WORKFORCE

Without skilled and engaged employees, it is impossible to build a sustainable organisation. It is our workforce which delivers on the promises we make to our customers, shareholders and the community and we work hard to attract and retain the best people to drive the future success of the company.

The graphs below illustrate our performance over the past 5 years in key workforce metrics.

Workforce—headcount

Workforce—headcount

Workforce—staff turnover

Workforce—staff turnover

Workforce—absenteeism

Workforce—absenteeism

Workforce—engagement survey score

Workforce—engagement survey score
*This year we also changed our employee engagement survey provider from Hewitt Associates to Towers Watson. Direct comparisons between this year's results and prior year results are not possible as the Towers Watson's engagement methodology uses different response scales and is based on a different set of engagement questions.

While the size of our workforce fell during the year as a result of our refined structure, measures of the performance of our employees were positive; absenteeism is static and turnover has decreased. We do however recognise that part of the fall in staff turnover reflects the economic downturn with our people seeking stability in their jobs. The fall in absenteeism may also be reflective of the tough economic conditions that have been experienced over the past year but is also due to the continued focus that IAG places on health and wellness of our people, ensuring that they take care of themselves and need less time away from work.

This year we have split the turnover figure between employee initiated turnover and employer initiated turnover, to provide greater transparency of the drivers of our turnover. In doing this we realised that historically we have only been reporting employee initiated turnover for our New Zealand operations. We have therefore gone back to prior year and included the employer initiated element of the staff turnover figure for 2008, to ensure that we are viewing like for like information that includes both employer and employee initiated movements.

The number of women in senior roles in Australia has fallen compared to prior year, but our approach to workforce diversity—such as flexible work arrangements and 12 weeks paid parental leave—remains industry best practice and is also reflected in the continuing portion of our people that opt for part time employment across our Australian and New Zealand operations. With more males in senior management positions rather than females, there continues to be a perceived skew in our salary ratio towards males. Breaking the Australian figure down into levels of staff members shows that at more senior levels pay rates are equal across the genders:

Staff members Pay rate
General Employees A$1.15:1
Manager/Senior Specialist level A$1.16:1
Senior Manager level A$1.10:1
Heads Of level A$1:1

This year we have also chosen to restate our prior year Women in Executive Management positions figure. This is because in the prior year we included someone that whilst they worked closely with the executive, were not formally a member of the executive at year end. Consequently the figure reported in prior year has reduced from 31% to 25%.

Understanding our employees and giving them opportunities to provide feedback remains a priority. We again conducted an employee engagement survey this year but have made a significant change to it, in order to align this important employee initiative with IAG's devolved model. Rather than each employee answering a mandated IAG standard survey, each Division was given the opportunity to design, deliver and brand their own specific survey. This enables them to measure and action those issues that are specific and relevant to their employees and people strategies.

This year we also changed our employee engagement survey provider from Hewitt Associates to Towers Watson. What this means is that direct comparisons between this year's results and prior year results are not possible as the Towers Watson's engagement methodology uses different response scales and is based on a different set of engagement questions.

Whilst direct comparisons to prior year cannot be made, what we do know is that 84% employee engagement for the IAG Group is in line with the Towers Watson global high performing company's benchmark. This is a very pleasing result especially as our employees have undergone a period of significant change.

Having the right people with the right skills in the right roles is critical to the success of our business. That's why we are continuing to invest in our people to ensure they have the necessary skills and support to implement our strategy and provide value to shareholders.

At Group level, we're focused on succession planning, and developing a Group framework on how to identify, assess and grow the future leaders of our company. Driven by our executive team and Board, this targeted program is addressing succession for all of our top tier roles.

We are also enhancing our performance management systems across our Australian and New Zealand operations. Each employees' performance is being evaluated on a balance score card that has been derived directly from the objectives of their team. The teams' objectives come directly from the division's objectives which in turn are derived from the Group's objectives. In New Zealand, their new performance management system—My Performance—is being used to help employees recognise exactly what they need to do to contribute to the ongoing profitability of the Group, rewarding them for how they do it.

How our employees behave is a direct reflection on IAG. Our values of respect, integrity, performance and a considered sense of urgency underpin our expectations of them. We have also been explicit about what constitutes ethical behaviour to all our employees. Our Code of Ethics was released in 2007, and details the fundamental principles applicable across all parts of the business, regardless of the country of operation. Underpinning the Code is a compliance framework that assists in meeting our obligations.

