Despite pressures on businesses intensifying and profitability for many falling, the cost of living continues to soar putting the topic of our long term viability as a nation squarely back on the table.
On one side we have business owners and investors seeing returns continue to fade while on the other side the outlook for workers remains gloomy as inflation takes hold. Indeed for most New Zealanders things are looking no more rosy today than they were a year or two ago even though business confidence in certain sectors has been somewhat restored. The challenge we face, irrespective of where we sit, is the same in that it is costing us more to live as we aspire to and yet we are earning on the whole less for the work we do. While some would argue the true cost of such pressures hurts workers more in that they can afford to be squeezed less, very few of us are advancing as we might meaning the challenges we face as a nation are shared by us all.
The Don Brash led 2025 Task Force and the recently formed Productivity Commission have, and will continue to in the case of the Productivity Commission, pointed out a number of policies and structural reforms that could, if we had the courage to pursue them, provide us with a better long term future. However, without widespread support, very few of the proposed solutions are likely to be implemented meaning we are likely to gain less from such investments than we otherwise should. What then can we do to engineer a better future that costs us proportionately but benefits us equally?
One potential key player could be the Unions. Historically the Unions played a crucial role in the modernisation of civilian life by opening our eyes to the plight of those less fortunate thereby enabling us as a whole to reflect on what is right. Today however the Unions, because they have been unable to chart a meaningful long term course, do little more than remind us of how things were and how they would be again if they were to disappear. On the other hand, if the Unions want to remain strategically relevant and thus of value to those they say need them, they may wish to explore a different path that could help solve our problems rather than reinforcing a view that contributes to our shortcomings.
The premise of opposing teams has, in my opinion, had its day. We all know the only companies that will succeed in the future will be those who build a team, ‘one’ team, that understands there are only two outcomes. Either we will all fail – eventually – or we can succeed. It won’t be common for organisations operating in a modern world to sustain the idea of winners and losers being employed under the same roof. We will either play together and enjoy the benefits of our efforts or fight amongst ourselves and lose out to those who don’t.
A question I have often asked is do the Unions position themselves as they do because they believe their members need them to take such a stance or do they position themselves in the minds of their members in such a way to ensure they remain concerned? In other words, who needs who? Do workers in this nation need an organisation to fight for their rights or do the Unions themselves need workers to remain fearful of exploitation in order to sustain their presence?
In my 20 plus years of business I have never come across a successful business owner or director who believed the way to win was to look after their workforce less. That said I imagine there are still a few unscrupulous businesses owners whose failure will come about as a result of their efforts to exploit rather than building something of substance and value. As we modernise as a society, businesses will become increasingly transparent and as they do their treatment of resources will become ever more apparent – including, importantly, their attitude towards their workforce. As such, I believe the advancement of the market will in fact become the primary driver of improving worker’s rights rather than the Unions as they would want us to believe. For this reason, of which the Unions are presumably aware, they will need to examine the role they play in the future in order to ensure their survival i.e. what will they do if their members are treated fairly and thus their need for protection continues to diminish as most of us would hope?
I believe the role of the Unions could in fact be even more significant going forward than it has been in the past however they will need to reinvent themselves in order to experience such an outcome. The role I believe they need to play (given their name derives from the word ‘united’ - not as a group against others but as a group in its entirety) is how they can equip their members with the tools to add greater value to an organisation and therefore become a more valued asset in the eyes of an employer. In other words, rather than fighting for member rights in order to try and improve their predicament (better wages and working conditions etc.) they could in fact shift their focus to becoming better ‘strategic enablers’.
I can envisage a time when the Unions, if they were so inclined, could enjoy a period where rather than creating fear in order to justify their existence and increase membership (which has extraordinary long term implications in that it undoubtedly compromises the quality of the relationship between employee and employer as it is based on presumed mistrust rather than one of alliance or partnership) could in fact be supported by employers because of their commitment to improve their members capability. If organisations felt the Unions were there first and foremost to enable their workforce (members) to become better performers, the organisations themselves could become their principle sponsors. If the Unions could get their heads around the idea that things could be different, they could in fact improve their member’s conditions (being the reason for past efforts) by enabling them to become increasingly productive.
