special report

The CEO vision problem

CEOs tend to look through rose-coloured glasses, a 2019 Australian HR Institute (AHRI) survey found. It’s a serious concern as CEOs are the principal conduits for information to the board.

“It won’t come as a surprise to many that CEOs are either consciously or subconsciously finessing the messages getting through,” says the institute’s outgoing CEO Lyn Goodear GAICD.

“We may have independent directors, but they have a very dependent relationship, with the CEO providing insights on the business.”

Those insights need to take the form of financial and non-financial metrics measured over a continuum of time. This is where the professionalism of HR practitioners comes into play. Just as we look to the capability, professionalism and credibility of financial advisers and lawyers, directors should be asking if their HR teams are industry credentialed and skilled, says Goodear.

On her watch, AHRI introduced a globally recognised industry standard and certification for members in 2015, recognising that “for too long, anyone could call themselves an HR practitioner”.

Strategically, HR touches all parts of an organisation, including sustainability hot spots of innovation, risk and remuneration.

“When highly skilled, HR is in an incredible position to highlight the real sustainability issues in a courageous way,” says Goodear. “Sometimes that means calling out the boss.”

Global talent on the rebound

A talent deficit is loudly recognised as what’s holding back Australian innovation, the growth and scaling of tech companies and the gamut of industries reliant on ever-evolving digital smarts. But luring the right people to fill the void presents challenges on multiple fronts.

After axing 457 visas as a primary regulator of foreign employment, the federal government has been tinkering with a year-long pilot for its Global Talent Scheme — which was widely criticised as being too costly for most startups — since June 2018, and has announced the scheme’s continuation under the new title, the Global Talent Employer Sponsored program.

In November, came news that government agents across four continents were recruiting 5000 “exceptional” candidates under the Global Talent Independent program using Australian residency and lifestyle to lure specialists in agtech, medtech and fintech, space and advanced manufacturing, energy and mining technology, and cybersecurity.

This all sounds hopeful, however, international competition is tough. “Top tech talent is in demand globally,” says Maria MacNamara, who in September 2019 became CEO of Advance.org, a network that connects 40,000 of the estimated one million Aussie expats currently working overseas.

“They go to where the best work is being done, where there is support for the work by government, the private sector and the market, and where there is sufficient funding to do the work,” she says.

A better approach to the global talent shortage for Australian organisations involves luring home-grown talent back to our shores, according to MacNamara. She’s currently developing a platform to connect expats with Australian organisations that need their skills.

Clever countries with strong diaspora policies — Ireland, India, Portugal and Israel, where there’s a diaspora minister — understand the benefits, “because expats gain valuable skills, experiences, and contacts internationally that they can transfer back to their country of origin by seeding businesses and entrepreneurship, training and mentoring local workers, and fuelling emerging industries”.

Curiously, Aussie expats, who lead the world in many fields, are often sidelined when they return.

A recent study by Advance and Indeed showed:

  • 34 per cent of returned expats don’t land an interview for a potential role when their skills precisely match the job requirements.
  • 67 per cent consider returning overseas because their international experience is not valued.

Three questions for the CEO

Lyn Goodear GAICD, outgoing CEO of the Australian HR Institute, says directors can really get under the organisational hood by asking the CEO searching questions on culture. Try these:

  1. Could you conduct a robust internal reality check to confirm the values upon which we base our customer-service standards?
  2. Can you demonstrate in what ways our current processes, policies and actions seek to reward only those behaviours we culturally value?
  3. Can you assure the board you have the right team and have authorised professionally credentialed HR partners who can be relied upon to accelerate ownership of the culture change process across the organisation — and to be accountable for it from beginning to end?

Remote recruits

Skills shortages abound Australia-wide, but there’s a hidden talent pool untapped until recently.

Jo Palmer, founder and MD of Pointer Remote Roles, a business that sources often far-flung talent for companies nationwide, recognised this when she saw numerous professionals hankering for work who lived in rural or regional areas.

In 2017, Palmer, who lives south of Wagga Wagga in rural NSW, was determined to create a level employment playing field for those candidates and for companies operating in the regions and in CBDs that have “outsource-able” permanent, full-time or part-time roles, contract or “gig” work.

