What does successful bargaining look like in defence? - KPMG Australia
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What does successful bargaining look like in the defence industry?

What does successful bargaining look like in defence?

The mere thought of enterprise bargaining has been known to instill dread in even the most seasoned HR professional. At KPMG, working with our clients, we know it doesn’t have to be this way.

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Our Workplace Relations Advisory team has deep experience of enterprise bargaining and developed a model to ensure the enterprise bargaining process is a smooth one – and one that benefits everyone.

In the third article of our defence workforce series, we explore five key issues for Australia’s land and maritime defence industry to have top of mind when prepping for enterprise bargaining.

1. Understand

Understand your operating environment, your business requirements, and what your people prefer particularly in the manufacturing and defence industry sectors, where trade unions have had historically high levels of influence, the priorities, tactics and influence of unions are important, but so too is your own view. The first thing an employer ought to do is take a good look at what is going on in their own house. Ask yourself whether the business understands its operating environment, its business requirements, and what employees want.

The operating environment:

  • What operational changes does your business need to make in order to stay competitive, and are those changes possible within the scope of the enterprise agreement?
  • What does the future of work look like in your industry in the next 3 to 4 years, and how will your enterprise agreement accommodate this?

Business requirements:

  • What industrial risk appetite is the business willing to endorse and stand behind to achieve the desired reform?
  • What are the business’ reform priorities, and what is the fall-back position if agreement cannot be achieved on its preferred position?
  • What governance and structures are in place to support a good outcome?

Your employees:

  • What is most important to your employees? Flexible work hours, greater control over workload, more employee consultation, salary, security of employment?
  • Have you considered the demographics of your workforce and the diversity of priorities? The workplace is rich with this sort of information, but are you tapping into it?
  • How unionised is your workforce, and how likely are they to respond to union campaigning?

2. Financial modelling

Financial modelling is a mark of a mature enterprise bargaining strategy. In our experience, a financial impact model is an extremely useful tool for the executive and negotiation teams to use to understand the value of any adjustment to an existing or proposed enterprise agreement. A financial model with a clean and intuitive dashboard allows the average user to alter the input variables and clearly see how this impacts the bottom line. This is powerful in three key ways:

  • In the strategy-room: the workplace relations, finance and HR professionals who bunker down to internally debate and draft the enterprise agreement will be able to compare the impact of adjusting the terms and conditions of employment. This process can highlight productivity gains that may get overlooked.
  • In the boardroom: when imparting the negotiation strategy to senior business stakeholders, a robust financial modelling tool can help shed light on the benefit (or cost) of a particular strategy; and
  • At the negotiation table: the power in being able to quickly and seamlessly test union proposals at the negotiation table cannot be underestimated. It can fast-track the negotiation process by facilitating ‘in principle’ agreements that can otherwise be very time consuming.

3. Internal communications

The most effective negotiation tactics at the bargaining table are likely to come to naught if they are not backed up by a persuasive employee communications campaign. After all, if employees are not motivated to vote “yes” at the ballot box, there is no agreement. 

There are many factors that contribute to effective internal communication. In our experience some design principles are particularly relevant to enterprise bargaining. These are:

  • Be bold – challenge pre-existing beliefs and assumptions: Presenting the facts is not enough to influence your employees. Leverage insights from the audience analysis, communication strategies and tactics. Use these tools to challenge assumptions and beliefs that underpin employee viewpoints in order to win hearts and minds;
  • Be personally relevant: Generic messages will not cut it when it comes to influencing employees. Content must resonate with employees’ core values or an outcome they really care about;
  • Be simple: Messages must be direct and simple, reducing noise and avoiding potential misinterpretation.
  • Be honest: Avoid using ‘spin’ or jargon and clearly explain how the communication is relevant to the audience; 
  • Be consistent: All leaders must be visibly aligned and consistent in their messaging. All leaders must be equipped to answer questions from their teams with confidence and conviction – doing your homework and due diligence here goes a long way; and
  • Be strategic: Ensure the right spokesperson is delivering the right message through the right channel to the right audience at the right time.

4. Reform strategy

It is tempting to seek to negotiate all reform priorities in one enterprise agreement. However, in our experience, where a business wants to transform operations, iterative reform over the long-term is much more sustainable. Experience tells us that developing an enterprise agreement strategy that maps a path over several horizons brings the best results. Focus on identifying reforms that need to be achieved in the current round of negotiations. These may include reforms that deliver the best productivity improvements and focus your energy on these. Other reforms, although important too, may be better bundled into the next round of negotiations.

Some new entrants to the defence industry in Australia may well have the benefit of pursuing a Greenfields Agreement. A Greenfields Agreement is an enterprise agreement that is made in relation to a new enterprise of the employer before any employees are employed. Where a Greenfields Agreement is an option, we recommend giving this genuine consideration as soon as possible because the negotiation process tends to be more streamlined.

5. Compliance

There have been many unfortunate instances where an organisation has implemented a comprehensive and diligent bargaining process, but makes a seemingly innocuous compliance error that proves critical and unravels the entire process. For example:

  • The “Better Off Overall Test” (BOOT): This test requires that each employee that would be covered by a modern award if not for the enterprise agreement, be better off under the agreement than they would if the relevant modern award applied to them.
  • Notice of employee representational rights: Employers must provide employees with a notice of employee representational rights in the manner and form required by the Fair Work Act (2009) and Fair Work Regulations (2009).

Non-compliance may void an otherwise sound enterprise agreement, and the negotiation process may need to be repeated. The time, cost and reputational damage caused by having to go back to the bargaining table can be significant. It is therefore vitally important to check and double check your work so that you can tick the compliance box with absolute confidence.

With the right strategy, you can be well-prepared and be assured that the strategic and operational requirements will be met or facilitated through the enterprise agreement. The key is to be proactive, mindful of your workforce and put in the hard yards early on.

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