Case studies

In the case studies below we share some of the initiatives that have driven our workforce performance.

Redundancies in our Australian Business
Ensuring the safety of our people
Rewarding employees for their performance
Building a sustainable business through flexible work arrangements
Engaging with our employees in the UK
Developing Leadership capability for the future

Redundancies in our Australian Business

Our employees have undergone a period of significant change throughout the year which has regrettably led to a number of roles becoming redundant.

Following a difficult year in FY 2008, we refined our Corporate Strategy and set clear priorities to rebuild the Group's profitability.

The intent of this refined strategy was clear: to ensure the economic sustainability of the Group and create shareholder value we would need to make IAG a more tightly managed portfolio of high performing, customer focused and diverse general insurance businesses. In particular, the strategy was underpinned by cost savings initiatives which included devolving shared services functions to our operating divisions, rationalising roles in the Australian businesses to reduce duplication with a focus on value add activities, and building a leaner Corporate Office focused on portfolio management.

Unfortunately, these changes resulted in the redundancy of just over 500 people in our Australian operations. Where possible, employees whose roles were made redundant were redeployed within the Group. Additionally, cost savings have also been made by curtailing recruitment and utilising flexible work practices such as part time work, job sharing and career breaks. In adopting this approach we were able to minimise the number of people impacted.

Such activities create significant uncertainly and worry for those people directly affected and we wanted to support the affected employees through the transition as much as possible, making sure they were treated fairly and assisted in finding alternative employment. Financial assistance in the form of a notice payment and severance benefit and payment in lieu of untaken leave were provided with a pro rata short term incentive payment for the portion of the year that the employee was employed also paid. All affected employees had access to an outplacement service which supports them in finding alternation employment and managing their financial affairs.

Ensuring the safety of our people

The safety of our people is of paramount importance, wherever they are located across the world.

With growth in Asia a strategic objective for us, we need the right staff in the right place. So when we signed an agreement with the State Bank of India (SBI) to form a general insurance joint venture, we knew that some of our local staff members would need to go to Mumbai, India on short term assignments or relocate there. Consequently, an initial small team of specialists and some of their families moved to Mumbai to work with SBI to build the business.

Unfortunately, shortly after commencing their assignments, terrorists attacked Mumbai at several key sites on Wednesday 26 November 2008. The Oberoi Trident Hotel complex was one of their targets, and was the hotel in which three IAG staff members were staying.

On being alerted of the attacks, the IAG Crisis Management process was activated. Key members from the IAG Crisis Management Team (CMT) met to analyse and manage the incident and members from the Asian Risk and Human Resources teams, together with our external service provider (Control Risk Group), joined the CMT for the next 36 hours as the incident unfolded. During the terrorist attack the CMT were in regular and constant contact with the IAG staff members, doing everything possible to provide them and their loved ones with the support they needed, working to get them home.

With well formulated Crisis Management processes, the support of the CEO IAG Asia, the hard working efforts of the CMT and the resolve of the individuals involved in the incident, a very positive outcome was achieved. All staff members inside the hotel under attack were safely extracted and repatriated back to Australia.

The staff were very appreciative of the support they and their families received from IAG and, despite the ordeal they had endured, all returned to Mumbai to continue their assignments.

Rewarding employees for their performance

The performance of our employees directly links to how we perform as a business.

Understanding this, IAG New Zealand has launched a new employee performance management system called My Performance, to provide a framework, processes and system to help the business achieve its objectives (individual, team and business), in a way that creates and maintains a better place to work for everyone.

The cornerstone of My Performance is the ongoing coaching conversations between employees and their Manager—helping to set goals, track progress, overcome obstacles and celebrate success—throughout the year. The new system enables people to see transparently how their personal responsibilities link to what IAG NZ needs to deliver as a business.

    'How' IAG New Zealand goes about delivering its results is fundamental to the success of My Performance. Everyone needs to demonstrate the right behaviours to build a constructive culture and a successful organisation. In line with this, five company 'attitudes' define IAG NZ's behavioural expectations:
  • Achieving—striving for your best, having ambition, challenging yourself, being focused and making a difference.
  • Together - Having meaningful relationships, bonding, connecting, caring, co-operating, contributing and having fun.
  • Give Back—Ensuring the future, being sustainable, enhancing our community.
  • Real—Being genuine, acting with integrity, sharing, being yourself, liking yourself, having pride.
  • Inspiring—Growing and developing others, motivating, being thoughtful, helping, giving feedback and support.

