Dick Smith’s shows the value of workplace culture

Dick Smith’s shows the value of workplace culture


By Paul Gollanafr.com

Australia’s new leadership drum will beat a different rhythm but for now we speculate and wait. How improvements to the Fair Work Act will play out or whether hungry regulatory ghosts of WorkChoices will appear are yet to be seen. No doubt employers will have increased say in certain aspects of employment but one shouldn’t place large bets on major changes. Alterations to the act for easy compliance are the new government’s policy, or that’s the impression given.

Adding reforms to foster greater workplace engagement should be on the list in developing the industrial relations (IR) framework. Workplace culture and engagement rarely receive centre stage attention, but add significant value to an entity’s goodwill.

Dick Smith’s recent IPO sale proposition had analysts speculating between $480 and $600 million. Expected margins are a healthy bounty for private equity firm Anchorage Capital which purchased the company from Woolworths in September 2012 for a mere $20 million. The firm paid an additional $74 million to buy out Woolworths’ agreement to a remaining portion of Dick Smith’s sale.

Anchorage’s strategies worked well to create an upsurge in Dick Smith’s value. Apart from selling $100 million worth of excess stock, CEO Nick Abboud, a former Myer executive, directed funds towards staff training and changed internal communication dynamics by implementing Google Apps across the workforce. Breaking down hierarchical one-way communication processes, according to Linda Venables, director of IT at Dick Smith, has vastly improved internal interaction and engagement as well as help build “community” and foster a “collaborative culture”. Can we take a leaf?

Rules for engagement must change because the very nature of the business game has changed. Driven by strong leadership, entities which enjoy continuing success place a high value on human resources and its development. Maintaining highly motivated staff and moulding a productive workforce encourages them to buy in to the idea their personal success and that of the organisation will pay off.

Part of the puzzle

There’s no mystery to motivation. Extrinsic motivators such as compensation and remuneration only make up part of the puzzle. Too much focus on these can create a monster that speaks the language of entitlement and comfort, leading to dampened creativity and productivity. Dick Smith’s path underscores the value of intrinsic motivators such as learning and creating a connected, supportive environment. Its internal transformation tackled the concept of engaging internal clients, creating effective communication between departments.

Where does government come in? The IR framework could provide greater access for business to resources that facilitate engagement. The Fair Work Commission should have an increased role in acquiring researched knowledge of workplace environments and ensure policies relate to the current landscape. The Fair Work Act needs to focus on creating a positive workplace culture and on productivity, which can only be achieved when the workforce functions in a value-added, optimistic environment that’s low risk. Global competition brings high risk and unpredictability which in turn has business slicing and dicing operational costs including staff numbers and wages.

While not wishing to knock unions, economic policies attuned to union thinking are contrary to business needs. Unions do positively contribute to increasing coordination between workers and management as well as reducing turnover. However, we cannot dismiss the premise union involvement can divide the workforce into clusters and reduce engagement with management or lock in labour inefficiencies.

The IR framework needs to promote an integrated conflict management system which interacts with approaches and procedures found in unionised workplaces to align staff and management goals. Provision for employee access to a platform that has a legally enforceable status to negotiate employment terms and conditions would give them a voice when dealing with management. The upshot of effective representation of employee voice is lower staff turnover. In a high work cost environment, workforce retention is essential for economic growth.

Germany as a role model

Perhaps Germany’s experience in innovating and value-adding workforce skills is our answer. Creating a multi-skilled workforce demands education and training, engagement and leadership from government and industry. A multi-skilled workforce can successfully be redeployed as business structures change.

Provisions of the act permit employers to ignore redeployment considerations except when the alternative position is nearly identical to the original one or requires minimal additional training. The deficiencies in engagement policy weaken employment mobility in businesses and must be addressed.

The level and effectiveness of employee voice rests on business management’s motivation, willingness and ability to engage. The study ‘When Does Voice Lead to Exit? It Depends On Leadership’ featured in the Academy of Management Journal 2013 Vol 56. It suggests managerial responsiveness to orientation and embracing change, governs the outcome of what could be an advantageous or disastrous employee engagement process. The combination of management’s influence in organisational decision making, ability to act on views expressed by staff and providing access to resources, result in successful staff retention and business growth. There are significant costs associated with failing to respond to employee suggestions and ideas.

Arrogance, aided by IR policies, diminishes a potentially buoyant job market. Businesses generally function as the moral metronome for society. Governments shape the vision of its future. Policies on workplace cultural change are needed now more than ever.

Paul Gollan is professor of management at Faculty of Business and Economics at Macquarie University. Co-author Anna Thomas is the faculty special projects officer.

The Australian Financial Review

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