed Wellingtonbased lawyer Graeme Reeves its chairman. He succeeds Chris Parkin to lead the nation’s largest art show. “Graeme thinks outside the square,” said NZAAT executive director Carla Russell. Sounds like the man for a job like that. Former KiwiBank chief executive Sam Knowles has joined the board of newly established and Kiwi-owned life insurance company Partners Life. The company is “focused on finding new ways to deliver high value products to New Zealanders and sharing value with its customers”, said Knowles, adding that he wanted to help create a fresh approach to life insurance and take on the mature Australian-owned insurers. Global insurance broking and risk management company Marsh has appointed Frederic Boles an executive director responsible for the growth of its financial and professional services business. Chartered accountant and strategic planning consultant Jeremy Bendall is now an independent director on the Institute of Financial Advisors (IFA) board. NZX director Nigel Williams has resigned and been replaced by Television New Zealand director Alison Gerry. Fruit and vege trader Turners and Growers has been taken over by German conglomerate BayWa Aktiengesellschaft and consequently re-jigged its board membership. BayWa’s Klaus Josef Lutz has become chairman, and Andreas Helber has also joined the board. Sir John Anderson and John Wilson, a Fonterra director, have joined the board as independents. Fisher and Paykel Healthcare has appointed former Foodstuffs New Zealand managing director and now professional director Tony Carter chairman of its board. He succeeds retiring chair and founding family scion, Gary Paykel. Ray Gillenwater has been appointed managing director of Research in Motion (RIM) for New Zealand and Australia.
MAY 2012 | THE DIRECTOR |
63
Better board evaluation options By Iain McCormick
E
valuating the performance of any board, its committees and its individual directors is a responsibility board chairs simply shouldn’t shirk. It involves directors undertaking a constructive but critical review of their collective and individual performance; identifying strengths and weaknesses and implementing plans for professional development. The aim is to help boards think more strategically, make better decisions and move toward best practice governance. A raft of board evaluation systems that include simple paper-based templates, web-based tools and interview-based evaluations, now exists. The pressure to embrace board evaluations sprang largely from the corporate governance disasters that led to the implementation of the Sarbanes-Oxley Act (2002) in the United States. Companies listed on the New York Stock Exchange had to both conduct board evaluations and disclose the results. Board committees, including the audit, nominating and remuneration committees, also had to conduct regular performance evaluations. The most common types of evaluation are: • Whole of board – examines the board’s skills, behaviour, processes, team outputs. • Committee – reviews the committee’s purpose, skill sets, processes and achievements. • Chair – assesses the individual’s board management performance, working relationship with board members and personal qualities. • Director – examines the individual directors’ understanding of their role, competencies and boardroom performance. • Chief executive – reviews the CEO’s performance against plan, their competencies and capabilities. Directors who have undertaken evaluations for many years still question its utility. Their criticisms of the process include: Evaluations are too long. Some whole-of-
64 |
THE DIRECTOR | MAY 2012
board assessments consist of 70 or 80 questions. They take a long time to complete and provide more information than is possible to follow up on. Directors get bored, pay little attention to the detail and often provide routine scores, typically 4 on a 5-point scale. Individual director evaluations can be worse with each director having to answer 40 or more questions. The personal nature of the feedback makes evaluation more sensitive than whole-of-board evaluation. The potential for unproductive feedback is significant. Evaluations don’t focus on critical issues. Board evaluations are typically based on a best practice model such as the London Stock Exchange’s ‘Corporate Governance: A Practical Guide’. Chairs often have issues other than those in the model that they want to assess as part of the evaluation. Good evaluations must be able to focus on new and sometimes unique issues. The question set is fixed. Chairs often want to alter questions or add new questions in an evaluation. The lack of evaluation follow up. Evaluations need