human capital magazine issue 10.09
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The magazine for people who manage peopleTRANSCRIPT
HUMAN CAPITAL MAGAZINEHCAMAG.COM
EXECUTIVE EDUCATIONAll about context P.32
CITI BENEFITSHealthy, wealthy workers P.48
PROFILEA lifetime in HR P.50
ISSUE 10.9
ALL ABOUT SYNERGY: INTERNAL/EXTERNAL BRAND PROMISES
WORTH?
WHATARE
ANNUAL SALARY REVIEW
PROVING YOUR WORTH
WITH HR ANALYTICS
GUIDE TO LONG-TERM
INCENTIVES
YOUYOU
HCAMAG.COM
editor’s letter
1
COPY & FEATURESEDITOR Iain Hopkins
JOURNALIST Stephanie Zillman
EDITORIAL ASSISTANTS Patrick Durrant, Tom Goodwin
PRODUCTION EDITORS Carolin Wun, Moira Daniels
ART & PRODUCTIONSENIOR DESIGNER Rebecca Downing
DESIGNER Ginni Leonard
TRAFFIC MANAGER Abby Cayanan
CONTRIBUTORSPeople + Culture Strategies, The Next Step, Kenexa, Frontier Software
SALES & MARKETINGMARKETING EXECUTIVE Anna Keane
COMMUNICATIONS EXECUTIVE Lisa Narroway
NATIONAL COMMERCIAL MANAGER Sophie Knight
ONLINE COMMERCIAL MANAGER Sarah Wiseman
CORPORATECHIEF EXECUTIVE OFFICER Mike Shipley
CHIEF OPERATING OFFICER George Walmsley
MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy
CHIEF INFORMATION OFFICER Colin Chan
HUMAN RESOURCES MANAGER Julia Bookallil
Editorial enquiriesIain Hopkins tel: +61 2 8437 4703 [email protected]
Advertising enquiriesNational commercial manager, HR productsSophie Knight tel: +61 2 8437 [email protected]
Subscriptionstel: +61 2 8437 4731 • fax: +61 2 8437 [email protected]
Key Media keymedia.com.auKey Media Pty Ltd, regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australiatel: +61 2 8437 4700 fax: +61 2 9439 4599Offices in Singapore, Auckland, Torontohcamag.com
Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept as HC can accept no responsibility for loss.
HUMAN CAPITAL MAGAZINEHCAMAG.COM
EXECUTIVE EDUCATIONAll about context P.32
CITI BENEFITSHealthy, wealthy workers P.48
PROFILEA lifetime in HR P.50
ISSUE 10.9
ALL ABOUT SYNERGY: INTERNAL/EXTERNAL BRAND PROMISES
WORTH?
WHATARE
ANNUAL SALARY REVIEW
PROVING YOUR WORTH
WITH HR ANALYTICS
GUIDE TO LONG-TERM
INCENTIVES
YOUYOU
Go to the head of the class
Letters to the editor [email protected]
Express yourself! Got a burning issue to get off your chest? Check out the readers’ forums at hcamag.com
There’s a strange (and quite coincidental) synergy between several of the features in this issue of Human Capital. We have our annual HR remuneration review, which aims to provide insights into what you and your team should be paid. With so many variables to consider, this will only ever be a rough guide, but it’s fascinating to see the direct link between supply and demand and the vagaries of geographic location and sector success when it comes to pay.
Of course, it’s all very well wishing or hoping for more money; delivering is another matter. HR professionals should be able to approach their boss with confidence – with clear evidence of how they are adding value to the business. And the best way to do that is via HR analytics.
Our feature on p.38 provides some clues on what you need to know about this exciting and rapidly developing area of HR.
In many ways, analytics is the next phase in HR’s evolution. With basic automation of HR processes under control, the next necessary step is to fully leverage analytics in a meaningful
way. Analytics is the glue that closes the gap between HR and overall business results.
The new generation of talent management suites must manage each and every essential HR process, including recruiting, performance management, learning and compensation. Once the essential HR processes are covered, the next step is to use analytics to ensure talent and business execution is maximised. It’s forecasting ahead, rather than concentrating solely on what’s already happened.
While all that sounds daunting, as one of our experts says, it’s not necessary to “boil the ocean in one go” – meaning that organisations
should start small, perhaps with a couple of insights into individual employees, and then build from there.
It’s the simple-in-theory-but-challenging-in-practice concept of making sure you have the right people doing the right things at the right time.
Imagine taking that evidence to the boss – chances are that pay rise may well come your way after all.
Iain Hopkins, editor, HC Magazine
We value your opinions and input. Human Capital would like to hear from you. Send through your comments to [email protected]. Alternatively, express your thoughts on the readers’ forums at hcamag.com
Analytics is the glue that closes the gap between HR and overall business results
The Tabbies are an international B2B publishing awards competition organised by the Trade Association & Business Publications International. The 2012 awards featured nearly 500 entries, with nominations coming from the US, Canada, the UK, Australia, UAE, France, India, Singapore and South Africa.
Best B2B magazine (single issue)Human Capital – Honourable Mention
Best B2B e-NewsletterHC Online – Silver Medal
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HC MAGAZINE 10.9
contents Check out the HC archive online: hcamag.com
REGULARS04 | In brief: news06 | In brief: hr insight
FRONTLINE INTELLIGENCE 08 | In Step – HR career experts10 | Legal12 | HR Consulting13 | Technology
14 | My Brilliant CareerAcknowledged best employer Abbott Australasia is setting the bar high in the medical research and healthcare field – and with talent tight, it’s hoping this latest accolade will reap rewards
28 | The only way is upIn every sharemarket downturn, the value and effectiveness of long-term incentives is questioned; yet now is the perfect time for re-setting LTI packages, writes Jon Finlay
32 | Back to schoolWhy choose an MBA over a Master of HR? Do both options hold appeal for HR professionals? Human Capital discovers the key is context
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Cover story: What are you worth?How are HR professionals faring in the continued economic turbulence? Find out in Human Capital’s annual remuneration review
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38 | Out with the rearview mirror; time to forecast the futureWhat gets measured gets managed – and capturing, interrogating and managing ‘big data’ is finally filtering through to HR. How can talent analytics be used to consolidate HR’s position at the exec table? Iain Hopkins investigates
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IN BRIEF
news
The month in numbers54 Number of injuries per million hours worked for casual workers (those without leave entitlements) compared with a rate of 35 for those with leave entitlements*
$350,000 The amount the Fair Work Ombudsman has ordered Rentokill Initial pay 396 current and former employees in back pay, caused by a payroll error
15.6 % Percentage of prospective MBA students in 2012 who are primarily interested in distance learning and online MBA programs; up from 4.4% in 2008^
Sources:*Australian work-related injury experience by sex and age, 2009-2010, Safe Work Australia^QS TopMBA.com applicant survey
TECHNOLOGY
APPLE CO-FOUNDER ISSUES Y2K-STYLE WARNINGn Cloud-computing – whereby companies ‘rent’ software over the internet rather than installing it on their own machines and upload data to be stored on remote servers – is widely touted as the only way forward in the 21st century.
Yet Apple co-founder Steve Wozniak has spoken out about the risks he sees in cloud computing. “I really worry about everything going to the cloud,” Wozniak said at a seminar in Washington in August. “I think it’s going to be horrendous. I think there are going to be a lot of horrible problems in the next five years,” he added.
The problem, Wozniak said, is that users effectively sign away ownership of the data through the legalistic terms of service with a cloud provider. “I want to feel that I own things,” he said. “A lot of people feel, ‘Oh, everything is really on my computer,’ but I say the more we transfer everything onto the web, onto the cloud, the less we’re going to have control over it.”
Fear-mongering aside, for organisations prepared to take the cloud-plunge there is a long list of significant benefits. Research by Deloitte found that 84% of Australian companies have either already begun transforming, or plan to transform their HR functions towards cloud computing, and the reason couldn’t be more straightforward: cost-cutting.
RETENTION
LESSONS FROM THE MOST ENGAGEDn The most engaged workers in Australia are perhaps not who you might expect. Yet the findings of a new report are in, and soldiers, accountants and insurance brokers all have one thing very much in common – they love their jobs.
The survey of more than 5,000 Australian employees by Right Management measured workers’ emotional and intellectual commitment to their job and to the success of their organisation.
While the drivers of engagement will vary for each organisation, Australian employees want to feel rewarded for their work, be clear about their career direction and proud of their employer.
As the industry with the highest engagement score, the secret for the armed forces lies in the sheer strength of leadership. For accountants and insurance brokers, their high engagement score is a result of varied work, client relationships, and simply being kept busy. On the other side of the coin, HR professionals working in biotechnology, retail, agriculture, hunting, forestry, and fishing industries have their work cut out – these sectors all returned the lowest engagement scores.
Across the board, the survey revealed a more general theme in low engagement: the longer a person works for an organisation the less engaged they become. Notably, the report also found that the older that workers are the more likely they are to be engaged.
The below graphic shows the balance between Job Engagement (the level of engagement people have to their job or profession) and Organisation Engagement (the level of engagement they have to their organisation).
Disconnected47%Or
gani
sati
on e
ngag
emen
tN
ot e
ngag
edEn
gage
d
Job engagementNot engaged Engaged
Benchwarmers
Free agents
7% 34%Stars
12%
Disconnected – Likely to underperform and leave
Benchwarmers – Likely to underperform and stay
Free agents – Likely to outperform but leave as soon as opportunity arisesStars – Likely to outperform and stay
Base: 7,310 employees. Australia and New Zealand, 2012
DID YOU KNOW? Globally, more than 232 million identities were exposed in corporate hacker attacks during 2011. Data breaches were usually a result of lost or stolen devices such as USB sticks, laptops, smartphones and tabletsSource: Symantec
HR STRATEGY
HR PRACTICES LINKED TO SUPERIOR ECONOMIC PERFORMANCEn Companies that are highly skilled in core HR practices earn up to 3.5 times the revenue growth and as much as 2.1 times the profit margins of less capable companies, according to new research.
In a joint report* by the Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA), the practices of high-performing companies were compared against those of lower-performing ones in 22 key people-management areas.
The key point of difference came down to three fundamental areas, namely leadership development, talent management, and performance management and rewards, where the top performers were investing in more activities and providing more options to employees on a regular basis.
“Overall, what these findings reveal is that ‘people’ companies are far more proactive and more strategic about ensuring they have the talent they need – today and in the future. They fully understand the connection between talent and sustainable performance,” Rainer Strack, from BCG said.
*From Capability to Profitability: Realising the Value of People Management surveyed 4,200 HR professionals and managerial staff in 100 countries.
LEGAL
n An employee for a not-for-profit employment services agency has failed in his bid to have his dismissal overturned after lying about his unauthorised use of a company vehicle.
In the case of Simon Workman v South Metropolitan Personnel Inc, the employee was dismissed after exceeding the speed limit in a company car at a time when he was not authorised to drive it, and failing to be honest in subsequent interviews. Employees of the agency were allowed to use the cars for private purposes if approved by the CEO, and on the condition they sign the log book.
Initially the employee in this case had said he was driving a client to a job interview, but crosschecking revealed this to be false.
The policy infringement came to light following the issue of a speeding fine. “[The employee] either deliberately misled [the CEO]
RECRUITMENT
EMPLOYEE VS EMPLOYER REMUNERATION MISMATCHn A new report from Robert Walters has revealed that some employers may be out of touch with what their preferred candidates are truly worth. The report indicates there are many factors to consider when it comes to remuneration – and the mix can be a challenge to get right. “Remuneration fluctuates depending on geography, industry, company budget, seniority and the job market, as well as the candidate’s background. Taking the time to understand [the very latest] market rates for the position you are hiring is crucial to ensuring the offer you make is fair,” Bradley Shotland from Robert Walters said.
The report, Managing the offer process to ensure you recruit the best professional, also revealed the following statistics:
• 46% of professionals use salary and market research to determine what their salary should be, while the majority of employers at 59% use internal bandings defined by role type
• Only a minority of candidates use the employer’s benchmark to make their decision – the majority use salary survey research and market rates
• 87% of employers have had a candidate turn down an offer of employment due to receiving a better one from another employer
• 31% of professionals surveyed believed the salary package was the most important part of the job offer
with his first explanation or deliberately chose not to later clarify what he came to realise was an incorrect explanation,” Commissioner Williams of Fair Work Australia found. The employee was dismissed because the employer had lost the “element of trust and honesty” essential to continuing the employment relationship.
Williams also commented that unauthorised use of the vehicle on its own would not have constituted a valid reason for dismissal – the key factor in the legitimacy of the dismissal was the lack of openness and honesty the employee showed during the investigation.
“The Tribunal has previously held … that where an employee is dishonest during such investigations the employer can no longer be confident that the employee will be honest in the future,” Commissioner Williams said.
DISHONESTY AND EROSION OF TRUST SOLID GROUNDS FOR DISMISSAL?
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IN BRIEF
ProductivityThe annual wage bill in Australia is approximately $606bn; total organisational productivity wastage can be valued at around $109bn. Where do we sit on the global stage, and what can be done to improve productivity?
Fast fact1.5 billion people in the world – or one-third of the working-age population – are “potentially underutilised”. This estimate of labour underutilisation is comprised of the 195.7 million unemployed people in the world and nearly 1.3 billion working poor who live with their families on less than US$2 per day per family member. ***
FOUR KEY AREAS TO BOOST PRODUCTIVITY**
Organisational structure, design and operating model - removing all wasteful, bureaucratic, and non-value work and outputs. 23% believe organisational structure, design and operating model have the biggest impact on productivity
Technology - being more ambitious and effective in process automation and technological change. 8% believe additional, new or improved technology would improve performance
People management issues - developing and utilising the full talents and capabilities of human capital. 54% believe people management issues have the biggest impact on productivity
Innovation - being deliberate and audacious with an innovation agenda. 15% believe further innovation would increase productivity
A WORKER’S AVERAGE DAY**58% work that added real value to my organisation
18% work that wasted time and effort
3% other activities that added value to my organisation
9% time networking with colleagues that added value to me and my work
12% activities that added to my personal development
58%
GDP & Productivity – Gross domestic product (GDP) is the market value of all officially recognised final goods and services produced within a country in a given period.
