When companies experience a squeeze on budgets, managers often face the legitimate fear that it can dampen staff morale. What happens, for instance, when a lean fiscal year brings with it an ineluctable freeze on pay rises and bonuses?
It’s a tough piece of news to break to top performers. But here’s the silver lining: when it comes to motivating staff, money isn’t the all-powerful magic bullet we believe it to be. In fact, research shows financial rewards do not strictly translate to a rise in employee productivity or morale. According to a 2013 study, the $62.56 billion spent on performance bonuses across the UK per year had “no impact on the motivation and commitment levels of the vast majority of recipients”.
So what causes the bonus paradox? Daniel Pink, the bestselling author of Drive: The Surprising Truth About What Motivates Us, argues that once our basic financial needs are met, most workers are driven by a sense of purpose in their work more so than pure profit. What’s more, once the level of work surpasses menial tasks, and “conceptual, creative thinking” is involved, monetary incentives can actually lead to poorer performances. Instead, what drives people through good times and bad are what Pink refers to as ‘intrinsic motivators’.
“We all have fundamental human needs that cannot be met by money. When these important human needs are met, we thrive,” says Michelle Bihary, applied neuroscientist and workplace resilience expert.
Drawing on Pink’s research, Bihary states there are four things most of us seek from work: autonomy (not being micro-managed), mastery (skill development opportunities), meaning (a sense of purpose aligned to personal values), and social connectedness (a sense of belonging).
“If a workplace helps to meet these needs, it will have thriving employees — making it easier to retain top talent,” says Bihary.
The good news is that companies can seek to fulfil those core needs in spite of financial downturns. Kelly Quirk, CEO of Harrier Human Capital, calls this the ‘total rewards’ approach.
“Many workers in corporate environments will feel more motivated and productive if they have a say in how they do their jobs”
– Kelly Quirk, CEO Harrier Human Capital
“Non-financial rewards are increasingly important as wage growth remains stagnant. Despite averaging 4 percent a year from the mid-1990s to 2013, wage growth has now dropped below 2 percent,” says Quirk.
Flexible work arrangement can be a powerful way to incentivise staff. “Trust is a huge factor in motivating others to perform well, and this can come through in the empowerment of employees to make decisions and work flexibly,” says Quirk.
“Whether it’s working from home one day a week, being able to take a longer lunch to go to the gym in return for starting earlier, or otherwise not being bound by traditional working hours, many workers in corporate environments will feel more motivated and productive if they have a say in how they do their jobs.”
Other effective motivators may include value-based incentives. In other words, programs that support diversity and inclusion, learning opportunities or personal development that recognise workers as well-rounded individuals, with interests and priorities outside of work.
Digital Web Agency Sitback Solutions has long championed the idea of personalising rewards to keep employees engaged. Voted one of the Best Places to Work in Australia third year in running, the company has successfully launched a number of non-financial initiatives that have resulted in a highly motivated and committed workforce.
“We base everything on values and make sure that any incentives are personal and authentic….[It could be anything from] free healthy snacks, flexible working hours, support around family or pet commitments,” says Careen Redman, head of People and Culture at Sitback.
“A reward doesn’t have to have a tangible cost attached if it’s valuable to an individual’s wellbeing.”
What do employers need to do to get good people from metro areas to relocate to regional areas? By Nicola Heath
Scott Timmins AFIML never wanted to move to Townsville.
“I thought ‘it’s a small country town . . . and I won’t get much out of my life up here,’” he recalls. Twenty years later, the people solutions specialist at TP Human Capital says he’s now considered a local.
Australia is a heavily urbanised nation. According to figures from the Grattan Institute, three-quarters of Australians live in cities with a population above 100,000.
We also live in a knowledge economy, where highly educated people gravitate towards inner cities – “where knowledge-intensive activities are clustered, and where demand for knowledge workers is highest,” states Deloitte’s 2015 report, The Purpose of Place: Reconsidered.
The challenge for employers in regional areas traditionally reliant on declining primary and secondary industries is to attract skilled workers from the cities.
They are up against significant anti-regional bias. Like Timmins before his move to Townsville, most Australians are reluctant to relocate to a regional area for work.
A survey by SEEK found just two out of five Australian workers would consider relocating to a regional area.
