The Great Divide

Research findings independently evaluated by Aremel Research Pty. Ltd.

THE GREAT DIVIDE

NOVEMBER 2006

Attitudes to Work by 1st Executive

the Inaugural Report on Australians’

E x e c u t i v e S u m m a r y f o r

The Great Divide

There is no geographic feature that looms as large in the history of

Australia's economic development as the Great Dividing Range. This

range of mountains and hills separates our lush coastal lands from our

harsher and more arid interior and stretches from our northern most

tropics to our southern extremities. In history it stood as a symbolic

barrier to economic progress and the exploration and crossing of the

Great Dividing Range revealed lands less fertile than those to the east,

but in many ways lands richer in natural resources. Our understanding

of the potential west of The Divide has released great wealth to this

country, never more so than with the resources boom of the last two or

three years.

Similarly, our understanding of the potential of our people is the key to

Australia's future growth. There is a gap in this understanding

though, a great divide, as this study will reveal. The employment

challenge in this country has changed irrevocably over the last few

years. The priorities are no longer just about getting Australians back

to work, but in engaging them in their work so that they can make real

contributions. Companies and governments alike share this challenge

as retention of staff, an ageing population and a growing economy that

is further supported by global trends, present different challenges.

People have never been more important, but closing the divide between

how employers see their workers and how employees view their jobs is

critical to our future economic success. Today, that gap should alarm

all employers.

This report draws upon independently commissioned research, desk

research and 1st Executive's own experience in consulting to a wide

range of clients on employment and staff retention issues.

1st Executive's Inaugural Study into Australians’

Attitudes to Work

Page 3

The Great Divide

There is no geographic feature that looms as large in the history of

Australia's economic development as the Great Dividing Range. This

range of mountains and hills separates our lush coastal lands from our

harsher and more arid interior and stretches from our northern most

tropics to our southern extremities. In history it stood as a symbolic

barrier to economic progress and the exploration and crossing of the

Great Dividing Range revealed lands less fertile than those to the east,

but in many ways lands richer in natural resources. Our understanding

of the potential west of The Divide has released great wealth to this

country, never more so than with the resources boom of the last two or

three years.

Similarly, our understanding of the potential of our people is the key to

Australia's future growth. There is a gap in this understanding

though, a great divide, as this study will reveal. The employment

challenge in this country has changed irrevocably over the last few

years. The priorities are no longer just about getting Australians back

to work, but in engaging them in their work so that they can make real

contributions. Companies and governments alike share this challenge

as retention of staff, an ageing population and a growing economy that

is further supported by global trends, present different challenges.

People have never been more important, but closing the divide between

how employers see their workers and how employees view their jobs is

critical to our future economic success. Today, that gap should alarm

all employers.

This report draws upon independently commissioned research, desk

research and 1st Executive's own experience in consulting to a wide

range of clients on employment and staff retention issues.

1st Executive's Inaugural Study into Australians’

Attitudes to Work

The Study

What is happening in the world of employment?

This study was conceived in the context of a dramatically changing

Australian workplace. The passing into law of Work Choices

legislation has been described as one of the most significant industrial

changes since organized labour. Since the draft legislation was made

available, we at 1st Executive felt that the discussion about the merits

of the changes was being conducted largely in the political arena. The

Government has promoted the long term economic benefits while The

Opposition and Unions have steadfastly opposed the changes. In such

an adversarial political environment it also seemed inevitable to us that

this was also how the media would approach its reporting – conflicting

ideologies lead to extreme examples, which in turn make good copy.

Arguably, the real test of the legislation will be in bad times and in

such a strong economy that may be years away. We believe what has

been missing is an understanding of just how Australians really feel

about employment, whether employer or employee. This report sets out

to redress that balance and to develop some insights about how people

may react in the context of these changes.

A Global Perspective

Australia remains in a sustained period of economic growth. Over the

last ten years the rate of unemployment has gradually declined and at

the time of writing was just 4.9% in Australia. Without entering the

debate regarding participation rates and the definition of “employed”

there is little doubt that the changes in our economy have delivered

some new challenges. Employers now face skills and labour shortages.

While the political discourse has been about skill shortages, it is

debatable whether or not there are even enough people coming into the

working population to meet Australia's needs over the next 20 to 30

years. This is not a uniquely Australian situation though and is

influenced by low rates of unemployment across developed markets –

4.6% in the USA, 5.4% in the UK, 6.1% in Canada and 4.2% in Japan.

Is There a Skills Shortage?....

Chart 1.1 - Unemployment

4.5%

4.7%

4.9%

5.1%

5.3%

5.5%

5.7%

Aug-05 Nov-05 Feb-06 May-06 Aug-06

Date

Trend

Seas. Adj.

Page 5

The Study

What is happening in the world of employment?