In 2011, the world’s largest GDP (based on purchasing power parity) was the EU. The US was ranked second. China, with the world’s largest workforce, was third, followed by India in fourth place (world’s second largest workforce). Australia ranked 18th. *
Norway is currently classed as the most productive nation in the world, based on its hourly contribution to GDP.̂
The US is ranked second in the world on this basis; however, it comes out on top against 27 nations in the EU, Japan and Switzerland in the amount of wealth created per hour of work.̂
US employees put in an average 1,804 hours of work in 2006; while Asia – South Korea, Bangladesh, Sri Lanka, Hong Kong, China, Malaysia and Thailand – surpassed 2,200 average hours per worker. However, those countries had lower productivity rates.̂
Sources: *International Monetary Fund ^ International Labor Organization
795,500,000China has the world’s largest labour force as
of 2011, with 795,500,000 workers
487,600,000India ranks second, with 487,600,000
workers (2011 figures)
12,050,000Australia currently has the world’s 43rd
largest workforce, with 12,050,000 workers (2011 figures)
15The smallest labour force in the world is that of the Pitcairn Islands (2004), with
only 15 workers
WORKFORCE STATS
HR insight
Sources:** Wastage adds up despite motivated workers: The Ernst & Young Australian Productivity Pulse*** Key Indicators of the Labour Market (KILM), 2007, International Labour Office, Geneva, Switzerland
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Best practice HR initiatives… these are something that emerging HR practitioners aspire to develop and implement. To explore this topic further, The Next Gen facilitated a professional development seminar for early and intermediate HR career practitioners to provide them with the opportunity to hear from two highly regarded HR leaders from organisations that demonstrate contemporary and progressive HR practices.
THE SEMINARThe 80 attendees enjoyed a panel discussion between Pip Russell, the Vice President of HR for Schneider Electric and Phil Taylor, the Head of People & Performance at General Property Trust.
The panel shared their experiences in developing and implementing fit-for-purpose HR initiatives to meet the needs of their respective organisations. The discussion explored four key initiatives:• Activity-based and output-orientated
working • “One HR Approach” to role model
alignment and consistency across the organisation
• Innovative leadership development and talent validation
• Low-cost but high-value employee benefits
KEY TAKEAWAYSThe audience heard that the HR initiatives that will be relevant and beneficial to one organisation may not necessarily be suitable for another. Of course, to be effective, these programs need to be specifically customised to suit each organisation’s respective business requirements, however there were certainly some key takeaways for the audience that can be readily applied across the board.
FRONTLINE INTELLIGENCE
recruitment Lisa Robson is a Consultant within The Next Gen division of The Next Step, a specialist consulting practice in the human resources market. For more information call
(02) 8256 2500 or email [email protected]. Website: www.thenextstep.com.au
GET BACK TO BASICS! A commonly-held frustration of HR and business leaders is that budding HR practitioners can be all too eager to work on elaborate programs.
Often what an organisation may require is a simple but clever solution to a “pain point”. For the HR function to ensure the success of larger-scale initiatives, they need to have built up the credibility through doing the simple things well.
“The business won’t let you do the sexy stuff until you build solid foundations and get the basics right,” Pip explained.
INFLUENCE, INFLUENCE, INFLUENCE! The implementation of any initiative, whether large or small, will require the ability to obtain the buy-in of key stakeholders to ensure its success. Achieving this commitment, particularly for emerging HR practitioners, can be challenging.
Our panel provided some tips to the audience on enhancing their influencing
capability. Their need to be resilient and persistent was highlighted. Pip advised that “if at first the business pushes back, think outside the square for another way to present the initiative.”
The panel explained the importance of speaking the language of the business and thinking as the leader would. Phil stated that “talking in terms of a leader’s ‘legacy’ can be very effective in getting their endorsement.”
DON’T BE AFRAID TO TRUST!The panel emphasised the importance of a trusting culture. This is two-fold; trust both your colleagues and also your broader workforce to do the role they were hired to do. They were employed as they demonstrated the skills and capability to perform the role, so give them this accountability.
This is not saying that peers and employees shouldn’t be challenged or questioned when needed, but focusing on output rather than face-time will benefit the success of HR programs. Phil believes that “the space for employees to reflect and plan goes a long way!”
FINAL NOTEAlthough a “one-size-fits-all” approach to HR initiatives is not advisable, there were a number of consistent themes shared by the panel that emerging HR practitioners can apply across the board for most fit-for-purpose HR initiatives:
• Get the basics right first• Use a variety of tactics to influence• Trust your peers and workforce
For those who do have the opportunity to implement leading-edge HR initiatives, understanding these key takeaways will most likely contribute to the success and buy-in of these programs.
“Leading the Way – Best Practice HR Initiatives”
The implementation of any initiative will require the ability to obtain the buy-in of key stakeholders to ensure its success
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MARKET MOVES
radar
By supplying Market Moves, The Next Step is not implying placement involvement in any way.
Julie Tanner has joined Stockland as their Senior Manager, Organisation Development & Diversity. Julie brings both senior organisational development and HR generalist experience gained working within high profile organisations such as Russell Investment Group, JPMorgan Chase and BT Financial Group. Outotec has appointed Samantha Patel as their Head of Human Capital for South East Asia Pacific. Samantha was most recently the National Manager People & Capability for the Construction Division of Leighton Contractors. She previously held HR Director level roles with Conneq Infrastructure Services, The Trust Company and Hitachi Data Systems. Andy Payne has been appointed the Head of Reward & Systems at Oil Search. Andy brings extensive remuneration and reward experience gained in organisations such as Westpac, BHP Billiton and Challenger Financial Services. Downer EDI Rail has welcomed Andrew Thackray as their General Manager Workforce, Learning & Recruitment. Prior to joining Downer, Andrew enjoyed more than six years with Schindler Lifts Australia as their Director of Human Resources. Cathy Doyle has joined BNP Paribas Australia as their Head of HR for Australia & New Zealand. Cathy has senior HR experience in reputable organisations such as Qantas, Commonwealth Bank and NRMA. She was most recently with Perpetual as their Group Executive Equities and prior to this as their Group Executive People & Culture. GE Capital has appointed Trevor Childs as their Organisational Talent & Culture
Director. He previously enjoyed the role of General Manager Employee Relations at Stockland for nine years. Prior to this he was employed with Ernst & Young as a Senior Manager Change Management. Jo Blackwell has been appointed General Manager People & Performance at SunRice with responsibility for both HR and Transformation. More recently, Jo held the position of HR Director within the Baking Division at Goodman Fielder. Since leaving Goodman Fielder, Jo has provided HR support across the corporate portfolios at SingTel Optus. Delaware North Companies have appointed Traci Eathorne to the role of Executive Director Human Resources. Traci brings strong HR leadership experience and has held senior roles with M&K Lawyers, Bristol-Myers Squibb and Mayne Group. Morag Clayton has joined dairy producer Murray Goulburn Co-operative in the role of National HR Operations Manager. Morag has most recently been working as a Senior Consultant with The Nous Group. Also joining Murray Goulburn in the role of Remuneration & Benefits Manager is Wendy Moore. Wendy is a highly experienced remuneration and reward professional and has worked with well-known organisations such as Jetstar, Aurecon and Cadbury.
State Super has welcomed Belinda Lawn as their Head of People & Culture. Belinda previously enjoyed a successful career with Macquarie Bank, most recently as their Global HR Director, Risk Management Group. To complement her extensive HR generalist experience, she has also held Director level roles in EEO, Learning & Development and Employee Relations. Liz Malady has been appointed the General Manager People & Culture of CPA. Liz brings very relevant experience from her successful nine-year career with Deloitte, where she was most recently their Director People & Performance.
Recent HR Market Moves
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FRONTLINE INTELLIGENCE
legal Joydeep Hor, Managing Principal – P: +61 2 8094 3101, E: [email protected] Seymour, Senior Associate – P: +61 2 8094 3104, E: [email protected]
People + Culture Strategies
Workplace grievances reflect the variety of human interactions that trigger them. From extremely serious unlawful conduct to relatively minor behaviour that is nonetheless annoying and unacceptable in the workplace, workplace grievances are difficult for employers to manage, whatever their size or level of resources and in-house expertise.
The key for employers is flexibility in grievance policies and procedures, knowledge of legal obligations and legal risk and awareness of simple, common sense steps that they can take to manage complaints and minimise poor staff morale and turnover, potential liability and adverse publicity for the business.
DEVELOPING APPROPRIATE POLICIES AND PROCEDURESEmployers need to establish policies and procedures that reflect and suit the size, resources and structure of the business. A generic grievance procedure needs to be sufficiently flexible to accommodate the range of complaints that will be made. At a minimum, good grievance procedures:• are administered by skilled, trained
personnel• are clearly documented so that employees
understand the process for making complaints and the steps that will follow
• ensure grievances are treated fairly, consistently, confidentially and expeditiously
• are procedurally fair, that is, each party knows the allegations against it and has the opportunity to respond
• allow the parties to a complaint to have a support person to attend meetings about the grievance
• allow informal and formal options for dealing with grievances including informal discussions, conciliation or mediation and formal investigation
• ensure that no employee who makes a complaint will be disadvantaged or victimised as a consequence.Whatever happens in the process of
managing a workplace grievance, the message is – document everything. Employers need to keep a very clear and detailed paper trail of the process followed to resolve the grievance.
EFFECTIVE MEDIATIONS AND CONCILIATIONS There is no legal imperative to settle a dispute in conciliation or mediation. Both parties must want to settle the matter and unfortunately, not all disputes can be settled by collaboration and compromise.
Some grievances may be mere misunderstandings about what behaviour is or is not appropriate in the workplace and can be resolved internally through discussion with an HR Manager or other appropriate manager, or through mediation with the assistance of an independent mediator.
However, there are circumstances where the alleged conduct of an employee is of such a serious, sensitive or potentially volatile nature, that attempts at conciliation
or mediation are just not appropriate. If the parties to a grievance are very angry, distressed, depressed, anxious or hostile towards each other, attempts at resolving the matter by conciliation or mediation internally within the business are not only likely to be ineffective, they can also lead to complaints by the employee against the employer for failing to take the complaint seriously. The key here is to engage a qualified external investigator to investigate formally and keep the parties at arms length. The employer can then make an informed decision about what action to take based on the findings in the investigation report.
ADVERSE ACTION CLAIM RISKSPractitioners in HR and workplace law are by now well aware that the “adverse action” provisions of the Fair Work Act 2009 allow an employee to bring a claim if an employer dismisses or otherwise disadvantages the employee because the employee has “made a complaint in relation to his or her employment”. It is up to the employer to prove that any adverse action was NOT taken for that reason.
While much has been made of increased legal risk that these provisions create for employers, the best way for an employer to defeat such a claim remains as it has always been – to follow good grievance procedures that include the points raised in this article, to never victimise an employee for making a grievance and to meticulously document the process, so that if necessary, the employer can prove that any disciplinary action taken was based on sound, consistent, fair and impartial processes.
PCS will be conducting a webinar on “Responding to workplace grievances: options and obligations” on Tuesday, 9 October 2012 at 12pm AEST.
Responding to workplace grievances: Options and obligations
A generic grievance procedure needs to be sufficiently flexible to accommodate complaints that will be made
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FRONTLINE INTELLIGENCE
HR consulting
There is currently a lot of talk about recognition. The best organisations spend a substantial amount of money and resources on their recognition programs. Despite these investments, employees don’t necessarily feel they are being recognised for great work.
One of the more common enquiries on employee engagement surveys is some variation of, “I receive recognition when I do good work.” The norm score across industries and countries for this question is about 55% favourable. Meaning, on average, about half of all employees feel they are appropriately recognised.
At the best companies (top 10%) the score is about 66% favourable, not overly impressive when these companies have favourable scores in the 80–90% range in a number of other areas.
Compare this to the enquiry, “I feel valued as an employee of this company,” which is much less frequently asked (indicating that many organisations don’t even see the value in asking about employees feeling valued). The average score here is 41% favourable, with 32% marking an unfavourable response. In other words, on average, less than half of the employees in a typical organisation feel valued as an employee and one-third actively believe they aren’t valued.
These findings also indicate that there is a difference between recognising and valuing employees. This is more than a difference in semantics; it’s a difference in experience. Recognition is the identification or acknowledgement of something. When we recognise employees, we acknowledge that they are doing good work and are letting them know we appreciate their efforts. Recognition is typically tied to what we do –not who we are.
Valuing is about appreciating the worth of
something (someone) and of esteeming something (someone) highly. When we value employees, we appreciate them for who they are and what they bring to the organisation. We acknowledge them not merely for tasks, but for the deeper intrinsic worth they add to the organisation by just being there.
Kenexa’s research shows that, in general, valuing employees appears to be a driver of engagement (and often the top driver) more often than recognising their efforts. In a limited sample of companies, ‘feeling valued’ showed up as a driver 85% of the time, whereas recognition of efforts emerged only 30% of the time. Feeling valued seems to reflect a broad core of what people are looking for in an engaging work experience – that is, a primary element that connects people to their organisation and motivates is a strong sense of feeling valued and appreciated. Recognition is important, but is more likely to be seen as a singular experience (event driven) than sustained (environment driven).
The two are interactive, however. Organisations that had high scores on valuing employees had higher scores on recognising employees. But recognising efforts didn’t always translate to people feeling valued.
Looking at dysfunctional organisations, one characteristic that emerges for some is rote recognition. These companies recognise people for anything and everything with no real purpose or thought behind it. It is as if someone was told, “recognition equals engagement” and so he or she just ran around patting everyone on the back saying “good job” regardless of the real effort or accomplishment achieved. This underscores the importance of showing your people you value, not just recognise, them.
Recognition without value, over time, will make the recognition hollow. It turns something that should be satisfying and special to employees into something rote and meaningless. Furthermore, without valuing employees, organisations fall into a dangerous zone where they fail to treat and see employees as people.
Valuing others isn’t a leadership thing, it’s a people thing, and it is probably the people thing that the majority of us cherish the most. If you think back to a moment in your life when you felt special and appreciated, it’s most likely a time when you were being valued in some way.
We can all do a better job of valuing those around us. As you go through your recognition rituals, take a few moments to show those around you how you value them. Maybe it’s because they make you feel good, or you learn something new from them every day, or they are warm to those around them, or they have the knack of diffusing tension in difficult situations, or they take care of the small stuff so you don’t have to.
Valuing vs. Recognising Employees
Jeffrey Jolton, Consulting Director at Kenexa L2, 451 Lt Bourke St, Melbourne
Phone (03) 9602 3899 or email [email protected]
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Many businesses choose to outsource their non-strategic activities
Q Our CFO has asked HR to consider outsourcing our HR and Payroll processes. How do we determine if
outsourcing is right for our business?
A There are many factors you should consider when determining whether to outsource non-core business
functions or perform them within your business. Every business is different and there is not one solution for every business; the answer is in Rightsourcing.