What skilled workers want
Nearly half the survey respondents said they would relocate for a pay increase to the tune of $20,000 to $30,000 a year.
Timmins recommends regional employers carry out a market analysis of metro wages to come up with a competitive remuneration package, and consider offering perks like a car or rent assistance.
Concerns about career progression is another issue. More than half of those surveyed said they felt that moving to a regional area would limit their career.
But Timmins says employers can sell roles in regional areas as good experience. Whereas a career in the CBD often leads to specialisation, in the regions, jobs are often multi-disciplinary.
A manager in a government department in outback Queensland may require skills across three or more different industries, says Timmins. “That can be really beneficial for them in the long term.”
The breadth of experience they gain in such a role can assist their career progression, whether they want to stay in regional Australia or return to the CBD.
What makes a region attractive?
Lifestyle is a big factor. Australians love living by the sea – 80 per cent of Australia’s population lives within 100 kilometres of the coast.
Jock Collins, Professor of Social Economics at UTS Business School, singles out transport infrastructure and an effective broadband network – “not one that goes through copper wires but one that’s very fast” – as critical measures to attracting people to regional Australia.
Investment in regional universities is crucial in both generating employment and stemming the flow of young people moving to the city to work or study.
Migration can drive economic growth, bringing “skills, experience, tastes and preferences that contribute vitality and vibrancy,” states the Deloitte report.
Employers, particularly in non-coastal areas, are increasingly looking to foreign workers to fill skills shortages, says Collins, who surveyed 1000 skilled migrants in regional Australia about their experiences. “Most said they had a warm welcome in the bush,” he says.
Regional cities can also build prosperity by enhancing their connections to inner cities and developing tertiary industries that employ knowledge workers.
One way to achieve this is “for governments and industry to locate significant knowledge-intensive activities in regional cities,” states the Deloitte report.
This worked in Orange, NSW, where the Greiner government moved the NSW Department of Agriculture (now the Department of Primary Industries) in the 1990s, at a time when traditional manufacturing jobs were in decline.
Today, Orange is thriving. It has a university campus and a new hospital that has cemented its position as a regional health centre. Unemployment remains low at 4.1 per cent, while property prices have risen 11.8 per cent in the 12 months to June 2017.
Back in Far North Queensland, Timmins has come to love Townsville, a city with “a country feel about it.”
“I never thought I’d see myself living in Townsville for the rest of my life, but I don’t see myself going anywhere else.”
Scott Timmins AFIML is a speaker at IML Leadership Matters Conference: 7 attributes of very successful leaders at Rydges Southbank Townsville on October 17, 2017. Book tickets here.
It pays to be prepared if sexual harassment rears its ugly head in your workplace
By Elizabeth Ticehurst
The term ‘sexual harassment’ has a ring of the 1980s about it. It evokes images of the bad old days of shoulder pads and big hair, when women were treated as workplace ornaments and expected to conveniently resign when they married or fell pregnant.
Three decades since the introduction of the national Sex Discrimination Act (SDA) in 1984, it may be disheartening to realise that sexual harassment still casts a long shadow on Australian workplaces. Yet community and judicial attitudes appear to be changing, requiring greater accountability from organisations and perpetrators.
The 2014 case of Richardson v Oracle Corporation Australia Pty Ltd and Tucker is often cited as marking a turning point in how seriously courts view sexual harassment and its effects on the victim. The complainant was initially awarded only $18,000 for general damages, consistent with a long history of the courts awarding rather small sums for sexual harassment.
However, on appeal this award was considered “manifestly inadequate”. The appeal court took into account general standards in the community and the awards of damages in cases of workplace bullying, and increased the damages to $130,000.
Large awards of damages such as this do more to hurt the employer than the perpetrator however, thanks to a provision in the SDA (and similar provisions in the equivalent state acts) that holds an employer liable for acts done by an employee “in connection with the employment of the employee”, unless the employer has taken all reasonable steps to prevent the acts. The phrase “in connection with employment” has been so widely interpreted that it can extend to an employee’s actions outside working hours, and even outside of the workplace.
In a recent Queensland case, for example, a tribunal ordered damages of more than $300,000 to be paid to a hotel employee who was sexually harassed by a fellow worker. The victim was sleeping in a hotel room provided by the employer, when she woke to find the hotel’s night caretaker naked in her room making unwanted sexual advances.