“Organisations can access the skills they need for the business no matter where they’re situated or where the new hire lives,” explains Palmer.

Accountants and bookkeepers, project managers, social media and marketing managers, psychologists for tele-health, graphic/web designers and others — around 400 at the time of interview — pay to become Pointer candidates. Palmer and her team run generic reference checks. When a job profile lands, candidates choose Tinder-style whether they’ll opt-in for the opportunity.

Who’s hiring? One example Palmer cites is an accounting practice with offices in six NSW towns, which has filled numerous permanent roles that aren’t client-facing. A fast-growing Melbourne bookkeeping business specialising in pharmacies no longer has an office. Instead, it’s hiring remote workers to skill and scale up.

Beyond the ability to find rare talent, says Palmer, benefits are in savings on office space (annual net commercial lease rates in Sydney are nudging $1000 per square metre), the important issue of staff retention (not everyone wants to commute or live where they work) and, Palmer ventures, the ability to dodge office politics, although she maintains camaraderie still happens long-distance.

How does it work? For hybrid teams, she recommends all meeting participants — on-site or remote — convene by videoconference. Swapping “internal” email communications for a project management tool and gathering the team together once or twice a year for training, client meetings or just a face-to-face chinwag are also advisable.

Bringing on belonging

Work is an important part of people’s lives, and while organisations have embraced HR, its buzzwords and metrics, something seriously has been lost along the way, says Rhonda Brighton-Hall, founder and CEO of Mwah (Making Work Absolutely Human), who will speak at the AICD 2020 Australian Governance Summit.

“We’ve sort of put everything in boxes, instead of looking at organisations as complex systems — you wouldn’t look at your financial report only today.”

Brighton-Hall, whose career spans a stint heading human resources at Luxottica and several senior human capital roles at CBA, puts the case for directors to look past human capital’s stock-in-trade measures such as the annual engagement score — “a system that can be gamed” — or diversity and inclusion reports.

“What we need are all the pieces that go along with people,” says Brighton-Hall , who believes what people want is a sense of belonging.

In the evolution of organisational psychology and efficient productive organisations — Lean, Six Sigma, Agile — there’s a major piece missing and that’s accountability or a sense of collectivism that takes the focus off individuals and leaders and explores: “How does the group come together?”

“Belonging is a collective understanding,” she says. “It’s about teams of people working together. Do we feel confident? It’s such a simple question, but we think it relates to purpose. I care about the work I do, and so do others. You care about relationships and how they are working. It is important you’re accountable for turning up and doing your best because people rely on you, you’re needed, and not just because programmatically we’re recruiting people from your diversity group.”

Fostering belonging goes offline to have conversations, not necessarily difficult ones, she says. “The more positive, good conversations you have, the less difficult ones there will be.”

Brighton-Hall notes that investment bankers, supreme court judges and heads of government departments in Canberra are now talking happiness, wellbeing and belonging — recognising that what were once sidelined as “soft” skills are vital for the health of organisations. Virtual reality (VR) is also making for impactful learning. Mwah has been working with real estate group Domain and social enterprise Equal Reality.

Research has shown VR experiences and the all-important contextual debrief help employees appreciate other perspectives on issues such as age, gender, race or capability, and help develop great understanding and empathy as well as retention.

“A world-class net promoter score for learning is 32,” says Brighton-Hall. “When we add VR, it goes to 47; when we use VR and a different way of facilitating a conversation, we get to 67. Those scores have been repeated with different clients and contexts.”

So how can directors unpack the culture boxes HR has created?

“Allocate time to more deeply understand culture — not a 20-minute presentation on the engagement score,” she suggests. “Consider how relationships work in the organisation. How do people feel working there? Do they feel comfortable and confident? How many people have spoken up in the past 12 months — and, where are they now? What’s happened to people who have put in bullying claims or taken maternity leave? Ask the questions. Don’t settle for a score.”

