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Address by Senator Peter Cook at the DIR workplace bargaining seminar



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ADDRESS BY SENATOR PETER COOK MINISTER FOR INDUSTRIAL RELATIONS, SHIPPING AND AVIATION SUPPORT, AT THE DIR WORKPLACE BARGAINING SEMINAR SYDNEY HILTON

TUESDAY 1 DECEMBER 1992

"WORKPLACE BARGAINING: CREATING A FLEXIBLE AND FAIR WORKPLACE"

Ladies and Gentlemen.

Australian workplaces are changing.

In my job I visit a lot of companies and I do a lot of talking and listening to workers, unions and management. There is no doubt that over the past few years there has been a quiet

revolution in the way work is performed and the way managers manage.

There is a rapidly growing number of companies where management, their employees and their unions are enthusiastically working together to create a new workplace

culture. .

This is a culture focused on improved productivity and competitiveness so the company, its workers and customers all get a fair share of the benefits.

Workplace bargaining has been an important tool that most of these companies have used to help them make the change to this more co-operative and productive culture.

I welcome you all here today to learn from some of the most successful companies who are using workplace bargaining as part of their strategies to achieve best practice.

The focus today will be on providing practical guidance on how to go about workplace bargaining to obtain the best and the fairest results.

A book hot off the presses, entitled Workplace Bargaining: A Best Practice Guide will be of great assistance to you. I'm very pleased to launch this book today and I understand you have all been provided with a copy. It is a very practical

hands-on guide to workplace bargaining. It has been prepared by my department with the assistance of the Australian Manufacturing Council.

This book provides essential information for all organisations undertaking workplace bargaining. It covers the process of negotiating and forming an agreement and it provides case study examples of some highly successful Australian companies'

workplace agreements.

If there is one clear message from the experience of successful companies it is that it is not possible to achieve the best results without being fair.

So much of the success of companies derives from creating an atmosphere of trust and goodwill with their workforce and their unions. A co-operative, committed and empowered

workforce is absolutely essential.

A negative cost cutting approach to workplace bargaining, focussing solely on such things as abolishing leave loading will do nothing at all to improve productivity and very little to cut unit costs. What it will do is lead to immediate

alienation of employees and confrontation. The Victorian Government's approach is not the road to success.

The message of the vital link between company performance, employee participation and fairness is being accepted world wide as the key to ensuring high levels of quality, productivity growth and profitability.

Six companies currently participating in the Australian Best Practice Program and featured in the book, Workplace Bargaining: A Best Practice Guide, are here today to share their experiences of workplace bargaining with you. Kelloggs, Colonial Mutual Life, Sheraton Hotels, ASTA, Smorgons and

Sterlands will demonstrate, through a series of practical workshops, how best practice standards should be adopted when developing workplace agreements. They will demonstrate how best practice can assist in setting the agenda for workplace

negotiations.

I don't know how many of you are aware of our Best Practice Program. Let me quickly digress to outline its main features. It is a program in which organisations competitively bid for Commonwealth funding on the basis of their comprehensive

strategy to achieve world best practice ie. their strategies to become internationally competitive. Their proposals are judged by a panel of experts chaired by Mr John Prescott of BHP.

The companies selected by the Expert Panel agree to act as demonstration models for other organisations. Management and unions from all sectors can learn from both their successes and their mistakes. Organisations interested in learning from

these best practice companies and adopting a best practice approach have formed networks in each capital city.

To date, the program has been working very well as today's case studies will demonstrate. I urge all the organisations represented here to join the network nearest to them. Details on these networks can be obtained from the Commonwealth Department of Industrial Relations in each capital city.

Workplace bargaining is now the centrepiece of this Government's wage fixing system.

There are over 550 workplace agreements registered with the Australian Industrial Relations Commission with hundreds more in the pipeline. These agreements cover more than 300,000 employees or 15 per cent of workers covered by federal awards.

Workplace agreements must of course, by their very nature, be tailored to the unique circumstances of each company.

