The double bind of sexism

Sexism is a cultural challenge that is entrenched in many Australian businesses. It is completely counterproductive, as many businesses are currently struggling to attract and retain talented people in a very competitive market.

Women outnumber men in Australia and have high workforce participation rates. The Australian Bureau of Statistics regularly calculates the sex ratio – which measures how many males there are per 100 females. In the most recent reporting period, Sydney and Melbourne’s wealthiest urban areas were shown to have some of the country’s highest proportions of women – with 94 men for every 100 women in North Sydney and Melbourne’s inner south.

Sexism can be overt behaviour by individuals, or embedded in the cultural assumptions and work practices of a business. Whether or not you directly spot it occurring in a workplace, you can certainly measure the outcomes it produces.

2012 Australian Census of Women in Leadership
2012 Australian Census of Women in Leadership
Female Executives within ASX 500 companies

The 2012 Australian Census of Women in Leadership report shows that a mere 9.2% of key management executives at ASX500 companies are women. This compares with 14% for US Fortune 500 companies, and 19% for companies in the New Zealand NZSX100. The ASX500 companies with the highest proportions of female executives are in pharmaceuticals, telecommunications, retail, and transport.

The disparity in achievement within the public sector is striking, with women comprising 35% of all directors across government boards at a federal level. 56% of ASX500 companies have no women at all on their board of directors, and 63% of ASX500 companies do not have any women in key executive roles.

It is quite clear that few Australian businesses are seriously addressing the sexism embedded in their workplace cultures.

One of the most interesting recent academic reports into the underlying factors causing the gender “glass ceiling” was published by Terrance Fitzsimmons from the University of Queensland Business School, titled “Do Australia’s top male and female CEOs differ in how they made it to the top?”. Drawing upon the results of a large number of previous academic studies, Fitzsimmons outlines the “double bind”, a core dilemma faced by female leaders who make it to a position of power.

In a nutshell, female leaders are viewed negatively by their direct reports when they are consultative, and also when they are assertive. In contrast, male leaders are perceived as more competent when exhibiting exactly the same behaviours. These perceptions can be seen played out in the daily media reporting of the federal election battle between Julia Gillard and Tony Abbott.

In response to the failure of the business community to improve female participation at leadership levels, some commentators have started openly demanding legally enforceable gender quotas for businesses. While binding targets are not likely to be introduced by any Australian government in the short term, the federal government have introduced several measures to combat workplace sexism and gender discrimination, with the most noticeable being the Workplace Gender Equality Act 2012. The main thrust of this federal legislation is to promote transparency, equal opportunity and equal pay in the workplace.

Workplace culture has a very significant effect on employee productivity, innovation, and retention. The entire organisation can greatly benefit from a culture that is more cohesive, flexible, and diverse. It is also crucial to remember that women are not the only people facing discrimination when applying for promotions within a business. People with disabilities, members of the LGBTI and Indigenous communities, and even older workers face very serious prejudice in recruitment processes.

Workforce recruitment and retention programs within many ASX500 companies are clearly failing. Business leaders need to lead by example, immediately speak out against sexism when it occurs, and take personal steps to ensure they hire, mentor, and promote a diverse range of people within their teams.

Managing wage risk

In a now almost ritualised gnashing of teeth, business lobbyists descended again on Canberra last week to hear the results of their latest efforts to influence the Fair Work Australia minimum wage determination.

A quick read of the report makes it clear that Fair Work Australia is really quite unsympathetic to demands for corporate welfare. It is hard to imagine a more scathing dissection of the demands put forward by the retail and hospitality industries.

Responding to the report, the Australian Retailers Association and the Australian Hotels Association, effectively declared war, claiming that the new minimum hourly pay rate of $15.96 will drive their industries out of business. It does however seem quite ironic that industry lobbyists are paid to talk down the people they represent, painting them as an economic basket case.