This study was conceived in the context of a dramatically changing

Australian workplace. The passing into law of Work Choices

legislation has been described as one of the most significant industrial

changes since organized labour. Since the draft legislation was made

available, we at 1st Executive felt that the discussion about the merits

of the changes was being conducted largely in the political arena. The

Government has promoted the long term economic benefits while The

Opposition and Unions have steadfastly opposed the changes. In such

an adversarial political environment it also seemed inevitable to us that

this was also how the media would approach its reporting – conflicting

ideologies lead to extreme examples, which in turn make good copy.

Arguably, the real test of the legislation will be in bad times and in

such a strong economy that may be years away. We believe what has

been missing is an understanding of just how Australians really feel

about employment, whether employer or employee. This report sets out

to redress that balance and to develop some insights about how people

may react in the context of these changes.

A Global Perspective

Australia remains in a sustained period of economic growth. Over the

last ten years the rate of unemployment has gradually declined and at

the time of writing was just 4.9% in Australia. Without entering the

debate regarding participation rates and the definition of “employed”

there is little doubt that the changes in our economy have delivered

some new challenges. Employers now face skills and labour shortages.

While the political discourse has been about skill shortages, it is

debatable whether or not there are even enough people coming into the

working population to meet Australia's needs over the next 20 to 30

years. This is not a uniquely Australian situation though and is

influenced by low rates of unemployment across developed markets –

4.6% in the USA, 5.4% in the UK, 6.1% in Canada and 4.2% in Japan.

Is There a Skills Shortage?....

Chart 1.1 - Unemployment

4.5%

4.7%

4.9%

5.1%

5.3%

5.5%

5.7%

Aug-05 Nov-05 Feb-06 May-06 Aug-06

Date

Trend

Seas. Adj.

The once traditional pathway for the non-tertiary educated

professional into management – the Sales Representative, is in trouble.

Whether the job title is Sales Rep, Business Development Manager or

Account Manager the fact is that in September 2006 there were three

times as many sales job vacancies on the major Australian on-line job

boards as there were CV's registered. Given that the up to date active

job seeker will typically complete a profile on line, upload a CV and

instruct the job board to automatically issue an application for each

qualified new role that is advertised, this is an alarming fact. It means

that, statistically, every sales person who is actively looking for a new

job has three to choose from!

The accounting profession is in a similar position. Australia is still

producing quantities of graduate accountants but fewer are staying in

the profession long term. Entry salaries are low, and compliance work

dominates the workplace. Accounting is one of the Federal

Government's immigration target inflows but there is often still

reluctance by Australian firms to employ accountants with little local

compliance experience. There are even initiatives to offshore

compliance work – but with countries like India also having a relative

shortage of accountants, there is inherent risk in such a strategy.

Our third example is Skilled Trades. As well as the common consumer

experience of trades people not showing up for minor, (and sometimes

not so minor), domestic projects, this shortage affects industry as well.

Initiatives for traineeships and courses offered through RTO's to get

people started, don't seem to have a significant impact. Young people

are turned off by the wages and employers and employees alike, by the

length of the commitment required to qualify.0

0.1

0.2

0.3

0.4

0.5

Changes in share aged 65+

1922 1932 1942 1952 1962 1972 1982 1992 2002 2012 2022 2032 2042

Historical average 1922 - 2000

Accelerating phase

These are just examples. We also know of real problems in meat

processing, engineering and business administration. This problem is

not uniquely Australian. Manpower Inc. published a simple global

survey from fieldwork conducted in January 2006 across 23 countries.

Sales Representatives and Accountants featured in the top 5 problem

professions in most of those markets.

…Or a Labour Shortage?

We all know that Australia, along with a host of other developed

nations, has an ageing population. It is clear that neither government,

nor employers, have adequately addressed this factor.

he problem is more acute than most people realize. The Productivity

Commission Report (2005) provides robust analysis.

T

The Acceleration of Ageing in our Workforce

Page 7

The once traditional pathway for the non-tertiary educated

professional into management – the Sales Representative, is in trouble.

Whether the job title is Sales Rep, Business Development Manager or

Account Manager the fact is that in September 2006 there were three

times as many sales job vacancies on the major Australian on-line job

boards as there were CV's registered. Given that the up to date active

job seeker will typically complete a profile on line, upload a CV and

instruct the job board to automatically issue an application for each

qualified new role that is advertised, this is an alarming fact. It means

that, statistically, every sales person who is actively looking for a new

job has three to choose from!

The accounting profession is in a similar position. Australia is still

producing quantities of graduate accountants but fewer are staying in

the profession long term. Entry salaries are low, and compliance work

dominates the workplace. Accounting is one of the Federal

Government's immigration target inflows but there is often still

reluctance by Australian firms to employ accountants with little local

compliance experience. There are even initiatives to offshore

compliance work – but with countries like India also having a relative

shortage of accountants, there is inherent risk in such a strategy.

