There are many books about principles and modes of leadership, change management and organisational design. Very few attempt to link the ideas with actual, specific outcomes. Some may make general claims of significant increases in productivity or efficiency but do not provide data. Perhaps the exceptions here are in specialist areas: the internationally recognised Dupont Workplace Safety Training programmes and modular training materials for the support and further development of safety professionals, line and operations managers and line supervisors, or in technical processes such as six sigma and in general the Continuous Improvement movement.

This is understandable at two levels. First, and most important, causality is actually difficult to attribute accurately. For example, a system change or behavioural change in one area may affect another area positively or negatively. An improvement in productive behaviour or better teamwork may coincide with improvements in technical processes or an upturn in the market. How do we separate these strands fairly? Second, change is made by people putting ideas into practice. That practice may vary – even unintentionally – or the ideas may be misunderstood, or both.

Organisations are not easily made into laboratories with experimental and control groups. People will vary in their opinions as to what caused what. In the words of an old saying, ‘success has many fathers, but failure is an orphan’. Despite these difficulties it is worth trying to ascertain what effect has occurred and whether it is attributable to the implementation of particular ideas. We look at implementation in a wide range of organisations. We examine work in the Anglican Church, schools, the public sector and diverse industries. They demonstrate that the concepts are not limited culturally nor to a sector or type of organisation, since the proposition is that they are based on fundamental principles of purposeful, human behaviour. We have applied them across the Public, Private and Not-for-Profit sectors. They all relate to creating Productive Social Cohesion.

We also have to bear in mind that not all change is measured in output alone. Qualitative measures such as personal job satisfaction, a sense of achievement and pride in work are also relevant and meaningful to members of an organisation and other stakeholders.

We have included several case studies here. Some are from the first edition as they provided the first really significant evidence of the potential of Systems Leadership and actually stood up to judicial scrutiny and were formally stated (Australian Industrial Relations Commission) to have delivered high productivity improvement. However, we have continued to see the ideas implemented in the last ten years and so have selected new case studies (more to be found on the website):

1. The implementation of Systems Leadership in the Australian Victoria State Judicial System.

2. The implementation in Mexico with regard to cross-cultural understanding and relationships that enabled a mining business to grow with mutual benefit.

3. The implementation in a state school in Far North Queensland, Australia.

4. The analysis of mental health services in Trieste in Italy.

5. The use of concepts to analyse combat in Afghanistan.

There are also other case studies; some from the previous edition and some since which can be found on the associated website www.maconsultancy.com. Also the websites Macdonald Associates, Bioss and SLDA provide other examples of the use of SLT.

The original cases were examples where the introduction of systems leadership concepts was careful and deliberate and did not coincide with technological change, where the impact was recognised not only in the organisation but also in the wider society.

Before examining these cases we would like to reinforce the argument that consultants do not bring about change. The leadership of the organisation brings about change. Overall a change process is a partnership between the leadership, advisers (internal and external) and the members/employees of the organisation. This is reflected in the authorship of this book. Consultants who claim to ‘change the culture’ do no such thing. If changes occur, it positively involves many people working hard over a long time. Leave the silver bullets for the vampires. The most important platform for change is a coherent, integrated set of concepts which is available to and understood by people involved in the process. This is what we have attempted to provide in this book. This will not be the product of one mind but the product of working relationships. It is imperative that the concepts are internally consistent and make sense. The first test of any articulation of process is whether it can logically be justified or falsified. It must predict its own failures.

For example, in one organisation where we worked the change process chosen was almost entirely based on the Working Together course (the dangerous ‘sheep-dip’ – the idea that all you need to do is take your people through the course without any other support or systems work). Very little structural or systemic change occurred in parallel. Unsurprisingly, very little positive change occurred and the course itself became a negative symbol only serving to expose the gap between good practice in theory and the evident poor practice in reality. Systems remained that contradicted the teaching, and the leadership handed the process to HR which, as predicted, made things worse, despite some heroic efforts from the HR team.

Although this was a failure in terms of positive outcome, it actually reinforced the conceptual framework by producing the predicted poor results. It was not, however, our proudest moment and Macdonald Associates should have had the courage to withdraw sooner given the conditions.