Unfortunately for retailers, Fair Work crunched the latest ABS figures, finding no link between wage rates and the widely documented structural change being forced upon Australian retailers by the Internet. Solid profits in the hospitality sector certainly didn’t add credibility to their demand for special treatment.

Choosing different battle tactics, the ACCI announced that they were disappointed that the wage increase wasn’t smaller, taking the opportunity to remind us all that the carbon tax will smash Australian businesses in 2012. Perhaps the well funded lobbyists at the ACCI have uncovered some new meaning in some ancient Mayan prophecies.

In Australian cities, market rates apply for wages. In an era of full employment, offering the minimum wage to attract skilled labour is laughable. The minimum wage is a mirage.

There are many specialist job roles which already struggle to fill positions even when wages are offered well above market rates. In these situations lengthy expensive searches for skilled migrant workers are required, using contentious 457 visa arrangements.

Adopting a rock bottom wages strategy not only limits your ability to fill a vacant position quickly, it is a poor strategy to choose when building a productive workforce.

It is also worth considering how productive your employees will be if they are struggling to feed their families and pay basic bills. The Fair Work report details the reality of the minimum wage, indicating that government welfare and tax concessions already provide a significant portion of the income received for people on the minimum rate. Without that subsidy, market pressure on wages would be higher.

On an economy wide basis, one of the most interesting observations in the Fair Work report is the changing balance between corporate profits and wages income within the economy.

Across the entire economy in December 2011, total income from wages was 53.1% of all income, while corporate profit was 28.5%. In 2001, the corresponding figures were 54.6% for wages and 25% for corporate profit.

Perhaps this simply reflects improved productivity, but it could also be due to the popularity of outsourced labour arrangements. Using these strategies to reduce wage costs does create some major new business risks, as has been seen recently by the construction and mining industries, which rely heavily on workforce “subcontract” arrangements.

The sudden collapse of the Hastie Group is an example, as the firm was a key skilled workforce supplier to many large organisations. The unexpected collapse left their clients without specialist workers, leading to a desperate scramble by their clients to directly hire Hastie employees.

Recent events have also shown that the structuring of outsourcing arrangements is also coming under more government scrutiny. The legal costs faced by Coles are likely to end up dwarfing the pittance they saved by outsourcing trolley collection at a few stores in Adelaide.

Leaders should consider carefully how they balance productivity and wage expenses, and the levels of operational risk they are willing to take to reduce wages expense. Outsourcing and subcontracting arrangements can greatly improve your workforce flexibility, but savings can quickly evaporate when skills are in short supply.

Taking the risk out of diversity

The top ranks of Australian big business have garnered a well-deserved reputation for being a boys’ club. In 2011, 250 of the top 500 ASX-listed companies had zero women on their boards.

Despite the ongoing lobbying of the Diversity Council of Australia, appointments to directorships at ASX-listed companies have long been the almost exclusive domain of a rather homogenous group of men.

A 2011 research report by the Reibey Institute into the board composition of the 500 largest ASX-listed companies found that a mere 235 individual women held directorships in our largest public companies. Those women held a grand total of 10 chairperson roles and 307 directorships.

A more sensible team balance is clearly needed by many companies, and it is not just a matter of hiring more women. Skills and age diversity are also relevant, and are also lacking on many boards. Boards are meant to represent shareholders – not the interests of the incumbent management team.

While the DCA regularly promotes studies which attempt to link company performance with board diversity, a lot more research needs to happen before we really understand the numbers.

A very controversial recent study by the German Bundesbank looked in-depth at how diversity within executive leadership teams impacted overall risk management within the German banking sector between 1994 and 2010.

The uproar created by the study was intense. The study effectively found that German banks which had higher levels of female executive participation at a CxO level (between 1994 and 2010) had taken measurably higher risks.

While hyperventilating critics paint the report as another piece of misogynistic propaganda, it is worth looking deeper. If anything, the study findings argue that CxO level executive experience and qualifications are absolutely crucial to organisation-wide performance. The conclusion presented is that mandated quotas for female participation led to people with lower levels of experience being appointed, resulting in the adoption of higher levels of risk.