What is Rightsourcing? Rightsourcing is the careful and balanced consideration of the different benefits and disadvantages between ‘in-house’ and outsourced business functions.
Rightsourcing requires you to evaluate the cost of outsourcing and understand the potential monetary and productivity savings, expected process improvements and additional value that outsourcing can add that you may not be able to deliver ‘in-house’. Once you have done that you can compare these to your organisation’s business objectives.
What business activities can I outsource? Many businesses choose to outsource their non-strategic activities. By outsourcing tasks your business doesn’t specialise in, you can access that industry’s most updated technology and processes. Your staff are then free to focus on more strategic and value-adding activities.
When deciding if a function should be outsourced, businesses need to analyse their value chain to identify core and non-core
Rightsourcing gets the right fit
FRONTLINE INTELLIGENCE
technologyNick Southcombe is General Manager, Frontier Software. (03) 9639 0777; frontiersoftware.com
activities. Assess whether the activity can be performed better or cheaper by a supplier. If the activity relies on fast-changing technology or a rapidly changing market, outsourcing could provide your business with more flexibility in that area.
Understanding the scope of the service to be outsourced and having a clear vision on what you hope to achieve by outsourcing, whether that be monetary, productivity savings or greater flexibility, is essential to making the right choice.
What are my payroll and HR outsourcing options?Payroll is a necessary aspect of all organisations, but it’s also a time-consuming use of resources that doesn’t add value to a business. This is why it’s common for businesses to outsource their payroll process which liberates their resources and allows them to take ongoing advantage of technological innovations.
Rightsourcing your Payroll & HR processes means undertaking a self assessment of your needs. A deep understanding of the critical processes to your business is vital.
The enterprise needs to determine what level of involvement they wish to have in Payroll & HR processes and which functions could be performed externally.
How do I choose a service provider?Selecting a service provider that understands your needs and works in harmony with your management style is a key requisite for a successful business relationship.
It’s important to select a provider with a proven record for implementing solutions smoothly, on time and within budget. Finding out exactly what services your provider offers, and which features are vital to your business, will help you choose.
Consider the security and accessibility of your data. Find out if your business needs 24/7 access to data and whether it’s more suitable to have data stored on the premises or in a secure data centre. Could your staff benefit from Employee Self Service?
Outsourcing can bring many positive benefits to your business. Following a Rightsourcing methodology will ensure you find the service options that will bring the most value to your business.
Like to know more?Frontier Software is partnering with the experts at ConsultPoint to present a webinar on Rightsourcing. It’s designed to help demystify this transformational business trend. To register or for more information visit www.frontiersoftware.com and select ‘Products’.
Rightsourcing is the careful and balanced consideration of the different benefits and disadvantages between ‘in-house’ and outsourced business functions
14 HCAMAG.COM
PROFILE TOBY BICKNELL
my brilliant career
Acknowledged best employer Abbott Australasia is setting the bar high in the medical research and healthcare field – and with talent tight, it’s hoping this latest accolade will reap rewards
Human Capital: What drew you to an HR role initially?Toby Bicknell: I started my career on the commercial side of the business, which led to managing teams of sales, marketing and administration staff. As I managed people over the years, I developed an interest in HR management. I was engaged by the opportunities to manage the human capital of the business – to take a role in shaping the business by finding the right people and working with management to build a culture that drives results. In 2002, the MD of Arrow Pharmaceuticals approached me to head up the HR function for their business and I’ve been in HR ever since. I’d always had an interest in working in the pharmaceutical space, so this was a great opportunity to dive in.
HC: What is your current role and how did it come about?TB: My current role is human resources director for Abbott in Australia and New Zealand. Abbott is a broad-based healthcare company, so I look after the HR needs of our many business areas, including pharmaceuticals, diagnostics and devices, and nutritionals. I was the head of HR for Solvay Pharmaceuticals in Australia when Abbott acquired the global Solvay business in 2010. Upon the local acquisition, I was appointed the HR director for Abbott in ANZ. It was a great opportunity to continue in an
industry I really enjoyed, but also expand my scope a bit further in a more diversified healthcare company with 75 years in Australia and a network of 91,000 employees globally. The role at Abbott was a healthy step up for me in terms of the size of the company and its complexity.
I was lucky enough to inherit an HR team at Abbott with a lot of experience – it had a deep understanding of the business and processes, but also good networks across the company.
HC: How would you recommend other HR professionals learn more about the wider business world?TB: It’s important for all staff to understand the actual business of the company they work for: who the customers are; how products are developed, distributed and sold; and where and why investments are made. At Abbott our view is that for credibility and the ability to offer strategic counsel, HR professionals need to gain a detailed understanding of the business, industry, regulatory and competitive environment of the company they support. Time spent on a well-constructed induction program for all staff is a good investment.
The number one recommendation would be to ask lots of questions. To achieve a wider business world understanding, you need a genuine interest in the commercial side of the business – not just the brands and operations, but the actual business model which drives
Here’s to good health – and
great HR
15HCAMAG.COM
Bachelor of Arts degree from the University of New South Wales; after graduation: Strategic Leadership for HR Professionals through Columbia University in New York
TOBY BICKNELLROLL OF HONOUR
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16 HCAMAG.COM
HC: Do you have any role models professionally or personally?TB: Unconsciously, I suppose my family and friends have been role models from a personal perspective. Professionally I don’t have a one-stop shop ‘oracle’ – instead I have become much better at seeking advice and opinions from people around me. Having multiple sources of reliable information is important in a world where spin is plentiful and reality is scarce.
What I’ve taken away from these role models, and now apply in my career at Abbott, is mostly about attitude. Work hard because nothing comes easy. The simple solution is often the best one. Have the courage to give honest feedback – be polite and sensitive, but don’t sugar coat your message.
HC: What’s the biggest HR challenge Abbott faces and how do you plan to overcome that?TB: It’s maintaining our position as an employer of choice and helping to make Abbott an even better place to work
the financial and investment decisions. These principles can be used to gain an understanding of many different businesses. The same goes for finding and retaining the right people – ask them questions about why they work in this industry or why they picked the role they’re in.
HC: What is your biggest career achievement to date?TB: My most satisfying career achievement to date is being part of the Abbott HR team at a time when the company has been recognised as one of the Top 50 Best Places to Work in Australia by the Great Place To Work Institute and BRW Magazine. Abbott has invested an incredible amount of time and effort into being an employer of choice, and one that can attract, develop and retain people with the best skills, the strongest commitment and the highest personal standards and values. This honour recognises a long-standing commitment to the growth, development and success of our employees.
We’re proud of the camaraderie and sense of pride amongst Abbott employees, and the fair and flexible workplace we’ve created.
HC: What’s the one piece of technology or resource that makes your life in HR so much easier – and why?TB: While I might regret saying this, having email on the Blackberry is a very useful piece of technology! In HR, it’s critical that we respond in real time and be accessible to resolve issues quickly. When you share the employee’s same sense of urgency, you demonstrate to them just how important they are to you and the business. The Blackberry is especially good when travelling or just out of the office for half a day. Any device which allows me to get away from the desk, and get out to meet with my customers – Abbott staff – is a good thing.
HC: Describe yourself in a few key words?TB: Calm under pressure, good listener and problem solver usually with very simple solutions, and when appropriate I tend to see the lighter side of a situation.
One of Abbott’s most innovative HR practices is the ‘Brain Boomerang’. Toby Bicknell outlines how this retention strategy works
“The Australian healthcare industry can be prone to a ‘brain drain’ lured by the seduction of an overseas experience. But here at Abbott we’ve implemented a strategy called the ‘brain boomerang’ – giving employees, at all levels, short- to medium-term international opportunities to work within the global Abbott network, followed by a return to Australia with even greater experience, networks and new ideas.
My boomerang will come back“Over the past few years, over 50
employees have seized this opportunity and been ‘inbound’ or ‘outbound’ on their boomerang experience, with a number of them taking part in secondments in Asia, the US and Europe right now.
“The strategy benefits both employees and our business. Employees have an opportunity to take on new responsibilities and learn in a new cultural environment. Yet Abbott benefits from the expanded expertise of its staff, greater retention and strengthened networks across the global business that means Australia is top of the list when it comes to program pilots or new clinical studies.”
17HCAMAG.COM
PROFILE TOBY BICKNELL
More industry profiles at: hcamag.com
in the years ahead. Making the list of the Top 50 Best Places to Work in Australia is a good start and great in terms of attracting top talent. The challenge will be to continue to retain people in a very competitive market and develop capabilities to meet future business needs. This is an industry filled with incredibly talented and highly skilled employees – individuals that specialise in medical research and must have deep understanding of the various therapeutic areas we work in. If you want to keep these skilled employees, you must work to meet their expectations and the business’ needs.
To do this, Abbott is investing heavily in L&D, providing excellent compensation and benefits, creating a culture of innovation, rewarding performance and enhancing our flexible working environment.
HC: Abbott scored highly in the Great Places to Work survey in the area of ‘trust in leaders’. Can you outline how that trust has been built?TB: At Abbott, we maintain that trust in any relationship is earned over time, with healthy doses of honest feedback, transparency in decision making, and timely recognition of good work along the way. Trust is also
built by a bit of ‘give and take’, so people feel the relationship is fair. For example, Abbott employees are extremely committed, and in return we work to provide flexible work arrangements to make it easier for them to juggle career and family commitments, knowing the job will get done to a high standard.
To feel trusted at work by peers and management is invaluable – it creates a feeling of responsibility, pride and engagement. It’s our view at Abbott that trust is essential to create a happy and productive workforce.
HC: Where do you see the future of HR heading?TB: HR is becoming a more permanent and integral business partner, not just someone who is called upon to fix the problem as a last resort. I believe Abbott is ahead of the curve in this regard. At Abbott, HR is included early in the planning and decision making processes. Just as a company carefully plans the details of a commercial initiative, we believe the same level of intensity should be applied to the human capital impact in the future.
18 HCAMAG.COM
HR remuneration reviewCOVER STORYCOVER STORY
EARNING YOUR KEEP: Annual remuneration review
With research suggesting pay increases across all sectors will be 4%, and 6.3% for the resources sector, factors such as organisational performance, sector, job and location of the employee will come into play. Where is HR in the mix?
HR remuneration review
19HCAMAG.COM
‘Narev orders executive pay freeze at CBA’. An audible sigh of resignation could be heard from senior executives across the big end of town upon reading the Australian Financial Review’s front page headline on 18 July. The report indicated that CBA CEO, Ian Narev, as well as other senior executives, will see a pay freeze on base salaries (not bonuses) for the 2013 financial year. CBA also warned that pay rises for lower-level staff would be less than in previous years – a policy intended to prevent widespread job cuts.
CBA joins ANZ, which has frozen pay for its top 900 earners for the past two years, and follows on from widespread backlash against high executive salaries. Paper company PaperlinX earlier in July agreed to slash the wages of top management, while Rio Tinto chairman Jan du Plessis warned that pay levels were spiralling out of control.
Is this caution widespread? And what does it mean for HR remuneration in the new financial year?
MINOR INCREASES OR HOLDING PATTERN?Lisa Morris, regional director of Hays Human Resources, takes the view that global economic conditions are here to stay, so rather than awaiting a dramatic reversal to global markets, employers need to adapt to the ‘new normal’. “That’s why forward-thinking employers and candidates are going ahead with their hiring or career plans. It’s also why employers are increasing salaries, albeit moderately,” she says.
Data from Michael Page indicates that most employers plan to increase salary levels in line with the CPI in order to retain their best people throughout 2012. Average salary increases of 3–4% are likely, with higher increases reserved for specialists with niche skill sets in areas like change management.
“What we’re seeing in the wider market also affects HR, and given that HR is not a revenue generating department, there is more of a focus on cost and cost control,” suggests Chris Grant, director of human resources and legal at Michael Page. “Sixty-eight per cent of salary increases over the next 12 months will be based on or varied on company, team and individual performance. That’s the gateway now to get an increase in salary.”
The news for HR professionals is far from rosy, at least according to The Hay Group’s 2012 Salary Movement Survey. This survey indicates that HR professionals as an overall function are being paid 2.5% below the national market average. Indeed, those with specialist knowledge or industry-specific technical skills (legal, IT) command a much higher premium compared to jobs such as marketing, sales and HR. For these roles, the report indicated that retaining talent and incentivising
No increases
Basis for bonuses over the next 12 months
Individual performance
Team performance
Company performance
Combination of these three
Source: Michael Page 2012/13 International Annual Survey, completed by 1,600 employers
19%
4% 10%
67%
Salary increases over the next 12 months
Standard increases across the board
Increases will vary on performance
Increases for top performers only
14%68%
16%2%
50
40
30
20
10
0
Salaries: Average salary increases
Less than 2%
1%2–3% 3–4% 4–6% 6–8% 8–10% 10–15%
4%1% 1%
Perc
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f em
ploy
ers
24%
45%
24%
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HR remuneration reviewCOVER STORY
20 HCAMAG.COM
Notes: These salary ranges can only be approximate guides as there are often specific circumstances relating to individual companies.Hays: Figures are the median from a lower and upper range (eg $160–170K); all figures are Sydney-based; all salaries exclude superannuationRobert Walters: Figures are for permanent roles, taken from the median of a lower and upper range; figures are basic salaries inclusive of superannuation, but exclusive of benefits/bonuses unless otherwise specified~taken from salary figure for ‘national HR manager’; otherwise ‘HR manager’ figure is $145,000^5+ years’ experience~~ HR advisor with 1–4 years’ experience-- Brisbane figures for permanent salary positionsMichael Page: Figures are the median from a lower and upper range (eg $160–170K); salaries indicated are based on annual basic salary, including superannuation at 9%, excluding bonus/incentive schemes; figures are for NSW and apply for large organisations only (defined as having a turnover of more than $100m)
Salary comparisons for permanent rolesROLE HAYS ROBERT
WALTERSMICHAEL
PAGE2011 HC MEDIAN
2012 HC MEDIAN
HR director (large employer) $300,000 $285,000 $215,000+ $236,600 $266,700
HR manager (large employer) $200,000 $175,000~ $154,500 $132,500 $176,500
HR business partner $110,000 $135,000 $129,000 - $124,700
Senior HR advisor/consultant $85,000 $125,000^ $90,000 $108,300 $100,000
HR officer/advisor $65,000 $85,000~~ - $84,875 $75,000
HR coordinator/administrator $55,000 $60,000 $67,000 $61,300 $60,700
L&D head $220,000 - - - $220,000
L&D manager $140,000 $147,500 $134,000 $87,300 $140,500
L&D specialist $95,000 $80,000 $95,000 $73,800 $90,000
L&D coordinator $65,000 - $67,000 $135,000 $66,000
Instructional designer $130,000 - $106,000 - $118,000
Rem&ben head $200,000 $285,000 $172,000+ $114,200 $219,000
Rem&ben consultant/specialist $100,000 $115,000 $118,500 - $111,200
Rem&ben analyst - - $87,500 - $87,500
Payroll manager - - $108,500 - $108,500
IR/ER manager $140,000 $135,000 $167,000+ $144,800 $147,300
IR/ER specialist $90,000 $97,500 $108,000 - $98,500
Recruitment manager $130,000 $145,000 $152,000 $133,800 $142,300
Recruitment specialist/officer $85,000 $85,000 $103,000 $93,300 $91,000
OHS head/manager $190,000 $125,000-- $146,500 $127,300 $153,800
OHS consultant $90,000 $112,500-- $95,000 $110,000 $99,200
OHS coordinator $60,000 $60,000-- - $76,300 $60,000
OD manager $140,000 $160,000 - $153,000 $150,000
OD specialist $110,000 $105,000 - - $107,500
Injury/RTW manager $100,000 - - - $100,000
Change manager $180,000 $180,000 - $162,500 $180,000
HR graduate - $50,000 $51,500 $51,300 $50,750
DID YOU KNOW?The view that Sydney and Melbourne-based workers are better paid is simply no longer the case, despite the fact these cities have been ranked in the top 10 most expensive cities in the world to live. According to Hay Group, Sydney workers are now earning 0.1% below the national average, while Melbourne workers earn around 1.2% less than the national average
21HCAMAG.COM 21HCAMAG.COM
performance through traditional pay-related measures may require a rethink (see Figure 1).
