Partnership Resource Centre
Workplace Partnership – Northpower and the New Zealand Public Service Association
4. Change Viewed from a Conceptual Perspective
While no one interviewed suggested the company has deliberately followed some sort of theory or conceptual model through this transformation, it has nonetheless attended to some broader dimensions of change, perhaps more so than many other companies. Comments thus far clearly indicate that the individual values and aspirations of people have been attended to and developed alongside the various developments of structure and service provision. For example, it is important to note that structural changes (separating network from contracting) and human resource practices (paying people according to how they perform) were both important in transforming the company. Thus, Northpower has attended to two broad dimensions of change: inner and outer shifts.
Not content with simply focusing on the delivery facets of change (as many others do), Northpower has attended to the inner shifts that are so important in sustaining change. The company and the union have facilitated both the shifts in staff attitudes and behaviours and the shifts that occur in structures. It might be tempting for people to say, “Well, look, they are paying their staff well – of course, they are successful.” This overlooks the fact that the company’s growth has occurred over a sustained period where increases in pay are not substantially ahead of the market, but are regarded as fair by both parties.
The model above shows how, when the two shifts of change (inner and outer) are attended to, the facets necessary to make change successful and enduring come together to build internal capability, externally delivering what is required. Building capability with a focus on aspirations and behaviours will not, on its own, deliver what is required. Likewise, focusing on processes, strategies, systems and so on will not, on its own, deliver what is required.
High-performance practices
Northpower has restructured its service delivery and actively worked to meet staff and union concerns. It is also useful to consider from a theoretical perspective what else contributes to the sustained success of this company and its relationship with staff.
In his book, The Human Equation: Building Profits by Putting People First, Jeffrey Pfeffer (Professor of Organisational Behaviour, Stanford Graduate School of Business) identified seven practices that highly successful companies engage in. In many ways, Northpower reflects such practices, as highlighted below:
Employment security - fundamental to most of the following high-performance management practices.
Northpower are not looking just to be a low-cost company or one that competes only on the basis of cost. It operates a "values approach" rather than a cost-based approach. In Northpower's case, this approach means it considers the value it provides to customers. This is evidenced by its adherence to hassle-free service for the customer and returning dividends to its consumers through line charge holidays. Because of this values-based approach, the constant threat to people's jobs as a cost concern is not a feature of management or employee thinking. Through continued growth and by expanding its contracting base beyond Whangarei, the company is not only providing employment security, but is also increasing employment opportunities.
There is also evidence of how long-serving staff have suffered illness with significant time off (weeks as opposed to days) and been very well supported and able to return to work. Companies less focused on providing employment security tend to focus on what the employment agreement allows and the remedial actions that can be taken and enforced.
Selective hiring of new personnel through rigorous processes identifying appropriate attitude ahead of learnable skills.
Northpower maintains a careful approach to who it accepts into its "family", and it is this family approach that assists it to be discerning about what is required. Most new employees are already known by someone in the company before they have their first interview and known by someone who is knowledgeable about what it
takes to succeed as an employee of Northpower. More than one interview may be necessary to secure a position, and because of its reputation in the community, it is an employer of choice.
"The relationship with the PSA is a definite part of the culture. I know Barbara Harrison [HR Manager] is working on a programme for developing skills in key positions so we have effective succession planning. We would rather keep key positions vacant and work around the difficulties with the vacancy, than get the wrong person who couldn't sustain the relationship. We'll get other people to stand in and take parts of the job if necessary." HR Advisor
Self-managed teams and decentralisation of decision-making as the basic principles of organisational design.
Significantly, more empowerment of staff was possible when the company separated its network business from its contracting business. Once where staff had to come back to the centre of the organisation for authority, skilled workers in teams can now make day-to-day decisions about how their team is organised and what its priorities are.