Our third example is Skilled Trades. As well as the common consumer

experience of trades people not showing up for minor, (and sometimes

not so minor), domestic projects, this shortage affects industry as well.

Initiatives for traineeships and courses offered through RTO's to get

people started, don't seem to have a significant impact. Young people

are turned off by the wages and employers and employees alike, by the

length of the commitment required to qualify.0

0.1

0.2

0.3

0.4

0.5

Changes in share aged 65+

1922 1932 1942 1952 1962 1972 1982 1992 2002 2012 2022 2032 2042

Historical average 1922 - 2000

Accelerating phase

These are just examples. We also know of real problems in meat

processing, engineering and business administration. This problem is

not uniquely Australian. Manpower Inc. published a simple global

survey from fieldwork conducted in January 2006 across 23 countries.

Sales Representatives and Accountants featured in the top 5 problem

professions in most of those markets.

…Or a Labour Shortage?

We all know that Australia, along with a host of other developed

nations, has an ageing population. It is clear that neither government,

nor employers, have adequately addressed this factor.

he problem is more acute than most people realize. The Productivity

Commission Report (2005) provides robust analysis.

T

The Acceleration of Ageing in our Workforce

their Generation X parents have worked and Generation Y doesn’t want

to go there. American commentators have referred to them as

“Generation Now!” Not only is the demography working against

employers who want to grow their businesses through talent but so is

the Generation Y mind set. Especially when research suggests that

short stays in jobs are to be expected and that these people may change

careers as often as six times in their working lives. As a rule of thumb,

every new recruit that leaves after 12-18 months will cost the employer

1.5 times salary to replace and train. It's an expensive dilemma!

Paradoxically though, Generation Y and Baby Boomers share some

common ground. Each will work hard and productively under the

right circumstances – but business has to find those circumstances.

Various commentators over the last 18 months have suggested that to

win over Generation Y employees, a company has to make itself

attractive to them, accept that their values are different, provide

variety, learning and development, be flexible about working

arrangements, (they understand deliverables and they understand what

technology can facilitate), make the workplace interesting, deliver on

promises and give them respect, accountability and responsibility.

As Baby-boomers read this, they will inevitably identify with how they

viewed their career prospects when they commenced their careers

between the mid 60's and early 80's. The fundamental difference is

that the economic environment rarely created the opportunity for all

but the best performers to be more demanding – there was always an

alternative resource available in the marketplace. Baby Boomers also

created financial commitments quickly as they sought to build wealth.

However, they are now exercising the discretion they have always

desired, about the kind of work they do. This generation is loyal,

productive at almost any age, willing to learn new skills, vastly

experienced and has the advantage of being a generation once removed

W

. Importantly, they see the way

e are going through an acceleration of ageing between 2002 and 2012.

We will have more citizens over 65 and a significantly higher share of

over 65's. It's a bubble that will stay with the Australian economy till

at least 2036 – and it is the Baby Boomer bubble. New entrants to the

workforce are predicted to fall by 35,000 between 2006 and 2010.

Participation rates will fall and we will face a rapid decline in the

growth of worker numbers. Kevin Andrews, the Minister for

Employment and Workplace Relations recently said “It is true to say

that Australia's demography, is its destiny.”

It is when we look at these demographics in the context of mindsets or

psychographics that all of this becomes interesting. The Baby Boomers

is a generation that never expected to grow old. It has worked hard,

built wealth and been reluctant to step down. The government has, to

some extent, bought into this with the enticements to stay at work and

recent superannuation incentives. However, Baby Boomers are at last

showing signs of wanting to slow down – never ones for retiring there is

now a significant move towards “downshifting”; less work, less hours,

telecommuting, contract and consulting work and small businesses or

more work from home. Meanwhile, employers have ever increasing

needs. Employees, especially Generation X, are working longer hours

and often working harder in leaner organizations while talent

retention has emerged as management's single most important business

performance challenge.

At the other end of the spectrum, Generation Y has no adult

recollection of high interest rates, the 1991 recession nor of high

unemployment. They see work as a means to an end, something that

serves their lives rather than defines their lives – they truly work to

live. More and more they want to do meaningful work, be fulfilled

without being stressed and expect challenge, progression, income and

the attainment of career goals quickly

Page 9

their Generation X parents have worked and Generation Y doesn’t want

to go there. American commentators have referred to them as

“Generation Now!” Not only is the demography working against

employers who want to grow their businesses through talent but so is

the Generation Y mind set. Especially when research suggests that

short stays in jobs are to be expected and that these people may change

careers as often as six times in their working lives. As a rule of thumb,

every new recruit that leaves after 12-18 months will cost the employer

1.5 times salary to replace and train. It's an expensive dilemma!

Paradoxically though, Generation Y and Baby Boomers share some

common ground. Each will work hard and productively under the

right circumstances – but business has to find those circumstances.