Neither employee was working at the time of the incident, but the tribunal found there was a sufficient nexus between the conduct of the caretaker and his employment for the hotel to be found vicariously liable for his actions. Importantly, the hotel had also neglected to take many steps which may have prevented the sexual harassment, including implementing a policy prohibiting discrimination and harassment, and training its workers in that policy. All of this is frustrating to employers – many would argue they can’t reasonably be expected to control their employees’ actions when they are not even present at work – but there are also indications of a common sense approach being taken.
In the 2016 case Mrs Linda Smyth v Northern Territory Treasury and Mr Doug Kerr an employer successfully showed it had taken all reasonable steps to prevent sexual harassment, and thereby avoided liability for its employee’s actions. In this case the complainant argued that a male employee had sexually harassed her at work by touching her inappropriately and sending her offensive e-mails. She alleged that the treasury was vicariously liable for this harassment, as the perpetrator had harassed her at work.
The NT Anti-Discrimination Commission found, however, that the Treasury had taken “all reasonable steps” to prevent the harassment. They had done this by:
Having a policy on harassment in the workplace (albeit not a policy that specifically defined sexual harassment).
Training employees in the policy.
Meeting with the victim and offering support.
Giving specific training to the perpetrator in the requirements of the policy, after a complaint was raised by the victim.
Monitoring the perpetrator in the workplace and moving him to a different desk.
Conducting a mediation.
The Commission noted that Treasury had taken these steps even though the victim insisted she would deal with the matter herself and did not want to make a complaint. They were therefore not vicariously liable for the perpetrator’s actions.
Employers cannot afford to be complacent about sexual harassment. The good news is that being prepared can pay off. Implementing an appropriate policy and taking prompt action to address any issues will be crucial in defending an organisation from liability.
Elizabeth Ticehurst is Special Counsel – Employment at KPMG
Conflict between co-workers needs to be handled delicately and resolved before it brings a business to its knees.
By Fiona Smith
Who would think a “good deed for the day” of washing and putting away a colleague’s coffee mug could bring an office to a standstill? But it did. People took sides, stopped talking to each other, work suffered, an official complaint was made and a mediator was brought in to settle the matter.
Crazy stuff can happen in workplaces because people don’t always act rationally and misunderstandings can occur when communication is poor.
“What is normal workplace behaviour? There is no such thing as normal, outside what is legally required,” says Joydeep Hor, managing principal of law firm People + Culture Strategies.
In the case of the coffee mug, the woman who brought the complaint thought the “good deed” was an attempt to annoy her. Her colleague thought she was doing the other woman a favour that might help them get along better.
Of course, there was some history behind the conflict. The complainant tended to keep to herself and was not particularly interested in being social. The other woman, who was outgoing, read her colleague’s reticence as rudeness and hostility and responded in kind.
They had both made complaints over two years to their manager about each other’s attitude, but – and here is the key point to this story – the manager decided this was too petty to act upon. Instead, the manager told each woman that the other would be spoken to, but it never happened. The manager just hoped it would blow over.
The mediator, Catherine Gillespie, says each worker was under the impression the other was ignoring an instruction to change her behaviour.
“The managers couldn’t believe they were complaining over [the coffee mug], but it was because management had ignored all the complaints over two years and hadn’t resolved the actual underlying issues,” says Gillespie, managing director of Workplace Harmony & Conflict Resolution.
Gillespie took all the parties for one-on-one meetings to find out what happened and then asked them to look at it from different perspectives. She then inquired what solutions they wanted and how they were going to work together going forward.
Once the role of the manager’s inaction was clearly understood, the women could shift some of the blame onto their boss, opening the way for better communication with each other.
“They both had the same intention: they wanted a good workplace,” says Gillespie.
In most mediations, Gillespie says she discovers a third person who could have resolved things. “But, because they didn’t, the situation has escalated”.
People don’t speak up because they fear the reaction when they ask someone why they don’t greet them when they pass in the hallway or why they seem to delay responding to their emails.
Speaking of emails, these missives are fuel to the bonfire of bad workplace relationships because the tone of written communications can be easily misconstrued.