The undeniable truth of the matter is that every worker in this country can only be paid a certain amount depending on the profitability of the organisation they work for. If the workforce requirements get beyond a level at which the company’s long term viability is compromised, they may very well become the entity that causes that ship to falter. While Unions and other employee advocates rightly say the recognition and rewards they seek for their members are necessary to ensure they can sustain their way of living, their demands may prove the catalyst that undermines their employer’s ability to continue trading - unless they improve the value of their contribution.
Perhaps a way organisations can further this discussion is to enter bolder debates with their workforce about purpose – being the reason for their existence. If people understood the purpose of an organisation, at least a profit focused one, is to generate revenue (wealth) for shareholders, they may be more inclined to want to become more involved. Not because they will be motivated to make their shareholders wealthier, but because they will realise their reason for working is no different than those they work for. If they recognised their motivations are the same i.e. to generate an income to sustain a way of life, they may be more inclined to want to know how they can make things better i.e. how they can benefit more from their time together. In other words, the employee employer relationship is an extraordinarily important yet somewhat unique one in that both parties need the services and support of the other to achieve their aspirations however unlike most long term relationships we experience in life, there is often no additional obligation to keep the parties together.
I believe employers in the future will know beyond doubt the performance and capability of their people is their greatest asset. The only way they will remain profitable is if they can not only retain their workforce but keep them engaged – otherwise they risk losing them to a competitor. For this reason the advancement of the market will be the principle mediator. In order to develop competition for such conditions to prevail, the Unions need to engage in a different strategy – being one that is dedicated to helping their people become more competent and effective workers in order to help their companies become better and more profitable players. By improving their employer’s profitability, they themselves will influence their ability to be paid more handsomely.
It is of no surprise many of the best companies in the world also tend to be the best employers. Perhaps the reason they do so well is because they see their staff as the key to their success rather than as an asset to be flogged. That said, I would suggest the single greatest inhibitor to deepening relations between employers and employees, and thus an on-going frustration for business owners, is the mind-set of union members because of the Union’s current stance i.e. their on-going efforts to try and cause their members to believe they will be taken advantage of if they don’t have their backing and support when in fact the opposite is more common i.e. because the Unions take an opposing stance, they put their members in a precarious position by turning them against their employer. That said, I appreciate the role the Unions have played in bringing immoral practices and indeed practitioners to our attention however the value they provide their members in the future is in question unless they are willing to engage in a deeper conversation about how they can utilise their experience to equip their members with the tools to improve their performance and thus increase the value of their contribution.
I often observe within a workforce an uneducated assumption or mind-set that presumes their commitment to a firm should not only guarantee their financial security, but provide the funding for their chosen lifestyle. What I mean by this is many workers choose to assume their exchange of time will assure them of not only on-going employment, but of increasingly comfortable living - which in my opinion would be a bit like an athlete joining a team on the basis that his commitment will assure him of a victory - rather than accepting the financial security we seek (in order to fund the lifestyle we wish to enjoy) is a consequence of, and thus proportional to, the value of our contribution. In other words, security cannot be demanded as many in the Unions seem to think but it can indeed be realised if we focus on the value we add. If we can enable employees to recognise that their security is in truth nothing more than a consequence of their performance, they will be more inclined to want to know how they can improve the thing that matters in order to be better rewarded. If we can help employees understand the better their performance (contribution), the more important they will become, and the more important (strategically relevant) they are, the more valuable they will be. Of course, the more valuable they are, the more they will be remunerated. Hence the reason I believe the Unions are better placed than anyone to initiate this conversation meaning no other party could do more for our economy – and in turn for their member’s loyalty.
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