Nevertheless, I believe that successful workplace bargainers have a lot to teach companies that are just starting the process of developing a workplace agreement.

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As the Best Practice Guide shows, a remarkably broad agenda has been pursued by companies. Initiatives include the introduction of flatter organisational structures, a move to self-managing work teams, more flexible working hours, the

introduction of annualised salaries which include a component compensating for overtime and penalty rates, and a greater focus on the customer.

However, there are some essential core ingredients that all the most successful agreements have in common.

Of these, one of the most important is having an integrated approach to improving performance and achieving international competitiveness.

Companies have reviewed the entire scope of their operations and have put together comprehensive strategies to achieve long-term and continuing improvements in productivity.

These strategies cover all aspects of a firm's performance not only work practices. The most successful workplace agreements have been just one part of a wider strategy which has included

other items such as investment in up-to-date capital equipment, maximising the use of that capital, a clearer focus on quality and the customer, and a review of management practices.

This is one of the reasons that the involvement and commitment of top management in the process is critical to achieving the best results.

These managers must be willing to change the way they work, accept the responsibility to lead the company through the difficult process of change, and be committed to sharing the benefits of workplace reform.

But, of course, its not only top management which must be committed to change. Commitment is needed at all levels within the organisation; middle management, workers and their unions.

It has surprised me, the number of companies I have visited which have identified middle management as one of the most difficult groups to convince of the benefits of change.

Effective consultative mechanisms are vital to ensure their commitment and the commitment of all other affected employees.

The South Australian company, Hendersons Automotive, is a good example of how to go about it. It has established a consultative committee which includes representatives from management, plant supervisors, shop-floor workers, clerical

staff and union delegates.

The minutes of its weekly meetings are circulated throughout the company.

It also communicates with its workforce in a range of other ways.

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For example, the divisional manager speaks to all workers in a weekly "State of the Nation" meeting and there is a weekly safety talk.

A newsletter is distributed every two-to-three weeks - with 80 per cent of contributions coming from worker.

The effective consultation and communication at Hendersons has been a crucial factor behind its recent workplace agreement and dramatic improvements in company performance.

Industrial injuries have dropped from 32 per cent of the workforce to nearly zero, absenteeism is below 2 per cent, staff turnover has been slashed from 120 per cent to 15 per cent, and production has been boosted from four hundred

thousand to nine hundred thousand units per year.

An important underpinning of any effective workplace agreement is training - training both on how to bargain and negotiate for members of consultative committees, and training that leads to a more highly-skilled and flexible workforce.

Any training program needs to meet the particular requirements of companies and their workers. In some companies this has meant basic training being offered in language, literacy and numeracy.

For example, Smorgons ARC has a workforce predominantly from non-English speaking backgrounds. The company, in consultation with a local TAFE college developed courses in English skills. Over one quarter of production staff now

participate in these classes. Many workers have gone on to acquire skills certification in relevant industry skills which would not have been possible without the English classes.

This brings me to a distinguishing feature of successful workplace agreements that I have already mentioned.

That is that they are as much about benefiting employees as benefiting the company.

These companies know that by addressing the needs of employees they receive pay-offs in terms of increased commitment, reduced absenteeism, and the retention of skilled and experienced staff members.

And a committed and skilled workforce is becoming more and more important. In the most successful companies it is ordinary employees who are taking the responsibility for ensuring quality at the point of production or service

delivery.

These companies are tapping the creative abilities of their employees to achieve continuing improvements in productivity.

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For example, at Email in Adelaide groups of workers from the factory floor have come up with modifications to product design and to the production process to completely eliminate some specific quality defects.

These workers have already saved Email millions of dollars.

Successful companies recognise that positive measures to improve productivity have a much greater potential to improve the competitiveness of their companies than a narrow and short-term focus on labour cost-cutting.

This is a fact which SPC's chairman John Corboy knows well. In August SPC successfully concluded its second workplace agreement. The agreement focuses on achieving further productivity and profitability and sharing the benefits of

this with workers.