In another example we worked with an organisation where there was a lack of capability in several key roles in the CEO team, as defined by our capability model. There was a lack of mental processing ability (according to the definitions) and an excess of energy and the use of power. Despite the CEO acknowledging this, it was not possible at the time to remove the individuals, and the change programme faltered because it was implemented in a patchy way. This is not to say the CEO was wrong. We must work in partnership, not to a set formula. All we can do is explain and predict that, if it is not judged appropriate to make certain changes, then this will affect the outcome. As was outlined at the beginning of Part 5, there is an ideal process but conditions for an ideal process cannot be created artificially. If the process is to be modified, so should expectations.

The remainder of this chapter examines the four new case studies and then returns to the major case that established Systems Leadership as a highly successful approach and had a significant impact not only on the organisations concerned but society itself.

Case (i):Victoria State County Court Performance 2015–16

EXECUTIVE SUMMARY: TOWARD COURT EXCELLENCE – PRACTICAL APPLICATION OF SYSTEMS LEADERSHIP AT THE COUNTY COURT OF VICTORIA, AUSTRALIA

This executive summary presents the context, process and outcomes of application of systems leadership at the County Court of Victoria. This work began in early 2014 and helped to inform new governance arrangements adopted by the Court in October that year. These principles and models continue to be applied especially in court administration and the performance of the court and the registry in the administration of justice continues to improve.

Context

The County Court of Victoria (the Court) is the principal trial court in Victoria, providing fair, affordable and effective access to justice for the Victorian community. The Court manages over 12,000¹ matters per year. The Court’s 65² judges (plus the Chief Judge) and its operations are supported by more than 300 staff. In addition to proceedings in Melbourne, judges also hear cases at circuit courts in twelve regional centres. Judges in the Court sit in three divisions: Criminal; Common Law; and Commercial. Circuit operations form a fourth group.

Increasing demand, complexity and other challenges

Sustained increasing demand: as shown in Figure 20.1 the number of matters finalised at the Court from 2009/10 to 2014/15 has increased by 18% (10,377 in 2009/10 and 12,258 in 2014/15), a growth rate of 3.5%.

Increasing complexity of matters heard: an ongoing significant issue for the Court is the growing complexity of the law. This area continues to contribute to increased hearing time for both pre-trial hearings and the average length of a trial. The management of this area is crucial to the Court’s ability to meet its obligations to the community and to reduce the negative impact of delay on complainants and accused.

Figure 20.1 Number of Matters finalised³

Increasing diversity of court users: there are an increasing number of individuals representing themselves in the Court and these Self-Represented Litigants (SRLs) require greater levels of support and case management. The number of SRL cases finalised in the Court has more than tripled since 2013.

Legacy IT infrastructure: a significant challenge for the Court is the redevelopment of its ageing case management system (the IT system which supports the majority of court processes).

Constrained fiscal environment: the Court operates in an increasingly constrained fiscal environment. Structural funding issues linked to the establishment of CSV need to be resolved to establish a sustainable financial base into the future.

Increasing workload on judges: from 2009/10 to 2014/15 overall judge numbers remained static at 60 (plus the Chief Judge) but the number of matters finalised per judge increased from 169.5 (2009/10) to 201.0 (2014/15).

Listen-Plan-Do: The application of Systems Leadership

Under the sponsorship of the Chief Judge, the CEO (chief court administrator) was supported by an external consultant and together they interviewed more than forty judges using Systems Leadership as the framework for questions and analysis.

The following challenges from a systems and behaviours perspective were identified:

• Purpose of the Court ‘To hear and determine matters in a fair, timely, accountable and efficient manner’ was clear but coherent systems of work were lacking as was the court administrative capability to work towards excellence using the International Framework for Court Excellence (IFCE) the Court had adopted.

• Governance arrangements needed to be established to clarify and strengthen the authorities of the Chief Judge, his ability to delegate authority for judicial administration to Division Heads and to improve the effectiveness of administrative support.

• Administration management hierarchy could be better structured to develop, improve and integrate systems of work and change in response to the new operating environment.