However, Craig Mason, managing director of HR specialist recruiter The Next Step, says that a word of caution is advised. Comparing remuneration data in HR has always been dicey, he says, due to a number of factors. For instance, comparing the remuneration for roles in low volume/high margin industries versus high volume/low margin may lead to significant misinformation being distributed. “Any HR leader that relies on general remuneration data is bound to be ‘out of whack’ with their direct peer comparison group,” he says. Clearly individual, company and industry circumstances must be considered.
ASSESSING THE VARIABLESIndeed, it’s difficult to talk remuneration without mentioning the patchwork economy and the industry sectors within it. As in recent years, Western Australia and Queensland have experienced high demand for not only HR professionals but candidates across the board due to the prevalence of the mining industry. “There is no denying that the surging staffing needs of organisations involved in Australia’s resources boom have driven the jobs market forwards over the past year. They’ve also, to some degree, insulated Australia from economic woes in the Eurozone and volatility in the world’s major stock markets,” says Morris.
The Hay Group PayNet database suggests that HR roles in the resources sector are being paid 22% more than HR roles in other sectors. “This indicates that organisations in this sector clearly have a different pay policy than most and pay is moving at a rapid pace, hence all roles – whether corporate or sector specific – are being paid at a premium. We should also take into account that a lot of these HR roles may also be based in remote locations hence why a premium would be applicable,” says Steven Paola, senior consultant at Hay Group and author of the 2012 Australian Salary Movement Index Report.
Industries such as banking and utilities are showing increasing signs of a positive recovery from the GFC with these being the only ones (outside resources) that have experienced a 4% or higher increase in Total Annual Reward (TAR) over the last 12 months.
In sectors such as insurance, FMCG, building materials, business services and retail, average actual salaries were between 3% and 10% below that of the national average, creating a challenge for these sectors to retain top talent and drive productivity through reward strategies.
Morris adds that there is also a wide-ranging understanding from employers in all industries that to find and retain the best people remains a challenge. Often, the candidates that are available do not match all
the requirements employers have. There is still a shortage of the right candidates to fill vacancies and competition for the top talent remains.
Mason says that like any market, an imbalance in either the demand or supply of HR capability will impact both the numbers of opportunities and the prices (packages) that are offered. “A couple of years ago we saw an imbalance with a lack of supply and subsequent package growth. In some markets, the supply side of the market is strong and therefore there is pressure on packages being offered,” he notes.
Specialist roles in heavy demand are Rem, IR and OHS, “with Change at the top of the list”, Mason adds.
Grant notes that big corporates are still hiring (and paying for) those with specialist skills – particularly for roles focused on increasing efficiency and effectiveness. He cites HRIS specialists or organisational change specialists with a focus on workplace planning as being in demand.
Morris adds that several key HR trends have kept demand high for certain skilled professionals. One is
-10
-8
-6
-4
-2
0
2
4
6
8
Total Annual Reward comparisons for common job families * The Hay Group definition of Total Annual Reward (TAR) is Fixed Annual Reward (base salary plus fixed allowances and benefits such as medical, telephone, company cars, etc, plus employer superannuation on fixed package elements), with the addition of Actual Short Term Incentive payments and Superannuation Contribution on variable Opportunity To Earn (OTE) payments, such as Actual Short Term Incentives
%
7.7Legal
Engineering
IT
Production
Finance & accounting
Logistics
Marketing
SalesHR
Admin
Research & development
Customer service
Advertising
and media
5.6
3.32.3
1.5
-0.5-1.3
-2.1 -2.5
-3.9
-5.5
-6.9
-8.6
TAR* differential % from all jobs
Fig.1
22 HCAMAG.COM
harmonisation, which has placed OHS high on the agenda for many organisations, and has put those with specialist skills in demand. Another has been the commitment to up-skill a workforce and promote a safety culture, thus increasing demand for OHS training specialists, particularly in the e-learning space. In addition, wellbeing programs are a high priority and major corporates are employing professionals who are dedicated to health and wellbeing.
INCENTIVESHay Group data suggests that the Compensation & Benefits function is the highest paid function as part of the HR family – by an overall average of 5%. All other sub-functions such as generalists, employee relations, training & development and recruitment are being paid similar to each other. These figures are based on Total Annual Reward (including incentives), indicating that HR employees are being paid incentives comparable to that of the national average.
The Hay Group report indicates that incentivised pay is becoming more widely used, with the bonus component of total salaries increasing across all job levels. In general (not specifically HR), executive target incentives increased significantly from 30.4% of total salaries in 2011 to 37.9% in 2012 – the largest growth seen for the last four years. Paola says this reflects a stronger shift to rewarding executives relative to company goals and performance.
When comparing actual incentive payments (2012) versus target set (in 2011), the incentive component of the reward mix for senior management/executive level was most effective in driving outcomes, with the average actual bonus payment outperforming the target by
around 3%. However, for the job groups of clerical, professionals and even managers, actual payments were around 2% lower than the targets – this gap is the closest seen in recent years.
“Organisations that ensure employees understand what they are rewarded for and link this to performance – business, team and individual – are the ones that are more likely to have an improved shareholder return and lower staff turnover,” Paola says.
SENIOR HR ROLESThe top end is soft but the experts agree there is movement being created by change and churn.
“It’s been a softer market than last year for HR professionals earning above $200,000. You could make the same comment about candidates in the $150,000–$200,000 bracket as well,” says Grant.
He adds that the exceptions are replacement roles and where a restructure has been orchestrated and a senior HR director has moved on. “Those people are then replaced with a 2IC or a less senior person because the mandate is quite different to when that person first joined; it’s much more about month to month, quarter to quarter, and less about the strategic HR initiatives,” he says.
This restructuring theme is widespread. “There are a lot of very senior HR directors available in the market for contract work due to companies having restructured and we’ve seen redundancies having taken place on more senior levels,” concurs Marisa Iuculano, manager of the Robert Walters Sydney HR team.
Indeed, according to The Next Step, 55.7% of all Australian HR practitioners indicated that their function has been restructured in the past 12 months – this frequency of restructuring often impacts the scale of the top role and, more often than not, reduces its standing.
“In terms of remuneration at the top end, many senior candidates are looking at roles with less pay than what they have been on in the past. The role itself isn’t paying less but active market participants are generally finding that they need to lower their horizons,” says Mason.
PART-TIME VS PERMANENTIt’s no surprise that the ongoing caution and tight remuneration budgets are impacting on the decision to hire permanent or part-time. Mason notes there is always an up-tick in the number of opportunities offered on a contract basis in an economy impacted by a downturn in confidence. In the 2009 downturn, confidence to acquire HR talent was permanently impacted. As normality returned to markets in FY11, confidence increased, as did the percentage of roles hired permanently (up from 51% in FY10 to 53%). Mason adds that FY12 has seen permanent opportunities drop to 46% of all HR opportunities in the market.
In Australia, 61.1% of all HR practitioners have worked for their current company for less than two years. Only 15% have worked for their current company for over six years. Why? One main reason is that 84% of practitioners believe that switching employers is the best way to get an increase in package. The other reasons for this significant turnover are:• Constant model and structural changes in HR• The scale of many teams being small, limiting career growth• The Ulrich model dominance, which limits internal career mobility• Changes in HR leadership bringing a different approach to the function• Poor leadership in the HR function• Burn-out created through a lack of
resources • Companies hiring the wrong HR
professionals for their level of HR sophistication
• HR professionals wishing to work in an end-to-end role which isn’t the trend in structures
Source: The Next Step
Want more pay? Switch employers!
23HCAMAG.COM
COVER STORY
“We’ve seen a sharp increase in the level of temp hiring activity,” Grant confirms.
“When looking at contracting there are two parts: one is temporary and the other is fixed-term contract. Even with that sharp increase, the majority has been ongoing temp rather than fixed-term contracts.”
There are two reasons for this, Grant notes. Firstly the inbuilt flexibility that interim hiring presents – perfect for peak times and for driving specific projects. Secondly there’s the ‘try before you buy’ aspect – mitigating the risk by taking on someone who may or may not form part of the permanent team in the long term.
BRIDGING THE GAPWith remuneration budgets set to remain tight, what else can employers be doing to ensure they attract the best HR talent? A first step may be to acknowledge the disconnect between pay expectations for employees and what employers can actually deliver. A Hays survey of 1,178 Australians suggested that 29% of employees expect their salary to rise by more than 6% in their next review. A further 38% expect an increase between 3 and 6%, while 33% expect less than 3%.
Employer expectations are not in alignment. According to the 2012 Hays Salary Guide, 42% of employers intend to increase salaries between 3 and 6% when they next review. A further 6% will increase above 6%. Forty-six per cent intend to increase salaries less than 3%.
“While many employers are still willing to increase salaries, they are doing so moderately and are instead
“While many employers are still willing to increase
salaries, they are doing so moderately and are instead focusing on non-financial rewards, such as flexible work practices”
– LISA MORRIS
focusing on non-financial rewards, such as flexible work practices,” says Morris. “They are also quick to discuss potential career paths with their high achievers. In addition, some employers are improving benefits, such as bonuses based on individual and company performance, parking and salary sacrifice.”
Hay Group research suggests that organisations that communicate pay in a number of ways are more likely to get a ROI for the reward spend, as well as evidence of increased engagement levels. Hence, Hay Group suggests that organisations should:• Have a well-documented rewards philosophy and
regularly communicate it to employees – not just at salary and bonus time
• Ensure employees understand and appreciate the tangible and intangible forms of reward that the organisation provides – this could be in the form of total reward statements Hay Group research also suggests that simply paying
people more doesn’t always have an effect on performance. Hence, the focus should then also turn to initiatives outside of pay such as career development and progression opportunities, work-life balance initiatives and building an engaged and enabled work environment and culture.
“The best companies also encourage employees to learn in areas outside their expertise, and give them assignments that stretch their capabilities,” says Paola. “They are more than twice as likely to use international opportunities to attract and develop talent as other companies – and less than half as likely to rely on pay and bonus opportunities.”
With inflation rates lower than salary increase rates, and skills shortages in some sectors and job functions (compounded by low levels of unemployment), it could put the ‘buying’ power solely in the hands of employees – especially an organisation’s most talented employees.
Hence employers need to focus on the following:● Link reward to performance and align individual’s targets with organisational objectives
Power balance
● Reward your outstanding performers, not just everyone equally● Communicate the total pay and benefits you offer employees and ensure you have the right mix of tangible and intangible elements to appropriately reward and recognise employees – often intangible rewards speak a lot louder than money● Align the job to the organisation strategy, ensure you have the right person in the right role and reward accordingly● Adopt a long-term view of rewards by creating a two- or three-year plan instead of a year-on-year approach.
HR remuneration review
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HR remuneration reviewCOVER STORY
THE POSITIVESFor HRDs attracting overseas talent to their HR teams, or for recruiters looking to lure overseas-based HRDs themselves, the news is brighter. Hay Group figures reveal that across all sectors and industries, Australian salaries are well above those of the US and UK as an average at all levels. In comparison to the UK, Australian salaries are 40% higher and in comparison to the US they are 10% higher. “This is no doubt heavily impacted by the rise and strength of the Australian dollar,” says Paola. “In January 2009, the UK vs Australia dollar for dollar comparisons would have been very similar but the gap has increased significantly since then. In saying this, Australia has four or five of the top 30 most expensive cities to live in the world so this does need to be taken into account.”
Mason’s top tip for what HR professionals should be doing to position themselves at the top of the pack centres on one factor: HR analytics. “All future HR roles are going to need to be able to drive the measures and numbers related to their area of responsibility – if they can’t do that, they will eventually be replaced by someone who can. In partnership with this is commercial change management – supporting productivity and efficiency gains,” he says.
“In terms of remuneration at the top end…the role itself isn’t paying
less but active market participants are generally finding that they need to lower their horizons”
– CRAIG MASON
25HCAMAG.COM
EXPERT INSIGHT
remuneration
For further information on this topic or to contact your local Hays office, visit hays.com.au
From time to time all of us are faced with the prospect of negotiating a salary increase. To give you the best chance of succeeding, your first step is to prepare a list of your recent achievements that exceed your last objectives. If you have only been in the role for one or two years, you could also compare it against your original job description. Include on your list any changed or rising work volumes or duties that you are now undertaking, and consider projects you’ve been involved in.
Then list the resulting benefit to the company of your actions. The aim here is to provide strong evidence to support the value you provide, so focus on outcomes.
Objectively assess your skills and results and look for any shortcomings. Take steps to overcome these and document improvements before you negotiate.
Then research the salary you feel your performance and results are worth by reviewing a recent Salary Guide. This enables you to back up your request with evidence and demonstrate that the salary you are asking for is in line with current market rates.
