Business 21C - Published by UTS Business

Australia must close the gap between workplace performance and potential or it will be turning its back on the biggest source of productivity gain in the twenty-first century, says Steve Vamos, President of the Society for Knowledge Economics.

People aren’t sufficiently engaged in Australian workplaces. This creates an enormous gap between performance and potential. Leadership habits, culture and management practices are at fault.

A recent Australian report by Gallup Consulting reveals that 80% of workers are not ‘fully engaged’. A US study concludes that lack of employee engagement costs organisations between 35% and 50% of their payroll. Both studies point to the need to focus more on developing workplace practices and environments that better utilise the skills and potential available today. Management practices and leadership habits are major contributors and need much greater development focus as part of nation building and addressing the productivity challenge.

My own observations convince me that even when people are working hard, they recognise that they are not fulfilling their potential. Nor are their skills being used optimally. In some sectors research suggests that skills are under-utilised on average by ten to fifteen percent – in some cases up to 40%.

This is a significant, yet hidden, problem. Not only does it represent a waste of potential, but this wastage of existing skills may be the most significant skills crisis we face. If tangible resources like cash and inventory were wasted at equivalent rates our management and measurement systems would be quick to respond.

The correlation between leadership, culture and management practices and workplace performance that I have experience most graphically was during my time as CEO of ninemsn, 1998 to 2003.

Early in the company’s life, our 100 employees were asked: ‘how happy are you working at ninemsn?’ The response revealed a satisfaction level of 40%.

When we asked why satisfaction was so low, staff answered that they did not know where our business was headed or how their individual efforts contributed to ninemsn as a whole. To enable them to do their best work, they needed leadership and management to clarify the purpose and objectives of the business and to connect their individual roles to that purpose.

All the training I’d had about having a plan and aligning objectives did not have the impact on me that this experience did. For twelve months we focused on conversations – often difficult – clarifying our purpose, examining tradeoffs and making decisions. The hardest decisions were those that resulted in redundancies. But we redeployed where we could, and treated those who left with respect.

The rewards came quickly. Gradually, ninemsn achieved clarity of purpose and we aligned staff objectives accordingly. Over time, product quality, business performance and staff morale improved. At the next annual survey 80% of staff said they were satisfied.

This experience taught me that as a business leader, my role was to drive for alignment and to enable people within the organisation to do their best work. Over the next five years I was consistently rewarded by this focus and the special workplace culture that evolved.

High performing workplaces rely on leadership attributes that understand:

• knowledge is to be shared;
• potential to lead is at all levels of an organisation;
• mistakes are learning (as long as the same ones are not repeated);
• the collective objective must shape individual concern; and
• great communication is two way and continuous.

In the words of Sir Alan Jones, Chairman Emeritus of Toyota UK, ‘Wherever you work, your job as a manager is to make your people be the best they can be – and usually they don’t know just how good they could be.’

All this may sound like common sense, yet it’s clearly not common practice. In 1995, the Karpin Report commissioned by the Hawke/Keating Government recognised the importance of developing high performing workplace leadership, culture and management. The report provided comprehensive insights into the way Australia prepares its managers for work and presented policy recommendations and options for improvement. It made the point that:

‘As the business environment changes, so do the skills and characteristics required of those employees who are best positioned to interpret and influence future changes; namely managers.’

Programs such as Enterprise Connect, managed by the Department of Innovation, Industry and Scientific Research (DIISR), recognise the importance of management capability to enable innovation, but more is required to deliver the wide-scale improvement we believe to be vital.

To close the performance-to-potential gap, we need to develop a common language and understanding, identify examples, disseminate knowledge and best practice and create broad awareness and governance structures that bring business and industry sectors to together.

I believe that Australia needs A National Work Plan for Creating High Performance Workplaces to curate what has already been done and to define what we can achieve going forward.

The successful collaborations of the Society for Knowledge Economics, supported by Westpac, Microsoft, Hewlett Packard , CPA Australia, PwC, the University of New South Wales, along with the Business Council of Australia, the ACTU, AI Group, Victorian Government, DEEWR and many others are testament to the interest and spirit of cooperation and interest that exists to make progress towards lifting workplace practices in Australia.

We have an opportunity to harness this interest, and to take action, that will make Australian workplaces the most productive, innovative, sustainable and fulfilling in the world.

In order to achieve this we need a set of shared aspirations:

• to be the nation with the most cross-sectoral, aligned and advanced dialogue regarding high performing workplaces practices;
• to establish benchmarks and research that measure progress across a holistic set of workplace performance dimensions and evidence the link between good practices, productivity and other social impacts of high performing workplaces;
• to include people from all walks of life in the delivery of leadership and human relations topics as they are taught in educational institutions;
• to provide stakeholders with better insights into the intangible performance areas of public and private sector organisations including skill at managing and developing human capital. (Standardising employee opinion surveys and making them publicly available, for example);
• to ensure effective people management is the number one priority of organisational leaders – and to develop or remove those who lack capability.

The drive to create high performing workplaces is the drive to make truth of the much said but less often demonstrated belief that ‘people are our greatest asset’.