Various commentators over the last 18 months have suggested that to

win over Generation Y employees, a company has to make itself

attractive to them, accept that their values are different, provide

variety, learning and development, be flexible about working

arrangements, (they understand deliverables and they understand what

technology can facilitate), make the workplace interesting, deliver on

promises and give them respect, accountability and responsibility.

As Baby-boomers read this, they will inevitably identify with how they

viewed their career prospects when they commenced their careers

between the mid 60's and early 80's. The fundamental difference is

that the economic environment rarely created the opportunity for all

but the best performers to be more demanding – there was always an

alternative resource available in the marketplace. Baby Boomers also

created financial commitments quickly as they sought to build wealth.

However, they are now exercising the discretion they have always

desired, about the kind of work they do. This generation is loyal,

productive at almost any age, willing to learn new skills, vastly

experienced and has the advantage of being a generation once removed

W

. Importantly, they see the way

e are going through an acceleration of ageing between 2002 and 2012.

We will have more citizens over 65 and a significantly higher share of

over 65's. It's a bubble that will stay with the Australian economy till

at least 2036 – and it is the Baby Boomer bubble. New entrants to the

workforce are predicted to fall by 35,000 between 2006 and 2010.

Participation rates will fall and we will face a rapid decline in the

growth of worker numbers. Kevin Andrews, the Minister for

Employment and Workplace Relations recently said “It is true to say

that Australia's demography, is its destiny.”

It is when we look at these demographics in the context of mindsets or

psychographics that all of this becomes interesting. The Baby Boomers

is a generation that never expected to grow old. It has worked hard,

built wealth and been reluctant to step down. The government has, to

some extent, bought into this with the enticements to stay at work and

recent superannuation incentives. However, Baby Boomers are at last

showing signs of wanting to slow down – never ones for retiring there is

now a significant move towards “downshifting”; less work, less hours,

telecommuting, contract and consulting work and small businesses or

more work from home. Meanwhile, employers have ever increasing

needs. Employees, especially Generation X, are working longer hours

and often working harder in leaner organizations while talent

retention has emerged as management's single most important business

performance challenge.

At the other end of the spectrum, Generation Y has no adult

recollection of high interest rates, the 1991 recession nor of high

unemployment. They see work as a means to an end, something that

serves their lives rather than defines their lives – they truly work to

live. More and more they want to do meaningful work, be fulfilled

without being stressed and expect challenge, progression, income and

the attainment of career goals quickly

something that promotes long term health benefits and longer life.

Tombak (2003) asserts that 70% of our health is dependent on our

lifestyle.

Not only does this go some way to providing the context for The Great

Divide that our research has revealed, but it is also a pointer for many

businesses economically. There is no doubt that talent shortage is the

greatest threat to the economics of business as labour costs

(remuneration, benefits, training and development) continue to rise.

While there has been some abatement of the threat with outsourcing

and “offshoring” initiatives, only the truly strategic responses to these

issues will succeed because, as we have seen, the shortages are becoming

increasingly global.

It is therefore puzzling that among all of the current

initiatives to keep people at work and to more deeply engage them, the

number of employers that actively manage initiatives to ensure that

workers maintain a healthy work life balance, are few and far between.

from Generation Y. It's like grandparents and grandchildren seeing

eye to eye more than parents and children.

There are also bigger issues at work though. The material striving and

work ethic of Generation X have created hard habits to break.

Corporate commitment, long hours, pay for performance and dual

income households are all characteristics of Generation X

professionals. So are high divorce rates, second and third marriages,

stress related illnesses, increased rates of depression and long term burn

out. (As many as 36,000 Australians, according to Dr Andrew Lloyd

and colleagues of The Prince Henry Hospital in Sydney and up over

250,000 Americans according to The US Center for Disease Control

(CDC), are believed to suffer from Chronic Fatigue Syndrome).

Generation Y workers have observed this and do not want the lives that

their parents had. They are determined to work 35-40 hours per week

and are often frowned upon for leaving their workplace on the stroke of

5pm. They see their leave as a basic entitlement to be taken when they

need to take it rather than negotiated with their employer and see their

work/life balance as critical to their long term health. As Generation

X looks at the Baby-boomers through the prism of its own working

paradigm, it's not surprising that they have mooted later retirement

and given birth to incentives to keep people at work later in life.

We believe that the symptoms themselves reveal the solutions that the

best employers must come to terms with.

There is no doubt that work/life balance produces healthier, happier

and more engaged employees – it arguably supports a better society too.

It seems that Generation Y has this right. There is also a growing body

of evidence and certainly opinion that retirement is, in fact, not a great

option for most people. “Retire to what?” is a question that can be posed

of 60+ year olds and maintaining a stimulating life is seen to be

Page 11

something that promotes long term health benefits and longer life.

Tombak (2003) asserts that 70% of our health is dependent on our

lifestyle.