My Performance helps a focus on the business's sustainability become part of everyone's day to day activities. Through demonstrating the 'Give Back' attitude, My Performance encourages individuals to contribute to our business sustainability objectives. The focus on development planning and discussions, along with ensuring everyone understands how meeting their individual objectives contribute to our organisational success, helps to raise our engagement and the sustainability of our workforce.

Building a sustainable business through flexible work arrangements

Facilitating our working from home program gives our people flexibility and helps us retain our staff members when their circumstances change, allowing us to maintain the best level of service possible for our customers.

Such a program is an important part of NRMA Insurance's people strategy to attract and retain staff. It is about getting the right person into the right role and being flexible about how we do that. And Lori Maynell is one of a growing band of NRMA Insurance call centre employees who work from home.

The Work From Home solution supports Lori's lifestyle well and has retained a long standing high performing employee for our business. Approaching retirement, without this flexibility Lori may otherwise have chosen to end her career to avoid the travel to and from work each day. As with an employee working in a call centre, she has access to the same systems and interacts with NRMA Insurance customers in the same way. What is different is the level of flexibility that she now has.

By retaining our people as they approach retirement, we are also retaining the valuable skills and knowledge that they have. This flexible work option gives the organisation the time to allow knowledge transfer opportunities to occur, allowing both the staff member and the organisation to benefit.

Engaging with our employees in the UK

To build a stronger and more sustainable company we need engaged employees. One way in which we assess the level of engagement is through our annual employee engagement survey; the more employees that participate, the more feedback we get. It is important to ensure that our employees know that we take their feedback seriously and are addressing issues raised.

Although IAG UK has always achieved a strong participation rate in the annual survey, one of the challenges that the business historically faced was ensuring that everyone was informed of the results in a timely manner, and that departments took specific actions to address the issues that were raised in the survey.

To assist with this and embed the importance of the survey and engagement activities, IAG UK have put in place a Champions programme. Nine high profile Champions have been appointed by the UK Executive team to represent the 1,300 employees. These Champions have the important role of advocacy of the employee engagement survey, supporting managers in the implementation of agreed initiatives and helping to manage the change brought about by those initiatives.

Following their appointment in February 2009, the Champions were initially focused on reminding colleagues of all the activities that were carried out as a result of the 2008 survey, encouraging all UK employees to participate in the 2009 survey. These activities helped drive participation in the UK engagement survey up to 83%, an increase of 13% on the prior year.

Developing Leadership capability for the future

Making sure we have the right people in the right roles is a strategic objective for IAG. Together with a Group Level Talent and Succession Management program, each operating division is also responsible for the development of initiatives that directly aim at growing individual and collective leadership capability within their divisions.

For example in the IAG Corporate Office, leadership capability development is a strategic priority with a view to developing a high performing, dynamic and cohesive team with a culture of performance and accountability.

Aimed at our senior managers, the six month Leadership Development Program (LDP) is one component of a suite of internally delivered leadership programs being launched across the IAG Corporate Office. The aim of the LDP is to equip existing and future IAG Corporate Office leaders with the self awareness and skills to be more effective leaders and managers who will actively contribute to an enduring and sustainable IAG Corporate Office environment.

The program—designed, developed and facilitated by the Group Human resources function that sits within the Corporate Office—runs over six months and addresses and develops key capabilities including communication and leadership skills, team building, business acumen, strategic thinking and coaching abilities. The program uses a range of learning methods such as residential workshops, case studies and role simulations, and applied learning scenarios and management snapshots. For the majority of time, the participants work in syndicates that simulate the office environment and so we shorten the distance between 'headspace' and 'workspace'.

Over the period of the program, the syndicate groups work on key projects that address real business issues faced by the IAG Corporate Office. The syndicates are responsible for, not only presenting recommendations to address the issues, but they are also charged with implementing as many of their recommendations as is practical and appropriate.

Initial feedback from the participants has been very positive. An evaluation conducted after the first residential workshop revealed an average score of 5.4 out of 6 to the program meeting expectations, with participants averaging a score of 5.7 out of 6 when asked if they were confident in their ability to use the knowledge and skills learned in the program. Equally as important is the value that our Corporate Office leaders place on the program, evidenced by their presence throughout the workshops and on-going sponsorship of the projects.