The simple reality is that many Australian businesses could benefit from taking a few more risks. Attracting a more diverse range of people (and skills) to your executive team will give you a wider set of experience to draw upon when you are facing challenges.

Diversity is not a compliance issue. It is a leadership issue that needs to be dealt with seriously by every level of your organisation. Sensitivity to workforce and customer diversity should be embedded into business processes, employee retention programs and hiring policies.

Quotas are the real risk to business performance, as they can sideline team members who have the highest levels of skill and experience.

The shifting balance of workplace relations

Workplace relations is about to become a lot more important for businesses that are looking to grow, and it has little to do with political sabre rattling from Canberra.

The ABS employment figures for February 2012 indicate an unemployment rate of 5.2% unemployment, with an additional 7.3% of people being classed as underemployed, or looking for additional hours of work. With Australia’s workforce participation rate effectively stable, we are clearly at full employment, and skill shortages are already quite painful for some industries.

shifting balanceThe figures indicate that many organisations have reduced their employee work hours, rather than completely firing people when business slows down. Being able to flexibly adjust employee hours is a quick mechanism to pump up profitability when business hits tough times.

But there are some rather serious consequences to be considered. The report went further, indicating that 56% of all underemployed part-time workers preferred to work full-time hours. In effect, almost 4% of the workforce would happily shift to a full time job – if the opportunity came their way.

In the current business reality of full employment – which is unlikely to change anytime soon – many businesses will clearly soon find themselves struggling to hang onto their casual and part time workers.

To make matters worse, a newly announced research study by the University of Sydney Workplace Research Centre has indicated that blue collar skills shortages are likely to become worse.

The study, which was union funded, points out a rather simple fact. That wages being paid to apprentices are falling well short of market rates. The consequences for businesses have been pretty dramatic,  with 12.5% of job vacancies for electrical apprenticeships in the Sydney region being unable to be filled. Critically, out of those who are eventually recruited, 40% of apprentices drop out before completion, with pay rates being cited as a major cause of drop out.

For any business that currently relies on casual and part time employees for key sections of their operations, this means that employee retention strategies are not just going to be necessary – they will probably be a matter of survival.

Think more than twice before firing

There are plenty of areas where technology has changed the way we work as teams. On a typical day, most of us rely on a combination of phone calls, email, and SMS. My more adventurous colleagues use IM tools, document collaboration, and even Twitter. Many people are already comfortable organising their personal lives using Facebook, so I think it is rather obvious that we now have plenty of ways to share information.

The way Twitter has been granted pseudo celebrity status by many journalists says a lot about how much our lives have changed. Many credit Twitter as the force behind the recent revolutions in the Middle East. Perhaps a Nobel peace prize is just around the corner?

Contrast this with the recent fall from grace for the humble SMS text message.

While hiring processes are inherently optimistic, not every new recruit is going to work out. One of the toughest tasks in management is successfully restructuring a team, and terminating employees. For everyone involved it can be a real emotional rollercoaster, and incredibly disruptive to the remaining members of the team. So it isn’t surprising that some managers would rather avoid direct confrontation, and try to find shortcuts.

So why is it risky to sack someone via SMS? And what about Twitter, Facebook, or even email? We use these tools everyday, so why is it wrong?

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Patchwork pressures and the long term unemployed

The prime minister is certainly an interesting person to watch in an interview, but her speeches can be a little underwhelming. I suspect most journalists have started to tune out as well, which could explain why there is so much reporting of Hitler saluting pollies, and the machinations of a politician – who has managed to become a party leader before being elected.

Gold nuggetWhile she was doing the rounds in Sydney this week, the Prime Minister dropped a few useful nuggets in a speech. So thank goodness for speech transcripts.

Apart from the usual talk of the 2 speed economy – or “patchwork pressures” as she likes to describe it, there are a lot of warnings of tough times ahead.