Not only does this go some way to providing the context for The Great

Divide that our research has revealed, but it is also a pointer for many

businesses economically. There is no doubt that talent shortage is the

greatest threat to the economics of business as labour costs

(remuneration, benefits, training and development) continue to rise.

While there has been some abatement of the threat with outsourcing

and “offshoring” initiatives, only the truly strategic responses to these

issues will succeed because, as we have seen, the shortages are becoming

increasingly global.

It is therefore puzzling that among all of the current

initiatives to keep people at work and to more deeply engage them, the

number of employers that actively manage initiatives to ensure that

workers maintain a healthy work life balance, are few and far between.

from Generation Y. It's like grandparents and grandchildren seeing

eye to eye more than parents and children.

There are also bigger issues at work though. The material striving and

work ethic of Generation X have created hard habits to break.

Corporate commitment, long hours, pay for performance and dual

income households are all characteristics of Generation X

professionals. So are high divorce rates, second and third marriages,

stress related illnesses, increased rates of depression and long term burn

out. (As many as 36,000 Australians, according to Dr Andrew Lloyd

and colleagues of The Prince Henry Hospital in Sydney and up over

250,000 Americans according to The US Center for Disease Control

(CDC), are believed to suffer from Chronic Fatigue Syndrome).

Generation Y workers have observed this and do not want the lives that

their parents had. They are determined to work 35-40 hours per week

and are often frowned upon for leaving their workplace on the stroke of

5pm. They see their leave as a basic entitlement to be taken when they

need to take it rather than negotiated with their employer and see their

work/life balance as critical to their long term health. As Generation

X looks at the Baby-boomers through the prism of its own working

paradigm, it's not surprising that they have mooted later retirement

and given birth to incentives to keep people at work later in life.

We believe that the symptoms themselves reveal the solutions that the

best employers must come to terms with.

There is no doubt that work/life balance produces healthier, happier

and more engaged employees – it arguably supports a better society too.

It seems that Generation Y has this right. There is also a growing body

of evidence and certainly opinion that retirement is, in fact, not a great

option for most people. “Retire to what?” is a question that can be posed

of 60+ year olds and maintaining a stimulating life is seen to be

Research Findings

The issue of employee retention receives a great deal of airtime among

business owners and managers. In 1st Executive's experience, much

management thinking goes into employee satisfaction. It was, in many

ways the ubiquitous “Employee Satisfaction Survey” that influenced

our line of investigation.

In the second “Energised” level, we generally see that employees are

“Employee satisfaction” does not make people want to stay with their

employer, it is the lowest common denominator and is the first rung on

the ladder of employee engagement. In this study we hypothesized

about, and then explored, three levels of employee engagement. The

first of these was “Enabled”. This is where the “satisfied” employee

resides. He or she has the basic conditions met; a place to work, agreed

remuneration and the basic tools required to do the job. In this

situation, an employee will come to work, (most days) and complete the

tasks they have been assigned to the best of their ability, as long as

nothing really gets in the way.

Enabled, Energised or Engaged?

EngagedCommunicated

IncludedWork/Life Balance

EnergisedMerit

Responsibility

Relevant autonomy

Development

Enabled

Tools

Conditions

Remuneration

given and accept responsibility, have some autonomy or authority to do

the job and recognize that they will be rewarded based on merit. It is at

this level that employees start to take initiative, do a little more for

their employers, work out how they can add value and start to become

accountable for the outputs of their work. At this level, typically

employers have sound position descriptions and effective performance

management systems.

However, it is only at the third, “Engaged” level that organizations can

feel that their workforce is relatively stable. In this kind of

environment, there is a shared vision being achieved. Underperformers

just don't fit, results matter to every individual and the employer makes

sure that employees are included in plans and maintain a healthy

work/life balance.

The two questionnaires were designed around this model and the results

present some challenges for Australian businesses for whom retention

of staff is a real business issue.

Page 13

Research Findings

The issue of employee retention receives a great deal of airtime among

business owners and managers. In 1st Executive's experience, much

management thinking goes into employee satisfaction. It was, in many

ways the ubiquitous “Employee Satisfaction Survey” that influenced

our line of investigation.

In the second “Energised” level, we generally see that employees are

“Employee satisfaction” does not make people want to stay with their

employer, it is the lowest common denominator and is the first rung on

the ladder of employee engagement. In this study we hypothesized

about, and then explored, three levels of employee engagement. The

first of these was “Enabled”. This is where the “satisfied” employee

resides. He or she has the basic conditions met; a place to work, agreed

remuneration and the basic tools required to do the job. In this

situation, an employee will come to work, (most days) and complete the

tasks they have been assigned to the best of their ability, as long as

nothing really gets in the way.

Enabled, Energised or Engaged?

