4. Research findings - feedback from the sector
4.1 Consultation process and issues
The research was conducted in a relatively short time frame, with consultations aimed at gauging the views and perceptions of relevant stakeholders from across the country. This limited the coverage of the consultation process, with selective sampling of key informants based on awareness of wage determination practice and interest in the study. There were essentially four key groups engaged in the process, including:
- Business Services - particularly those with established wage assessment processes or ratified industrial agreements;
- FaCS representatives from the central and State and Territory Offices;
- peak body organisations representing service providers and consumers; and
- industry groups including unions, employment advocates and workplace/industrial relations bodies.
A number of issues were presented to participants in the consultation process, which varied according to the stakeholder group. Issues presented to Business Services engaged in the process included:
- current wage processes in operation, their advantages and disadvantages;
- potential application and feasibility of adopting the SWAT in Business Services;
- awareness and application of alternative wage assessment processes, particularly competency-based assessment systems;
- issues and considerations relating to the payment of award-based wages, including:
- industrial relations considerations
- quality assurance principles
- cost and the impact of award-based wages on financial viability
- practical/implementation issues; and
- perceptions of best practice in wage assessment for Business Services.
Other informants in the consultation process were asked similar questions, adapted according to their specific interest and experience in the field.
4.2 General comments
A diverse range of wage determination processes were identified during the research and consultation phases of this project. Whilst some consistent approaches were identified, there was a high degree of variation in the wage determination systems in operation. The variation throughout the sector seems to have arisen from divergent development activities that have occurred in recent years in response to numerous reforms to the disability employment sector. An ad hoc approach to developing wage determination processes ensued in the absence of a prescribed direction for Business Services in relation to best practice wage determination procedures. The research team considers that many of the payment systems developed are unlikely to stand up to scrutiny when considered in a quality assurance or legislative context.
The following sections describe some of the key issues identified by stakeholders engaged during the consultation process.
4.2.1 The business vs service ethos
A number of informants in the consultation process expressed concern about the dichotomous role of Business Services, citing difficulties associated with managing the balance of 'profitable business enterprise' and 'disability service organisation'. Whilst most informants recognised the need for a true business, it was suggested that the historical background of the sector will restrict rapid business development in some organisations. In particular, 'older' Business Services and those that form part of a holistic service organisation (that is, where the organisation provides employment support, accommodation, recreation and so on) were identified as those that see themselves as a service first and a business second.
The findings of the recent Business Services review have highlighted the need for the sector to adopt a more sophisticated business approach. Many Business Services are now likely to review practices to ensure that they participate in appropriate industries/markets - that quotes for contracts and so on reflect the true costs of labour and that selection and recruitment policies reflect standard business principles, that is, the right person in the right job.
4.2.2 Assessment tools - what works?
Opinion was varied in relation to the extent to which current wage assessment processes represent best practice. Whilst some Business Services have structured wage assessment processes in place, many operate without a formal wage assessment mechanism. Of those Business Services that do have formal processes in place, most informants indicated that such systems are not without flaws, and have usually been developed to meet specific organisational needs whilst attempting to improve wages for employees. Many Business Services recognised that the system in place may not fully comply with current policy initiatives or legislation and may not necessarily constitute a 'fair' wage outcome for employees. Those that have developed innovative assessment processes have usually done so in isolation, sometimes without the assistance of relevant specialists in the field of assessment or industrial relations. Many informants indicated that whilst various systems may not represent an ideal model of best practice, a formal process that attempts to address issues of fairness, consistency and legislative/standards compliance is ‘better than nothing’. In this context, there was no consensus in relation to recommending any of the current systems for broader adoption throughout the sector, although some informants felt that the system they operate could be adopted more broadly.
The majority of Business Services that have a formal assessment process in place indicated that it suited their particular circumstances quite well, citing various reasons why other widely used systems were not appropriate for their specific situation. There were, however, a number of Business Services identified that use common assessment tools and payment systems. The most commonly used assessment tools identified during the research project were the SWAT, the Greenacres tool and the 'flat-rate' historically based payment system. Many Business Services use adapted versions of these tools.
All assessment processes identified during the research project may be loosely grouped into four broad categories, including:
- historical wage payments (usually without formal assessment);
- productivity-based assessments (including the SWAT);
- competency--based assessment; and
- hybrid models.
Each system was recognised as having distinct advantages and disadvantages attributed to them, which are addressed in further detail in sections 5.15.4.
4.2.3 Financial viability
Financial viability was the primary concern of Business Services in relation to the payment of wages in accordance with relevant awards or other formal wage assessment processes. All Business Services consulted during the research assignment expressed a desire to pay the highest wages possible to their employees, but most recognised that increasing wage costs would significantly influence financial viability of the organisation. This indicates, therefore, that many Business Services may not be paying wages that would be consistent with a valid and appropriate (fair) award-based wages system.