The 2 speed economy is hardly news for anyone living in New South Wales over the last few years. It will be interesting to hear the reaction of the newly elected NSW state government when the reality of upcoming Keynesian inspired federal government spending cuts sinks in.

If we are going to be Keynesians in the downturn, we have to be Keynesians on the way up again. That means hard decisions lie ahead.

Amongst it all, it was good to see that Gillard’s focus will be on increasing the pool of skilled people in the workforce. So far it seems like it will amount to adult literacy programs, and putting “incentives” in place to get the long term unemployed to turn up to job interviews.

For some businesses with moderately skilled workforces, a makeover and skills refresh for the long term unemployed will probably help. But workforce demographics are already looking ugly, and skilled migration and foreign student programs have been slowed to a trickle.

Many businesses will clearly struggle to fill jobs for years to come. Effective employee retention and development programs will be vitally important for many industries over the next few years.

The culture of rogues and revolving doors

Finding enough hours in the work day is a serious challenge for many business leaders. To fit everything into a hectic workload, regular feedback and mentoring sessions with direct reports are often sacrificed.

There will always be people who like to moan about their jobs, and take up serious chunks of your work day with their concerns. After work social activities can be a useful release valve for your employee frustrations, but it is worth making sure that frustrations are properly addressed in a more formal way. As seen within the Australian Navy, extreme behaviours can start to be considered “normal”, and severely damage the image of the organisation.

When a serious problem springs up, many CEOs tend to naturally focus on repairing the public image of the organisation. Other very signficant issues can easily be overlooked – such as increased employee turnover.

Nipping a problem in the bud is always going to be cheaper. Some useful KPIs which can help you spot the early signs of an emerging problem with corporate culture include:

  • employee attrition trending upwards
  • service quality measures declining
  • absenteeism rates trending upwards
  • use of sick days increasing

A sexual harassment complaint is clearly one of the clearest possible signs of problem. While they can be isolated incidents, they are typically intertwined with problems in corporate culture, and often become highly publicised.

Revolving door

The Australian Human Rights Commission has produced guidelines for businesses working through sexual harrassment complaints processes. They have found that 86% of complaints involve a male harrassing a female co-worker, and that 60% of cases involved a more senior person harrassing the complainant. Recent high profile Australian cases in business and sports are now being touted as causing an increase in legal action, as aggrieved parties realise the potential size of settlements.

When scandal hits, the villain is sometimes a rogue employee. Whether the sin be fraud at Satyam, sexual harrassment complaints at David Jones, or racist and anti-semetic public comments by a top employee at Dior – there is often an obvious villain.

While the rogue may get much of the public attention, it can be easy for a disconnect to develop between the public corporate message, and the reality of the corporate culture perceived by employees. Legal advisors offer little help to leadership trying to avoid internal damage to workforce efficiency and corporate culture.

Disconnects can be devastating for employee performance and retention, and increase the chances of further problems emerging. The ongoing scandals uncovered within the Australian Navy clearly directly impact recruitment and retention, damage the reputation for defence related organisations, and are one of the most extreme examples of systemic failure of leadership you will ever find.

Even relatively minor problems with corporate culture can lead to higher employee attrition, and seriously increased wage costs. In addition to the expense of recruiting replacements – which is often 25 to 40% of salary – industry wage rates rarely decline. Hiring at today’s salary rates is inevitably more expensive than retaining an employee for 6 years with modest annual salary increases.

To give this some perspective, you might be interested to know that the Northern Territory has consistently had one of the highest population growth rates in Australia. While achieving that total growth, it also manages to have the highest proportion of residents leaving each year. 7% of the entire NT population leave every year, resulting in a rapidly spinning revolving door of population change.

Darwin would already be one of Australia’s most propserous cities – if they could just slow down the exodus of skilled residents. Many corporates would be overjoyed to reduce employee attrition to a mere 7%.