EngagedCommunicated

IncludedWork/Life Balance

EnergisedMerit

Responsibility

Relevant autonomy

Development

Enabled

Tools

Conditions

Remuneration

given and accept responsibility, have some autonomy or authority to do

the job and recognize that they will be rewarded based on merit. It is at

this level that employees start to take initiative, do a little more for

their employers, work out how they can add value and start to become

accountable for the outputs of their work. At this level, typically

employers have sound position descriptions and effective performance

management systems.

However, it is only at the third, “Engaged” level that organizations can

feel that their workforce is relatively stable. In this kind of

environment, there is a shared vision being achieved. Underperformers

just don't fit, results matter to every individual and the employer makes

sure that employees are included in plans and maintain a healthy

work/life balance.

The two questionnaires were designed around this model and the results

present some challenges for Australian businesses for whom retention

of staff is a real business issue.

The Great Divide

Almost 90% of employers believe that up to 80% of their

workforce will be stable for two years.

74 of employees said that they would move either as soon

as possible or when the right opportunity came along.

62% of employees believed that their career path required

that they leave their current employer.

The Great Divide undeniably exists.

Retention Myths Broken

Job diversity does not help retention; in fact it can drive

people away and therefore needs to be carefully managed.

98% of employees say that they do need challenge at work,

but just over half of employees feel that they have challenge

in their jobs.

Challenge does help retention; the challenged are more

likely to stay. However, the younger employees (Generation

Y), demand challenge the most but are less challenged than

more experienced workers.

Less than half of employees feel that they are “considered

and included” in planning while three quarters of

employers feel that they do include their staff – there is at

best a breakdown in communication.

Sociability has an interesting effect on the workplace.

Strong sociability can be the glue that holds strong teams

together and can be a powerful source of division for those

that feel they do not fit and would like to move.

Only 29% of employees felt that their pay was “generous by

%

Executive Summary

Page 15

The Great Divide

Almost 90% of employers believe that up to 80% of their

workforce will be stable for two years.

74 of employees said that they would move either as soon

as possible or when the right opportunity came along.

62% of employees believed that their career path required

that they leave their current employer.

The Great Divide undeniably exists.

Retention Myths Broken

Job diversity does not help retention; in fact it can drive

people away and therefore needs to be carefully managed.

98% of employees say that they do need challenge at work,

but just over half of employees feel that they have challenge

in their jobs.

Challenge does help retention; the challenged are more

likely to stay. However, the younger employees (Generation

Y), demand challenge the most but are less challenged than

more experienced workers.

Less than half of employees feel that they are “considered

and included” in planning while three quarters of

employers feel that they do include their staff – there is at

best a breakdown in communication.

Sociability has an interesting effect on the workplace.

Strong sociability can be the glue that holds strong teams

together and can be a powerful source of division for those

that feel they do not fit and would like to move.

Only 29% of employees felt that their pay was “generous by

%

Executive Summary

industry standards” yet remuneration had little apparent

effect on retention. Almost perversely, those that intend to

leave their current employers as soon as possible believed

that their pay was “generous by industry standards” –

perhaps indicating that they are less aware of the

competitive salaries on offer than the more engaged

employee is.

The Performance Management Divide

There is inconsistency in the provision, robustness and

usefulness of position descriptions, leading to doubt among

employees about what is really expected.

Almost half of employees experience a failure from

management to provide clear direction within days of

commencing a new role due to having no formal induction

program at all.

Employers and employees agree that there is insufficient

coaching and mentoring in their organizations – yet many

managers don't seem to realize that this is a core part of

their role.

89% of managers say that they conduct Performance

Appraisals at least every twelve months yet 49% of

employees say that they have not had a performance

appraisal in twelve months.

While employers say that they support and value training

and development, only 56% of employees feel that they have

access to training that will improve their skills. Only 39%

believe that there is sufficient training made available to

“meet a challenge”, only 26% say they have company

sponsored professional development plans (despite almost

70% of employees asserting that this would increase their

level of commitment) and only 21% have a development

plan that is the result of a structured skills requirements

process.

While pay does not seem to affect retention, the overall

approach taken by employers to pay and pay rises reflects

the general performance management malaise. While

employers reported a generally sound set of values used to

determine remuneration levels and pay rises, the proportion

of employees who believed they would be paid more for

better results, contributing higher value and harder work

was consistently much lower than employers indicated

would be the case.

Work Life Balance – The New Aspiration

While 65% of employers claimed to have Work/Life

Balance initiatives such as some working from home,

flexible hours, job sharing and increased family

orientation, 74% of employees wanted to see more of these –

suggesting that their views on what is available differs

from that of their employers.

Employers believed that an increased focus on work/life

balance had led to increased productivity (60%), a reduction

in sick leave (55%) and better morale (69%).

62% of employers feared that they would lose staff to

organizations that better supported work/life balance while

58% of employees confirmed that this fear was justified –

they would leave for better work/life balance.