As Mr Corboy says and I quote:

'It's a well demonstrated effect. If you can improve your productivity by 5 per cent then you add up to 30 per cent to your profits. There's more than one way to improve your profits than by slashing wages. I personally don't believe

it's very intelligent to ask people to perform by cutting their wage. There are much more intelligent ways to get them to do that.' (Radio interview 3AW, 10 November 1992)

Mr Corboy is right. And his view is shared by hundreds of companies which now have workplace agreements.

I am particularly heartened by the emerging trend of companies using the opportunities provided by workplace bargaining to introduce measures to help workers balance their work and

family responsibilities.

The agreement recently finalised by Mission Energy and the Australian Services Union to cover workers at Victoria's Loy Yang B Power Station when it opens is a case in point.

The agreement introduces a number of measures to create a productive workplace and also includes a joint mission statement about the company's underlying philosophy. It states

'The success of the Company depends on its employees... The methods for constant improvement must build on the , partnership values of mutual aid and respect, open two-way communication, shared success and innovative problem solving

which will lead to competitive excellence.'

This philosophy is reflected in the special initiatives in the agreement for workers with families.

For example, the agreement includes generous parental and maternity leave provisions, compassionate leave for family emergencies, permanent part-time work and flexible working hours.

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In establishing rosters, equal consideration will be given to the business needs of the company and the preferences of its employees.

Mission Energy has made an undertaking to assess child care needs at the outset of operations with options to be considered including an on-site child care centre to provide occasional care.

Another essential feature of any effective agreement is the development of appropriate measures so that improvements in productivity and performance can be assessed.

There is little point in having a workplace agreement if you can't measure the effect it has had.

Measurement indicators will need to address both qualitative and quantitative factors, including customer satisfaction, absenteeism, output, cost and financial performance.

As well as measuring performance, companies need to set targets for improvement.

One of the best ways to do this, and a major feature of the Australian Best Practice Program, is to set benchmarks by comparing the company's performance with the best performers in the world.

Best practice companies from industries as diverse as manufacturing, tourism and insurance are showing other companies how to do this.

The final point I'd like to make is that workplace agreements should be seen as only the start of a process of continuous improvement.

Its important to realise that your first workplace agreement won't be your last and that what is a solution to your company's problems today won't necessarily be the right answer

in a few years time.

If companies are to remain internationally competitive, all levels of the organisation must be continually looking to find better ways of working.

A good example is the great success of Dulux Australia's Clayton site in Victoria.

I have visited this site recently and I was particularly impressed by their achievements.

Dulux has now completed its third workplace agreement.

These agreements over the past three years have been instrumental in reducing the time taken to produce a batch of paint from 120 hours to 40 hours and improving the number of batches produced in full and on time from 68 per cent to near

100 per cent.

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ASTA Components, a unit of Aerospace Technologies of Australia, is another case of a continuous and successful reform program.

Its reform program began in 1989 and has seen annual sales improve from $37 000 per employee to $91 000, and hours lost per employee because of industrial disputes drop from 30 to zero.

Management, unions and workers at ASTA are committed to finding further means of improving performance and refining work practices.

The enterprises that I have referred to and others that you will hear from today are just the tip of the iceberg.

Many other Australian enterprises have shown that they have the foresight to formulate workplace agreements which are an important part of a broader, holistic approach to achieving international best practice.

But we need to ensure that this message spreads even more widely.

That is the point of this seminar and of all the Government’s workplace reform programs.

The reason for promoting workplace agreements is clear.

The adoption of fair and flexible workplace agreements based on best practice strategies is essential for individuals in each workplace; for the growth of the company concerned; and for our competitiveness as a nation.

Productivity-based workplace agreements are the basis of the Government’s industrial relations reform agenda which aims to make Australia's workplaces the best and the fairest in the world.

We need to be the best so Australia's goods and services can be produced and sold profitably against international competition at home and abroad.

But we also need to be the fairest. This not only to ensure employee commitment to workplace reform, but also because it is the Australian way to respect the values, aspirations and dignity of all people. This Government recognises that people are the key ingredient in long-lasting and real economic gains.