"Northpower has more paperwork than ever. It's just a fact of life. But gangs have the freedom to make the call, and the bosses will back you up if you act within the rules and the scope of your authority. Cell phones are a great help for checking things out with the supervisors at home base. We've changed from having to get supervisors out to jobs. The gangs are smaller now than they used to be, and it tends to be that the team makes the call - not just the foreman." PSA Delegate
While teams may have more active responsibility for problem-solving at the appropriate level, productivity and timeliness of performance is very much to the fore in team thinking.
"Contracting work is fully ready to be performed when it is assigned. People within the contracting team have their own project management and are empowered to solve their own problems. The mindset in the contracting group is how we can do three jobs instead of the two that may have been planned. One of the main contributors to this productivity is being very clear about what is required. The guys take pride in their work and know what it takes to do a superb job; they have a very clear understanding." Chief Executive
Comparatively high remuneration based on company performance.
"Anyone will say that the goal is to make money through others, but not everyone can carry it out. The key is to make sure everyone feels on the same team, and this is not just about being approachable, but sharing in the rewards of success."Chief Executive
"It took about a year of discussions but we asked how we could make this work, i.e. increase our rates yet provide greater performance. The company agreed that, if we performed, they'd pay. We looked at how it would work, how it would be monitored and how it would be fair to both parties."PSA Delegate
"My philosophy is nothing's gonna change if you sit and do nothing. There were 11 of us at the time. We might have got a better deal if there was more but I did it for what I was happy with.
In the end, it worked wonders - everyone is happy, and you can set goals to go for increased earnings. If you put extra effort in and a quality performance all round, you'll get paid for it. The previous reviews, no one took seriously, there were no benefits we could see. Once people could see a benefit, they could look seriously at it." Tree Cutter
Extensive training, learning and development.
Northpower and its staff have a positive approach to training and skills development.
"We put a focus on training and showed that the skills people developed were portable qualifications."Chief Executive
"We have eight trade coaches across the company. They work auditing safety programmes and assist with training, coaching and supporting anything to do with safety, but their most important role is to be there for the guys." Group HR and Safety Manager
Reduced status distinctions and barriers, for example, dress, language, office arrangements and wage differences across levels.
"We're all on the same level. Our pay is good and it's linked to performance. Alan Jolly has his management talking to us regularly but it's not finger pointing or putting guys in the firing line. If a guy doesn't perform, we say you've let the boys down. It's a tight team. If I called for help, I could guarantee they'd be there in half an hour. I expect a decent day's work, and if someone's attitude isn't right, they hear about it." PSA Delegate
The concept of hierarchy - either between management and staff or within teams - is a redundant concept.
"We've also had a 'new breed' of worker who may have been here 5 minutes and who works with a guy who has been here 10 years, yet the 5-minute guy can put up his hand and say, 'I can do a lot better than he's doing'. These guys with four or five of the older guys plus future leaders we had identified who were a 'quieter lot' banded together to form the Super 10. The 10 became 12 and the 12 became 55 on the new agreement. Some staff have had the misperception that they've been shut out, but they haven't. They are welcome to perform to the standards and be eligible for performance rewards." Area Manager
"It's an awesome company - they listen and they are family oriented. It's not 'us and them' as it is in other companies. When we have social events, all the bosses come and mingle. And workers don't mind giving the bosses a bit of jip in a good natured way. On a personal note, they looked after me well last year when I had quite a bit of time off work. Bosses came round, seen me at home including arranging nurses from work. And they'd phone in and check on my progress. They cared about me - I wasn't just a number. The company spends a lot of time on the 'we' concept, not an 'us' and 'you' company. If you feel like you're part of the company, you perform better. You don't just turn up as a worker who is clock-watching. The days go by quickly. We get our worksheets and are off and don't come back till we have finished." Tree Cutter
Extensive sharing of financial and performance information throughout the company.
The company goes beyond being open in the sharing of information. It has a fundamental belief that joint problem-solving is dependent on openness and clarity about responsibility. The joint approach to problem-solving at Northpower is typified by the following quote from the CEO:
"If a problem arises, share the problem in the relationship. The company has an issue in that it needs to keep making profits. It has another issue in that it needs to keep people safe. If we take the view that the first issue is one for the management to address and the second is for the troops to address, we create inherent conflict. Where both parties share responsibility for both the issues, conflict is minimised." Chief Executive
This attitude to openness and clarity is based on a high level of self-awareness and reflection that exists in the management team and the leadership they provide.
