Get accustomed to the customised workplace

When you have untangled the tax package, turn your mind to a small bill in Parliament. It points to profitability.

The bill is Sue Kedgley’s version of two-year-old British legislation that establishes an employee’s right to ask for flexible work hours and conditions and requires an employer to give reasons if denying the request.

The bill has been parked for a year while the government seeks non-legislative ways of promoting workplace flexibility. Reports from Britain give two conflicting assessments of the legislation there: that employers are comfortable with it; and that staff requests as a result of the law are creating difficulties.

For businesses here it looks like one more workplace regulation on top of six years of such impositions. The government shares Kedgley’s social objectives but doesn’t want a scrap with business.

As the downturn works through the economy the government needs positive pointers and to be able to demonstrate it is acting to lift productivity growth.

There are many inputs to productivity growth, notably foreign market access, research and innovation, education and skills, infrastructure and energy, tax, regulation and workplace practice.

Some only the government can do. It tries hard on access, underspends on research, is trying to lift education quality, is spending hard on infrastructure after a slow start, has eased some tax rules (and there is the new package) — and, contrarily, has tightened workplace regulation.

But that still leaves a lot of room for firms to lift their game, to get more firm-grown innovation, for example, and to get more out of their workforces. The government’s role there is in light-handed facilitation.

The context is a very tight labour market that adds costs and militates against productivity increases.

Officials studying the labour market have detected a fundamental change in its behaviour in recent years. That requires the government and employers to think differently.

First, the labour market is flexible and dynamic — largely thanks to the 1991 deregulation. There is a large amount of movement between jobs.

Second, the participation rate is among the world’s highest. Unless there is an international economic shock, analysts reckon unemployment will stay under 5% for the next five years.

That rules out an early return for employers to the 1990s when cheap labour was plentiful. In fact, right now there is anecdotal evidence employers are hoarding labour despite the downturn.

So to maintain profitability firms have to find ways of lifting productivity. In part, that means taking employees more seriously.

Re-enter Kedgley. Her focus and that of most media comment is on the employees — getting work to fit better into personal and family wants and needs. Employers don’t want to be forced into that — they’ve had enough of “rights-based” regulation.

But turn the focus round: smarter employers have figured that responding to employee needs — in working times, leave and work methods — can also lift profits.

This is the message from Peter Townshend, director of the Canterbury Employers Chamber of Commerce. Townshend in the past has caned the government for excessive regulation and inadequate action on compliance costs.

But when he introduced flexible work practices in his office it worked better. He now advocates to his members that they follow suit.

Phil O’Reilly, chief executive of Business New Zealand, is another advocate — not least to avert legislation.

Their point is that flexibility works for profits. Case studies by the Labour Department offer some supporting evidence. Firms which have introduced flexible work practices lose fewer skilled staff and have better motivated staff — which can lead to useful innovations and higher output.

The case studies also show that offering more flexibility does not trigger a stampede of demanding employees nor stamping of feet by those who miss out.

Moreover, costs are small. The department study quotes Westpac: “The costs are in not doing it, especially in this employment market.”

Flexible work practices are not a job lot. There is no simple template to plonk on every workplace. Much work can’t be made flexible. Each firm has to work out what it can offer and to whom, then develop clear and transparent processes to ensure employees know exactly what the possibilities are, who is entitled to them and in what priority order. Clear and transparent monitoring is vital.

All of which a large firm’s HR department can handle. But New Zealand businesses are overwhelmingly small-to-medium, with little time or resources for fancy fripperies — and so little realistic scope to reap the gains.

The parallel is energy efficiency. Big firms have the resources to do the numbers, pick the right options, save energy and save costs. Small firms don’t and can’t — unless someone takes them in hand.

That goes for workplace flexibility. The gains are not easily calculable in advance and it looks too hard. O’Reilly and Townshend have their work cut out persuading such firms of potential gains. Legislation certainly won’t do the trick.

But not moving down the flexibility track also carries a risk. Under-30s, social researchers say, are more confident, expect to swap employers from time to time and demand that employers are more responsive to their needs and preferences — just as they expect goods and services they buy to be tailor-made.

Welcome to the customised workplace. It’s a lot less simple to manage, especially for over-40s managers. But just maybe it offers higher profits.