Money and the workplace

I like to keep an eye on a few Radio National podcasts, particularly All In The Mind and The Law Report as they often have interesting discussions which link back to the workplace.

A recent All In The Mind episode looked at the 'psychology of money' interviewing Claudia Hammond. While it explored the psychology from a social sense rather than directly from an employment perspective I still found it discussed a number of useful concepts worth expanding here.

Below us a mix of items both discussed in the show and from my own readings and experiences.

1. Consider salary increases in the right perspective.

This isn't referring to positions which are being paid well out of their relevant banding / market rate - that needs to be rectified as you may be filling the position with candidates operating at a completely different level to what you need or have a flight risk. This is referring to salary increases within appropriate bandings.

The value of $5,000pa increase to the incumbent of a role paying $60,000 will be substantively different to someone on $90,000. If you have a star performer and are providing a salary increase consider strategically how you position those increases.

For instance, if you had a budget for up to $8,000 increase on a $65,000 role (about 12.3%) there's a few options on the table. An employee  on $65,000 would probably be pretty chuffed with a $5,000 increase and changing that to $8,000 probably won't provide a huge engagement benefit relative to the $5.000 already on the table.

Splitting it up however and providing the remaining $3,000 as part of a structured development program  provides sustainable recognition over the longer term. I would argue with a greater net gain in employee satisfaction as you now have two meaningful increases rather than one plus a development plan.

In terms of organisational benefit you have the direct financial impact of paying the $3,000 at a later date. Furthermore at the end of this process you've either got an employee who has successfully developed to a new level of performance; or you've identified development gap and can bank the $3,000 for a more appropriate time or reinvest elsewhere.

2. Money as a motivator needs to directly link to behaviour you wish to see rather than a vague end goal.

This was touched on in the Radio National program. A study was done in America researching at the benefits of financial incentives for students and exam grades, the money was reasonably substantial ($1,800).

One group of students was provided the money if they simply produced good marks but was not provided further structure on how to achieve them.

Another group was paid to achieve specific tasks selected to assist them in reaching the goal (i.e reading specific books, researching and revising particular items. etc). It was this group that performed significantly better than the former.

If you have a performance and incentive scheme make sure it's specific enough that it targets relevant behaviours and actions that achieve your ultimate goal. A end of quarter bonus on meeting sales targets is nice and simple but how are your staff meeting that goal? is it in line with your organisational values? Do they know how to meet the goal or are they just swimming furiously up stream? Sure, too much structure can be an administrative burden and cause you to loose focus, but not enough and you might be inadvertently rewarding the wrong thing or ending up with an empty association.

3. Money isn't necessarily the motivator you need.

Not surprisingly if you ask an individual they will always tend to say they want more money and that it will motivate them more (why not!) but the research shows the link is not as strong as one would think. Thomas Chamorro-Premuzic wrote a great little piece summing up research on the subject here.

The results indicate that the association between salary and job satisfaction is very weak. The reported correlation (r = .14) indicates that there is less than 2% overlap between pay and job satisfaction levels. Furthermore, the correlation between pay and pay satisfaction was only marginally higher (r = .22 or 4.8% overlap), indicating that people’s satisfaction with their salary is mostly independent of their actual salary.

In addition, a cross-cultural comparison revealed that the relationship of pay with both job and pay satisfaction is pretty much the same everywhere (for example, there are no significant differences between the U.S., India, Australia, Britain, and Taiwan).

What I've tended to find from speaking with other senior HR practitioners is that its when employees start to experience gaps in the non-financial motivators that money comes in to fill the gap. Money on it's own isn't a great motivator when you're already paying in band for a role or beyond a certain point. This is somewhat mirrored in Thomas' own discussion from the research he reviewed "Quite simply, you’re more likely to like your job if you focus on the work itself, and less likely to enjoy it if you’re focused on money."

Do employees have a manager that provides an opportunity to learn and grow? Do they view their job as important for the organisation? Have they been praised recently? - these are the things that can make a real difference. 

