Australian Industrial Relations - A Brief History

ABC Radio National's Rear Vision recently broadcast a useful and informative episode titled Bosses and workers in Australia.

If you're not aware of Rear Vision, it's an ABC Radio National program that's free to podcast and each week "...puts contemporary events in their historical context, answering the question, 'How did it all come to this?'". 

It's certainly one of my favourite podcasts probably because I've learnt so much from it! Rear vision knows no bounds covering a diverse range of subjects such as finance, geopolitics, technological advancements, business and culture.  

This episode investigates some of the key movements in industrial relations in Australia from the late 19th century to today. I suggest you listen to the episode if you get the chance. Here I'll draw out some items and quotes I found particularly interesting.

Australia and New Zealand are unique:

The system of conciliation and arbitration that evolved in Australia from 1904 onwards was very unusual by international standards. The distinctive feature was that minimum terms and conditions were governed by awards made by an independent tribunal required by law to take into account public interest. They did so on the basis of representations made to them by employers and their representatives, and employees and their representatives. Apart from New Zealand, no other developed country went down that path. - Kerry Phillips 

Probably not too surprising but interesting nonetheless. One item I found particularly unique was when I compared Australian employment law to Singaporean employment law in my client groups. In Australia the Fair Work Act 2009 has almost universal coverage (barring some exceptions). However in Singapore, the Employment Act does not cover anyone in a supervisory, managerial or executive position earning more than $4,500SGD per month (around $51,000AUD PA). I'll admit I'm certainly not an expert on Singaporean employment law however in my experience this situation puts an even greater emphasis on the use of contractual terms driving employment conditions. 

Looking to Europe and the United States also shows a very different industrial environment to Australia.

What they tended to do, particularly the European democracies, they tended to use legislation to lay down minimum terms and conditions. There are some countries in Europe that do have minimum wage mechanisms where there are periodic adjustments by independent tribunals or by government on the recommendation of independent bodies, and the United Kingdom would be an example of that. But there are still countries that don't have any minimum wage mechanism at all. Germany is one. There is in fact considerable debate in Germany at the moment about the adoption of a statutory minimum wage. But the German system has relied on collective bargaining, and particularly on collective bargaining at the industry level rather than at the workplace level. So you would have a collective agreement that applied to the entire coal industry or the metals industry rather than agreements that applied to a particular workplace. And that system is breaking down and that's one of the reasons I think why they are looking at the possibility of introducing a statutory minimum wage.

In some developed countries, most notably the United States, they didn't use legislation either, so workers in the United States, in many jurisdictions, have very limited legal protections of their terms and conditions of employment. So in the United States there is a minimum wage, it is set out in an Act of Congress and it is very, very rarely increased. So it tends to be very, very far behind community norms. - Professor Breen Creighton

Enterprise Bargaining can be a cause of inequity:

There's a great complexity of opinions emerging. My own opinion is that the degree of significance that has been given to collective bargaining is unfortunate. Unfortunate because it means that wage earners who are represented by strong unions have done significantly better than wage earners who are not so represented. And this has created inequities within the wage structure. There are people—and not a few people, quite a significant number—who rely on the minimum wages set by the Fair Work Commission, and these are falling further and further behind the people who benefit from the bargains negotiated by strong unions. I certainly wouldn't advocate the abolition of collective bargaining, it would be a senseless thing to be advocating, it's not going to happen. But I think that the degree of emphasis that's been given to it is unfortunate and I've said that in my submission. - Professor Keith Hancock

This is something I agree with. I continue to be taken aback by some of the conditions and clauses found in enterprise agreements, particularly when compared to award free employees. Uncapped redundancies, superannuation of 17%+, warning letters which expire after 6 months.... these are all items that you can find if you go looking.  Certainly enterprise agreements can serve a useful purpose in modifying an award to suit a local business context. However, in many cases they can also cause union's to leverage their bargaining power to push unnecessary conditions and restrictions causing business to divert resources from their high performers and constricting their capacity to implement change.  

The Fair Work Act 2009 significantly simplified the Australian industrial relations system:

By the late '80s, early '90s, the award system was an absolute mess. In the federal system, there were well over a thousand awards. And there were thousands of awards in the various state systems. And very often, with the best will in the world, it was hard for an employer to know whether they were bound by a particular award or not.The Howard government purported to put in place a mechanism to review the existing mess and try to rationalise the content and the coverage of awards. They failed. To their great credit the Rudd/Gillard government succeeded in that. And that mass of awards was reduced to 122 modern awards, and that was a major achievement. I don't think that the government or the Tribunal get as much credit for that as they deserve. That was a very significant achievement, and those 122 awards, plus the national employment standards, that's what's now the safety net.And you engage in enterprise bargaining, moving on from the safety net, and subject to the BOOT test, that is the test that says that for an agreement to be approved by what we now call the Fair Work Commission it has to be shown that workers covered by the agreement are better off overall than they would be under the otherwise applicable award. - Professor Breen Creighton

I was fortunate enough to enter the HR world around the birth of the Fair Work system and so I was able to avoid most of the complexity that existed prior. I experienced some of this complexity when I worked on a workplace advice line and advised employers who may have been bound by throwback redundancy provisions or Long Service Leave. The throwback redundancy provisions ended 31 December 2014 and now employers can look towards the 4 yearly review of the modern award system for future changes. This review is occurring now.

I look forward to the current award base being updated. While the 2010 awards were a great step in the right direction, they also had some issues, inconsistencies and in some cases confusing for employers to fully understand. It seems like these items are being rectified with the insertion of pre-calculated rates into the new awards.

