Christina Boedker

Lifting Australia’s productivity is an ongoing challenge. Business leaders have blamed the industrial relations framework and almost every day there are calls to make labour more flexible – to some, this means cheaper and more disposable.

But manipulating staff as inputs within a market equation is not a sustainable way to lift productivity. Cutting wages and conditions is hardly an incentive for individual employees to work harder and produce more.

A critical part of lifting workplace productivity is having a great boss. Great bosses are those that enable workers at all levels of organisational hierarchies to lead change and be the best they possibly can.

Ongoing research that I have led since 2009 has canvassed more than 5600 employees at 77 Australian companies. It clearly identifies leadership as having the greatest correlation with firm productivity and profitability. It is the interpersonal and motivational skills of bosses that prompt staff to exercise discretionary effort.

Front-line managers especially have the strongest impact on profitability. This level of leaders manages important relationships with customers and has the biggest span of control.

Great leadership is about valuing employees and being compassionate. Compassion does not necessarily mean being soft: sometimes as leaders we have to ‘be cruel to be kind’. This will involve having hard conversations.

Compassion is also a two-way thing. It flows from the ‘top down’ but also, importantly, from the ‘bottom up’. In other words, hard conversations must be initiated by all staff, including subordinates. A great leader then, is a person who values feedback and criticism as learning opportunities.

The key question for Australia in future decades is how to sustain our position as a leading economy. Enterprise bargaining during the 1990s got the productivity levers moving at a workplace level, but what is the next big thing for moving Australia’s productivity agenda forward?

Focus could be provided by a new entity, such as the leadership institute recommended by the Prime Minister’s manufacturing task force. It could help firms lift leadership skills through education and research programs. And it should work with all sectors, operating collaborative industry projects that collect and benchmark productivity data to generate new policy insights.

Here, too, a compassionate approach will be required. A government-sponsored initiative can provide support and offer leadership, but unless it fosters the co-operation and engagement of industry and workers across all sectors, nothing will happen. Government, enterprise and its associations, unions and others all have to come together to jointly drive this agenda.

Dr Christina Boedker is a senior lecturer at the Australian School of Business. She will discuss her research at the Australian Graduate School of Management’s 35^th anniversary conference in Sydney on 11 September. This opinion piece was previously published in The Australian Financial Review: Bosses are key to productivity.

Professor Chris Styles

Workplace Relations Minister Bill Shorten’s comments yesterday that managers need to do more to improve employee engagement shines the light on the current productivity debate on the quality of management and leadership in Australia. Is he right and what should be done about it?

Firstly, there is no doubt that Australia’s productivity is not at the level it should be, particularly when compared to other OECD countries.  The 2009 report Management Matters – How productive are we, completed for Department of Innovation, Industry, Science and Research concluded that one of the causes of our lagging productivity was that while some of our organisations stack up well with the best internationally, there are too many that don’t perform well at all, particularly when it comes to managing people. 

Getting people, processes and systems to work productively is a challenge and the responsibility of everyone in an organisation, but in particular those in managerial positions.  Creating, encouraging and reinforcing the right environment within an organisation drives innovation and, in turn, its productivity.  More productive organisations obviously result in a more competitive Australia.

However getting people, processes and systems to work productively is a lot harder than it sounds and while there are some proven principles, there is much to be discovered.    This has profound implications for the way we develop managers.   We not only need to draw on what research tells us works, but also instil a mindset of constantly finding new and better ways.   In the same way we emphasise innovation with respect to products and services, we also need a focus on innovation in business models and management practices.

As part of this, the debate in Australia would do well to go beyond “employers vs. employees”. Indeed the distinction between the two is rather blurred. Is not someone in a managerial position also an “employee”?  Anna Booth from the ACTU has a point when she says the current IR system is entrenching a ‘Unions vs. Management’ mentality.

We also need to think through what forms of organisation are needed now and may emerge in the future to meet customer demands.  Then taking into consideration the changing needs and aspirations of the workforce, we need create and develop the most productive models of management.  There isn’t – and won’t be – just one right answer.  

This leads on to the kinds of skills, attributes and knowledge needed by managers. Acquiring and developing these will be the result of experience, experimentation, coaching and structured learning experiences.  Getting this right will require dialogue between organisations, business schools, unions and government as to how to equip current and future managers with the mindset and tools they need. If ever there was a time for collaboration, it is now.

Chris Styles is the Deputy Dean and Director of the Australian Graduate School of Management.

This article first appeared in the Australian Financial Review, 14 February 2012.