Directors need to draw on risk management lessons learned from the pandemic and reflect on the employee value proposition, say Michelle Tredenick FAICD and Prof Petrina Coventry FAICD.
Lessons from a crisis
Michelle Tredenick FAICD is a non-executive director of IAG, First Sentier Investors, Cricket Australia and Urbis. She says boards became more attuned to employee relations when COVID-19 swept the country. “It’s fair to say the industries I’m involved with are not at the forefront of radical change in workplace relations,” she says. “But I like to think about it as the relationships employers and employees have together and the partnerships that they have, regardless of what’s going on in terms of industrial relations. The emerging wisdom in this area is that it’s really about the partnerships you create with your employees and how the whole employee value proposition is brought to bear for your workforce. COVID-19 in particular accentuated this because, in many ways, it built a closer bond between employers and employees as they relied on each other to navigate through the changes in the nature of work.”
Professor Petrina Coventry FAICD, director of development with Adelaide University Faculty of Professions and Business school — and a non- executive director of the Australian Human Resources Institute, Australasian Association of Philosophy and Beston Global Food — says boards should “learn from the disruption” of the pandemic. “Preparedness for crisis management, resilience and workplace shifts will continue to be important and we have been able to develop new strategies around that due to the pandemic. How is that captured in strategy for long-term effectiveness?”
Addressing wage pressure
The 2021 wage price index rose by 2.3 per cent, well below the 3.5 per cent increase in inflation. The recent minimum wage lift may further pressure organisations to increase employee pay packets — or risk losing valuable talent in a tight labour market.
Tredenick says wage growth presents a significant challenge. “Inflationary pressures are being driven by geopolitical factors and other external concerns. But we will see quite a degree of pressure on wages and it’s very challenging for organisations to navigate through that, because they don’t want to end up in a spiral of both inflation growth and wages growth,” she says. “It is a tight labour market and is impacting all skills and industries. That’s not going to be solved easily or quickly. Trying to attract and retain employees, means you have to be more creative and flexible. Much of that the environment was created during COVID-19 and will remain important. It’s not going to replace the need for wage rises to attract talent, but will help mitigate and balance it.”
Coventry says boards must consider the impact of real wage stagnation. “If the fear of the ‘great resignation’ is real, what decisions need to be made around how to address wage stagnation? This is impacted by the increased costs that business are facing through energy, supply chain disruption and its consequences.”
Preparing for change
If the government enshrines casual worker job security in the Fair Work Act, increasing casualisation could present a number of risks for boards, says Coventry. “How do you manage workers with multiple roles? Are they turning up exhausted? Is your place of work their first, second or third priority? How engaged and able are they in managing multiple roles? What are the implications of that for worker safety and any claims that may crop up? It crosses over into industrial relations. Worker engagement and safety will continue to need further board oversight.”
ABS data shows only 14 per cent of workers are union members, compared to 40 per cent in 1992. However, Coventry notes this may change. “When you have increased hardship, inflation and work insecurity, there will be a rise in interest in unionism,” she says. “Add that to social media, which influences the tsunami of activism that can become hard to contain.”
Coventry adds that the notion of individual rights has gained greater focus since the pandemic. “This includes vaccination policies and regulations versus individual rights, and rights in relation to technology, AI and digital systems that might be replacing transactional roles. Decisions around when you introduce systems that might replace workers may become more important.”
Tredenick believes the way organisations managed their workers in the pandemic will help. “COVID-19 signalled a major change in workplace relations. IR changes from the new government will likely build on that.”
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