As a side note, one item I found interesting when working with multiple awards is the way they each had their own subtle style in how they described what might be effectively the same clause. My take is this was the work of individual unions and industry groups which injected their writing style into the awards they were making submissions for.

You can find out more about the 4 yearly Modern Award Review at the Fair Work Commission here.

Feeling swamped? Try this technique

I'd like to share a technique I've used when faced with a project or task which at first glance may seem overwhelming. By overwhelming I am referring to what may initially feel a lack of direction or overpopulation of potential sub-tasks.

Basically this technique involves mentally teleporting yourself to the completion of the project (or just beyond it) and asking a hard hitting question - 'What would cause me to define this project as a success?' 

By asking this question you can hopefully clarify what may be a cluster of semi-defined tasks, challenges, opportunities and resources into very clearly defined primary and secondary KPI's/goals, In addition you should be able to identify distraction tasks.

I'll elaborate on these below and provide examples from a project I worked on where I engaged with an organisation in setting up new business unit in New Zealand. Below is also a simple model I put together to help visualise the process. 

Primary KPI's/Goals: 

These goals are critical to the project and define success or failure. In other words, they are the fundamental achievements by which you can look back on a project and say "Yes, this was a success." If a project can still survive without one of these being completed, it may be secondary goal. 

Example:  When opening a new overseas business unit: 

1. Staff have legally compliant contracts to be employed on

2. Staff are able to be paid accurately via a payroll function

3. Resources are in place to provide base level HR support

4. Capacity for expansion and integration into the group function

Secondary KPI's/Goals:

These KPI's are not irrelevant, they add value to a project and can make the difference between a satisfactory result and an exceptional one. They may even be quite important, however these goals alone do not define success or failure of a project. It may even be that they are a secondary stage of a primary goal and so require that to be completed as a prerequisite. In the ideal world, a project will be resourced to achieve the primary goals and some secondary goals - but this isn't always the case! 

Example: 

1. Systems in place for HR metrics capture i.e an HRIS or equivalent

2. Resources in place to provide higher level HR support (complex queries requiring local knowledge)

Distraction Tasks:

These items may only add low value to a project, or worse be value neutral or reduce value. They may be easy to achieve and can be falsely veiled as quick wins. Probably best described as busy work, while you may feel like you're being productive by completing them, at the end of the day they have not assisted in boosting the success of a project by a worthwhile margin.

To be clear, some of these tasks may have value down the line at another place and time. However they need to be assessed in the context of the project now and the resources at hand.  

Example: 

1. Tidying up the presentation of organisation charts (aligning boxes and formatting colours)

2. Producing policies which may unlikely be used at this stage or duplicate local industrial law

I'd like to think of my comments here and diagram as a first draft so I look forward to coming back to it at a later stage and refining it further. 

The Leadership Code

I'll confess right now I'm a Dave Ulrich fan. Aside from the fact he's consulted and done research for over half of the Fortune 200 as well as being formally recognised as an international HR thought leader multiple times, I'm just really attracted to his focus on HR being measured by the value it creates for an organisation.

Today I'd like to highlight the model presented in The Leadership Code: Five Rules to Lead By. Dave summaries his research in the video below however if you wanted to read a little more, a google search of title actually produces a few extracts from the book.

"60-70% of what any leader, anywhere has to know and do is the same basic stuff."  - Dave Ulrich 

1. Strategist - "Where are we going?"

An effective leader needs to have vision that adds value. As a leader you need to know where you are taking your team, your functional unit, your organisation. I like the term strategist because it implies thoughtfulness and purpose to achieve a long term goal and so that's why I think it's more than just vision. Dave uses the term 'practical futurist' and points out that not only does a leader need to create a future pragmatically but also ensure that their team understands that direction as well. 

2.  Executor - "How do we get there?" 

An effective leader needs to be to get things done by turning plans and strategy onto action. This is a competency that requires discipline and accountability. I'd also say this involves the ability to prioritise resources and think tactically in order achieve relevant outcomes working across business teams.

3. Talent Manager - "Who goes with us?" 

An effective leader needs be able to engage people, to motive them and make them feel like part of a team. Importantly however, the energy that a leader generates among their team needs to be directed towards building value in the organisation. An experienced talent manager can identify, build and direct skills to ensure people are performing at their peak. 

4. Human Capital Developer "Who stays when we're gone?" 

An effective leader needs be able plan for what talent needs to exist in the future. Here talent moves from achieving short term results to meeting to future strategic needs. In one sense a slightly selfless thought process that views talent beyond the individual and instead focuses on the organisation and the next generation. I'd imagine strong crossovers here with succession planning competencies. 

5. Personal Proficiency - A common, core factor. 

While Dave's research as part of the RBL group found most HR practitioners tended to naturally associate themselves with one of these quadrants, all leaders had to master a core factor - Personal Proficiency.

"It's not a role, it's a set of personal competencies that allow you to be trusted by those you lead. Personal Proficiency deals with insights about yourself; with your ability to know yourself, to learn, to have integrity, to have emotional intelligence, to exercise good judgement..." - Dave Ulrich

I'm not surprised that the personal proficiency quadrant is given a high importance in this model. This quadrant contains universal elements you would expect in a leader and I would also argue acts as a foundational personal and intellectual framework form which the other quadrants can stand. 

The Leadership Code: Five Rules to Lead By, By Dave Ulrich, Norm Smallwood, and Kate Sweetman.