The CEO and a small senior team during 2014 worked closely with the judiciary, supporting the transformation of the governance arrangements for the court. These changes were endorsed by the Chief Judge unanimously accepted by the Council of Judges, the governing body of the County Court in October 2014. The capability gaps to effectively implement improvement underpinned by the principles of the IFCE were also addressed through the redesign, and new appointments to the executive team to reflect different levels of work complexity. The CEO led a programme of change that has encompassed a range of initiatives and improvements based in systems leadership. Work to date has included:

• Developing and implementing a ‘Working Together Program’ that is being progressively delivered throughout the Court (including some judges who were more involved in the administration of the Court) to build understanding and capability in SLT. More than fifty staff and managers and nine judges have so far participated in the programme. Designed specifically for the Court, this programme is delivering a tailored leadership approach, and aims to strengthen the foundation of capability, foster the desired culture of collaboration and teamwork, and support the implementation of improvements across the Court.

• Adoption of ‘team process’ as the standard and expected way of working in teams.

• Adoption of ‘task assignment’ as the standard and expected way of assigning work.

• Role clarity work using SLT principles to redesign roles including clarity of authorities in relation to line management, project management and lateral role relationships.

• Redesign of various systems of work to improve productivity and remove waste.

The redesign of governance structures, is the principle focus of this case as the work was foundational, establishing a system by which the court could be directed, managed and organised to make the ‘IFCE work’, and through improvement in systems of work, drive with purpose toward court excellence.

Outcomes and benefits

The outcome of the revised governance structure has enabled the Judiciary, Registry and Administration to work together in a system with clearer purpose, boundaries and authorities. The level of work is now appropriate to the complexity of the roles concerned in particular, the capability of the Division Heads has been engaged in order to improve court performance as well as administer justice in individual cases.

The outcomes of judges exercising their newly delegated authorities are evident in the 2014/15 measures of court performance– see Figures 20.5 and 20.8.

Clearance ratio relates the Court’s caseload to its capacity. It is the ratio of the number of outgoing matters expressed as a percentage of incoming matters. The clearance ratio is an indicator of whether or not a court is keeping up with the demands for court services in terms of its incoming caseload. The Court has increased its clearance ratio indicating it is getting through the work, meeting demand and that it has capacity to meet its time standards in the future.

The cost per case is measured by dividing the total recurrent expenditure within the court for the year by the total number of finalisations for the same period. It provides a unit measure of efficiency. From forecast to actual for 2015/16 there was a 13% reduction in Crime and an 11% reduction in Civil.

Figure 20.2 Clearance Ratio

Figure 20.3 Cost per Case

The improvements evidenced in the above measures were realised in the face of growing demand and were enabled by the redesigned governance structure.

Judge O’Neill, Head of the Common Law Division was interviewed in the August 2016 Law Institute Journal regarding innovations in the Court. For Judge O’Neill the new authorities as Division Head gave him ‘the opportunity to shake up the management of the lists that fall in his division, bringing in innovations to drive efficiencies and slash waiting times’. The effect of the innovations has cut waiting times to 6–8 months and resolution time has also shortened drastically, with 65% of judgements provided within thirty days, and 85% within ninety days. Similar efficiency drives are happening in the other divisions.

Good systems support leadership succession

One of the critical issues identified in planning was ‘What if the Chief Judge (who is a champion of this work) leaves the Court?’ The former Chief Judge was due to retire in July 2016, however, following twelve years of outstanding leadership, His Honour Michael Rozenes resigned as Chief Judge of the County Court in June 2015 as a result of illness.

This was an emotional and unsettling time for the Court. But the new governance system allowed the Court to navigate the many and complex issues that arose with the former Chief Judge leaving. A recurrent concern raised in the initial interviews with judges went from a context where ‘God knows what is going to happen when the Chief leaves … It’s terrifying’ to one where, as challenging as it was, systems were in place to sustain and reinforce change and behaviours. Specifically there was a clear hierarchy of authorities to work with to make decisions and act on the many issues that arose. In addition Division Heads monitoring and improving the delivery of court services in their respective areas.