"If things aren't going the way we'd like them to, we have to discipline ourselves to look at what we (in management) are doing that is contributing to that and be prepared to change our perception of the events. This provides an opportunity to self-correct, and if we do this, it can change how things happen on the other side. If we hear in our own team, 'If only they would do this or change that', this indicates that something is not going right. It's far easier to change what we are doing than to change what they are doing." Chief Executive
The importance of trust
Underpinning all of the above is the issue of trust. Building trust, along with encouraging innovation, measuring the right things and aligning incentives with new practices, is at the top of the tree when it comes to maintaining the high performance work practices of successful companies described above.
In some ways, trust is the equivalent of the company's immune system. Low levels of immunity in humans can lead to perpetual sickness and death - similarly with low trust in organisations. In organisations, this perpetual sickness is evident in the use of high-cost practices such as checking supervision and vigilance, excessive compliance, adversarial behaviours, political posturing and turf wars. In such an environment, those most able to contribute their hearts and minds to organisational goals simply "turn off"; they do only what is required, never really helping their organisation deal with increasing complexity and/ or competition in the market.
Employers trying to break through a culture of employees only doing what is required typically respond by introducing even higher levels of control and compliance techniques, rather than responding in a genuinely open and inquisitive way. This simply perpetuates the problem, embedding a culture of even more compliance and a correspondingly less innovative and problem-solving culture.
To a great extent, building trust comes from adopting new mental models and the ability to understand how we helped create the culture that we have. For example, the high-performance practice of sharing information with employees requires letting go of the moretraditional managerial prerogative associated with keeping information close and maintaining one's power base. Sharing information also implies that the status of holding "secrets" and the "ego food" this provides can be given up. Keeping things secret actually conveys a lack of trust in those with whom those secrets may be shared.
"When I've got ideas that might impact on people in some way, I confide in the union early. An example was the reorganisation of office staff and office reporting relationships. I see early consultation is all part of building trust. Having trust in relationships is such a critical part of why we succeed, and it hasn't happened by accident." Group HR and Safety Manager
Another part of building trust is dealing fairly with people - this involves patience. Critical to fair dealing is a willingness to explain and explain again why things are important or why changes need to be made - especially where changes impact on an individual's job. This emphasis on fairness is at odds with a highly contractual approach to employment relationships and makes a fundamental statement about the importance and value of the relationship. This is something Northpower understands well.
"If there is an issue that is unable to be resolved within teams, one of the guys would be at my door saying, 'What are you doing to do about it?'. We've developed a lot of mutual trust, and this flows over to the way problems are dealt with. For example, someone might come to me and say, 'Look at clause x of the agreement. That wording doesn't seem right - it could be interpreted to mean ABC'. We've had examples where we would know the interpretation taken wasn't within the intent and we'd fix it.
We'd operate the agreement to meet the intent and fix the wording up with an agreed variation."Area Manager
The access to senior management by small groups of employees also builds trust, especially where senior management takes an active listening role. This personalised communication conveys a greater sense of caring and respect for employees than the more typical, but less personal, newsletter or video.
Last, but not least, building and maintaining trust involves working cooperatively with union representatives. Attempts to bypass those in whom the workers have placed some trust gives a particular message of disrespect, not just to the authorised representatives, but to the workers themselves. Northpower and the PSA have embraced their relationship in a way that has transcended cooperation to collaboration.
"The key thing is we are totally open in discussion of issues. The respect is mutual and evidenced by listening. We can each listen and both of us [CEO and Mark Furey] can change our view.
I find that, when people stop worrying about their personal positions on each side, the business does well, and they as individuals end up doing well - even in redundancy situations where staff are re-deployed. We've also assisted to get people to believe in their own capability if they need, in the end, to find work outside Northpower." Chief Executive
Some other examples of building trust concern responsiveness to issues.
