Much has been made of recent scandals arising from sexual relationships in the workplace and in most cases the relationships are said to have been ‘personal and consensual’. While not a new issue, we have seen changes to the way organisations have responded to the relationships, perhaps as a reflection that our culture is less accepting of the conduct.

Is it ever appropriate for a senior executive to conduct a sexual relationship with a workplace colleague, whether they are an employee, a representative of a client or customer, contractor or consultant to the business? Continue Reading Is a workplace relationship ever consistent with good governance

Working with many of Australia’s leading employers has given us strong insights into the planning and habits of the leaders of high performing organisations.Measuring performance

It is virtually an absolute that these organisations have a clear view of what business success looks like for them – they have a clear but flexible strategy and are relentless about executing it.

Importantly in managing their workforce and its culture – they know what high productivity looks like for their business and workforce.

It sounds like a statement of the obvious: on the docks crane lifts per hour are a standard productivity measure. Performance can be measured against competitors domestically and globally. Best practices are transparent and something to be aimed for.

But in other businesses the notion of productivity is a murkier one. The productivity of a senior banking professional or a teacher can be harder to measure, particularly if their role is not clearly defined or their performance not linked to an overall business strategy. There may be no universal or even widely applicable standards of high performance for benchmarking purposes.

This is where we see leading employers stand out. These are organisations that know what high performance means for their business. They have their own understanding of what productivity means to them and how to improve it. They can then make decisions about how their labour arrangements will facilitate higher productivity. They are conscious of hand brakes on productivity and work to remove them. We have the privilege of working on projects – sometimes brief, sometimes with work streams that run for years – to constantly move organisations to their desired frontier of high performance.

Whilst the productivity of Australia’s workforce overall has steadily increased (climbing approximately 10 index points to 104 index points since 2011 – good but not great) the picture looks different when we look through a magnifying glass at particular sectors or organisations. There the performance is more mixed – with factors such as legacy labour restrictions and underinvestment in capital resulting in some organisations being well behind the eight ball.

The positive story here is that productivity can always be improved – and the lower the starting base the more room for improvement!

But the first and most fundamental step is to know what it means for your organisation and to have a system to measure it. From there, the metaphorical sky is the limit.

The NSW work health and safety regulator has brought a successful prosecution against a company director resulting in a criminal conviction and fines against the director and the company. An order was also made requiring the director to pay the costs of the prosecution. It appears that this is the first such successful prosecution under the harmonised Federal safety legislation in NSW. However, the fines imposed in this case ($15,000 against the director and $150,000 against the company) were low given the specific circumstances of the case.

What does this mean for me?

Directors and officers in a business must be able to show that they have taken reasonable steps to exercise due diligence in respect of their safety obligations. This decision reinforces these obligations and the importance of compliance with the positive duty on directors to ensure and verify that processes and resources are used and implemented appropriately.

What happened?

Austral Hydroponics grew greenhouse truss tomatoes. On 7 March 2013 Eang Lam, the sole director of Austral, directed one of his employees, Mr Nuon to remove plastic sheets from the roof of a greenhouse. No instruction on how this task was to be done was provided to Mr Nuon, nor was any fall arrest equipment provided. Mr Nuon used a ladder to climb onto the roof of the greenhouse. While standing on the gutter of the greenhouse and attempting to pull away the plastic sheets, Mr Nuon lost his balance and fell 2.5 metres.

Mr Nuon suffered a fracture to his spine which caused spinal cord damage and tetraplegia (also known as quadriplegia). Mr Nuon’s condition was considered catastrophic. He remained in high dependency care in hospital until he died in August 2014. It was not alleged that the death was caused by the injures received from the fall.

The Court found that Mr Lam failed to exercise due diligence by taking reasonable steps to ensure compliance with the Safe Work Australia’s Code of Practice on ‘Managing the Risk of Falls at Workplaces Code of Practice’. There was no risk assessment for the task and no safe work procedure. Mr Nuon was not assisted in undertaking the task and was not adequately supervised. Mr Lam did not take reasonable steps to ensure that workers were only directed to work on the roof of a hot house after a risk assessment had been conducted and control measures were implemented to minimise risks to safety.

What lead to the low penalties?

Mr Lam could have been fined up to $300,000 and Austral up to $1,500,000. However, the Court imposed low penalties because:

  • evidence showed that Mr Lam was suffering post-traumatic stress disorder and major depression, and had significant symptoms of anxiety
  • Mr Lam and Austral had limited capacity to pay fines
  • evidence showed the good character of Mr Lam and his community contributions in business since 1983
  • it was unlikely Mr Lam or Austral would reoffend, given the remorse and contrition of Mr Lam and that Austral was no longer trading, and
  • early guilty pleas from Mr Lam and Austral.

If you would like to discuss this decision further, please leave a comment or contact us.

As this year’s public company reporting season comes to a close, the following trends in executive remuneration across various industries stand out:

  • Modest or nil increases in fixed remuneration for executives with some companies electing not to increase fixed remuneration for the third consecutive year;
  • Increases in short term incentive deferral practices and/or other changes to STI structure;
  • Significant changes to terms of long term incentives. For example, lengthening performance testing periods and mechanisms for rating performance for the purposes of initial LTI allocation or grant.

Unsurprisingly, organisations have also continued to review and monitor their remuneration structures, with several opting to decrease weighting towards STI and increase weighting of LTI.

[In our next Director Dashboard blog we’ll discuss more specific trends in executive remuneration in the superannuation industry.]

Sometimes for boards, no news is bad news.

Improving safety statistics, workplace diversity reporting, industry remuneration statistics and ‘good’ employee turnover levels are ‘people’ matters that board members are usually informed about. But are there matters that Boards don’t hear about because their executives don’t want to trouble them with problems or be the bearers of bad news? Continue Reading Director dashboard – is no news good news?