The most telling evidence of the success of this change was in October 2015 when Chief Judge Peter Kidd was appointed to the Court. He said ‘My initial impression was that the court was functioning in a highly organised and structured manner … it was an ordered, calm but busy environment …’

Case (ii):Torex Gold – Using the Values Continua as the Cornerstone of External Relationships

Case (iii):Education Queensland

RESULTS

Some of the results I have seen as Principal include:

• Excellent productive working relationship with the Parents and Community Committee President. Together we are applying SL material to our P&C organisation.

• The creation of new mythologies with leadership team members – Staff in leadership team experiencing greater clarity in the work of their roles; weekly reporting indicating significant progress; Team Leadership and Membership steps evident in interaction between team, and respect for delegated ‘authority’ to complete work; my leadership by attending staffroom at 11 a.m. each day to interact with teaching team.

• Delivering on the SL Principle of: the right people in the right roles doing the right work.

• More productivity – progress is highly evident in all areas of the L/Ship team’s specific roles – evidenced through rapid transformation of areas relating to the AIP.

• Productive new systems:

a. Staff have a universal language to apply when engaging in discourse about the social component of their work.

b. Leadership Team members have engaged with the Task Assignment model, and completed some pleasing work as a result.

‘As a Classroom Teacher under Mark’s leadership, the school is much calmer because we know the support is there … He has worked with us to design and implement whole school systems like School Wide Positive Behaviour Learning (SWPBL), Sound Waves, Guided Reading and Daily Writing Consolidation systems … With this calmness comes self-assurance for the staff, because we are valued as an individual who is part of a team, creating a network, a community among the school staff … We are comfortable because there is no ‘in crowd’ and no ‘out crowd’. Everyone is different, but in this culture difference is respected and our tasks are done more efficiently and effectively … We are able to put forward ideas from our role and know they are considered.’

Writing system

As Head of Curriculum, focusing on the development of a writing system, the application of SLT to my work in 2016, enabled me to operate at a high level of detail effectively for the first time, successfully using social process; to have teachers know the key issues and together develop a targeted response, one where they were the key players. From the first time the data yelled at us to do something, it was thoroughly analysed and planned in detail from the start. It meant that I was able to use knowledge I had been storing away to choose the right people for the right work. I was able to use their skills and their standing in the school to influence the staff in a positive way. Building this effective writing system, easily provided the methodology to maintain and improve it and when I went on leave it was easily transferrable to my replacement. The SLT process I had worked through meant that I had made a sustainable system; a system that is powered by the teachers and is supported by the other systems in the school.

Reading system

The student data above demonstrates the reading systems consistency of purpose and practice, delivering continual, more consistent improvement of reading results in 2016 and 2017 regardless of these students ethnicity, socio-economic status and minor intellectual or behaviour disorders.

As Lead Teacher use of SLT has facilitated ownership of the reading system by all involved through the effective application of social process … The efficient, successful reading system design has delivered:

• clear understanding of authority and accountability, scripted well-resourced systems, effective training, clear expectations and timelines with accurate data collection.

• a change of the teacher aides role from that of simply reading with students to working at a para professional level – efficient programme delivery, improved skill and knowledge capability and involvement in system innovations.

• analysis of recordable data allowing individual student’s achievements to be monitored and alterations made to the system, if necessary, to ensure continual reading growth.

• creating reading goals with students and informing stakeholders of progress has effectively motivated all involved.

• The work of my role as TA team leader and custodian of the reading system, listening to employee’s suggestions, ensuring timelines are met, quality assuring the results, continually identifying and implementing innovations is necessary for success.

• This ‘relative writing gain’ of the MSS students from year 3–5 is demonstrating performance significantly above the ‘average gain’ of Queensland schools – as a direct result of the Daily Writing Consolidation system, which was implemented in 2015.

Figure 20.4 Writing Yr 3/2014 to Yr 5/2016

Figure 20.5 Reading Yr3 2015 to Yr 5 2017

Case (iv):Contrasting Symbols in In-Patient Psychiatric settings in Italy and the UK

Senior leaders from a mental health service in the UK went on a study visit to Trieste to see what could be learned from their services. Mental Health services in Trieste, Italy have become well known for their non-restrictive systems in mental health care. For example, they have no locked wards, no low secure units and use sectioning under their equivalent of the Mental Health Act very rarely. Their ward environments appear less institutionalised than those found in the UK and patients are referred to as ‘guests’. Their in-patient suicide rates are markedly lower.

