HR and the year of living legislatively

THE MOST SIGNIFICANT overhaul of Australian workplace relations in decades was one of the biggest issues of the year for HR professionals, according to Human Resources magazine’s 2005 editorial board.

Many agreed that the changes, which will include the establishment of a single national industrial relations system and the establishment of an Australian Fair Pay Commission, were necessary.

“The whole workplace reform thing I think is long overdue and this is not a political comment,” said Steve Rowe, the British born group executive of human resources for Perpetual Trustees. “As a Pom coming to this country, you look at the costs and inefficiencies associated with having different state systems. So, irrespective of the substance of the law itself, the fact that we’re taking six systems and putting them into one I think is absolutely critical for business … It will mean less money for the lawyers and it will mean greater clarity and simplicity in terms of the whole employment arrangements for people.”

Roger Collins, professor of management at the Australian Graduate School of Management, agreed that much of the IR system needed simplifying. However, the complexity of the reforms was worrying. “That much legislation indicates that, like the tax act, they’ve created a nightmare. They don’t really understand the underlying issues so they have to cover every contingency, and of course, they’re rushing it through parliament. It is fundamental because it makes changes which are going to be widespread and quite long lasting.”

His other concern was that much of the debate about the current legislation had been quite negative “because it’s all abut getting rid of penalty loadings and things. It’s not about creating volunteers or highly engaged people. The legislation is about trying to cut costs … rather than necessarily getting higher workforce engagement.

“Therefore, I think the legislation is not going to be the solution to higher productivity in Australia. It will help reduce some of the costs, but organisations that just focus on costs rather than revenue don’t go anywhere.”

Collins said both sides of politics had failed to emphasise the upside of highly engaged workforces and the benefits of high engagement in the debate.

“You can take costs out of it by legislative reform, but it doesn’t necessarily mean you have engaged workers who are volunteering to add more value or that you have got the right skill set that industry and business really need.”

Collins was also encouraged by the talent coming into HR. “We’re getting a much higher calibre of young people coming through. They’re better qualified and have a better understanding of the business models in the commercial aspects of their organisations, rather than just HR,” he said.

HR has also continued to mature as an industry. Celebrations around HR, like the Australian HR Awards in Melbourne, have attracted more attention and publicity, Collins said. “It’s good for the HR community that we now have a sense of identity and purpose. It’s a healthy indication that we actually like who we are, whereas I think perhaps ten years ago the occupational identity of HR people was quite weak and they didn’t know what they stood for or who their role models were.”

In building an occupational group, he said, lawyers and doctors and engineers have always had a great advantage because they were always socialised at university. They understood who they were and what they were going to become, but because so many HR people come through different paths into the profession, Collins said, this made it harder for them.

Engagement on the agenda

Of the notable wins for the HR profession over the past year, Steve Rowe, group executive of human resources for Perpetual Trustees, highlighted further development of HR management and strategy, occupational maturity and recognition, as well as better awareness of the HR function. “Analysts who make decisions about stocks are starting to understand the importance of employee engagement,” he said.

For example, the Macquarie Research report which found National Australia Bank (NAB) had a particularly low employee engagement score was “quite ground breaking”, Rowe said. “For the first time, some of the analysts are starting to look at engagement in a more structured way and as an important factor in determining the value of an organisation. Boards are becoming more intelligent about the importance of investing in people and culture to support the business strategy.”

Macquarie Research Equities downgraded their earnings forecast and changed their recommendation to neutral on NAB in September 2005.