a dynamic follow-up process, including an action plan and follow-up report. Directors should be able to comment on the action plan and the adequacy of the follow up. Online board forums can be productive. A lack of good governance evidence. Most evaluations ask board members to agree or disagree with specific statements. Very few evaluations ask boards to cite evidence or examples of their good governance. Evaluations become meaningless rating exercises without clear evidence of achievement. New evaluation systems that deal with these types of issues are, however, emerging. They are dynamic, engaging and tailored to individual companies. They provide a costeffective solution to governance evaluation which can’t be achieved by the consultant and interview-based processes. They are particularly well suited to not-for-profit
organisations and cost-conscious medium to larger enterprises. The new generation features long-form evaluations and simple, easy to complete, short forms. These quickly identify whether the board and individual directors are adding value to the organisation and the board. More app than website-like, the evaluation forms are clean and simple without fancy fading pictures or lots of text boxes or links. The aim is to get the board member into the evaluation with as few keystrokes as possible. The focus is on clear navigation with immediate recognition of what questions have been completed and what haven’t, and the forms can be used on a range of tablets and smart phones. Follow-up questions can be generated based on the previous years’ evaluations – no more tedious and pointless process of repeating questions year after year. The systems allow for additional new questions. The chair can thereby focus on key areas missed in traditional fixed-question systems. With prices for these applications falling, boards can desert expensive consultant and interview-based systems for simple and effective tailored alternatives. Finally, interactive planning and followup systems enable boards to agree on actions to improve governance, write follow-up reports and comment on both short- and long-term progress. Progress review dates can be built into annual board work plans. There’s a lot wrong with many current director evaluation systems. The new generation could do a lot to lift governance performance through better and more accessible board evaluations. Iain McCormick PhD heads DirectorEvaluation.com – www.directorevaluation.com and runs the Sport NZ Governance Evaluation service.
UP TO 44% OFF
BOOK SALE THE COMPLETE GUIDE TO GOOD GOVERNANCE IN ORGANIZATIONS & COMPANIES – Doug Matheson Researched and reprinted four times over the past seven years, this definitive but practical ‘how to’ guide is for any organization governed by a ‘board of directors’, ‘board of trustees’, ‘council’, ‘committee’ or similar governance structure.
Normally $85.00 (incl gst + P&P) Now $72.50 (incl gst + P&P)
Save 15%!
GREAT GOVERNANCE – HOW THE BEST BOARDS WORK – Doug Matheson Great Governance is practical guide to understanding how to be a good director or trustee. Based on the author’s vast experience as a director and written in simple terms, it explains what it takes to create a great board – in the private, public or not-for-profit organizational world.
Normally $49.00 (incl gst + P&P) Now $29.50 (incl gst + P&P)
Save 40%!
ALSO ON SALE...
LG Contacts contains the latest information on district and regional councils, Council Controlled Organisations, government departments and agencies, and other public organisations.
Normally $35.00 (incl gst + P&P) Now $26.50 (incl gst + P&P)
Save 24%!
MEGA THINKING – HOW TO TAKE YOUR BRAIN TO MAXIMUM PERFORMANCE – Charles Donoghue Mega Thinking is a practical yet very personal guide to helping us understand what makes us tick and, from that understanding how to build positive change into our everyday lives.
Normally $35.73 (incl gst + P&P) Now $19.95 (incl gst + P&P)
Save 44%!
CONTACT SUE MCDIARMID, SUBSCRIPTIONS MANAGER (09) 300 2671, EMAIL SUBS@MEDIAWEB.CO.NZ
BookSale_FP210x275_MGT0412_Jen
LOCAL GOVERNMENT CONTACTS
Wealth has its advantages. We’ll help you make the most of yours. However you see your future, ASB can help make it happen. Our Wealth Managers can help you access market-leading fund management - both here and globally - and provide you with first-class investment strategies personalised to your financial goals. Talk to an ASB Wealth Manager about the best ways to protect and grow your wealth.
Call 0800 108 084 or visit experienceASB.co.nz ASB Wealth Managers’ disclosure statements are available on request and free of charge from your ASB Wealth Manager. ASB Bank Limited.