“It is because they are overlaying all of their past history and assumptions onto that email that they read it in different ways,” Gillespie says.
“Then, when they don’t talk to each other, they start talking to their colleagues about how horrible the other person is.” Communication between the two people becomes difficult, team meetings are awkward and cliques and divisions form in the workplace.
“The productivity of the whole team is now affected because people feel like they have to take sides,” Gillespie continues.
Gillespie says most situations can be resolved: “They actually do want to have a voice and be able to resolve things. They don’t like being in that uncomfortable state.
“We need to have those difficult conversations – and people want to have them.”
Surveys of executives have shown 85 per cent of them had issues they were afraid to raise at work, according to Margaret Heffernan, a former CEO and author of Wilful Blindness: Why We Ignore the Obvious at our Peril.
“[They are] afraid of the conflict that would provoke, afraid to get embroiled in arguments they did not know how to manage and felt they were bound to lose,” she told an audience at a TED Talk in 2012.
This means that leaders, who go out of their way to recruit the best people, fail to get the best out of those people, she said.
Margaret Heffernan delivers her ‘Dare to Disagree’ talk at TEDglobal in 2012.
Joydeep Hor says his firm is increasingly asked to audit the culture of client organisations and mediate when there is conflict. There is often a systemic problem that can be identified behind the conflict and, unless it is analysed, then trouble is likely to reoccur.
“You will be back in the same spot, maybe not with the same people, but very quickly,” he says.
Hor says disputes usually involve people who are reasonably well-regarded by their employer: “But, for whatever reason, some level of conflict has developed in the relationship – whether it’s a personality conflict, ways of working conflict, or a disagreement about operational matters.” This has a flow-on effect to other people.
“The organisation doesn’t see it necessarily as a legal matter, but they see it as a very core productivity and cultural matter,” Hor says.
If organisations want to protect themselves from conflict, they should start by having clear expectations about the kind of communication, respect and behaviour that is accepted, he says.
A sure sign of conflict is a rise in stress leave and complaints, says dispute resolution specialist Shirli Kirschner.
“We are primed to fight, flight or freeze when we feel unsafe and that is why conflict is so unhealthy for humans because, the minute we feel unsafe, we are running huge amounts of adrenaline and negative headspace,” says Kirschner, who is the principal of Resolve Advisors.
Kirschner says a common scenario is when a new person comes into a workplace and tries to change bad behaviour that has previously been tolerated.
That misbehaving person may have been protected because they were regarded as a high performer in other ways, because they had a close relationship with a client or were a favourite of the CEO.
“The new person coming in is operating by a new set of rules and that creates huge problems. The person exhibiting the behaviour may have been doing it for 10 or 20 years and they are completely befuddled about why it is suddenly not OK,” she says.
Conflict also arises when a valuable employee has a “messianic complex” and believes they are the only one who can keep the system running.
If an area becomes understaffed, these people will quietly take on all the extra work and not complain.
“And then, at a point, they snap. They then often feel angry and undervalued. Because of their own huge competence and silence, they are not under-appreciated, but no-one has any visibility about what they have done,” Kirschner says.
“The day they start feeling undervalued, the world starts falling apart on both sides. The organisation can’t understand what is going on and the person can’t understand how they can possibly be under-valued when they have given their heart and soul and hundreds of hours.”
Other common flashpoints are promotion from within, difficult personalities, poor communication or co-ordination (perhaps leaving people out of an information loop), or issues to do with the business that put people under intense pressure, such as downsizing or relocation.
Kirschner says dealing with conflict should start with an assessment. Going straight into an investigation can sometimes make things worse by unearthing bad behaviour on both sides.
She suggests taking each person for a confidential coffee meeting, where they can be asked what result they would like to see out of the situation.
Then a recommendation should be made for mediation, perhaps with an expert mediator, an investigation, complex coaching, or something else.
With any luck, that “something else” may involve something simple like an acknowledgement of the complaint, an agreement that things will change and a determination to “move on”.
Should investors have a say on what CEOs are paid?
The premise: Those companies which adopt a ‘say on pay approach’ are better led, perform well and have lower costs, so says research from business school INSEAD.
