Appendix F Lessons from the private sector

Across private sector consultations, we heard from most organisations that flatter organisational structures suit the agile and flexible 21st century workforce. The most common number of layers from our consultations was eight, which is currently used at BHP Billiton, Challenger and Commonwealth Bank.  Organisations also told us that contributions made by individuals should be valued based on their work and expertise, rather than their level in the hierarchy. Telstra found that when job titles were consolidated and based on the work the employee contributed, their organisational structure was flattened.

Meaningful career progression was important to both employees and organisations engaged for the review. BAE Systems’ human resources function created a framework for career progression of their employees. It includes a number of education and other outcomes that employees need to attain in order to progress and is managed within the employee’s specific functional group, supported by HR as necessary.

Many organisations consulted identified with the Panel’s recommendation to properly recognise specialists and value their technical expertise. Similar to the APS, some specialists in organisations had previously been promoted into managerial roles in order to be remunerated appropriately and progress in their careers. Now, all organisations consulted have a specialist pathway, or are currently developing one, to ensure specialists are able to advance their technical skills and can have meaningful career progression without the need to become a manager unless they would like to do so. Aurecon and Johnson & Johnson have also incorporated an element of leadership by encouraging mentorships across their business’ to ensure there are continual opportunities for growth.

Spans of control across the private sector were consistent and commonly sat between 6-10 direct reports for managers. Some of the key factors that are used to consider if a manager’s span of control should be increased or decreased include:

• The complexity of the work that is being undertaken.
• Ensuring teams and managers feel supported and have manageable workloads.
• Stakeholder and customer relationships are able to be maintained.

Larger spans of control were noted to be used in service delivery areas and mining sites and narrower spans of control for highly specialised work.

All private sector organisations consulted had leadership training and/or programs in place: both modular ‘off the shelf products’ that can be rolled out at scale, as well as bespoke training for senior leadership. It was widely agreed that leaders need to be well equipped to successfully support their teams and deliver for the organisation. Some of the key elements that make up leadership training across the sector include:

• A leadership group, L40, at Aurecon who meet three times a year and discuss how they progress the leadership strategy. This is also used as a feedback session on the understanding of the leadership strategy and celebrated areas of achievement.

• Providing individual coaches for senior leaders at Commonwealth Bank who can assist with development plans. Consideration is also given to future leaders to ensure capabilities that might be required in the future are highlighted as what might be essential down the track.

• Ongoing leadership programs, as PwC Australia have identified that one leadership program will not mean competence for the rest of an employee’s career.

• Identifying that people leaders will be required to develop additional soft skills especially in the context of the COVID-19 pandemic, such as creating psychological security for employees at Challenger.

• Ensuring that people leaders are supported and are able to deliver outcomes and have open and honest conversations with their team members. Johnson & Johnson want their leaders to feel confident and empowered to have conversations and be their best self.

Strategic people management was highlighted to improve business performance when it is a core part of an organisation. In particular, BHP Billiton noted their Chief People Officer roles were really crucial in driving the desired culture and helping to influence and build leaders. This enabled them to set the culture from the top of the organisation and ensured that leaders modelled it. Similarly, Aurecon noted the need for people to be at the centre of their organisation, particularly given “they are in the people business”.

A leadership charter was important for most consulted organisations, allowing leaders to define and set the example of how an organisation works. Johnson & Johnson are closely linked to their credo as a “moral compass”, including management training and using it to guide their Executives in their decision-making. Performance against Credo responsibility is also rated in the form of a survey. This allows for accountability and highlights areas for development for Johnson & Johnson leaders. Similarly, NAB use their core values to provide a clear statement of ‘what we do and what we don’t do’.