"We were informed by the PSA of a late performance review for one of the staff. When we inquired, we found out that the person didn't like doing them and was putting it off. We got onto it and helped him. Another example concerns the performance pay system. It's really important that, even if you have clear criteria, you also have a process of scrutiny so people can see it's fairly applied. That's what we do. The relationships are very real - in the way we have partner relationships at home. We are comfortable trusting - it's a natural way of being for us." Group HR and Safety Manager
A feature of the way the company works with its employees and the union is that it doesn't pretend that, once something new has been decided, even over a long period of consideration, it is necessarily fully complete. The willingness to test, re-examine and review, including checking whether the intent of agreements is being delivered, is an important component of open communication and reducing frustration.
"We keep progressing the agreement. Guys are delegated from within the company to continually meet and discuss next versions of the agreement, and this is no different to what's supposed to happen. There is more trust on each side, which is maybe not always apparent or obvious. The trust comes from integrity and competence. If we make a commitment, we keep it, and we don't shy away from making commitments. The other thing is competence. Respect and trust go together - you won't get the trust of the guys if they don't think you're up to it.
What I don't like about the agreement is that it's pretty arduous for the supervisors who have to do these six-monthly reviews. But against that, we've traded a week's worth of head-butting with the union over bargaining with an on-going process with the staff. The traditional view might be, 'We've got to do all this extra stuff' - but it's worth it. Collective bargaining doesn't take weeks or days - it's over in hours." Area Manager
While such a comment might appear to minimise the complexity of the situation, this form of bargaining represents a profound shift from the norm that many other companies experience. The shift is one from a series of adversarial and sporadic events to a dynamic process within an active relationship. Instead of being an end in itself around which considerable resources are directed by opposing sides, collective bargaining is a means to an end - the end being an enduring relationship where both parties are focused on mutually agreeable outcomes.
This view about collective bargaining is a view shared by the parties, and almost everyone interviewed for this report commented on it in an unsolicited way. The parties are justifiably proud of how little time is required to settle what, for many others, is an arduous and painful part of their employment relations. The organiser, workplace delegates, those they represent and the management clearly share the view that the way in which they all work together during the year is a contributing factor to the smoothness with which collective negotiations proceed.
"The influence of Mark Furey was a key point in time for the company's development. Mark could see difficulty in the way the collective agreements were working for both the employees and the company and the need for rewards to be greater aligned to productivity. And until the new agreement was developed, staff had a lot of suspicion about how the subjective criteria for exceptional performance were being applied. The staff themselves thought the system needed to be more robust and had the confidence in their ability to benefit from productivity-based rewards. As a consequence, union membership has been boosted."HR Advisor
The respect and mutual trust built on a day-today basis provide a tangible benefit and reward through relatively stress-free negotiations and minimal productivity downtime. As illustrated above, building mutual trust is not something that happens quickly or by accident.
What the parties have done to get to the point where collective bargaining is "a breeze" is important. Together, they have developed their skills in joint problem-solving, and it is this capacity to work collaboratively that has facilitated effective and efficient negotiations. Through their behaviour between negotiations, the parties recognise that the day-to-day relationships and significant events cannot sensibly be separated. That behaviour in the negotiation environment is inextricably linked with behaviour outside this environment. To reiterate a point made earlier, it wasn't always the way.
"There was a time when there was adversarial behaviour, and it was when we used to get 19 percent pay claims at bargaining time. And we would offer the CPI as a response. But all that has been sorted now. There isn't the gulf between workers' expectations and the company's expectations like there used to be."
"I notice Mark Furey makes himself available and gets on particularly well with Alan Jolly. The timing of sorting out problems is a key part of the relationship. There is mutual willingness to recognise the intent of the contracts; it's not too difficult, it just happens." HR Advisor
"I accept I was part of helping achieve worthwhile change. That said, it's not about me. I no longer have active involvement on a day-to-day basis. I like to think I've helped members, not just to achieve goals but also to build confidence in their own skill to deal appropriately with day-to-day issues within the company without depending on me." PSA Organiser