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Wednesday, 30 May 2007
Page: 96


Mr GIBBONS (4:25 PM) —Many industrialists and governments in the Western world now recognise and acknowledge that it is people who are the new engine of success—but not the Howard government, who are doing the exact opposite to what this nation needs. I now refer to a new source of competitive advantage. Most people equate successful companies with increasing profits, improvements in productivity, product quality, excellent services, access to low-cost finance, being in the right industry at the right time and being able to respond quickly to changes in consumer and market demand.

But, as Burud and Tumolo highlight in their excellent book Leveraging the New Human Capital: Adaptive Strategies, Results Achieved, and Stories of Transformation:

Like it or not, people are the only way to achieve these outcomes through their creativity and knowledge, their relationships with customers and co-workers and their professional networks.

This therefore raises these questions. If the creativity, knowledge and performance of people are the key to our future prosperity, what do we need to do at the business level—be it in high technology, manufacturing or service provision, public or private—to enhance their performance and productivity? And what are the national policy settings we need to support and enhance good management and leadership at business level?

These have long been critical questions for leaders and managers of organisations. Many of the answers have been and continue to be dismissed as ‘soft’ or ‘intangible’ by the majority of business leaders. The quality of the information available today, backed up by many years of solid and sophisticated research from around the world, cannot be ignored, particularly given the fact that intangible assets, such as people and their skills, product brands and technology represent approximately 70 per cent of the market value of most publicly listed companies.

Before I proceed to talk about what the research evidence tells us contributes to employee motivation, engagement, creativity and productivity, I would like to list some of the factors that we know have exactly the opposite effect. Most are embedded either in this government’s Work Choices legislation or in these new so-called safety net amendments, with many solutions deemed as being either prohibited or non-allowable matters.

As I said earlier, whoever dreamt up this legislation and these changes has done Australia and its economy a major disservice. It is the typical Liberal, born-to-rule and lazy way of implementing conservative, misguided ideology. Just some of the factors enshrined in the original bill and in these amendments that do not help include issues of trust, being treated and rewarded fairly and having good workplace relationships and open two-way communication. These factors are consistently mentioned in most, if not all, research and management literature as being critical-to-success factors.

So how does Work Choices help create these success factors? The short answer is: it doesn’t. In fact, it does the exact opposite. It actually legislates unfairness. It allows unfair dismissal with no reason needed, and that affects over four million Australians. It allows dismissal of the rest of the workforce for any so-called operational reason. So much for trying to balance fairness with the need for flexibility!

It sanctions employers locking out their staff without notice. So much for open two-way communication! It does not trust workers to have a ballot of their own choosing. It is designed to prosecute trade unions and their officials, who are elected representatives, for carrying out their legitimate role. It allows for the removal of a range of pay and conditions and for a reduction in real take-home pay.

It says, ‘You don’t need or deserve a meal break.’ It removes independent vetting of agreements. So much for fairness! What it says to Australia’s working men and women is: ‘Your government and your employer don’t trust you or your paid and elected union officials.’ It says: ‘We don’t care if you are dismissed or paid unfairly. In fact, we’ve actually made it legal to do so.’ It says: ‘We expect employees to give their mind, body and spirit—but don’t expect fairness in return. You’ve had it too good for too long and it’s back to the master-servant relationship for you.’ This is precisely the wrong recipe. It is a recipe for economic stagnation, a recipe driven by misguided ideology, not by the considerable evidence available regarding what is required to achieve productive workplaces and therefore gain the much needed productivity increases that we as a nation so desperately need.

There are numerous acknowledged researchers and authors I could quote regarding the evidence about what is needed. One in particular is Professor Jeffrey Pfeffer, who is professor of organisational behaviour at Stanford University Graduate School of Business as well as visiting professor at Harvard Business School and visiting professor at the London Business School and the Singapore Management University. He has studied business and organisational behaviour for 30 years, is the author of 11 books on the subject and has taught at executive seminars in 28 countries, including Australia.

Professor Pfeffer cites evidence from a five-year detailed study of companies from a diverse range of industries which indicates consistent productivity gains in the order of 40 per cent by implementing what are known as high performance or high commitment management practices. Evidence indicates that these outcomes are achieved because of the ‘set of practices that are grounded in sound social science principles and have been shown to be effective by a great deal of evidence.’ The research shows that increased involvement, and control and trust through self-directed work teams, encourage people to work harder. The building of skills and, just as importantly, facilitating the efforts of people in applying their wisdom and energy results in people working smarter. Information sharing and empowerment leads to a reduced need for the costly overheads associated with supervision and an alienated workforce in an adversarial relationship with management. Such research and its implications cannot be ignored—they are too significant and important for Australia’s workplaces and our prosperity. As a society and an economy, we must shift our view of workplace relations away from the adversarial focus of Work Choices to an approach based on comprehensive research and the evidence it provides which encourages engagement, motivation, innovation and excellence—in other words, high-performance workplaces.