4. Money can backfire as a motivator if you're not careful.

A great example was discussed in the podcast where a fee was being introduced as a disincentive - unfortunately it didn't work. 

And there are examples where it completely backfires, paying people things at all. And one of the best known of these is a series of studies that were done in nurseries in Israel, and they decided that what they would do was fine parents if they turned up late, which lots of nurseries now do, because they were fed up with parents constantly turning up a bit late to pick up the kids and one member of staff had to stay with some kids that were behind. And they thought this will be a brilliant idea, and they charged them quite a bit.

And yet it went so wrong, this plan, that within a week every single parent was late at least once, which was extraordinary. And so it changed a favour of the member of staff staying late and parents feeling guilty about that into a paid-for service. And so then if people were running late at work they thought, oh well, I'll just pay the money, it's worth it, I'll just pay the money. And so it is curious in a way that it went so wrong. And then they stopped making the payments and it didn't turn back again afterwards, which is really worrying, which means if you do want to bring in some sort of incentive scheme you really need to be sure it's going to work and to try it out to see what unexpected side-effects of that it might have, because if you going to crowd out people's altruism and people's kindness, then you need to be very careful about that.

Here money created the framework for new expectations and when those expectations became behaviour, removing the framework (money) didn't make a difference because they were already ingrained as standard practice. What's also interesting is that providing a fee became compensation for any social/emotional guilt. 

Associating money with something can always bring with it subtle, but impact meanings - make sure you've considered potential consequences first before opening up the coffers hoping for an easy fix!

Failing to follow a lawful and reasonable direction

In regards to dismissals for serious misconduct in my experience they have often come from actions which resulted in a serious an imminent risk to the reputation, viability or profitability of the employer's business (in reference to section 2 of the definition of serious misconduct).

Given this it's interesting to see a case which instead relies on section 3 (c) - The employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee's contract of employment.

The recent case of Barkhazen v Conair Australia Pty Ltd [2016] FWC 6520 (an appeal has been lodged) looks at this element of the definition.

An investigation occurred where Ms Barkhazen was found to have engaged in improper conduct in a meeting (following on from a grievance from her requesting an apology from a manager in the meeting). Ms Barkhazen was informed she would receive no apology from management and was advised to move on and not raise the matter again.

Workplaceinfo has a useful write up of the case here. As a high level summary, this case involves an employee, Ms Barkhazen who was the Accounting, Tax and Payroll Manger at Conair Australia. Given her role, Ms Barkhazen was also known as the pseudo "HR Manager" for the office as well.

Unfortunately for Ms Barkhazen she did raise the matter again with the manager who then subsequently lodged a further complaint. Ms Barkhazen was placed on special leave with pay and a further meeting was held regarding Ms Barkhazen's ongoing pursuit of an apology from the employee against direction. At some point during the meeting Ms Barkhazen was informed she would also be required to undertake an independent medical assessment.

The employer agreed to Ms Barkhazen's wishes to not be escorted from the building after the meeting. Given this Ms Barkhazen returned to collect her belongings from the office and also took her personnel file unbeknownst to the employer.

While there are some other elements to the case, here i'll be looking into the issue around the personnel file. The employer quickly noticed that Ms Barkhazen's file was missing and formally communicated several times with Ms Barkhazen's solicitors requesting it's immediate return. This involved multiple letters each requesting a specific date of return or at a minimum information as to the whereabouts of the file (Commissioner Cambridge notes at least 7 formal requests). The final of these letters stated that the employer was considering termination due to willful misconduct as a result of her inaction. While Ms Barkhazen's solicitors responded to a number of letters, they never made reference to the missing employee file.

Given this the employer decided that in "the absence of any response from the applicant’s legal representatives regarding the whereabouts of the applicant’s HR file, represented the applicant’s failure to comply with a lawful and reasonable direction. Consequently, the applicant was considered to have engaged in wilful misconduct and it was decided that her employment should be summarily terminated."