Maria Guadalupe Associate Professor Economics and Political Science, INSEAD
We found that a say on pay does indeed pay off across multiple dimensions (in a paper published in the Review of Finance, ‘Say Pays! Shareholder Voice and Firm Performance’).
Our analysis, which covers 250 cases of proposals to adopt the say-on-pay policy between 2006 and 2010 – before shareholder votes on pay were mandatory in the US – shows that if the policy was adopted, say on pay increased shareholder value by about five per cent. We also show evidence that say on pay has a positive impact on firms’ accounting and operational performance in the years following the vote.
By giving shareholders a channel to express their opinions, it intensifies board monitoring and pressure on the CEO to improve performance. It can also affect the current level and structure of executive pay, making it more closely tied with performance.
Graeme Bottrill National president Australian Investors Association
Shareholders have a wide range of investing, corporate and management skills, but I expect that the typical investor most likely has a minimum of these skills.
Since these ‘average’ shareholders have little ability to determine an appropriate remuneration package for a CEO, it’s difficult to imagine a mechanism where shareholders could have a credible input into such matters.
Having said that, it is certainly appropriate to call out the extremes. This is not some formal arrangement for ‘having a say’, but the investing community can certainly recognise an excess when presented with one, and may be active and vocal at annual meetings and the like.
My view therefore is that shareholders should not be given any formal arrangement to control CEO remuneration, but they may have a voice through the annual meeting process.
Martin Lawrence Research director Ownership Matters
I think they should have an influence but not the final say. In a large listed company, you have to strike a balance between allowing shareholders to have their views heard and them actually having a final say.
The areas where I think shareholders should have an absolute say is around the allocation of their equity to executives. As a shareholder, you have a fundamental right to a share in the company. We used to have quite good rules in Australia for dealing with insiders’ capacity to get their hands on shares without paying the market price.
Those rules have basically been gutted over the last 10 to 15 years. Now you see the curious thing of large listed companies spending tens of millions of dollars of their shareholders’ money to buy shares for their executives without shareholders having any binding say on it at all.
Many organisations now recognise that a diverse workplace is not only something to aim for on equity grounds, it is also strength that enriches and expands the skill sets and understanding of an organisation. A workplace that values diversity can increase employee job satisfaction, in turn reducing staff turnover, as well as harness perspectives and insights it might not otherwise consider – a crucial step to understanding different customers and markets. At a time when Australia is facing a skills shortage and an ageing population, workplace diversity is more important than ever.
However, actually ensuring people of diverse backgrounds are hired in your organisation and are then made to feel welcome is something that many workplaces struggle with. Here are five steps you can take to encourage workplace diversity.
Ensure your HR team recognises the importance of diversity
There is no point espousing the importance of a diverse workplace if the people responsible for hiring are not on board. An HR team needs to do more than pay lip service to the value of diversity – it needs to truly appreciate that a homogenous workplace is one that is missing out on crucial perspectives and skills. Ensure your HR team has done rigorous diversity training, and, critically, ensure your HR team itself is diverse.
Invest in diversity training
There will be limitations to what an organisation can learn through in-house measures. Organise for an external body to run diversity training for your workplace and ensure that all employees attend – even (maybe, especially) senior staff. Get feedback on what the workplace thought of the training – have debriefs with staff members who may have specific concerns or questions. These will not be trainings that you can organise as a one-off occasion. They will need to be ongoing, firstly to cater to new employees and secondly because diversity is not a static or fixed issue – it is constantly changing and being re-assessed as Australia’s wider diversity changes. What’s more, if the aim of the training is to educate the workplace, a commitment to reinforcing the lessons is important.
Implement diversity-friendly policies
Providing alternative working arrangements, such as a compressed work week, job-sharing, part-time roles and modified start and end times to the working day will make your workplace more accessible to those with children and caring responsibilities. Accommodating cultural and religious holidays will make your workplace more welcoming to employees from culturally and linguistically diverse backgrounds, as will permitting diversity-friendly clothing choices in the office. Lastly, but most importantly, make sure that your wages are fair and equal – not only within your organisation but across the workforce more broadly.
While facilitating diversity in junior and middle management positions is often very achievable, ensuring that diversity reaches the senior levels of an organisation will often involve further steps. Mentoring is one way to encourage diversity in executive positions. Match underrepresented employees with senior members of staff and encourage membership with relevant external professional organisations to support diversity in your workplace.