Consider the organisation’s financial situation and your overall team’s recent performance. Time your meeting request with good overall profitability results or after you have successfully taken on additional responsibilities or been involved in a good project outcome.
Now that you are prepared, it is time to meet with your direct manager in person. If salary reviews are held at the same time each year, you should wait for this opportunity to present your case. But if increases are granted across the year, ask your manager for a meeting to review your salary.
When it comes time for this meeting, keep it professional. Stay calm and focused. Do
not become emotional and do not talk of how much money you need, such as rising bills or mortgage repayments. Keep your review purely professional.
Above all, use the list you prepared of your accomplishments and the value you add to the organisation as the basis of your negotiation. In this way, you’ll clearly demonstrate your worth and will be in a stronger position to secure the maximum of the salary increase on offer.
Have a fall-back position. If your employer cannot afford to increase your salary, can you agree on a date for another pay review in six months? What about additional annual leave, study or other benefits?
It is worth asking about benefits in particular. According to the 2012 Hays Salary Guide, 77% of employers give their employees benefits, or non-financial rewards, in addition to salaries and bonuses.
Parking, private health insurance, and above-mandatory superannuation are common benefits. Other benefits you might
hear of include club or gym membership, or a car or car allowance.
Typically, benefits increase with experience and the seniority of the position. But we have seen countless cases of employers using benefits to reward top performers when they are unable to increase salaries beyond a certain level.
Or you could ask your manager to discuss with you the outcomes she or he needs to see to justify a salary increase in future. From these you can agree upon setting targets and a timeframe in which to review your results. This not only gives you goals to work towards, but it shows your manager that you are genuinely interested in adding value to the organisation.
Of course once you achieve these goals, you have solid evidence to support your next salary negotiation.
Preparation and evidence are key steps in negotiating a pay rise this year writes Lisa Morris, regional director of recruiting experts Hays Human Resources
Negotiating a pay rise
remuneration softwareTECHNOLOGY
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The numbers gameHC: With involvement and input required from many stakeholders, how important is ease of use when it comes to remuneration systems? NF: In our experience, it’s critical. Most users will access a system to undertake a review and then they may not access again for a number of months. They need to be able to log in and easily work their way through the process without the need for training or assistance. Also the process can be exceptionally complex and is usually driven by a number of rules relating to eligibility, performance, market data, roles, employee entity, divisions and budget. As a manager undertakes a review these rules should be seamlessly working in the background and guide a manager through the process. It’s also important that managers can easily access reports for any teams reporting into them. Through reporting they can see the status of the review, how teams are tracking to budget, and increases by gender or performance.
HC: How can employers ensure they are maximising their remuneration offerings – and again, how can technology help? NF: It’s critical that organisations distribute increases fairly and equitably and pay for performance. Technology assists, as guidelines can be embedded in the system to drive outcomes and guide the process. The process becomes far more transparent and it is much easier to implement and communicate the organisation’s guidelines.
Managers can also clearly see an employee’s total reward offering, not just their base salary, and can therefore make informed decisions. These days with FBT there is not much that companies can offer in terms of financial reward so it is essential that this is managed properly. We find that companies really value the function to print out total reward statements for employees. This ensures that employees have a full understanding of their total remuneration offering and it involves very little administration.
Remuneration review time need not be a messy, time consuming process. Human Capital looks at how technology has changed the game
Employee remuneration accounts for a significant proportion of an organisation’s cost base and has a significant impact on employee engagement and retention. However, most organisations are still using Excel-based spreadsheets to manage the salary review and incentive payment processes. Are online/cloud/hosted solutions set to revolutionise the market? One of the first organisations in the region to build a web-based solution (R.Review) to specifically manage the remuneration review process was Remesys. HC talks best practice with Natalie Feller, director of Remesys.
Human Capital: Can you outline what ‘best practice’ remuneration software now encompasses?Natalie Feller: The process using spreadsheets and mail merge for remuneration letters/statements is a nightmare – exceptionally time consuming and prone to errors. Best practice software should encompass the following:• It needs to be very intuitive so that users can literally
log in and start using the system. • It needs to be flexible – this is critical. Every
organisation has a different approach to the review process and has different terminology, fields and rules. The solution needs to be able to accommodate even the most complex rules and guidelines. A best practice system does not require the organisation to change their process to ‘fit’ the software.
• It needs to manage annual, interim, ad-hoc reviews including salary reviews, bonus, share and commissions (not many solutions manage all of these processes).
• The system should guide the user through the company’s process using alerts, comments, emails and workflow based on the company’s guidelines.
• The solution needs to be able to accommodate all of an organisation’s letter/rem statement templates, allow the administrators to update these templates as required, and automatically generate the right letter for an employee based on the data in the system.
• The solution needs to provide the administrator(s) with the ability to easily manage the process including managing changes, configuration of the system, setting up access rights, updating matrices and importing and exporting data.
executive compensationREMUNERATION
28 HCAMAG.COM
THE ONLY WAY IS UP
In every sharemarket downturn, the value and
effectiveness of long-term incentives is questioned;
yet now is the perfect time for re-setting LTI
packages, writes Jon Finlay
29HCAMAG.COM
THE ONLY WAY IS UP
than cash goes further to ensuring alignment of economic interests with shareholders.
This is because the market, rather than the company, pays for any gains or increase in value that is built into share-based LTIs: the cost to the company is most often an accounting standard value based on the share price at grant. Any gain in share value is created by investors over time – so the sharemarket funds the increase in value, through gains in the share price.
Cash can still be used in a way that aligns pay and performance, but careful design is required. Cash is often used in Australian businesses of global companies where the Australian regulatory environment has made the use of some forms of equity problematic.
The best share-based LTI has the following features – it is offered to executives that will value it and be motivated by it because it is large enough compared to their salary, and because they perceive that the LTI will turn from an opportunity into real value as the company’s share price performs.
LOW VALUATIONS MEAN MORE VALUE IN PACKAGES The reason why it makes sense to be thinking about LTIs now is that a sharemarket near the bottom of a price cycle in which valuations remain generally depressed is in a phase that best suits good future company performance being rewarded with share price gains. At present pricing levels, generally speaking, the sharemarket offers plenty of capacity over the medium term (five years+) to reward LTI opportunities provided to executives.
It’s important to note that companies should not be increasing employee costs by replacing a share-based LTI opportunity with a cash replacement in times when the
If there is one positive to be drawn from the painful – and extended – market downturn that followed in the wake of the GFC, it is the fact that it has forced companies to re-examine every aspect of their business settings.
The complacency of the mid-2000s is a distant memory. Companies have had to adapt to survive the leaner years of the GFC, and hone their business techniques ruthlessly to set the scene for recovery.
Remuneration has definitely been an area that has been scrutinised and, where necessary, restructured.
By ‘remuneration’ I do not necessarily mean the issue of levels of executive pay, which consistently attracts lurid headlines contrasting the straightened economic circumstances with eye-watering amounts of CEO pay – especially in North America. I mean the more prosaic challenge facing companies, of structuring compensation packages across the executive group that both motivate the individuals concerned and align their interests with shareholders.
It is worth stating here that executive pay in the Australian corporate market is much more balanced than it is in North America: it is well-regulated, with input from shareholders and stakeholders, both sought and incorporated. Executive pay in Australia is not ‘broken’, as it arguably is in other jurisdictions.
A GOOD INCENTIVE PACKAGE WORTH MORE THAN THE SUM OF ITS PARTSIn fact, remuneration committees have the opportunity to add significant value right now to their companies, with judicious choices of long-term incentives (LTIs) for their senior people. The economic and market cycle is perfectly situated for setting – or re-setting – LTI packages.
The basis of an effective LTI consists of three components:• It must comprise a high enough level of opportunity
value to seriously motivate the person receiving it. • It must accurately determine the performance that is
to be rewarded, by measuring the right things.• Performance should be measured over a long enough
term, arguably five years or more. In structuring a LTI, the remuneration committee has
a choice between shares, rights, options, units or cash. These are simply the tools that will deliver a particular value outcome: it is the value outcome itself that is at the heart of the remuneration structuring task.
Structuring an effective LTI needs to take account of many things, including: the company’s prospects over the period between grant and vesting/exercise; the ability of management and the board to impact the share price, compared to outside factors; the economic cycle; government regulation, including taxation; changing industry practice; and shareholder expectations. Generally speaking, however, the use of shares rather
The purpose of share-based LTIs is to provide opportunity for selected employees to share reward and risk with investors when the market is providing that opportunity
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executive compensationREMUNERATION
market is not delivering share price growth. The purpose of share-based LTIs is to provide opportunity for selected employees to share reward and risk with investors when the market is providing that opportunity. The future capacity of the sharemarket to reward good performance by the company over the measurement period – the time between grant and vesting – is the first important factor in deciding when to offer a share-based LTI opportunity.
Secondly, the level of opportunity to be provided needs to be high enough to actively engage the employee in doing their best to achieve good financial performance. A good rule of thumb before inviting an employee to participate in a share-based LTI scheme is to stand in the employee’s shoes and consider whether they would likely need to liquidate any LTI gains immediately on vesting, or hold the equity – if they are likely to ‘cash out’, an annual bonus opportunity may be more effective than providing an LTI opportunity. A good advisor can provide a board with insights on setting levels of opportunity, as well as appropriate performance measures and hurdles.
The measurement of performance is also critical. Investors will have no problem with LTI structures when the company is creating some real value, and the market is actually paying for the bulk of that. But investors are right to be wary of a rising market tide lifting all boats: the company must employ the right KPIs and the hurdles that measure real performance. If it simply uses total shareholder return (TSR) without testing the extent to which the company management and board actually influences the share price, the board may be just giving executives a ‘free ride’.
About the authorJon Finlay is
head of executive compensation,
Australia, Towers Watson
GIVING INCENTIVE PACKAGES – AND THEIR HOLDERS – TIME TO WORK BESTLastly, the ‘T’ in LTI is vital. Clearly, LTIs are more distant in the motivational sense to an employee than salary or bonus, which has important implications for designing the best LTI for executives. The psychology of reward motivation tells us that the longer the time it takes to earn a reward, the greater the size of the opportunity that needs to be provided to achieve the same level of motivation as cash salary or bonus.
But in the wake of the GFC, we should understand ‘term’ better: remuneration committees must create a long-enough performance period that the company can grow in value. Two decades ago, the standard LTI term was 10 years: these days, it is rare for employees to stay in one job that long.
In fact, since the late 1970s, performance periods for LTIs have shrunk back from 10 years to three years. That is barely enough: a vesting period of less than three years on options will generally not deliver significant value growth as it often takes at least three years to get some real growth in the share price.
Also, when a senior executive comes into a company, it may take about two years for them to really understand the organisation – what makes it tick and how it makes its money. Therefore, it can take two years before an executive can really start to be an effective contributor. If that executive is given a three-year LTI – particularly if they leave the job in that period – they will have left before they have had enough time to make an effective contribution to the company.
LTI structuring is now leaning towards striking a middle ground: more and more companies are signing their executives to five-year LTIs, reflecting the realities of a market recovery. Crucially, that is a long enough period for both the executive to get to grips with the company and make a definable impact, and for the share price to reflect that contribution, and the LTI to start to deliver value.
What makes the present so opportune for highly effective LTIs to be established is that the current sharemarket doldrums will not last. A five-year LTI set now is likely to deliver significant value to its holder – as the sharemarket recovers – and to the company in terms of the performance and value generated.
In every recession, every sharemarket downturn, the value and effectiveness of LTIs is questioned: but it is also precisely the time when smart companies focus their management teams on getting the most out of the upturn by putting effective LTI packages in place, and make their grants. The bottom of the share price cycle can be the best time for shareholders to invest in long-term incentives for their management teams.
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masters of businessEXECUTIVE EDUCATION
32 HCAMAG.COM32 HCAMAG.COM
Back to SCHOOL
Which post-grad qualifications are most suitable for HR professionals? Human Capital discovers the key element to consider is context
33HCAMAG.COM 33HCAMAG.COM
For years the debate in HR circles has been around how the function can get a foothold at the executive table. Now the debate has shifted to just why exactly the function should be there, and how sustainable its position really is.
The news is not great. According to Hay Group’s Next Generation HR report, which surveyed over 1,400 HR professionals and senior management from around the world including Australia and New Zealand, just 27% believe HR is making a significant strategic contribution to their organisation; most respondents (66%) positioned themselves somewhere in the middle of the scale, confirming that there’s still much room for improvement.
ALL ABOUT CONTEXTIt’s a sentiment echoed by John Shields, associate dean (postgraduate coursework) at the University of Sydney. He says that a key requirement for anyone practising or planning to practise HR is to understand context.
“Context counts; it’s crucial,” he says. The University of Sydney has built its Master of
Human Resources and Industrial Relations around this concept of context, which Shields says operates across three spheres: the functional context (reward & recognition, talent management, etc); the organisational context (change management, organisational communication, HR information systems, etc); and a wider economic and regulatory context (to deal with employment law, the institutions and policies that influence what can and can’t be done in the world of HR practice).
Shields notes that there have been “big transformations” in HR over the past 10–15 years, requiring those who practise the profession to sharpen their skills. “There’s now a radically different way of managing down, a radically different way of managing up, and radically different ways of managing out – not just outsourcing but managing out to meet social, legal
Strategic vs transactional: the road to the futureHay Group research highlights the past, present and future priorities for Australian and New Zealand HR operators
LAST FIVE YEARS NOW NEXT FIVE YEARS
1. Reducing employee turnover 1. Enhancing individual and team performance 1. Developing future leaders
2. Reviewing reward strategy/ redesigning reward programs
2. Increasing productivity and ‘doing more with less’
2. Enhancing individual and team performance
3. Enhancing individual and team performance 3. Improving employee engagement 3. Ensuring greater ROI through people
4. Improving employee engagement 4. Developing future leaders 4. Increasing productivity and ‘doing more with less’
5. Complying with HR legislation 5. Creating more efficient performance management programs 5. Attracting talent
and ethical obligations,” he says. “That’s all a good thing but it sometimes makes HR practitioners who are schooled in a narrow functional area – the payroll admin or recruitment side – a little nervous because it looks like a much broader brief.”
Exploring this deeper, Shields says the ‘managing down’ aspect comes into play with the devolution of day-to-day HR functions and decision-making to line managers; while the ‘managing up’ aspect plays into HR’s desire to operate strategically. Shields doesn’t believe either transition has been handled well.
