Positive Hiring Intentions – most employers are planning on hiring more people

Widening gap between candidate and employer salary intentions – most candidates expect more than employers are prepared to pay

Skills shortages – 54% of employers in Australia are experiencing difficulty in filling critical positions. This number is significantly higher in WA and QLD. Australia is ranked fourth out of 39 countries for skills shortages in critical roles.

These factors combined have moved the pendulum of power well and truly back into the favour of employees. Reality is that well qualified candidates in the trades, sales and marketing, engineering, mechanical, accounting and technical trades have an abundance of choices.

Candidates in these professions can afford to be choosey about which roles they accept. For recruiting Organisations having a good reputation or brand in the marketplace becomes mission critical. To minimise turnover rates Organisations need to be able to deliver on the psychological contract that exists between them and their employees. Work places that don’t satisfy employees basic and higher level needs will find it increasingly difficult to attract and retain staff.

Not only do organisations need to meet candidates increasing salary expectations, they need to provide an environment where people enjoy, achieve and are actively engaged in their work. Leadership, strong organisational values, a great culture and team based incentives become increasingly important in this kind of environment.

Smart Organisations are being proactive in positioning their Organisation to deal with this storm. They are developing their Employment Value Proposition (EVP) and they are investing in building the culture of their organisation to maximise their ability to attract and retain their people. Increasingly successful organisations also measure the level of engagement of their workforce. They continually look for ways to deliver on the promises that they have made to their existing employees and look for ways to become more attractive to potential new hires.

The bad news for employers is that this situation is not a temporary. In spite of the Global Financial Crisis the ageing population and the mining boom mean that this storm is likely to continue to worsen for years to come. Organisations need to reinvent themselves and review how they engage their existing and potential workforces to successfully navigate the storm.

Activity based offices are designed to give people the freedom of how to work, where to work and when to work. There are no assigned desks and in most cases no private offices for executives. Team members are also encouraged to work remotely.

 Sections of floor space are tailored to different activities with “hubs” for smaller groups and individuals. “Clubhouses” feature more collaborative areas to encourage “brainstorming” and more collaborative activities. In Google’s case they have breakout rooms where staff can play table tennis, pool or even enter sleeping pods to rest and think creatively.

Although the concept is relatively new in Australia, ABW was developed in Europe over 20 years ago and it is now common place in most parts of Europe.

The Financial and IT industries sectors in Australia have embraced the European born concept and have reported a number of benefits including an increase of 15% increase in productivity, a reduction in staff turnover, significant increases in employee engagement and satisfaction since the move to Activity Based Working. A move towards ABW impacts positively on the Organisations brand and also on the Employer Brand as organisations are able to differentiate themselves based upon the office environment and the way that they interact with each other.

Another benefit of Activity Based Working is a reduction of up to 30% of office space required to house a typical organisation. Statistically, 55% of desks in an average office are empty at one point in time.

One of the greatest challenges of ABW is for older leaders in organisations to adapt and embrace the cultural change that this kind of office environment creates. Status is no longer derived by the size of your office, team members have increased freedom to work remotely so Managers can no longer rely on the “bums on seats” management approach and must adapt to the new role as a coach.

This approach to Office design is impacting the way people are working now. The younger generation has a clear preference to work in this way. Older leaders will need to adapt and adjust their leadership style.

The office design directly impacts how people interact, ABW is likely to become increasingly common-place as employers try to attract and retain the most talented people.

These analysts are wrong; the share price of the Organisation has fallen by almost 20% since the scandal started and has wiped billions of dollars off the company’s market value.  So how can it be that what happened in a tiny division of News Corporation has had such a monumental impact on News Corporation’s overall share price?

The answer is that the company’s reputation or brand has been damaged and that this reputational damage has impacted the News Corporation brand throughout all parts of the empire. Investors, employees, customers, and governments will now think twice before doing business with anyone associated with News Corporation.

Stakeholders and media are asking how this could happen in an organisation managed and run by the Murdoch’s, a family famous for their tight controls and scrutiny of their businesses. People are questioning the culture of the News of The World – clearly the culture of this business was one that emphasised “getting the story” and paid little attention to the way the story was obtained.

 Additionally, people are wondering what the culture is like in the other parts of the Murdoch empire?  If this culture is prevalent in other parts of News Corporation what other scandals will be uncovered?

On a very personal level both Lachlan and James Murdoch have had their personal brands damaged. One would have to seriously question if they are competent to be Directors of this or any other company?

From a legal perspective in Australia a Chairman and all Directors of the business are required to act with the care and diligence of a reasonable person in a like position in a similar company.  It would seem reasonable that if phones were being hacked and millions of dollars “hush money” was being paid that the Chairman and all of the Directors would have, or should have known. For a Chairman and Director of such a large company to blame the people that they appointed is not acceptable. In the end the buck stops with the Directors.

From an ethical perspective the Directors of a company have a responsibility for the culture of a company. If a company’s culture is allowed to develop in a way that is not in the long term best interests of all shareholders they can and should be held to account.

The Murdoch’s have created a very powerful media empire over many decades. The reputation of News Corporation has been severely damaged within a very short period of time and this brand damage has cost shareholders billions. At the end of the day culture influences a company’s reputation and reputations can be worth billions!