Historically the Trieste services were more institutionalised than their UK equivalents in the early 1970s with more psychiatric beds per head of population. It was the leadership of the psychiatrist Franco Basaglia that made their transition to their current success possible. He defined the work of the organisation as primarily to engage and work with the people it served, rather than to control behaviour according to a set of restrictive rules that assume people will behave badly or unsafely. This created a systems change, with the focus of treatment being on the individual and what they might want or need, and the focus for staff behaviour being how they might go about engaging individuals with the service they had to offer. There was a greater willingness to tolerate uncertainty and risk (and one would assume a less punitive response to adverse incidents when they happened). Thus people were trusted and treated with respect.

In the UK, a common response to in-patient suicide has been to improve ‘environmental safety’ – to remove any potential environmental feature that could facilitate a suicide attempt. This has mainly focused on the removal of ligature points – anything that can be used for securing a ligature to facilitate a suicide attempt through hanging and has required significant financial investment.

On visiting one of the in-patient wards in Trieste, we were struck by the extensive presence of ligature points throughout the ward environment. In the UK, ligature-free taps, showerheads and door handles all have a distinctive downward sloping design. In the wards in Trieste, the fixtures and fittings were all more consistent with those found in a home environment. This more homely atmosphere was heightened by attractive furniture, pictures and curtains, and in combination more akin to a hotel environment.

In trying to understand the better performance of the service in Trieste in relation to in-patient suicide, it seems possible that one factor may be the prevalence of ligature-free fixtures and fittings. In the UK service the resulting rather clinical and institutional environment may serve to symbolically communicate the message: ‘You are very unwell, and such a danger to yourself that you cannot be trusted even with a normal door handle or tap.’ This could contribute to someone’s sense of fear and hopelessness about their experience of mental illness. We know that in many health conditions, not just mental illness, hope is positively correlated with recovery, and it may be that this powerful symbol denoting an unintended organisational mythology of hopelessness may be actively contributing to poorer outcomes.

Thus we can see that in Trieste the combination of leadership Behaviour (Basaglia) the introduction of new Systems (treatment and environment) and the positive use of Symbols (ligature points) have all contributed to a lowering of suicide rates and the general positive identity of ‘guests’ as they address their mental health issues.

Benna Waites: Consultant Clinical Psychologist

Case (v): ‘Leadership in Combat’

Comalco

Comalco’s smelting business unit consisted of three major aluminium smelters: one in New Zealand (New Zealand Aluminium Smelting or NZAS), one in Tasmania (Bell Bay) and one in Queensland (Boyne Island). The NZAS story is told in detail in the case study reproduced on the website. In more general terms Karl Stewart became managing director of Comalco Smelting in 1987. In his previous roles as head of an organisational development team and vice president – organisational effectiveness, he had been concerned about the quality of leadership and the negative effect of certain systems. Prior to these roles he had spent fifteen years in line management roles, the last four of which were as General Manager of Comalco’s bauxite mine. He was acutely aware of the predominant ‘them and us’ division in employment and specifically linked this to the nature of employment systems.

In effect, Comalco Smelting, like many other traditional industries, appeared to be two parallel organisations: one a ‘staff’ organisation largely attempting to function as a meritocracy with at least some systems of performance management and pay for performance; the other an ‘award’ organisation, of ‘workers’, hourly paid, with a range of role bands, negotiated systems of pay, attendance and overtime. Of course, this is the old ‘white collar/blue collar’ distinction, a distinction which was simply assumed by most people in leadership and HR roles as if it was some sort of natural order. Essentially the staff were ‘management’ and primarily identified with the company while the ‘hourly’ employees were the ‘workers’ and primarily identified with the union. This was the case right across Comalco, Hamersley and most mining and heavy industry sites in Australia and many other countries.