“There’s still a lot of tension between the functional line managers and the HR professionals. There’s fault on both sides there but something we do at the Sydney Uni business school is remind HR people that the game isn’t all about impression management up the line strategically; it’s also about effective communication, resourcing and support down the line to line managers. If the latter doesn’t work properly, the whole system falls apart. You can think strategically all you like but if your operation systems are not capable of supporting that, you’re wasting your time.”
It may be an exciting time to be in HR, as Shields says, but it’s also a challenging one. It’s perhaps the key reason why so many people are queuing up to do a Master in business.
WHO ARE YOU?In order to talk about options for post-graduate study for HR professionals, some background is required.
The assumption that most students have several years of work experience under their belt is incorrect – inasmuch as they may have experience, but not necessarily in HR. Essentially there are two student markets that tertiary institutions aim to capture for undertaking Masters study. The first is ‘conversion’ students, who perhaps have a Bachelor’s degree in one area, say teaching or engineering, and they believed they
34 HCAMAG.COM
would build their career in that area. However, aged 22–23 they have decided it’s not what they want to do. They convert to an area like HR; effectively, it’s a significant change in their career trajectory. Shields notes that students may have some years practice in other areas of business – perhaps marketing or operations – but not in HR.
There is another set of students who are keen on ‘career deepening’. They are typically already on a HR career trajectory and they may have a few years (perhaps three) of experience in that field.
Shields adds that it’s unusual to find many students aged in their 30s or 40s undertaking a Master in HR having already spent 10–15 years in HR. Those students would typically opt for an MBA if they want to go further, he suggests.
“If you are working in the field of HRM and you don’t have a background in that area, you may seek to do a Master of Management or Master of Business in HRM – there are a few straight Masters of HRM around but not many. These Masters enable the student to focus on HR in more depth with a view to building their career in that profession,” suggests Anne Ross-Smith, director of Graduate Studies at Macquarie University’s Faculty of Business and Economics.
WHAT’S INVOLVED?At Sydney University, the Master of HR and IR is a one-and-a-half year commitment. Under it sits a graduate diploma which is one year; under that sits a graduate certificate which is one semester.
The grad cert and grad dip have exactly the same content as the Masters, ie, a mix of functional and strategic HR – the ‘three spheres’ referred to earlier.
This still rankles some HR professionals, Shields says, and it’s not uncommon for students to come to him to complain about the strong IR slant in the Masters. However, he says lack of knowledge is “dangerous” because if HR doesn’t know what the compliance requirements are or if they don’t understand the nature of collective bargaining systems which might apply, they will not be able to advise their line managers appropriately, “and that’s one of the reasons why organisations find themselves in costly litigation over things like unfair dismissal, or over non-compliance with termination rights”.
“It’s easily avoidable, and it doesn’t mean you need to become a legal expert to do it properly; it just means that HR practitioners need to understand the baseline employment law requirements and also the institutional settings including IR settings.”
Shields concedes that a quick look at the most popular non-compulsory units reveals a direct link to the changes occurring in HR practice – change management, information technology, organisational communication.
Student case study
HC talks to MGSM student, Rebecca Downie, organisation development and capability manager at LexisNexis Australia, about her return to study
Human Capital: Can you briefly outline where you are at in your career and why you have opted to return to post-grad study?Rebecca Downie: I’ve worked in HR for over 20 years and have been fortunate to have held a wide range of exciting and challenging roles. For me, post-grad study is about strengthening my professional HR practice through business acumen so I’m increasingly able to support my clients to handle the ambiguity and complexity inherent in the challenges they face today. The expectations and demands of an HR professional today are much higher than they’ve ever been. We cannot rely purely on our functional expertise. To be a true business partner we must first
understand the commercial and operational aspects of the business. Then we are in a position to bring better informed HR expertise which makes an increasingly strategic contribution to the businesses.
HC: Can you outline what post-grad course you are undertaking and how and why you have arrived at that decision? RD: I’m just completing my Master of Management at MGSM. After researching the extensive range of quality post-graduate programs in Australia I quickly came to the conclusion that MGSM’s was the one for me. The quality of the curriculum, the lecturers, the learning environment and the support the school provides has been first class. The modular nature of the program was also a selling point in that it allowed me to choose the program I could commit to so I could balance my studies with other commitments.
HC: Is there any particular aspect of a career in HR that you are uncertain about, or that you hope your new qualification might assist with?RD: For more than 10 years now I’ve had roles with a strong global involvement. I was keen to undertake a program with an international business perspective that would allow me to consolidate the skills I had gained through experience. Managing change is now such an integral part of the HR portfolio. This qualification, which is highly relevant, current and is best practice, will help to inform my analysis, decision making, planning and client relationship management.
HC: Any advice to other HR professionals looking to return to study?RD: My advice is if you’re procrastinating about doing study, then just do it! Careful planning in terms of how to balance study, work and personal life is a challenge. It’s worthwhile planning a year ahead to ensure you have the right support and plans for how you will get the most out of the study while still meeting the demands of work. It’s easy to over commit. There’s no doubt that the commitment is great but the rewards are many and it’s something I really wish I had done earlier. I’ve seen the benefits for me and for my business. I can also see how the learning and experience will continue to deliver benefits as I expand my career.
The learning and experience will continue to deliver benefits as I expand my
career
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masters of businessEXECUTIVE EDUCATION
“It ties to the additional skills and knowledge that HR is looking for, and one of them is how do you better communicate with line managers who might have an accounting, marketing or engineering bias to their knowledge? How do you get onto their wavelength so you can get them involved in making valid, reliable decisions about individual level performance, progression and reward? That’s about resourcing line managers to be better communicators.”
From semester one, 2013, there will be a number of compulsory core subjects. One covers people and employment, which includes introductory HR functionality plus the IR and legal operating context – the helicopter view. The second covers HR strategies, looking at HR practice in terms of the human capital implications of organisational success and effectiveness. A third is a capstone unit called talent management, which will be an amalgam of learning & development and staff selection, with a bit of performance management in the mix.
Finally, there is a unit on organisational sustainability. It includes elements of CSR and the ethical practice involved in engaging in paid employment, coupled with a broader understanding of organisations and the environment. It’s this last unit that Shields is most
There’s now a radically different way of managing down, a radically different way
of managing up, and radically different ways of managing out
– JOHN SHIELDS
enthusiastic about. He claims it’s time for business schools to “get serious” about the long term, not just how to manage the numbers so the CEO gets a bonus. “It’s about changing the timeframe. What are we doing now that will set us up for success five years down the track?”
This stretches beyond just financial settings; it’s also about the human capital settings, CSR, and ethical practice. “Who else in an organisation is going to
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masters of businessEXECUTIVE EDUCATION
champion that if it’s not the HR practitioners? Your accountants are focused on the next quarter, maybe the next year, and so are most of your executives. As a matter of professional obligation and responsibility I think it does fall to the HR professional to champion sustainable practice in an organisational life.”
THE MBA QUESTIONHR professionals are sometimes uncertain about the most effective post-grad qualification they should aim for. To help clarify the matter, Shields emphasises that the MBA is not a specialist qualification.
He suggests asking a question: where do you want to be in five years’ time? “If you want to be an HR professional in a specialised area of HR like reward management, that requires quite sophisticated conceptual and practice knowledge of rewards. If you want to be in that space by the time you’re 30, then I’d say you don’t need an MBA to do that.”
An MBA is a stepping stone into general management, particularly for someone who has come from a functional background. Someone might have 10 years in HR; they’ve got a Master of HR, and they may be aged 30–35. Now they want a shot at the C-suite. “How do they transition from being a specialist in this space to being in the space of strategic general management? An MBA is one of the further career change devices that can be used for that purpose,” Shields says.
Andrew Heys, lecturer in management (people and organisations) at MGSM, says there are two key reasons
why a HR professional would undertake an MBA. The first is to refresh and deepen their existing knowledge and understanding of HRM and gain a theoretical framework for the work they are already doing. Secondly, they undertake an MBA to enhance their business vocabulary and understanding, drive business results through HR initiatives and develop the skills to quantify the impact of those initiatives.
David Senior, director of career services at Melbourne Business School (MBS), suggests the key is relating HR practice in the bigger picture of business. “Our program provides HR professionals the opportunity to focus on People Management as a core module subject and also focus on the integration of that within a business,” says Senior, who adds that HR professionals who have undertaken the MBA at MBS feel the rounded experience “enables them to think as an HR professional for the whole business”.
Integrated learning, he adds, provides a broad, holistic view of how business is conducted and an understanding of real-life problem solving.
The majority of MBAs don’t have a fully prescribed set of units – some have six, others nine, others 10, but most will offer 12–16 subjects, leaving the option for a student who’s interested in a particular specialist field to take 3–4 units in that area. That means the student graduates with an MBA but might have a sub-major in HR. “It really comes down to student choice here – weighing up the various value propositions,” suggests Ross-Smith.
MGSM offers students the ability to tailor their program through their choice of electives. Examples of suitable electives for students in HRM include Strategic Human Resource Management, Business Performance and Management, Executive Coaching, Leadership and Motivation, Managerial Self-Development and Managing with a Global Mindset.
“Students should align their choice of electives to suit their individual career objectives, and the demands of their role and their organisation. For example, students working in an international organisation may elect to take a subject with an international flavour, such as Managing with a Global Mindset,” suggests Heys.
Alongside assessing the faculty’s ties and relations with business, Ross-Smith says that students should at least ask what their employer is interested in.
“If I was embarking on a Masters I would be talking to my supervisor, my work colleagues, the HR department, to find out things like the pragmatics of doing it, their experiences, what the career path options might be if I have a Masters, whether they would be more inclined to advise me to do an MBA or a Generalist Masters, depending on where they see my career going.
“For $2,500–3,000 per subject, 12 subjects in a degree, it’s a big personal investment. You want to be sure you’re making the right choice.”
Program type● What type of program? Some add depth to existing subject knowledge, while conversion courses introduce students to new areas of study or provide preparation for a career.
Program credibility and future opportunities● Does the institution have a good reputation for the chosen discipline: does it have national/international profile?● Are staff renowned and active in their research areas?● Check quality assessments of teaching and research: how well do results compare with programs at other institutions?● Have program alumni been successful? Check employment rates and success stories.
Key questions to askResources and infrastructure● Are study facilities, library and IT services, and support available 24/7?● Are graduates’ needs catered for by a dedicated administrative centre or graduate school?● Does the institution use virtual learning technologies or innovative approaches to interactive teaching?● How large is the cohort on your program? Will you study in a group, with others?● What support services and ‘extras’ exist for post-graduate students? For example: specialist careers advice, languages, personal skills development.
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talent analyticsHR STRATEGY
time to forecast
the futureWhat gets measured gets managed – and capturing,
interrogating and managing ‘big data’ is finally filtering through to HR. How can talent analytics be used to consolidate
HR’s position at the exec table? Iain Hopkins investigates
Out with the rearview mirror…
39HCAMAG.COM
The new era of talent analytics will be predictive rather than prescriptive, and will be used for national and international benchmarking of HR practices, according to leading HR professionals.
Upon winning HR director of the year at the 2011 Australian HR Awards, Alec Bashinsky, national partner, people and performance at Deloitte, told HC that he believes HR will only become sustainable by focusing on data and metrics, in the same way that other business divisions look at data-driven insights before making decisions.
“The HR industry has to make better use of people data,” Bashinsky said. “We spend a lot of time as an organisation assessing our metrics but I’m not referring to past tense, I mean looking at future trends. What’s happening in certain workforce areas, how do our people want to work and how can we build organisations to support that?”
His words have been echoed by other observers of the HR function.
“Prescriptive analytics will get you so far,” says Eugene Burke, chief science analytics officer at SHL. “HR need better data which will help them with what happens tomorrow, not what happened yesterday.”
WHAT’S THE HOLD UP?Until relatively recently, HR professionals have been limited in their ability to provide managers with the granular details they need about possibly their most important assets – their people. It has meant that HR has lagged behind other key business functions like sales, pricing, supply chain. There are two primary reasons for this lag: lack of technology and lack of capability.
Peter Howes, vice president, SuccessFactors, suggests
that the past 15 years have seen the growth and maturity of business intelligence (BI) tools. While these tools have allowed for development in capability, the HR community has been less successful in the implementation of the supporting technology to automate the data loading into BI tools.
“Unlike finance, sales and supply chain, HR had people data in multiple systems in every company, in addition to the core HRIS and payroll systems such as employee surveys/engagement systems, and some or all of talent management suites are in independent systems,” Howes explains.
The key to effective utilisation of HR technology, Howes adds, is to integrate data from multiple systems and to have the capability of routinely updating data from these multiple systems.
The second reason why HR has lagged behind is because HR technology doesn’t succeed without pre-packaged content, as opposed to a tool that allows you to build whatever you want to build.
“There are 10–100x permutations of people data that may be insightful compared to sales, finance and supply chain data,” says Howes. “HR practitioners don’t have the knowledge to interpret what all of the implications and insights of the information might be. HR practitioners do not learn how to interpret HR information in the university programs; AHRI does not have standards for the interpretation of HR information. This area is very immature in the HR profession.”
THE CHANGING NATURE OF METRICSThe HR function itself has evolved so rapidly over the past decade that measures of effectiveness have scrambled to keep up. The traditional notion of HR ensuring processes
AN EXPENSE A RESOURCE A FLEXIBLE ASSETA COMPETITIVE
ADVANTAGE
A cost of doing business
Categories of people with certain skills and hard to retain. Must be properly
deployed. An asset, like equipment or
materials
Individuals who produce and adapt to changing conditions
A network of individuals who work together to achieve a
desired result
Source: KronosWorks Australia
What is the value of your workforce?
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talent analyticsHR STRATEGY
are working – for example that recruitment quotas are being met, that absenteeism is being handled effectively – now needs something extra. “We know where everybody is and what they can do. That’s prescriptive analytics; it tells us where we’ve got to. But increasingly leaders want to know, where can we go next?” says Burke.
Technology is finally coming to the table. A business execution suite – as opposed to a traditional talent management suite – provides analytical tools that help bridge the gap between business goals, people management practices, individual performance and business results. It integrates workforce analytics and strategic workforce planning applications. That capability allows companies to analyse talent and HR data, and correlate it with data from other business functions such as finance, enterprise resource planning (ERP), operations and customer relationship management systems (CRM). This is the basis for developing true predictive analytics on a company’s workforce.
If a CEO or a senior executive in an organisation is planning to embark on a change – it could be a procurement of a new IT system or a significant acquisition of a new company – they would create an airtight business case. HR is no different.
Ari Kopoulos, national sales & marketing manager at
EmployeeConnect, says that accurate and relevant metrics is the first stage in building a case for procedures and strategies that impact on business results, drive change and build competitive advantage.