Good managers are described as being people and task oriented, honest, open and importantly, fair (Shroers 2009).  Good managers are also managers that show initiative, responsibility, drive for achievement and are emotionally stable (Yukl 2006). Managers that show surgency, conscientiousness, flexibility and intellectance have positive correlations with managerial effectiveness.  A negative correlation has however been identified with managers that exhibit agreeableness and fairness with managerial effectiveness (Yukl 2006).  This is also supported in a recent Harvard study that revealed that ‘fair’ managers are perceived by peers as less in control, less powerful and having limited ability to appropriately reward and punish.  Yukl’s (2006) research also suggests that being agreeable and fair as a manager can result in a diversion from task orientation in favour of interpersonal and emotional focus in the workplace.

To demonstrate this phenomenon, two high-ranking managers from Pfizer were examined as part of a Harvard case study into what makes a manager successful.  Whilst both managers were high-performing, it was the manager with a reputation for “toughness” and exhibited often abrasive behaviour that received a tap on the shoulder for the newly-vacant position of CEO.  This contrasts with the second manager with a reputation for showing respect, fairness and in turn being respected by her team members.  This ‘tough’ and strong management style was not only considered necessary for a promotion to the company CEO, it was also strongly favoured across other industries examined  (Wiesenfeld et al 2011).  It is these perceptions and the reputations of how powerful managers are, that most influence their promotional chances, rather than perceptions of how fair they actually are.

This in some ways demystifies why some managers do not behave consistently fair.  Managers see respect and power as two mutually exclusive avenues to influence, and many choose the latter.  Companies that support bad management can face dire consequences.  Those loyal to fair managers may be opposed to the promotion of new managers showing rude and abrasive management styles.  In the Pfizer case, it was found that employees loyal to the ‘fair’ manager resigned upon the appointment of the ‘tough’ manager to the position of CEO.

All is not lost – the species of fair managers are not destined to become extinct. Rather, changes in organisational design and culture can support managers exhibiting ‘fair’ management styles. Organisations can show support for fair management behavior.  Some simple examples include using a measure of fairness in managerial performance reviews.  Managers that are viewed as fair can also gain views of power.  This is suggested that patience is needed, however returns are promised through managers persevering with showing a fair managerial style.

The AFL has placed artificial barriers in the market to ensure that the rich clubs cannot simply go out and “buy” the best players. The AFL’s number one objective is to develop their brand. They do this in part by creating a structure that creates an even competition. A more even competition makes for closer games. Closer games enhance the popularity of the sport and this drives profitability.

The AFL’S salary cap combined with the AFL draft concessions limit a player’s capacity to switch clubs. This is in stark contrast to European soccer where there is a total “free market”

 In European soccer there are no salary caps and no restrictions on the recruitment and retention of players. This means that the wealthiest clubs like Real Madrid and Manchester United continue to get stronger.   They can recruit from anywhere in the world.  As a result these clubs have dominated European soccer for decades. Few clubs have the financial resources or the brand power to compete with them.

European soccer reflects the wider employment market. Employers compete in a global open market, with few restrictions. Large, successful organisations can offer their employees more money and more benefits.   Talented employees are unrestricted in choosing who they will work for.

Fortunately, smart clubs and smart employers know that players and employees don’t necessarily choose where they will play/ work based solely on the salary they will receive.

Indeed, there has been much research conducted into the role that salary plays. Salary is generally seen as a hygiene factor, or a factor that employers must be competitive on.  More important than salary is the psychological contract that exists between an employer and its employees, this specifically concerns mutual expectations of inputs and outcomes.

Indeed, there are numerous examples of players joining clubs where the salary that they receive is less that they would have been offered elsewhere.   Invariably players, like employees join and stay at the clubs who best address their collective set of needs. Clubs that consistently deliver on the promises they make in this psychological contract will attract and retain their players.

All professional sporting teams compete fiercely for the most talented players. These players make decisions about which clubs to join based upon monetary and non- monetary factors. Players want great coaches, strong relationships, a cohesive team environment, personal development, great facilities, common vision, a strong culture and the chance to be part of a successful team.

Increasingly loyalty and retention amongst professional athletes goes well beyond how much you get paid. Employees are no different.

If an organisation’s people have been exposed to years of excessive spending, risk-aversion, HR rationalising, bureaucracy, or even overly centralised control, then there could well be major obstacles to shifting that culture, especially throughout introduction of any new strategy and initiatives. Altering the behaviour, perceptions, and performance of teams of people to successfully achieve change is very difficult.  Take for example, downsizing, the more prominent implications of downsizing are actually in relation to the impact on culture (and not as one would envisage, upon cost savings or short-term productivity gain).

Sound strategy resonates with the culture of an organisation; it’s a natural fit if you like. That being said, cultural shifts are sometimes required to support a new strategy or framework in an effort to become a true value-based organisation. This is especially the case if that strategy necessitates increased cost containment, customer focus, speed, and a focus upon leadership & development.

Culture is heavily influenced by an organisation’s executives and managerial staff, through decision making and their strategic input and direction. It’s imperative that more managers commit to a greater understanding of the critical importance of culture; especially the assessment of culture. Only after people in an organisation recognise that the current culture needs to transform to support their organisation’s success and progress, can change actually occur.

By assessing culture more thoroughly, managers gain a far broader awareness as to the full extent to which their team are willing to accept change, and determine the root causes of problems which impede stronger organisational performance. Ultimately, the choice will come down to whether Managers allow the culture to grow/change inceptually, i.e. self-develop where individuals operate in self-defined silos / vacuums; or more wisely, those same Managers invest the necessary time and resources to proactively define the internal brand, culture and behaviours anticipated which best serve all team members, the organisation and the customers.