It was not until the day of the unfair dismissal hearing that the personnel file was returned in person. 

In her submission Ms Barkhazen raised the following:

Further submissions made on behalf of the applicant also dealt with the purported reason for the applicant’s dismissal being misconduct relating to her failure to return her personal HR file. It was submitted that at the time the applicant was suspended from duty, she was concerned that her HR file was the only objective evidence that could show that she was a diligent and productive employee. Further, the applicant feared that the respondent would alter her performance records if she returned the file to them. Consequently, she did not disclose the fact that she had the HR file.

In response, the lawyers for Conair submitted: 

...that the valid reason for the dismissal of the applicant was her failure to respond to the lawful and reasonable direction to advise Conair if she had the HR file or if she didn’t, and that the evidence has now subsequently clarified that she did have the HR file all along. Ms Jones rejected the proposition that because the applicant may not have seen the letters of 21 and 23 December 2015, she could not have contravened the reasonable and lawful direction of the employer. Ms Jones submitted that there had been no response provided to any of the requests made for information or return of the applicant’s HR file.

Commissioner Cambridge considered these elements in his decision:

In this instance, the applicant was summarily dismissed for misconduct involving a failure to comply with a lawful and reasonable direction of the employer. The direction of the employer, conveyed through their lawyers to the applicant’s lawyers, involved either the return or information regarding the whereabouts, of the applicant’s HR file. At the time of dismissal the employer was not certain that the applicant had removed her HR file from the records held at its premises. The failure of the applicant’s lawyers to provide any response to the repeated inquiries concerning the HR file was construed by the employer to represent a failure on the part of the applicant to comply with lawful and reasonable directions.

In circumstances where communication regarding very serious employment related matters is transacted between legal representatives for the respective parties, it would be reasonable to expect that all communication would, at very least, be acknowledged and responded to, even if only in an elementary manner, perhaps indicating that a more comprehensive response would subsequently be provided once instructions had been obtained from the client... 

...Although it has subsequently emerged that at the time, the applicant was unaware of the directions regarding the HR file contained in the letters of 21 and 23 December, the employer had valid reason for the dismissal because it was reasonable for it to assume that the absence of any response to those letters, and the earlier letter of 14 December, represented a deliberate refusal to comply with the directions. In any event, even if there was some invalidity that could be established for the reason for dismissal as was within the knowledge of the employer as at 4 January, the subsequent actions of the applicant have confirmed valid reason for dismissal.

It's interesting to note that even though Ms Barkhazen claimed she did not receive notice of the request for file from her solicitors it was found to be a valid reason for termination on the part of the employer. In this case, as Commissioner Cambridge notes, it became a redundant point as she clearly did have the file. However it does reinforce the point that communication to a person's appointed legal representative can have the same impact as communicating with the person directly. 

In addition the case shows that a lawful and reasonable direction can also be a simple as being directed to respond to a question. 

The Commissioner also addresses the claim that the file was taken for Ms Barkhazen's protection. Quite rightly the Commissioner mentions that Ms Barkhazen could have simply copied the contents of the file and then returned it. 

It was a shame that this spiraled out of control so quickly. It was not raised that Ms Barkhazen had historical performance concerns and it appears that had Ms Barkhazen simply accepted her employer's initial finding that her behaviour was poor in a singe meeting and followed direction this would have ended there.

I have frequently seen employees start to dig themselves holes and get more and more extravagant in their fervor to defend their (often poorly justified) position on a matter. This seems to be one of those examples.

As an HR Practitioner I have often found that transparency and the philosophy of "no surprises" has been a useful in countering these behaviors before they crystallize. It becomes more difficult to hold an irrational position when all the pieces are on the board for you to see.  It's not completely clear on why Ms Barhazen was asked to attend an independent medical examination, I can only assume this was in relation to her continuously seeking an apology after being directed not to. While speculation without all the information, it could be that this was potentially the catalyst for her to take the file out of concern regarding it's intention, justification and and impact.

