AMBITIOUS corporate incentive schemes and performance goals can cause anxious employees to lie about results – and this has a negative impact on productivity, according to University of Sydney Business School research.

Professor of accounting, Wai Fong Chua used the example of the Finnish multinational, Nokia, which suffered financially because of the fear that it generated amongst middle and senior managers.

“Shared fear was so strong amongst Nokia’s middle managers that they withheld important information about the viability of its technology from senior managers,” Prof. Chua said. “The company suffered significant losses as a result and was forced to exit the smartphone market.”

Prof. Chua’s own research relating to the Australian subsidiary of a global computer company has confirmed the need to better understand ‘affective technologies’. These she described as processes, information systems, and performance/financial goals that “have an emotional impact and economic consequences”..

“Take, for example, a billion dollar revenue target that is to be achieved within 18 months,” Prof Chua said. “This tends to produce an affective outcome. 

“It could be anxiety, it could be fear, it could be excitement, it could be all of these things and that, in turn, affects the way people work in an organisation.

“I believe there is considerable fear and anxiety in today’s corporations, especially those experiencing financial challenges. When corporate distress is not well handled it can have quite adverse consequences.”

Explaining her interest in ‘affective technologies’, Prof. Chua said financial managers today played a key role in designing performance management systems.

“We’re fundamentally interested in ensuring that the systems we design and the goals that are set enable people to develop their potential and achieve to the best of their ability,” Prof. Chua said.

“Stretch goals can motivate staff.  But, when tied to incentive schemes that operate in unsupportive corporate cultures, this can prompt fraud.”

For example, she said, investigations were continuing into the incentive schemes at the Wells Fargo bank in the United States, where about 5000 employees were thought to have created fictitious customers in order to meet or exceed their performance goals.

While researching affective technologies, Prof. Chua has also looked specifically at innovative start-ups and the relationship between entrepreneurs and investors.

“When passionate entrepreneurs, who are really keen on developing their product, turn to venture capitalists, the focus of their project may change in an unwelcome manner,” she said. “Investors are generally interested in earning a quick rate of return and their shorter-term focus may differ significantly from the passion of entrepreneurs.”

Prof. Chua said companies “need to be aware of levels of anxiety and fear and enable folks to discuss processes and goals without being so afraid that they fabricate an answer”. 

“Organisations are emotional arenas, not just economic entities,” she said.

www.sydney.edu.au

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THE Australian Institute of Management 2016 National Salary Survey has revealed a culture shock: two thirds of Australian businesses are losing employees due to a lack of workplace culture.

With the rising cost of employing new people – it costs on average $26,410 to recruit a new employee, almost half the average national salary – the AIM survey found 54.6 percent of businesses had concerns over staff retention. 

Almost two thirds (63.7%) of businesses pinpointed organisational culture as their biggest human resources (HR) problem and 58 percent of businesses indicated learning and development of staff was also a HR issue.

The survey also found 66.8 percent of Australian employees left a current job to start a similar role at another organisation.

AIM chief executive officer, David Pich said the cost of staff recruitment was a threat to business operational costs.

“Retaining staff is no easy feat,” Mr Pich said. “Employees can become restless in roles that have limited career advancements or where they don’t enjoy their time at work.

“Combine that with a volatile property and rental market and the pressure to contribute more to their superannuation fund, it’s no wonder staff are becoming disillusioned and feel the need to move jobs as a perceived guarantee to a salary increase. People are investing less into their future, because they need to spend more now.”

 Mr Pich encouraged business leaders to reassess their current pay model and suggested creating a positive and inspiring workplace culture to decrease staff turnover and retain human resource.

“People don’t leave companies; they leave leaders,” Mr Pich said.

“Great managers and leaders make decisions that impact people’s lives and that impact can be felt well beyond the workplace. We spend about a third of our working-age lives doing just that – working. So it is vital our experiences in the workplace are positive as they impact on our overall well-being and on society as a whole.

“At AIM, we’re constantly encouraging our members to invest in building a positive workplace culture, by having open streams of conversation and offering training and professional development support.”

The AIM National Salary Survey, now in its 52^nd year, is based on the responses of more than 500 organisations across Australia, covering more than 25,000 employees and 270 job roles.

www.aim.com.au

AIM SURVEY KEY POINTS

• Four in five Australians (81.9%) leave their current role in search of new challenges.
• More than half (56.5%) leave because of limited career advancement opportunities.
• It costs on average $26,410 to recruit a new employee.
• National salary growth has decreased from 4.1% in 2012 to 3.0% in 2016.
• The industries with the biggest decreases in salary growth are construction, retail, finance, manufacturing (metal/auto) and professional services.
• One in three (34.5%) Australian businesses are making superannuation contributions above the standard.
• The biggest human resource issue for business is organisational culture, at 63.7%.

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A NEW Bankwest survey of 500 small-to-medium enterprises (SMEs) has discovered clear tactics in boosting productivity include banning staff from accessing social media and content streaming websites in the work environment.

While some SMEs are actually boosting spending on productivity by more than 70 percent, as well as the online media bans, most Australian businesses appear to be taking seriously ‘the task of making the boat go faster’ according to Bankwest executive general manager of business banking, Sinead Taylor. 

The 2016 Bankwest Business Productivity Report outlines how more than half of 500 Australian SMEs surveyed recently are blocking, or intending to block, employee access to social media sites and websites that stream entertainment or provide gaming, gambling and dating services.

Based on a survey of more than 500 senior SME managers across Australia, the report revealed that in a bid to improve productivity 54.6 percent of the country’s SMEs are controlling, or have plans to restrict access to Facebook, Twitter, YouTube, eBay and other websites.