97% of businesses require customer services skills

71% of CEOs cited human capital as the leading source of business growth

20% increase in productivity in workers with human skills training

$36b boost to GDP by 2030 due to a more skilled and happier workforce

Sources: Deloitte Access Economics: Premium Skills: The wage premium associated with human skills (2019); The Path to Prosperity: Why the future of work is human (2019); Soft Skills for Business Success (2017)

How compliance got hot

Compliance has gone from box-ticking to a searing focus for organisations, with the banking Royal Commission, financial reporting transaction scandals and the #MeToo movement giving impetus to the “massive” upswing in interest.

Organisations are reviewing culture and how they present themselves to the open market, and the pressures of both public and regulator scrutiny have become dual drivers, observes Deborah Coram, CEO of compliance training organisation Safetrac.

Reminders are constant with headline-grabbing issues such as the systemic underpayment of workers and changing industrial manslaughter laws.

“We’ve seen really interesting things happening in organisations,” says Coram. “One is the ownership of compliance — now people are fighting over it! Does it fit with legal, HR, the CEO, the CFO or the head of risk?” The head of risk, Coram believes. “Previously, no-one wanted it because there was no budget for it.”

Oversight has also been promoted with greater CEO involvement and the board’s responsibility for culture. Compliance is keeping directors up at night, Coram reports, as they ponder the consequences of staff doing the wrong thing, and how to ensure they don’t. Wide-ranging code of conduct training is hot, covering values and ethics, workplace health and safety, bribery and corruption, whistleblowing, privacy and more. Courses in anti-bullying and harassment, discrimination, anti-competitive behaviour and cybersecurity are also in high demand. However, companies are eager for employees to know the rising risks. Founded by law firm MinterEllison, Safetrac was acquired by former litigator Coram and others in 2019. Clients range from ASX 100 businesses to small enterprises with 10-plus employees.

The tightly regulated financial services sector represents 65 per cent of its client base, followed by retail and construction. Some are taking up to 20 different courses.

Once compliance training was a regurgitation of legislation, but it’s more engaging in the digital age, says Coram, although it still doesn’t sound like fun, nor should it, insists Coram — she prefers sustainability or integrity training.

How do organisations motivate staff to learn compliance? Some incentivise it. Others may refuse bonuses for those who haven’t completed a course.

And where’s the assurance that the training sticks? “At the end of the course, we can test learners and feedback can be given to the organisation on consistent weaknesses.”

Make your workforce well

Health and wellbeing issues are key to productivity, now they are rocketing up the risk registers for all organisations. In October 2019, the Productivity Commission urged a generational shift in approaches to Australian mental health in the draft report of its inquiry into the issues. It noted that in any one year, approximately one in five Australians experience mental ill health, accounting for a $13b–$17b annual workplace absenteeism cost.

“The costs of mental ill health and suicide are large and pervasive, and are borne not just by those people with lived experience of poor mental health and of caring, but also by their families and friends, governments (through current and future taxpayers), employers, insurers, and the broader community,” the report said.

Among its reform recommendations, the report has urged that mental health be explicitly included in workplace health and safety, with codes of practice for employers developed and implemented. The same risk management approach that applies to physical health and safety (an approach familiar to employers and employees) should be applied to psychological health and safety.

The Deloitte report, Premium Skills: The wage premium associated with human skills, released in November 2019, found a shortage of human skills in many businesses and predicted this shortage would increase. Customer service, organisation and time management, digital literacy, and leadership were listed as the greatest shortages. Building these skills through training rather than buying them through recruitment was the best solution.

“Skills shortages are the second most commonly cited barrier to business performance,” the report said. “Ultimately, there is clear rationale for both businesses and individuals to invest in the level of their human skills.”

A 2017 Deloitte report Soft Skills for Business Success found businesses spend $7b annually on recruitment compared to $4.5b on formal training.

The 2019 research included analysis of more than nine million job advertisements, which revealed that the most in-demand skills are human skills. Around 96 per cent of job advertisements note the need for time management and organisational skills and 97 per cent need customer skills.

“Beyond their contribution today, human skills are set to grow in importance,” the report found.

“By 2030 it’s expected that two thirds of jobs in Australia will be human skill-intensive.”