Page 17

industry standards” yet remuneration had little apparent

effect on retention. Almost perversely, those that intend to

leave their current employers as soon as possible believed

that their pay was “generous by industry standards” –

perhaps indicating that they are less aware of the

competitive salaries on offer than the more engaged

employee is.

The Performance Management Divide

There is inconsistency in the provision, robustness and

usefulness of position descriptions, leading to doubt among

employees about what is really expected.

Almost half of employees experience a failure from

management to provide clear direction within days of

commencing a new role due to having no formal induction

program at all.

Employers and employees agree that there is insufficient

coaching and mentoring in their organizations – yet many

managers don't seem to realize that this is a core part of

their role.

89% of managers say that they conduct Performance

Appraisals at least every twelve months yet 49% of

employees say that they have not had a performance

appraisal in twelve months.

While employers say that they support and value training

and development, only 56% of employees feel that they have

access to training that will improve their skills. Only 39%

believe that there is sufficient training made available to

“meet a challenge”, only 26% say they have company

sponsored professional development plans (despite almost

70% of employees asserting that this would increase their

level of commitment) and only 21% have a development

plan that is the result of a structured skills requirements

process.

While pay does not seem to affect retention, the overall

approach taken by employers to pay and pay rises reflects

the general performance management malaise. While

employers reported a generally sound set of values used to

determine remuneration levels and pay rises, the proportion

of employees who believed they would be paid more for

better results, contributing higher value and harder work

was consistently much lower than employers indicated

would be the case.

Work Life Balance – The New Aspiration

While 65% of employers claimed to have Work/Life

Balance initiatives such as some working from home,

flexible hours, job sharing and increased family

orientation, 74% of employees wanted to see more of these –

suggesting that their views on what is available differs

from that of their employers.

Employers believed that an increased focus on work/life

balance had led to increased productivity (60%), a reduction

in sick leave (55%) and better morale (69%).

62% of employers feared that they would lose staff to

organizations that better supported work/life balance while

58% of employees confirmed that this fear was justified –

they would leave for better work/life balance.

Conclusion

Almost fatalistically, on the day we drafted this conclusion, we received

a communication from a client in a small to medium sized business.

One of his senior managers had, just through lack of skill and

awareness, alienated a large group of skilled workers who saw little

alternative than to leave the organization. The organization operates

in an industry with acute skills shortages and has a mixture of

experienced and relatively inexperienced but skilled and qualified staff

with little prospect of a fast recruitment cycle to replace any staff that

do leave. The business is very busy with a back log of work and should

the situation with the staff not be resolved, the management group will

be doing their team's work as well. If our research is accurate, and we

believe it is, this scenario will be played out week after week in

Australian businesses until management acts.

The findings in this research study are not complementary to line

managers. There is an overriding sense in the data that employers and

particularly line managers are out of touch with the attitudes of

employees. In entitling this report “The Great Divide” we were

genuinely shocked at the breadth of the divide in the views of

employers and employees about where those employees would be

working in around two years time.

It was also disturbing to hear that many employers claim to have

systems in place that tell employees what is expected of them, how they

are doing, how they can improve and how they can earn more money

and yet employees know that these systems are often poorly and

inconsistently applied, if at all. In many cases management simply is

not doing what is says it is doing and quite often the CEO is unaware of

this because the senior group is regularly evaluated – while their teams

Page 19

Conclusion

Almost fatalistically, on the day we drafted this conclusion, we received

a communication from a client in a small to medium sized business.

One of his senior managers had, just through lack of skill and

awareness, alienated a large group of skilled workers who saw little

alternative than to leave the organization. The organization operates

in an industry with acute skills shortages and has a mixture of

experienced and relatively inexperienced but skilled and qualified staff

with little prospect of a fast recruitment cycle to replace any staff that

do leave. The business is very busy with a back log of work and should

the situation with the staff not be resolved, the management group will

be doing their team's work as well. If our research is accurate, and we

believe it is, this scenario will be played out week after week in

Australian businesses until management acts.

The findings in this research study are not complementary to line

managers. There is an overriding sense in the data that employers and

particularly line managers are out of touch with the attitudes of

employees. In entitling this report “The Great Divide” we were

genuinely shocked at the breadth of the divide in the views of

employers and employees about where those employees would be

working in around two years time.

It was also disturbing to hear that many employers claim to have

systems in place that tell employees what is expected of them, how they

are doing, how they can improve and how they can earn more money

and yet employees know that these systems are often poorly and

inconsistently applied, if at all. In many cases management simply is

not doing what is says it is doing and quite often the CEO is unaware of

this because the senior group is regularly evaluated – while their teams

are not. Performance management is paid lip service and is rarely seen

as a strategic priority. When one considers that in many organisations,

employments costs, or human capital represents as much as two thirds

of revenue, this is simply crazy!

It is difficult to say whether this is a crisis for management yet or not.