A particularly expensive cup of coffee

The relatively recent case of Raj Bista Glad Group Pty Ltd t/a Glad Commercial Cleaning was too unique and somewhat humorous not to warrant a post. Aside from Vice President Hatcher's rather witty highlights in his decision, it's the employer's extreme reaction to circumstance which makes this case particularly notable. The Sydney Morning Herald covered the case in an article here.

At a high level summary, this is an unfair dismissal case concerning a dismissal for serious misconduct. The conduct itself concerned Mr Bista, a part time cleaner for Glad cleaning services who was dismissed for having a cup of coffee at the client's premises prior to starting his shift.

Serious Misconduct is not just a loose term in Australian industrial relations, it is a specifically defined form of misconduct which warrants summary dismissal by an employer. The definition is found under Regulation 1.07 of the Fair Work Regulations and is designed to cover behaviours where an employee has engaged in theft, fraud, assault or engaged in deliberate conduct causing serious and imminent risk to health and safety etc.

Serious misconduct in unique in that there are not only very particular set tests one must meet but also that creates a material disadvantage to employee in regards to their termination. For instance employees are not entitled to notice in lieu of termination as noted in Section 123 (1) (b) of the Fair Work Act 2009 and this also impacts an employee's entitlement to Long Service Leave where they have had less than 10 years service (ACT and TAS being 7 and 15 years respectively as LSL is state based legislation).

With this in mind an employer should be sure they are on sound footing when terminating an employee for serious misconduct as in most cases they would at the same time be making a conscious decision to withhold entitlements the employee would have otherwise received on termination.

In this case the employer made the termination on grounds that Mr Bista engaged in theft stating to Mr Bista in a letter that "Neither the coffee nor the paper cup it was made in were the property of yourself or the Glad Group". Furthermore they claimed that this action this caused a serious and imminent risk to the reputation, viability or profitability of the business in that:

• The tenant expressed distrust towards Glad Group Cleaners; and
• Glad Group's viability depends on it's reputation when tendering for contracts.

I particularly enjoy Vice President Hatcher's reference to the English language when describing how disproportionate the employer's definition of theft was to that of common sense usage in the workplace.

In Mr Bista’s case, I consider that the conduct upon which his dismissal was based was insignificant to the extent that it could not constitute a sound, defensible or well-founded reason for his dismissal. In my view, any reasonable person would regard his conduct as involving no more than a trivial misdemeanour... I prefer to take a more commonsense approach to Glad’s characterisation of Mr Bista’s conduct. In my view describing his conduct as “theft” verges on an abuse of the English language as used and understood by the ordinary person...

Vice President Hatcher goes on to outline a number of mitigating circumstances to assert why this is the case noting points such as:

• Mr Bista had previously shared coffee with his own supervisor and had been invited to have coffee by staff members of the client.
• On the day in question, he made the coffee in front of two employees of the client and chatted with them while doing so. The employees made no objection to his actions.
• The "property" the employer was claiming that was stolen consisted of the "coffee, hot water and a paper cup. They were all consumable items. Their collective value would have been well under one dollar."
• Mr Bista apologised immediately when confronted by the Office and Facilities Manager and explained he did not know he was not allowed to make a coffee. It also appeared by actions of the manager that this apology was accepted at the time.

On the item of "serious am imminent risk to reputation..." etc. Vice President Hatcher interestingly notes that the mere fact that Glad was on a rolling monthly contract with the client and had to undergo a public tender did not substantiate the claim that such a risk existed. Also the Office and Facilities Manager's comment that there was now an "element of distrust" was directed at Mr Bista personally rather than the employer.

This second consideration highlights that employers need substantial grounds to claim such a risk and need to be cautious if the risk is actually concerning just an individual or the organisation. It was also noted that it would not have been difficult for the employer to simply relocate Mr Bista to another site if required.

Vice President Hatcher awarded $9172.20 in damages to Mr Bista in addition to reinstatement, resulting in what ended up being a very expensive cup of coffee.