Recognise your own limitations
Any individual will have a limited experience of the world and will subsequently have limited perspectives on a given issue. Acknowledge that there may not always be an objective way of seeing something and if someone else in your office has a different perspective, stop talking and listen. Everyone has unconscious biases. Don’t be defensive if you are called out on them – acknowledge it is okay to be wrong and treat it as a learning experience.
Claims of workplace bullying are a disturbingly familiar story. An employee has a performance problem and their manager decides to do something to fix it. The manager gives the employee some critical feedback, which the recipient feels is unwarranted. The employee makes a careless mistake and the manager berates them in the lunch room. Finally, the manager decides to put the employee on a performance improvement plan, only for the employee to take an extended absence on sick leave, and bring a bullying complaint against the manager.
Resolving a bullying complaint inevitably involves strong emotions on both sides. The employee making a complaint may genuinely feel they have been unfairly targeted, while the person complained against commonly reacts with shock and disbelief.
In 2014, for the first time, Australian workers were given a legal avenue to address workplace bullying while it was going on. Before that, they could claim compensation for mental stress caused by bullying, but only after the damage was done.
Changes made to the Fair Work Act mean workers can apply for a “stop bullying order” against an organisation, an individual, or a group of individuals. If an application is successful, the Fair Work Commission can make any order it considers appropriate to protect a worker from the risk of further bullying, short of requiring payment of money or imposing a financial penalty. These amendments provided, for the first time, a legal definition of bullying as “repeated unreasonable behaviour”. Importantly, the definition specifically excludes “reasonable management action carried out in a reasonable manner”.
Despite initial fears the changes would spark an avalanche of applications for “stop bullying orders”, in the 2015-2016 financial year the Fair Work Commission received just 734 applications. Less than 8 per cent of these proceeded to a decision being issued by the Commission, and a “stop bullying order” was issued by the Commission in only seven cases.
The Commission appears to take a pragmatic approach in determining if bullying has occurred. In the recent case of Edwards v E&S Trading Co, Rebecka Edwards, a sales consultant at the E&S kitchen and bathroom store in Moorabbin, claimed she’d been bullied due to incidents that included:
a colleague accusing her of spilling coffee beans in the kitchen and yelling at her to clean it up
other employees arguing in the company’s reception area in front of customers
rumours among other staff that Edwards had “egged” a colleague’s car
allegations that a colleague was “stealing” Edwards’ sales
management ignoring her complaints, thereby perpetuating these behaviours.
As is often seen in bullying matters, the complainant was also subject to performance management, and had received a final warning for her own conduct.
The Commission accepted that Edwards was anxious and distressed and genuinely believed she’d been bullied. They also noted that the E&S managers could have handled the performance management process in a better way.
But in light of how the evidence from other witnesses sharply contrasted with Edwards’ own, the Commission decided it could not objectively conclude Edwards’ colleagues had “repeatedly behaved unreasonably” and bullied her. The performance management process, although not perfect, was deemed “reasonable management action”.
In another 2016 case, Western Australian truck driver Bevan Gillies claimed he was the victim of a sustained campaign of bullying and intimidation by his depot manager at HPS Transport, including:
giving the driver a warning letter after he refused to complete an afternoon run
singling out the driver for failing to complete and sign the employer’s uniform policy
giving the driver a warning when he turned up four hours late to work [his start time was 3am], and subsequently standing him down with no pay.
However, the Commission considered that all these incidents were consequences that flowed on from Gillies’ own actions, and that the manager had taken reasonable actions in a reasonable manner. Importantly, it concluded that as the depot manager no longer had any direct dealing with Gillies, there was no risk of him being further bullied, so the “stop bullying order” application was dismissed.
4 TIPS TO MINIMISE THE DAMAGE CAUSED BY WORKPLACE BULLYING CLAIMS
Be prepared, but not panicked, about bullying complaints
Have a policy that outlines expectations of employee behaviour in the workplace
Investigate any bullying allegations that are raised, and take action if necessary
Be especially careful to follow due process when dealing with performance management.
Elizabeth Ticehurst is Special Counsel – Employment at KPMG.
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