Enlightened NZ employers more worker inclusive - EMA

An employment specialist says the 'master-servant' relationship between bosses and staff is long dead in New Zealand, and consulting with staff on changes is common place.

The employers and manufacturers association's David Lowe responded to comments made by visiting US management consultant Dr Tom Schneider, who was brought to New Zealand by the public service association to meet a number of government organisations.

Dr Schneider told NBR ONLINE that for organisations to be high performing, managers need to ask staff what the problems are, and include them in the process of coming up with solutions.

He says this does not happen in most companies.

But Mr Lowe says New Zealand has a strong culture of staff inclusion, and in fact, it is a legal requirement for staff to be consulted on changes.

"The old master-servant approach to running a company is very outdated in New Zealand.

"Most employers and businesses do not run that type of arrangement, they run a more collaborate and inclusive style of management."

Mr Lowe says the recent changes made at the Ministry of Foreign Affairs and Trade is a good example of this process being used.

In February, MFAT chief executive John Allen signalled more than 300 jobs would be cut from the department, but after opposition from staff the final number of job losses was 79.

Mr Lowe says the public sector is usually very good at including staff in the change management process.

"Usually, the public do not see that happening. It is a matter between the employer, the employees and their representatives. The MFAT example is one of the few occasions where that became public."

Large organisations face the biggest challenges in terms of including staff, says Mr Lowe.

"Just getting all the good ideas from everyone in a large company through to the decision makers can be very hard.

"Sometimes things can get lost in translation," he says.

"Achieving that two-way communication flow is one of the things they have to keep working on because it is hard." 

The full interview with Dr Tom Schneider:

Public service leaders in New Zealand are too timid to make the tough decisions needed to improve efficiency.

That’s the view of visiting management consultant Dr Tom Schneider, a former policy adviser for presidential candidate Bill Clinton in 1992.

Dr Schneider has been brought to New Zealand by the Public Service Association to meet chief executives from a number of government organisations including Corrections, Justice, Customs, several district health boards and Auckland Council.

Speaking to the NBR while in Auckland, he said he had been here for about a week and met with people from 10 different government departments so far.

He said a major shift in culture was needed but most civil sector leaders were too timid to lead the charge.

“About 20% are true leaders and ready to implement change, 60% are in the middle and waiting to see what happens and 20% are resistant to change.

“That is pretty much true in any organisation.”

The government needed to identify these leaders and give them the resources and support they need to make a change, he said.

Dr Schneider’s observations of public sector restructuring were that they usually amounted to little more than “moving the boxes around. “Making cuts does not change how you do things. You may have fewer people doing things but they’re doing it in pretty much the same way so they just have to work a lot faster.”

There needed to be a fundamental shift in the approach to problem solving, both in the public and private sectors,” he said.

This occurred when an organisation’s frontline staff were brought up to the same level of management and were involved in the processes.

Staff in public sector organisations would often be sceptical of change measures because they could view it as another “flavour of the month strategy,” Dr Schneider said.

“But if they sense that the change is real, then they will absolutely embrace it and I haven’t seen a country or an organisation where that has not been true.”

Public sector restructuring has been building up since the 1980s but has only really started to take off in the past 10 years.

Thirty years ago, the private sector went through a massive change due to globalisation, technological advances and changing market structures, he said.

“The public sector, for the most part, has not gone through a similar restructuring.

“Now, as governments face huge deficits, voters throughout the OECD are starting to push back on governments, looking for the same sort of reforms.

“Voters are looking for high- quality services but they’re also looking for greater efficiency, and in most cases for lower cost.

“They do not want their taxes to rise and they want lower debts. These are the same sorts of pressures the private sector starting facing in the1980s.”

“Everyone understands that meeting customer expectations and the performance objectives of the organisation is accomplished by the people who actually do the work.

“Management’s task is to make sure they have the skills, knowledge and resources to do the job.”

But this did not happen in most companies.

Dr Schneider said in a traditional organisation, management would tell their workers what the problems were and how they should fix them.

“In a high-performance organisation, the manager goes in and says: ‘We aren’t getting the results: tell me what the cause of the problem is’.

“So the manager, instead of being a boss telling people what to do and checking up on them, is now recognising the people who have the knowledge to solve the problems are the people who do the job.”

Employees then owned the problem, he said, and would approach it as they would a problem with their own house; they would go back and keep working on it until they got it right.

Dr Schneider said organisations would not get the best out of their staff by kicking them out the door and effectively “moving the deck chairs around” with the workers who remained.

He said if organisations implemented a long-term plan of involving staff in the day-to-day running of the organisation, staff turnover would be lower and performance would be improved without ever having to lay off workers.

Companies such as Unilever, Proctor & Gamble and 3M in the private sector and Kaiser Permanente in healthcare were examples of organisations that had gained market share and improved productivity while actually increasing the number of employees, Dr Schneider said.

Stripping costs from healthcare sector

Dr Schneider has been consulting for organisations since the mid-1970s.

Some of his clients include Exxon Mobil, Bell Canada, Australia Post, Yale and Harvard.

He is also on the board of advisers for the Centre of Australia and New Zealand studies at Georgetown University in Washington DC.

One of the biggest organisations Dr Schneider was involved in was Kaiser Permanente, the largest healthcare delivery organisation in the US.

This highly unionised company has 167,000 employees in 569 different locations, including hospitals, clinics, and offices.

“In 1996 it was on the verge of bankruptcy and was in a very bitter, public war with its unions.

“We started by getting labour and management, who didn’t get along at all, working together to improve performance through an engagement process.

“So the union and the workers were at the table, at exactly the same level as management. They were all in it together.”

Initial changes delivered close to a billion dollars in cost savings, followed by the setting up of small “unit-based teams” throughout the company, which saw doctors, nurses and management working together on day-to-day problems.

“It could have been secondary infections or how long it takes for a patient to get an x-ray done, the time for a lab test to come back, that sort of thing.

“The people who actually deliver the services were figuring out what thereal problems were, what the causes were, then what the solution was and how to implement it.

“And that is a continuous cycle.”

Dr Schneider said Kaiser Permanente now had thousands of such teams, which had drastically reduced staff turnover.

“According to their numbers, it used to cost $88,000 to replace a single nurse. At one point in time, they had almost 20% turnover of nurses.

“They have 47,000 nurses. So a huge amount of money was being lost, and by working together they’ve cut turnover to into the single digits, saving them literally hundreds of millions of dollars.”