Opinion article

Trust and industrial relations reform in the time of COVID

CEDA Chief Executive, Melinda Cilento, reflects on the recent discussions about industrial relations reform after COVID-19 and argues that trust and transparency are key to building sustainable and roundly beneficial outcomes.

Over recent weeks I have been involved in numerous conversations regarding the workforce and workplace of the future, working from home, workplace flexibility, work-life balance and sitting alongside these issues, the complex topic of industrial relations systems and reform.  

Some organisations had been evolving and rolling out systematic approaches to workplace flexibility and work-from-home. Last week as part of the AFR Reshaping Australia Dialogues livestream that I was part of on Rethinking Work, Telstra CEO Andy Penn and BHP Chief People Officer, Athalie Williams presented good examples from both their organisations.

However, for many organisations, COVID-19 has delivered a work from home transition akin to someone who liked going for the occasional jog suddenly deciding to run a half-marathon every day for about 180 days in a row. That’s probably not what the experts would advise, but here we are.  The biggest questions now relate to what we will choose to learn and take from this experience.

At the workplace level a couple of key learnings present themselves. 

Firstly, let’s call out one of the biggest barriers to work from home prior to COVID: trust, or more correctly a lack of trust in the ability and preparedness of workers to be as productive at home (or elsewhere) as they are in the office. Those that have built trust quickly have done so by communicating well and often in our new virtual world, and by clearly shifting expectations and performance conversations to managing for results – outcomes rather than inputs (such as the number of hours observed at your desk). 

While many have probably been surprised by how well they and their organisations have handled this sudden shift, it hasn’t been all smooth sailing. A recent Harvard Business Review study, for instance, reported that a significant proportion of managers do not feel they have the skills and capabilities to manage remote working and that this is causing them stress.

Similarly, a recent Knowledge@Wharton report highlighted that managers are responding to the uncertainties of remote working by being even more controlling in their approach, resulting in complaints from employees including that there is greater focus on productivity than employee wellbeing at a time when the opposite ought to be true. The conclusion: that companies have problems establishing and communicating trust to their employees. The paper goes on to highlight that research shows that establishing trusting working relationships makes companies perform better over time. 

If we join the dots, the positive take out is that the COVID-19 experience shows we can trust employees to perform, but that building and strengthening that trust systematically, and building the skills to do so and to manage remote workforces requires deliberate emphasis and investment. 

There has been plenty of focus too on the responsiveness and cooperation shown by employees, unions and regulators in agreeing to loosen workplace rules that would otherwise have impeded the roll out of the JobKeeper payments and their efficacy. Some are calling for these changes to be retained and for further changes and simplifications to boost employment. All of this against the backdrop of a longer-term IR debate that has barely shifted in more than two decades. 

From my perspective the temporary changes agreed were able to be achieved because they were win-win, and more specifically, because employees could see the benefits to them. Longer-term reform requires the same thing: a genuine belief from both sides that changes will benefit workers as well as business and a mechanism to review and respond to changes. A promise of more jobs ‘over the cycle’ or in due course won’t cut it, and changes that aren’t backed by workers are unlikely to be sustainable. 

In our discussion on the AFR livestream, Andy Penn called for a more principles-based approach and I agree whole-heartedly. The system and regulations are wickedly complex. This means that some inadvertently fall foul of the rules, while others intent on doing the wrong thing have plenty of opportunity because the complexity of the rules designed to provide greater certainty, only create more confusion.

I have spoken to some organisations that would benefit greatly from reform, including in their capacity to deliver a stronger employee value proposition, but who are not interested in the current agenda because they can see no hope for genuine simplification. 

And here’s the rub and the link back to recent experience – success of a more principles-based approach is more likely with greater trust. So how can we change the reform conversation to focus on building trust and transparency with an emphasis on better communication and collaboration, at the workplace and with key players in the system?

Perhaps a starting point might be thinking not about the jobs that may be lost through digitisation and automation but about how we can combine tech and human skills. We should also think about how we can attract skilled workers to sectors that desperately need them, such as aged, health and disability care, and what reforms might support this and enable jobs growth in the services sector more broadly – a sector clearly decimated by COVID. 

Many have concluded that work is never going back to what it was. I agree, but we can’t assume that work in the future will go where we want it to without some careful stewardship – at the workplace level, and at the policy and system level. 

A different conversation is required – one that focuses on the challenges and opportunities before us, not the solutions we thought were needed in the past. 
About the authors

Melinda Cilento

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Melinda Cilento is Chief Executive of CEDA, a company director, economist and experienced senior executive. She is a non-executive director of Australian Unity and Co-Chair of Reconciliation Australia. Melinda is also a member of the Parliamentary Budget Office panel of expert advisors.

Melinda was previously a Non-Executive Director with Woodside Petroleum, Commissioner with the Productivity Commission and Deputy CEO and Chief Economist with the Business Council of Australia. Melinda has also previously held senior roles with the Federal Department of Treasury, Invesco and the International Monetary Fund.