Sack The Bosses, They're Killing The Economy


As the national economy sinks toward recession at the prospect of an Abbott government, Australian enterprises must work harder at becoming more efficient, more productive and more profitable. The dead weight on Australian businesses must be cut adrift or polished away. The evidence shows that the biggest dead weight on the national economy is the Australian managerial class.

Most workers recognise bad bosses quickly. They may be too aggressive, they may be too passive, they may avoid conflict or provoke too much of it. Most of all, bad bosses want control over their employees, through micromanagement, passive aggression and/or bullying. The effect of these kinds of controlling behaviours on worker satisfaction and on workplace culture is dire. Employees who feel controlled are less likely to use initiative or to “go the extra mile”, and workplace cultures under controlling bosses are often competitive and dismal. An international survey in 2008 found that more than half of all Australian managers engage in this kind of unproductive behaviour.

Australian managers are less honest than their co-workers. Last year, recruitment services company SHL found in a survey of Australian workers that 39 per cent of managers had lied in their resumes in order to get a job. This compared with just 25 per cent of other workers.

A large part of the problem with Australian managers is that most of them are of the same stock. The senior executives in the “top” Australian companies are nearly all white men in their fifties who have qualifications in economics, business or engineering, as a 2012 survey found. Yet most research in the fields of behavioural economics and group psychology finds that decisions are better overall when they are made by groups constituted by diverse membership (so long as the group’s members all agree on fundamental principles).

As if it’s not enough that they are dishonest, promote poor workplace culture and are inherently uncreative, Australian managers have in recent times augmented their deleterious effects on efficiency, productivity and profit by claiming ever-expanding remuneration packages. Since 1993, average weekly earnings have increased by about 80 per cent, which equates to 5 per cent every year. Until the Global Financial Crisis, the earnings of Australian executives and CEOs increased by a whopping 250 per cent – or 18 per cent every year. In 1993 CEOs earned, on average, about 15 times the average salary. By 2008, they earned over fifty times the average salary.

As well as being widespread, problems among Australian managers are long-standing. The Commonwealth government’s Karpin Report of the Industry Task Force on Leadership and Management Skills, released in 1995 after a four-year inquiry, contained major criticism of the quality of Australian management across the board. Merely the latest in a string of public inquiries critical of local management, it found that there was a deep and worrying lack of leadership skills throughout Australia’s managerial class.

Perhaps aware of the increasingly heavy burden they place on Australian enterprises and other organisations, Australian managers and executives constantly attempt to deflect the blame for sluggish economic data onto their employees. A steady flow of press releases from the business peak bodies – the Business Council of Australia (BCA) and the Australian Chamber of Commerce and Industry (ACCI) – say the albatrosses around the economy's neck are unproductive workers and the “inflexible” wage and condition minimums to which they are entitled.

The solution, as proposed by business-oriented think tanks like the Institute of Public Affairs, is to amend industrial relations laws to allow more “flexible” workplaces. Of course, this is code for making it easier for bosses to sack workers, just as WorkChoices did between 2004 and 2007.

Independent data belies the claims of the management class. In Australia, labour productivity, which measures labour outputs per hour of input, is at an all-time high. Among the nations which measure productivity in a comparative manner, only Slovakia records a higher level. Indeed, Australians work more unpaid hours and are more productive while at work than almost any other OECD workforce.

So if Australia has an issue with productivity – and company bosses tell us all the time that it does – then the problem is not with labour. It’s with senior and executive management.

One way of removing the drag that management places on the national economy would be automate its function: if the response of an unimaginative manager to a budgetary problem is automatically to reduce staff (presumably through a simplistic application of the idea that the most variable cost to an enterprise is labour), it would be much more cost-effective to have a machine lay people off, rather than continuing to pay an executive manager a seven-figure salary plus options and bonuses.

But that would be to merely accept the status quo (albeit at a much-reduced expense), and would do nothing to address the enormous social and economic consequences of mass lay-offs. The preferable solution is to demand much better performance from Australian managers, by forcing them to engage with their workforces, by holding them accountable for their decisions, and by remunerating them in ways that does not create a separate economic class.

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