“In practical terms, this involves the HR professional strategically leveraging measurement to provide a deeper insight,” he says.
This is echoed by Peter Harte, vice president, Kronos APAC. “If you can’t track it and you can’t measure it, then there’s no real ROI on it. CEOs and CFOs want a ROI on any particular system they implement and they haven’t traditionally understood the value of tracking what happens with people once they enter the workforce,” he says.
“We need clear metrics on people – and HR needs to be able to articulate answers back to the line or other senior leaders,” Burke adds.
Lead indicators now fit into three categories. 1. Where a group of measures/metrics are combined together to provide a more holistic perspective –the metaphor that Howes uses is to equate a single metric to an X-Ray. It gives a static two dimensional picture. A move towards groups of metrics would act more like an MRI. “A group of metrics which can be more predictive would be combining voluntary labour turnover with
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career path ratio with recruitment source ratio. We would want to know these measures segmented by: grade or level, organisation unit, performance rating, position/company tenure, job family/occupational group etc,” Howes explains.
2. Integrating qualitative metrics like engagement score with quantitative data like voluntary turnover rates – this is much more predictive than standalone measures like turnover rates.
3. Index-related measures – which Howes believes is the key future trend. Traditional metrics consist of one measure (eg voluntary turnover) divided by another measure (eg average headcount) to give a ratio or multiplied by 100 to give percentage. “A bit simplistic,” as Howes states. Outside of the HR world, one can look to an example of an index measure with the Southern Ocean Oscillation Index (El Nino/La Nina). “When we watch the news we see the index as somewhere between 120, (indicating very high probability of significantly above average rainfall over the next six months) – and 80, (indicating very high probability of significant below average rainfall over the next six months). Very few people know how the index is created. We need to build the
“Presenting managers with accurate and easy to assimilate
talent analysis embeds a level of quality in their decisions”
– ARI KOPOULOS
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HR STRATEGY
equivalent for index measures like managerial bench strength. ROI of training etc.” Howes also feels HR can generate more predictive analytics by integrating people data with business data. Examples: revenue per salesperson by performance rating or impact of employee engagement on branch profitability.
EFFECTIVENESS AND EFFICIENCYDoes this mean that traditional metrics such as cost to hire and time to hire – which are almost benchmarks for efficiency – will lose traction in this march towards measurements of productivity? Not necessarily, but Howes believes they may need to be tweaked. “While we’ll always have efficiency measures, we need effectiveness measures,” he says. “In staffing this is primarily related to the effectiveness of recruitment source. We can define effectiveness by measures such as performance rating in the first year – or first two years – and percentage salary increase in the first year.”
Burke adds that “you might have the most efficient method, the most efficient process, but it’s not actually delivering the talent that you need”.
Talent analytics provides answers to key HR challenges – from the effectiveness of recruitment and employee development strategies through to insights on current on-the-job employee performance and management and leadership potential. Industry and regional comparisons can also reveal how workforces stack up against the competition.
Part of this is looking at the potential of existing employees, but this too is rooted in lag analytics: what an employee’s past experience has been, what qualifications they have, etc. The real question regarding employees who show potential, Burke says, is how the organisation can engage them.
“Work potential is something people looked at and scratched their heads, because we can easily see what
qualifications someone has, we can check their work experience to see what they’ve worked on. However, I think organisations have started to wise up to the fact that they’re lag measures as well. They tell you what the person has learnt today but not necessarily what they can do with that or what they can learn in the future.”
Burke believes there is a “talent sweet spot”, whereby if the organisation can engage those with the right potential in the right way, “they’re suddenly in that top right-hand corner [of the performance vs potential matrix] where they want to be. That can all be driven by data”.
PULLING IT ALL TOGETHERKopoulos states there is no doubt that analytics can be used to assist the strategic decision making process within HR, and this process is greatly enhanced with access to information that presents ‘what if’ scenarios, trends and drill-down analysis into root cause. “This can only be achieved when data is consolidated, integrated with all the HR modules and communicated in real time with clarity, supporting meaning and usability,” he says.
The ‘what if’ scenario building is particularly apt for remuneration review, to use just one example. Analysis usually means selecting an employee demographic or location and applying the increase. The direct impact of a change in remuneration is immediately apparent, but Kopoulos says it shouldn’t stop there. “Look into the history and analyse relationships between other functions such as performance, training and length of service positive and negative trends and indicators.”
Best practice uses visualisation tools like charts, gauges and maps, bringing high-impact, predictive insights to meet operational, analytical and strategic requirements. Dashboards also work well in this regard.
“It doesn’t matter where the data comes from – obviously it’s got to come from the systems you want to measure – but it really is a business intelligence tool and it
• Data collection – Automatically collect accurate data• Time and attendance – Reduce errors; minimise overpayment• Absence management – Manage the people who aren’t there• Forecasting and scheduling – Right person, right place, right time• Activities – Link your people to the work that they do• Analytics – Monitor, diagnose and address issues• HR and payroll – Consolidate your employee-related information• Hiring – Find, select and hire the right people
Solving 3 critical business issues:
CONTROL LABOUR COST• Reduce overpayments• Eliminate manual processes• Reduce over-scheduling• Provide visibility and control
MINIMISE COMPLIANCE RISK• Centralised policy administration• Local policy enforcement• Detailed audit tracking
IMPROVE WORKFORCE PRODUCTIVITY• Automate productivity-killing processes• Match labour to volume• Understand the impact people have on the business
What is workforce management?
Source: KronosWorks Australia
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talent analyticsHR STRATEGY
takes a combination of all that data and then presents it in a way that you want to see it. You must understand what your KPIs are, take the information from your disparate systems, and then present it so it’s effective and you can make decisions,” Harte explains.
Kopoulos adds that in most organisations the hiring, firing and promotion is the manager’s responsibility. “Presenting them with accurate and easy to assimilate talent analysis embeds a level of quality in their decisions,” he says. “For example, understanding the sources of departure, reasons for departure, and sources of high performers and potentials, provides insights that build cost effective strategies for retention and hiring.”
USING THE EXISTING DATABurke urges HR professionals to transform the way they look at and interpret the data they already often have at their fingertips, gathered from the recruitment process, from 360-degree reviews, exit interviews and other sources.
“You’re not extracting the best information from that data. It’s not a ‘use once, throw away’ kind of piece. You can use that data in a more aggregated way to get a much better picture of the people profile. Don’t just transact with it, use it in some way to answer those questions.”
Harte notes that ‘joining the dots’ can be surprisingly straightforward. Historical data remains important to make some performance assumptions, based on people and tasks, or metrics around customer service. This then needs to be projected forward so that each employee understands what they need to do and can be measured against it.
“The technology can now be instantaneous, so you can start looking at things like attendance and absenteeism or productivity. When you start looking at trends, you can then focus on who are your top employees as you go forward, and you realise that perhaps they should be treated differently. It might become a performance issue or a coaching issue.”
THE FUTUREWhat might the future hold for HR analytics? Burke suggests it might tie in both the customisation and diversity of HR offerings – specifically taking a leaf out of retail customer loyalty plans.
“At the moment I would shop in Australia or the UK and I’ve got my customer loyalty card. What the organisation is doing is tracking my transactions and is using that data to get a sense of ‘if Eugene Burke shops locally and there are lots of other Eugene Burkes out there, how can we keep that customer engaged? What kind of products, what kind of services do we need to provide to them?’
“Think of the same thing inside organisations. How do we keep employee Eugene engaged? What do we know about Eugene? How many Eugenes are there in the organisation? I think that’s fascinating; it’s almost drilling it down to diversity or specific individual employees. So that employee has value in terms of their potential and we can use data to know how to keep someone like Eugene engaged.”
Burke concedes that big data can be “frightening” and “intimidating”. However, in his view, “you don’t have to boil the ocean in one go”.
“It’s more around the kind of capabilities in an organisation. If they’re not along a maturity level, of being a high-end user of analytics, it’s finding out where to start first. Some organisations such as the big consultancies may have that capability and they’ve got that data – but if you know three or four things about an individual and you know what keeps that individual engaged then at least you can start building up a picture by an individual, by a group, you can start building the journey in a manageable way.”
And technology will continue to make things easier. Engagement questionnaires are coming out on mobile phones, via the internet, or self-service kiosks – even smartphone apps. Shift workers can now schedule their own work times with self-service tools. And with the web-based technologies the results can be produced in any format users feel comfortable with.
Yet talent management and HR technology alone do not make HR strategic. In order to gain greater credibility with executives, Howes says HR leaders must be able to deliver fact- and data-based business cases for what they are doing, argue why investing in a specific workforce program will deliver a certain ROI to the business and – when possible – help CEOs prioritise and allocate budgets and resources across business functions for optimal execution and performance.
“To achieve this outcome, companies must create a Centre of Excellence [CoE] in strategic workforce planning and analytics. We must also build the skills in the HR community to interpret the implications of workforce analytics and use this information to formulate HR strategies and HR interventions,” he concludes.
“We know where everybody is and what they can do. That’s prescriptive analytics; it tells us where we’ve got to. But increasingly leaders want to know, where can we go next?”
– EUGENE BURKE
EMPLOYER BRANDS
internal brands
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Great internal brandsDoes your company’s internal brand work in synergy with its external brand? Do your employees convey the brand promise to your customers and all stakeholders they interface with? Barbara Palframan Smith and Simon Covill provide the answers
Think about it. Those brilliant advertisements that tell your current and prospective clients about your great products and services; those smiling faces of employees that convey your company culture and mark you as an employer of choice. All of that can come to nothing with just one bad customer or employee experience and with negative comments which spread like wildfire on social media.
Marketing and increasingly HR departments spend considerable time and money on developing brand promises externally – the marketing and recruitment brands. But it is the internal brand promise that plays an integral part in the culture employees experience every day and impacts on their behaviours and attitudes. The internal brand is the DNA or heart and soul of the organisation, and one that needs to be nurtured.
So, how do you ensure that the internal brand matches external promises?
A CHECKLISTSome key questions to ask yourself when you are integrating the internal brand with the external brand are:• Is there a disconnect between your employees’
experience of the company and the messages in your marketing and recruitment advertisements?
• Do your senior leaders communicate well and engage employees or are they remote and removed from them?
• What language is used in internal communications like induction kits and HR policies and procedures? Is it understandable or highly bureaucratic?
• Do your employees understand what role they play in the company’s brand efforts? Are they brand ambassadors and are they committed to delivering on the brand promise?
TWO SIDES OF THE SAME COINYour external and internal brands are two sides of the same coin. What shapes the customer and recruitment experience can also be used internally to engage employees in the brand promise and vice versa. However, while the external brand can be seen, the internal brand has elements of both the seen and the unseen. And yes, it is so much easier to work with ‘the seen’. But it is the
The secrets of
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• You have done audits and surveys that encourage honest feedback
• Your senior leaders are aware of any internal problems or challenges that have surfaced and are involved in addressing them
• Your employees are brand ambassadors and live the organisation’s values in everything they do and are recognised for doing soThe internal brand has become a powerful business
tool and great external brands have little clout if they are not reflected inside the organisation. After all, it is the way employees, think, feel and behave that reflects a company’s culture, reputation and its success.
Barbara and Simon will be speakers and workshop facilitators at Ark’s Internal Communication Forum in Sydney, 30–31 October 2012. Visit arkgroupaustralia.com.au
What shapes the customer and recruitment experience can also be used internally to engage employees in the brand promise and vice versa
unseen elements that capture the internal brand, the ‘feel’ of the organisation, its values, principles and ideals.
LOOK BEYOND THE TANGIBLELook beyond the tangible symbols for embedding the internal brand – always be aware of the fact that you can weave the brand into employee benefits, company guidelines, recruitment and retention policies, and many others. This is where HR and internal communications professionals can work together to make it happen.
THE BRAND ENABLERSSo, who are the brand enablers in your organisation? A thorough audit will show you who looks after what – and the most likely people will come from Marketing, HR, the CEO’s office, Business Development, Legal, IT, Corporate Affairs and Internal Communications. However, before you embark on the audit, remember the following:• Expect some resistance from vested interests who are
more focused on the external brand promises• Find allies and champions for the cause• Start at the top with executive buy-in• Use internal communication mediums effectively• Streamline each department’s input into the
development of the internal brand and be focused on the alignment between internal and external brands
A POWERFUL BUSINESS TOOLHow will you know that you have succeeded in building that great internal brand? Some of the indicators are as follows:• You have integrated external brand messages into
every internal communications channel
About the authorsBarbara Palframan Smith is director of BPS Communications in Sydney and focuses on organisational change, and business and financial communication. Visit bpscommunications.com.au or email [email protected] Simon Covill is manager, internal communication – people and culture – at City of Sydney. For further information email [email protected]
physical & financial wellbeingEMPLOYEE BENEFITS
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We feel how we think
Joanne Allen, Citi’s head of human resources Australia and New Zealand, reveals the significant influence employers
have on the physical and financial wellbeing of employees
It’s long been understood that the mind controls how we feel. Thoughts direct energy to, and reinforce, our mental or physical state. It is critical therefore to tune into our thoughts, not just the content but the quality of our thoughts for optimal health and wellbeing.
Nelson Mandela was incarcerated for 27 years. When questioned on how he coped with the isolation, degradation and hostile conditions with only one visitor or one letter every six months, he responded with a quote from William Henley’s Invictus: “I am the master of my fate: I am the captain of my soul.” We can draw many lessons from the way in which this iconic leader managed his responses to his environment by working with a purposeful intent to control, monitor and shape his own thoughts.
I recently attended a program and was introduced by the speaker to the concept of a hierarchy of ‘Quality of Thought’. The base level is ‘Destructive Thought’ – negative, harmful and vindictive in nature. Slightly higher on the scale is ‘Non-Productive Thought’ – the content is focused on judgment, assigning blame, irritation and possessing a victim mentality. Flipping to the positive side of the scale is ‘Productive Thought’ – defined as thoughts that facilitate critical thinking, creativity and problem solving. The highest level in the hierarchy is ‘Pure Thought’ –
characterised by thoughts of love, compassion, gratitude, harmony and peace.
If you conducted an audit of your thoughts, where would you be spending most of your time? The quality of our thoughts dictates the quality of our outcomes. So, it is prudent to ask ourselves, why do we spend so much time in low quality thinking? The answer lies somewhat in our evolutionary makeup. Human beings have a predisposition to focus on negative events as they are generally more potent than positive ones, more contagious and because negative events tend to turn more negative more quickly than positive events become positive (Alex Linley, 2008).