The inevitable truth though is that the overall lack of employee

engagement should concern all employers. The real potential for

commercial harm to many organizations lies in the relationship

between this lack of employee engagement and the demographic destiny

of the workforce. It is getting older and the participation rate will

decline for many years to come. Employees, especially the skilled and

the talented will exercise more and more choice about where they work.

Organisations that do nothing to keep their best talent and their

strategic skills will suffer.

So, who is responsible? While the report highlights line management

failings, we don't believe that this is where the final responsibility

rests. As line managers progress through an organization there are

some that develop intuitive people skills, some that continue to educate

themselves and some that succeed, at least in the short term, by force of

will and perhaps power of intellect. Within that professional

development timeline, many do not acquire technical people skills –

they rely on Human Resources for that. Human Resources has the

technical skills and is often called on to sort out the difficult people

issues and is expected to straighten out an HR “issue” before giving an

employee back to line management to get on with the job.

At worst, Human Resources has failed. Human Resources has

generally failed to win a seat at the strategy table. It is too often seen as

a technical advisor and, possibly, with the advent of Work Choices, this

Page 21

are not. Performance management is paid lip service and is rarely seen

as a strategic priority. When one considers that in many organisations,

employments costs, or human capital represents as much as two thirds

of revenue, this is simply crazy!

It is difficult to say whether this is a crisis for management yet or not.

The inevitable truth though is that the overall lack of employee

engagement should concern all employers. The real potential for

commercial harm to many organizations lies in the relationship

between this lack of employee engagement and the demographic destiny

of the workforce. It is getting older and the participation rate will

decline for many years to come. Employees, especially the skilled and

the talented will exercise more and more choice about where they work.

Organisations that do nothing to keep their best talent and their

strategic skills will suffer.

So, who is responsible? While the report highlights line management

failings, we don't believe that this is where the final responsibility

rests. As line managers progress through an organization there are

some that develop intuitive people skills, some that continue to educate

themselves and some that succeed, at least in the short term, by force of

will and perhaps power of intellect. Within that professional

development timeline, many do not acquire technical people skills –

they rely on Human Resources for that. Human Resources has the

technical skills and is often called on to sort out the difficult people

issues and is expected to straighten out an HR “issue” before giving an

employee back to line management to get on with the job.

At worst, Human Resources has failed. Human Resources has

generally failed to win a seat at the strategy table. It is too often seen as

a technical advisor and, possibly, with the advent of Work Choices, this

has been exaggerated over the last year. In 1999, American author,

Dave Ulrich identified that the mandate of Human Resources fell into

the quadrants of Employee Champion, Administrative Expert, Change

Agent and Strategic Partner. Our research indicates that in Australia,

much of the discipline is stuck between being an Administrative Expert

and an Employee Advocate.

The Strategic Partnership between Human Resources and Line

Management that needs to focus on sourcing, developing and retaining

talent for the corporate goal of increasing value rarely exists in

Australia, if it did, there would be no Great Divide.

Page 23

– November 2006

Narrative by Andrew Thoseby,

Director, 1st Executive Pty Ltd

Managing Editor Daphne Cauchi,

1st Executive Pty Ltd

Designer Ashley Hibbert

Special thanks to Suzanne Whitmarsh

Managing Director, 1st Executive Pty Ltd

Jonelle Dunscombe

HR Services Manager, 1st Executive Pty Ltd

Anna Zinzopoulos


and Kalli Swaik


Also thanks to Russell Alford

Ron Jungalwalla

Lyle Potgieter

and Robert McMorrow

A full version of the report is available from 1st Executive at $295 per

copy (including GST). Please call Andrew Thoseby on 03) 8617 8100

or visit us online at http://www.1stexecutive.com.au.

has been exaggerated over the last year. In 1999, American author,

Dave Ulrich identified that the mandate of Human Resources fell into

the quadrants of Employee Champion, Administrative Expert, Change

Agent and Strategic Partner. Our research indicates that in Australia,

much of the discipline is stuck between being an Administrative Expert

and an Employee Advocate.

The Strategic Partnership between Human Resources and Line

Management that needs to focus on sourcing, developing and retaining

talent for the corporate goal of increasing value rarely exists in

Australia, if it did, there would be no Great Divide.

– November 2006

Narrative by Andrew Thoseby,

Director, 1st Executive Pty Ltd

Managing Editor Daphne Cauchi,


Designer Ashley Hibbert

Special thanks to Suzanne Whitmarsh

Managing Director, 1st Executive Pty Ltd

Jonelle Dunscombe

HR Services Manager, 1st Executive Pty Ltd

Anna Zinzopoulos


and Kalli Swaik


Also thanks to Russell Alford

Ron Jungalwalla

Lyle Potgieter

and Robert McMorrow

A full version of the report is available from 1st Executive at $295 per

copy (including GST). Please call Andrew Thoseby on 03) 8617 8100

or visit us online at http://www.1stexecutive.com.au.

The Great Divide

Business

Transcript of The Great Divide