Those Business Services paying wages linked to award levels or based on a structured assessment process tended to be those that are not only financially viable, but profitable, with a more highly sophisticated business philosophy. In some instances, however, it was reported that the assessment process could be used as a mechanism by which wages are lowered in order to match the organisation's capacity to pay. This raises the issue of objectivity of assessment, and potential manipulation of assessment outcome.
4.2.4 Comparative assessment
As discussed above, most Business Services that do not use the SWAT or another structured wage assessment process cited financial viability as the primary reason for not doing so. Interestingly, none of these services had undertaken a formal comparison of the potential impact of implementing a formal wage determination process on labour/wage costs to the organisation. Notwithstanding this fact, most Business Services in this position expressed little doubt that the adoption of these systems would increase costs and threaten financial viability.
Similarly, none of those Business Services using a structured assessment process stated that they had formally compared the difference between adopting one tool over another, although some cursory comparisons had been made. The decision to adopt one system over another was usually attributed to capacity to pay the assessed wage; fairness of wage outcome for the employee; administrative or other resource requirements of adopting the system; and advice of human resource/industrial relations experts.
The majority of Business Services involved in the consultation process that have a basic or historical wages system, indicated that they would be interested in conducting or reviewing a comparison of various wage assessment processes. They feel that such research would confirm their suspicions that they would experience a significant increase in wage costs should a formal and consistent wage assessment strategy be implemented.
4.2.5 Sector's ideals of best practice
Feedback from many informants reflected a general recognition that historical (and many current) wage determination processes are unsatisfactory in terms of validity, fairness and appropriateness. Even some of those services that have developed an enterprise agreement or wage assessment tool of some kind said that they would like to see a fairer, more appropriate wage paid to people working in Business Services. Whilst this recognition exists, the capacity of Business Services to pay a fair and appropriate wage may limit their ability to practically adopt such principles. Comparative trials would address this issue conclusively.
Notwithstanding this (perceived) limited capacity to pay increased wages in many Business Services, informants representing the sector were comfortable expressing opinions relating to what they feel an ideal wage assessment process should look like. Key elements include:
- flexibility to respond to changing work roles or jobs;
- recognition of highly specialised jobs that have been adapted ('tailored') for particular workers;
- practical considerations in relation to resource requirements of conducting assessments;
- influence of wage payments on financial viability (which may ultimately influence the number of employees able to be supported);
- combination of competency and productivity considerations;
- some indicated that assessment should be linked with training and an identified career path; and
- reliability and validity, whereby the worker's true capacity (that is, productivity and/or competency) is measured.
A number of Business Services referred to the level of support required by employees as a variable upon which wages should be determined. Others, however, contended that on-the-job support is a funded activity, and if FaCS funding for such support is adequate (being addressed by the Case-Based Funding Trial), then the issue of support should be viewed separately to wages. Indeed, a supporting standard of Disability Services Standard 9 states that ‘The agency’s budget reflects that Government contributions do not subsidise the wages and salaries of employees with a disability’. Further, supporting standards of Standard 10 state ‘Each person’s support program is based on an individual assessment [and that] the level of support to be provided is agreed between the agency and each person with a disability’.
The research team’s view is that the issue of on-the-job support requirements is a separate issue to wage determination, as Business Services receive funding to support employees in the workplace. Further, we contend that if a person's support needs dramatically influence their capacity to undertake a particular job, an appropriate assessment process will identify this, and placement in an employment setting may not be the most appropriate outcome.
Other informants representing peak bodies, the industrial relations sector and government representatives, identified additional elements that they felt would be an important component of a best practice assessment process, including:
- consistency across the sector, so that a person assessed in one service would receive the same pay if doing the same job in a different service;
- independent assessment by accredited assessors;
- links to training and development opportunities;
- a minimum wage safety net of $40 to $50 per week; and
- a justified link to appropriate awards, or detailed account of the rationale for wage assessment processes and pay schedules.
Issues influencing decisions to adopt alternative assessment processes
As stated above, many informants recognised that wages have historically been too low in Business Services, and most expressed a desire to address these deficiencies. The impact of a higher wages bill on financial viability tended to be the primary reason for not implementing a more appropriate wage assessment process. Other issues influencing the decision to implement an alternative system were also presented, including:
- cost of assessment (if not subsidised by the Commonwealth);
- administrative and other resource requirements, such as the cost of providing and linking the assessment to training opportunities;
- auditing and quality assurance, particularly if internal assessors are used;
- balancing the objectivity of independent assessors with a lack of organisational knowledge;
- timing of 'mass assessments' in large organisations;
- the underlying philosophy of the service - that is, those with a service ethos adopting an 'open-door' policy are likely to be less profitable, and therefore have less capacity to pay award-based wages;
- having the right job (or enough jobs) available that are suitable to the assessed capacity of the employee; and
- consistency throughout the sector - that is, whether the adoption of a system in service x will be comparable with one in service y. This issue supports the proposal for a single assessment tool to be adopted across the Business Services sector.