There are many examples of research that identify the key elements that contribute to excellent workplaces, including research based in Australia from both the private and public sector. The results of one such study published in 2003 directed by Dr Daryl Hull of the University of New South Wales sought, with support and funding from the Business Council of Australia, to identify the factors which differentiated ‘excellent’ from ‘very good’ workplaces in Australia; note: not the good workplaces from the bad but the excellent from the very good workplaces. The criteria for excellence were based on previous research by the Business Council and include: being world-class; high-performance, including outstanding business performance; competitiveness; innovation; flexibility and adaptability; fair and equitable pay and conditions; an open management style; ethical behaviour; and where training and learning were promoted.

A wide range of workplaces were studied across various industries and locations. The research concluded that quality working relationships were the ‘central pivot’ underpinned by a total of 15 key drivers that the authors believe were identifiable, quantifiable and manageable. Some of the key drivers appear to be significantly at odds with the Work Choices legislation and the ideology espoused by the Howard government and certain representations of the Business Council. They include fair pay and conditions; being safe, both physically and psychologically; clear values, including information sharing and an understanding of the individual behaviours expected; and high-quality working relationships where managers and team leaders acted as captains and coaches. The authors also emphasised the importance of trust and how the issue of trust was constantly raised.

The finding of this research and its report are most enlightening, given that it was a study of what the key drivers of excellence in Australian workplaces are. The report also identified some of the factors that were not impediments to achieving excellence—and one of those was trade unions. The report clearly highlights that unionised workplaces could achieve excellence. Given that the Howard government, its Work Choices legislation and some of the government’s key supporters attempt to demonise unions on a daily basis, I would like to again quote Professor Jeffrey Pfeffer from his book Management 2.0, which is due to be published later this year. Professor Pfeffer has kindly given permission to quote his work. His observations about trade unions include the following:

If there’s one word that never fails to raise the blood pressure of my friends in business, particularly in the United States but actually all over the world, that word is ‘unions’.

In the minds of many people, organized labor is the arch enemy of the basic prerequisites for economic success—flexibility, efficiency, and a relentless emphasis on business results. Even presumably progressive and liberal people, and even executives in countries with a strong union tradition, see unions as anachronisms in the modern world. Of course, people will sometimes admit that organized labor may have been important and useful in earlier, less enlightened times and acknowledge the role of labor organizations in promoting workplace safety, outlawing child labor, and limiting working hours. However, with these reforms now thoroughly institutionalized in both law and custom, the advocacy role of unions seems less valuable.

Professor Pfeffer continues:

Like much conventional wisdom, however, the prevailing views about unions are often inaccurate or incomplete. So, it’s useful to set the record straight so that organizations and their leaders can make better and more profitable decisions.

Consider first the effect of unions on wages. Yes, there is evidence that unions raise wages—that is, after all, their primary reason for existence. But higher wages do not necessarily translate into either lower profits or diminished competitiveness ... in competitive market positions, there is essentially little or no union effect on company profitability.

There is currently a lot of discussion about the implementation of a ‘high road’ competitive strategy in which advanced industrialized countries stop trying to compete on the basis of labor costs—a battle they can never win—but instead compete on the basis of innovation, productivity, and brainpower. In this effort, the evidence suggests that the implementation of high performance work practices is useful. So, another issue is how unionization affects the implementation of the best human resource management approaches.

Contrary to what many people seem to believe, having a unionized workforce is not antithetical to the implementation of so-called high commitment or high performance work practices—things such as investment in training, working in self-managed teams, longer term time horizons for the employment relationship and more job security, information sharing, and so forth. Rather, the empirical evidence suggests that unionization is positively associated with the implementation of high performance work practices and makes changing to a ‘high road’ management approach more likely and easier. At worst, unions have no effect on the implementation of these practices, but there is almost no evidence that suggests they have a negative effect.

There is a range of issues that Professor Pfeffer continues with. But, clearly, the internationally renowned experts have proven that driving down workers’ wages and conditions actually has a negative effect on productivity, yet the Howard government persists in implementing its misguided ideology and born-to-rule syndrome by introducing the most draconian workplace relations system the nation has ever witnessed. The Howard government way is the lazy way. There was not the slightest attempt from this government to research and implement modern human resource management techniques—techniques that have a proven track record of lifting productivity resulting in higher profits for businesses and higher wages and better conditions for Australian employees.

With the Work Choices bill and these amendments, the Howard government has again proven that it is trapped in a time warp. It is locked into the lazy, miserable, mean-spirited conservative philosophy of the born-to-rule elite, and this has the potential to severely restrict our growth as a nation. If anyone needs any further proof of this government’s misguided and distorted view of the world they need look no further than its attitude to Australian trade unions. (Time expired)