More than half of SMEs surveyed, as part of the Future of Business Series of reports, are imposing the measures on all staff but nearly a quarter exclude management from the restrictions.

Ms Taylor, said productivity could be reduced significantly if employees were distracted by activity on certain websites, and that could potentially lead to errors and impact adversely on customer service.

“These days, many sites require active engagement – much more so than in the past when people simply surfed the net,” Ms Taylor said. “However, in introducing restrictions you need to ensure they don’t backfire by sending a signal that you don’t trust your people.”

The approach is most marked in the construction sector. Businesses here are most likely (70 percent) to block or intend to block these websites, claiming they distract workers from their paid roles.

TACTICS WHICH PRODUCE

Other tactics to drive productivity include allowing flexible working hours, investing in new IT, providing education and training, allowing staff to work remotely, and providing fruit or meals in the office.

A third of SMBs plan to re-arrange seating in the office, provide gym access or subsidise gym memberships.

“Sometimes simple changes like re-arranging seating in the office can enhance the way staff work together to get things done,” Ms Taylor said. “That has certainly been our experience at Bankwest.” 

Three-quarters of SMEs are embracing at least one emerging technology to improve business productivity.

One in four view predictive analytics and 3D printing as important for future productivity gains and a fifth believe robotics will drive productivity.

“Medium-sized businesses are more likely than small businesses to place importance on emerging technologies,” Ms Taylor said. “Construction businesses are most likely to see predictive analytics as the way of the future and manufacturing businesses are most likely to view robotics or 3D printing as key.”

SPEND ON PRODUCTIVITY

The report found the average amount businesses will invest in enhancing their productivity is set to top $660,000 in the next 12 months – a 70.7 percent increase from the average of about $387,000 SMBs claim to have dedicated to productivity last year.

The additional spend is driven largely by medium-sized businesses, which, on average, plan to spend more than $1 million on productivity initiatives over the next year (up 75.5 percent). Meanwhile, small businesses intend to lift their average spend by 21.5 percent to almost $103,000 in the next year (up from almost $85,000).

The forecast productivity spend is highest for accommodation and food services businesses, at nearly $2 million, a 114.6 percent jump from almost $900,000 last year.

This despite the Bankwest Economy and Finance Report, published last August, revealing this sector was most bearish about the future. Around two in five anticipated worsening business conditions and lacked confidence in their prospects.

“The increasing productivity spend in this sector may suggest these businesses are taking proactive steps to ensure they prevail despite the challenging conditions,” Ms Taylor said.

HIGHLIGHTS

 SME productivity tactics: Allowing flexible working hours (44.4 percent); investing in new IT (38.8%); providing productivity education and training (37.1%); allowing staff to work remotely (33.5%); providing fruit and/or meals in the office (31.1%); re-arranging seating in the office (33.1%); and, providing access to a gym or subsidising gym memberships (32.7%).

 SMEs intend to spend their productivity investment in areas including technology upgrades, better facilities, staff incentives for productivity improvements, staff training and education programs, and engaging external consultants.

 SMEs are increasing their productivity spend for “business growth” (45.2%), ‘meeting customer demand’ (41.6%) and ‘lower operating costs’ (39.8%).

www.bankwest.com.au

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RECOMMENDATIONS from the Productivity Commission’s review of the Workplace Relations Framework will need to be taken into account by most business managers over the next year.

While the review has not produced wholesale changes so far, there are a number of recommendations that employers should be aware of, according to workforce specialists WFS Australia – a ‘workforce software’ development group. 

WFS Australia strategy director for Asia-Pacific and Australia-New Zealand, James Kissell, said the Productivity Commission’s recommendations were aimed at balancing the needs of businesses and their workers in the key areas for penalty rates, unfair dismissal and labour awards flexibility.

PENALTY RATES

The Productivity Commission has recommended reducing Sunday penalty rates in line with Saturday rates to embrace the seven-day economy. Businesses may need to re-evaluate the way they roster staff, ensuring they get the right mix of workers on the weekends based on their hourly rates, experience and abilities, preference for working hours, and whether they need to have time off.

“Some workers may want more hours to make up for the reduced penalty rates, while others may be unwilling to work on Sundays if they aren’t getting those higher rates,” Mr Kissell said. “An automated workforce management system makes it easy to get a clear view of each person’s situation and managers can make rostering decisions accordingly.”

UNFAIR DISMISSAL

The commission has recommended changes that will make it harder to bring unfair dismissal claims, which can be a drain on company time and resources. Mr Kissell said often employees argue they were dismissed or demoted because they exercised a workplace right.

“Using an automated workforce management system means businesses have a clear audit trail and proof of how employees have been treated,” he said.

“It also means that businesses are less likely to make mistakes, for example, when ensuring staff have adequate time off and are rostered fairly.”

AWARDS, FLEXIBILITY

The Productivity Commission reported some awards may be changed, while individual flexibility arrangements were likely to be encouraged in future. Businesses may be required to update their processes to comply.

Mr Kissell said this could be as simple as a change in hourly rates, or it may involve changes to things like rest times and the minimum amount of time between shifts.

“Managing these changes can be complex without an automated system,” he said. “Employers that have such a system would only need to update the relevant parameters and their employees will automatically begin receiving the benefits of their new award.
“Ultimately, if companies communicate clearly with staff and are transparent about their efforts to accommodate everyone’s needs, they are more likely to have an engaged and loyal workforce.

“Implementing a workforce management solution can help simplify and streamline this process.”
www.wfsaustralia.com

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