Interestingly, not only do low level quality thoughts diminish our sense of fulfilment and drain energy, they actually have negative health consequences. There is a raft of research available to confirm this. For example, the University of Pittsburgh study found that optimistic thinkers have decreased rates of death, are less likely to be diabetic or suffer hypertension than their negative thinking counterparts and are 30% less likely to die from heart disease. They also found that negative thinkers are 23% more likely to die from cancer.
Conversely, having a good mental attitude and high quality thoughts have positive consequences for health and
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where each corporate client is assigned a relationship manager to tailor programs to meet the often differing needs of participating organisations.
According to Steve Sampson, who manages ‘Citi at Work’ for our corporate clients, one of the most attractive elements of the program are seminars to educate and enrich the financial knowledge of employees. Sessions on home loans, wealth creation and money management provide employees with greater peace of mind in knowing that they are across the latest developments in personal finance and investment.
One of the defining components of any health and wellness program is a strong communications program to relay the benefits to employees. Placing a logo on the intranet hoping that employees stumble across it doesn’t work. A structured communication and events program will enhance the value of the offering to staff and the take-up rate. ‘Citi at Work’ relationship managers use a variety of tools including information kiosks in corporate office cafés and lunch rooms, eDMs, deskdrops and newsletter inserts.
Don’t underestimate the value of health and wellbeing programs for your business; take the time to constantly review the breadth, quality and effectiveness of your offerings. Communicated and implemented well, these will help reinforce your employment brand to both existing and prospective employees, improve retention and of course make for a happier and more productive workforce.
satisfaction levels. Barbara Fredrickson at the University of North Carolina found that people who are flourishing experience a ratio of a minimum of three positive emotions, events or experiences for every single negative one. The University of Wisconsin found that positive thinking fights off common colds and other ailments and that negative thinking weakens the immune system to flu vaccine. In addition, positive thinking turns on the parasympathetic nervous system, releasing feelings of calm and relaxation to counteract stress and adrenalin.
EMPLOYERS CAN MAKE A DIFFERENCEYou may be thinking, what is the relevance of these concepts for workplaces today? Enter the rise of health and wellbeing programs. Organisations can capture a competitive edge by not just providing the appropriate workplace health and safety systems required by legislation but also by facilitating an environment that encourages employees to perform optimally by bringing their best selves to work. At Citi, we take a holistic approach to supporting our employees to live more fulfilled and healthier lives.
As part of the employee benefits platform, Citi has a five pillar approach to health and wellbeing with the program refined each year based on internal and external conditions. The five pillars are: Health and Safety, Fitness, Personal Effectiveness, Social and Community, and Financial. This last pillar is one that is often neglected by organisations and yet in these tough economic times should probably rank as one of the most important ways organisations can contribute to the short, medium and longer term wellbeing of their employee base.
FINANCIAL WELLBEINGAt Citi, Financial Wellbeing includes programs for our employees built around banking privileges, convenience and financial knowledge. The program’s privileges include fee and interest rate discounts on Citibank’s most popular lending products, increased reward point allocation on credit cards, and cash back offers on transaction accounts. Convenience is offered through a tailored website and onsite assistance.
While you might expect these benefits for employees at a bank, the services are also offered to corporate clients through ‘Citi at Work’. This is an in-house banking platform
Not only do low level quality thoughts diminish our sense of fulfilment and drain
energy, they actually have negative health consequences
– JOANNE ALLEN
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A life in HRPROFILE ERIC COOPER
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With over 40 years’ experience in the profession, this month’s profiled HR practitioner has plenty of stories to tell. Tom Goodwin sits down with Eric Cooper, HR manager, Guide Dogs NSW/ACT
Beginning his working life in the dangerous acid pits of an electrolytic factory, AHRI fellow Eric Cooper has gone on to spend over 40 years working in HR – a career that has avoided the obvious health risks associated with his first role, but one that has had its own unique challenges nonetheless. Having seen and experienced a great number of changes firsthand in the HR field, the scope and sheer longevity of his career stand out as an example of the experiences that a career in HR can provide, if you are willing to work hard and take the occasional risk.
Taking some time out from his present role as HR manager with Guide Dogs NSW/ACT, Cooper sat down with Human Capital to share some of his insights into the world of HR and the changes it has undergone since he first began his career.
AS TECHNOLOGY CHANGES, SO TOO DOES THE WORKPLACEFrom a purely historic perspective, it is difficult to speak about change in the workplace without touching on the influence of technology. As might be imagined, one of the most significant changes Cooper has seen in the workplace is the increasing presence of IT. For a modern worker, it seems almost impossible to imagine a time when computers were not of key importance in the workplace – not to mention the manner in which mobile phones, emails and (increasingly) social media are blurring the work/home divide. Though many of his roles have involved IT at some level, Cooper still recalls a time when it was not the pervasive force that is often seen today.
“You wouldn’t be bothered by an IT situation at all after you’d clocked off at 5pm. It didn’t exist. Mobile phones didn’t exist – what IT has caused is a huge invasion of personal time and an adaptation of people to take that as normal.”
Despite this criticism, Cooper is positive about many of the benefits that IT has brought to the workplace. For him, resource management, training, skills development and data analysis are all rendered substantially easier by modern IT systems. “I fully support it – I don’t like paper,” he laughs.
SOCIAL UPHEAVALDespite its influence, Cooper feels that the most obvious change he has seen take place in HR is not technology based – rather, it is the demographic/s catered to that has changed. Personnel departments, he explains, grew out of a post-WWII need to assist and employ returned servicemen and women.
Modern HR, by contrast, covers an increasingly wide spectrum of issues which has resulted in a necessary growth of its responsibilities and an increased prominence within the workplace. The years between the 1940s and the 21st century have seen a large number of equal opportunity and diversity programs being developed to better address previous issues of inequality. To ensure that such programs are being enacted effectively and according to legal requirements, HR has become an increasingly necessary feature of companies.
In the case of Guide Dogs Australia, it was these external factors, as well as a gradual increase in the number of staff that left the organisation in desperate
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“You wouldn’t be bothered by an IT situation at all after you’d clocked off at 5pm. It didn’t exist”
– ERIC COOPER
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A life in HRPROFILE ERIC COOPER
need of a dedicated HR department. This increased prominence may also indirectly serve to
aid in breaking through the often discussed ‘glass ceiling’ for women in the workplace. HR is a field heavily dominated by female workers – by extension, the increased prominence of HR in the workplace may aid in the influence of women in making board-level decisions in a company. “With the advent of equal opportunity and the escalation of HR studies to a much broader and complex level, we see the population now about 80% female in HR, with many directors in that mix – which gives entry to senior management and board-level contribution,” says Cooper.
FROM CORPORATE TO CHARITABLE ORGANISATIONCooper has worked for a number of high-profile corporate companies – IBM and Qantas among them – but when speaking with him, it becomes apparent that his five years with AAPT rank as a particular high note in his career. Starting with the company in the 1990s, Cooper spearheaded AAPT’s HR department as the company grew from 150 to 1,800 staff – a task that would be a daunting prospect for any HR professional. AAPT was aggressively acquiring additional companies to
Personal file: Eric Cooper
Family: Married to Vicky who is the boss (40-year contract)
Favourite sports: Tennis, soccer, golf, walking
Favourite movie or TV show: Just about anything on SBS…travel and history
Best advice ever received: No harm in trying! You just never know what you can do
Self-described: Not a bad dancer!
Hobbies: When I retire perhaps
First job and/or worst job: Working in an electrolytic workshop, walking between open pits of acid
If not in HR: Had that choice and came back to it. It will be on my tombstone –‘HR Guy’
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I believe HR is now embedded as a natural part of life at Guide Dogs and is referred to for assistance
– ERIC COOPER
facilitate its own plans of telecommunications dominance, which eventually left Cooper working through a series of five mergers that took place within the space of his time with the company. During his time with Qantas, he had been part of a 23,000 person company, a relatively small cog within a much larger corporate machine. While AAPT started as a substantially smaller company (approximately 100 workers), this meant that his personal stakes were raised substantially higher than he had previously experienced, as the company’s success or failure was more directly dependent on his own management of staff issues. Sheer hard work seems to have been the key to success for AAPT in its early days. Cooper describes working seven-day working weeks for weeks at a time. “Personally, I lived on adrenalin,” he says.
After spending a number of years as a consultant, Cooper subsequently began working for not-for-profit organisations. Beginning with Sunnyfield Independence, a group that assists people with intellectual disabilities, he has made his way through a number of organisations to his current role with Guide Dogs NSW/ACT. The transition from working for corporate to not-for-profit organisations has not been without difficult aspects. “I think it’s rounded me off – I think it’s made me a lot wiser but also harder, in some respects. You see things that you wish you hadn’t seen, but they do exist and you do have to deal with them,” says Cooper.
In spite of this, he sees the rewards as being quite substantial. Cooper’s most recent undertaking has been building the HR department at Guide Dogs NSW/ACT from scratch. After 25 years of HR responsibilities being delegated internally to various project officers or simply outsourced, a change in the organisation’s CEO brought about changes in the structure of the organisation.
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More industry profiles at: hcamag.com
the future. During the case, the HR manager of Centennial was liable for a breach in workplace relations legislation, despite simply “following instructions” from his superiors and his own limited control over the company itself.
The full implications of the case ruling are yet to truly be seen, but Cooper seems certain of at least one outcome: “From a work and study perspective, this will put great pressure on HR managers to be right.”
As for his own future, he remains uncertain whether this will be his own final adventure in the lands of HR. After 42 years in the field, when asked about his proudest achievement he doesn’t point to any one particular memory, but speaks of his time engaging with others in the same profession. “Many of my colleagues have gone on in their own careers and it’s simply a good feeling to know you shared a bit of time in their development.
“I believe you are remembered for who you are and sometimes what you did.”
More information about Guide Dogs NSW/ACT can be found at guidedogs.com.au
Beginning with a self-described “clean desk” and moving to a “fully automated, IT-based system”, the results have been impressive.
As might be expected, there were initially a number of structural changes introduced, with Cooper mentioning “integrating roles” and “stripping out duplicated responsibilities” as being tricky to handle. Some suspicion accompanied these changes, but within a-year-and-a-half Cooper was able to demonstrate that the changes he made had contributed savings of close to $500,000 for the organisation.
“I believe HR is now embedded as a natural part of life at Guide Dogs and is constantly referred to for assistance and guidance,” says Cooper.
FUTURE CHALLENGESGiven that Australia is an increasingly litigious society, not to mention one with a highly complicated IR landscape, it seems inevitable that HR departments will need to exercise growing caution in both legal and civil matters. The June 2011 ruling in Fair Work Ombudsman v Centennial Financial Services Pty Ltd (2010) 245 FLR 242 is of particular interest to Cooper, largely due to the precedent it may set for advice given by HR managers in
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SIGN OFF
the lighter side
SEALED WITH A KISSMany people sign off their emails and text messages with an x, for a kiss – but according to media reports from the UK, the habit is actually making the colleagues of the x-inclined uncomfortable.
In a survey conducted by mobile network Three for International Kissing Day, some 44% found receiving virtual kisses from co-workers awkward.
A further one in four people said they felt obliged to return the sign of affection – even if they did not really feel inclined to do so.
However, etiquette expert William Hanson told the Daily Mail that “you should only put a kiss [on a message to a co-worker] if you would kiss them in real life”. HC reader ‘Rach’ commented: “Haven’t come across ‘x’ too often, but I thought that LOL was Lots of Love, not Laugh out Loud! I always thought it uncomfortable when people signed off that way (particularly a subordinate male colleague), and thought (being a Gen X) that I just wasn’t up with the way that Gen Ys work! The solution is to now just ask my lovely Gen Y assistant to interpret strange acronyms.”
A ‘DESK NAP’: SECRET TO PRODUCTIVITY IN CHINA?It’s something which seems wildly out of place with the Western understanding of workplace conduct. Further, it doesn’t quite align with the view that Chinese offices are hives of unrelenting productivity.
Yet ‘nap time’ is an accepted part of Chinese working culture and if an employee is feeling tired it is considered OK for them to snatch 40 winks at their desk. Napping in the office is not at all seen as a sign of laziness, and is actually seen as a legitimate, invigorating task. In Shanghai, there are even ‘nap bars’ near executive centres where soft music and alarms are provided.
In fact, the tradition of desk-napping is not at all out of alignment with current research. A recent Australian study concluded that a 10-minute nap produced immediate improvements in all outcome measures (including sleep latency, subjective sleepiness, fatigue, vigour, and cognitive performance), with some of these benefits maintained for as long as 155 minutes.
According to traditional Chinese medicine theories, to repress one’s desire for a mid-day doze is to wage war against the rhythm of your body, the rhythm of yin and yang. But following an influx of Western management styles, the days of the desk-nap may be numbered.
Instant interview deal-breakersWhen asked about the most outrageous interview mistakes they had encountered, hiring managers reported the following in a recent CareerBuilder survey:• Provided a detailed listing of how previous employer made them mad
• Hugged hiring manager at the end of the interview
• Ate all the m&ms from the sweets bowl while trying to answer questions
• Constantly bad mouthed their spouse
• Talked about how an affair cost him a previous job
• Threw his beer can in the outside trash can before coming into the reception office
• Had a friend come in and ask “HOW MUCH LONGER?”
PUNK/ROCK HR: TOP HR TIPS FROM MUSICUK leadership expert Peter Cook, and managing director of Human Dynamics & The Academy of Rock, and author of Punk Rock People Management, was asked to provide some punchy punk and rock tips for business. Here they are:
On work relationships• Bad Romance – Lady Gaga: If
you’re having trouble in a work relationship, change what you’re doing, rather than banging your head against the same wall.
• Like A Virgin – Madonna: To succeed in business, treat each day like it’s the first time.
• Knowing Me Knowing You – Abba: If you want to serve your customers really well, find out their wants, needs, whims, foibles, fancies, fantasies, fanaticisms and ensure what you are offering touches the parts that others cannot or dare not reach.
On innovation • Walk On The Wild Side – Lou
Reed: Encourage mavericks, madonnas and the odd prima donna at work if you want new things to happen.
• I Can’t Control Myself – The Troggs: Creativity at work without precise execution and discipline rarely leads to innovation.
On HR strategy• I Still Haven’t Found What I’m
Looking For – U2: Business needs constant learning and reconnaissance. If you stop looking and learning, just like Kodak, you may disappear from view.
• Won’t Get Fooled Again – The Who: If something does go wrong, do something different. The only mistake is not learning from mistakes.
written by Stephanie Zillman