What was also apparent was that behaviour was very different between the two groups. Two very obvious and symbolic differences were sick leave and time management. In an article in the Business Review Weekly (BRW) (BRW, 31/1/1994) Stewart said, ‘the difference between staff and award workers in terms of sick leave is a ratio of one to ten. In other words for every one day of sick leave taken by staff, award workers take ten.’ With regard to time management staff generally did not watch the clock and had no punch-clocks (clocking in and out). Workers (under the award) left exactly on time and felt they were ‘paid for time, not work’. This was also demonstrated by the very existence of overtime for one group but not the other.

This may seem obvious and is easy to describe; addressing it, however, is not merely a question of putting everyone on salary. How the fundamental supporting systems of this structure are addressed, identified, redesigned and implemented is crucial. The work was done over the three years that preceded the change with major emphasis on improving the quality of the leadership, poor performers in leadership roles were dismissed. In the lead-up to the offer of staff employment being made the entire management team of the NZAS smelter met in Christchurch for several days of intense work. In two days every system was examined in terms of whether it was and should be a system of equalisation or differentiation.

Following this planning period, the work was done to change those systems and symbols that had been identified as needing change. This was not particularly time consuming because over the previous three years a lot of work has been done to improve the systems that applied to the staff workforce. After the event it was interesting to find out (through confidential interview and audit) the comments made by operators and tradespeople. These concentrated upon the more symbolic systems to test whether the company was serious. As a result ‘all staff’ was tested not simply by the salary system and terms of employment being equalised, but by systems such as the ‘staff Christmas party’. Would it now be open to all? The answer was ‘yes’ – with significant success. The availability of ‘biscuits’ with coffee and ‘beer and cheese’ staff briefings were seen as a much more crucial test than even equalising the sick leave system. Car parking, transport, uniforms, canteen facilities and bathroom facilities were others that were carefully watched by those deciding firstly whether to move to staff and whether it really meant they would be ‘staff’.

Preparation was meticulous and detailed, using the systems leadership training concepts. Information about change was given to all on an individual basis by their manager-once-removed (M+1). Leaders were assessed as to their capability and removed from role if not up to the new role. As Stewart said in the BRW article, ‘You can’t expect the troops to take any notice of improved work performance if they have evidence of poor management.’

The Working Together courses were introduced to teach the new requirements of teamwork, rather than command and control. Eventually the entire workforce went through this programme. The Working Together courses helped in these specific ways:

• They clarified work expectations with regard to leadership and teamwork.

• They introduced a common language to help in work and communication.

• They built mythologies and a culture based on a shared experience as the course provided stories of success and disasters with rafts, ropes and planks.

So was all this preparation and planning worth it? First, there was a clear measure in simply the number of people who chose to remain with the organisation and to move to staff contracts: 98%. The figures for all of the Comalco plants were not ends in themselves but indicative of a coherent approach, message and leadership. Indeed all the Comalco smelters and Hamersley Iron reached figures in excess of 97%.

It is interesting when considering these figures that the AIRC found specifically that there had been no element of coercion. This can be compared with other organisations that thought they would ‘do the same’ and only offered the contract with some cash. These operations were fortunate if many more than 50% signed. However signing a contract is not an end in itself. What benefits did it produce? The run charts (Figures 20.1 and 20.2) were submitted and accepted as evidence by the AIRC.

These examples of output improvement are clearly linked to the change in leadership and systems. It should be clearly evident when that change occurred. All the graphs show significant change in September 1991 with preparation activity before that. It is interesting to note that the revenue to the smelter from the sale of the additional high purity metal (Figure 20.3) was greater than the cost reduction brought about by having fewer employees.

These changes caused a great deal of debate about the nature of the process, especially whether it was ‘anti-union’. This is largely a distraction, even recognising the political significance. The approach was to improve leadership behaviour, appropriately redesign systems and manage symbols including understanding the symbolic significance of specific changes. The purpose was to improve business performance by realising the capability of the workforce.

Some months later, however, random interviews were conducted by external consultants about the effect of the changes on work experience. What was evident was the improvement of the work experience itself. Working around furnaces all day is not, for most, an intrinsically satisfying experience, but people reported a step change in the quality of their working lives. Examples included feedback that proved to the operators that they were listened to; they also appreciated that they could use their discretion more and understood the context better. In addition, many reported an improvement in their home life: ‘I don’t just go home and open the fridge for a beer, I’m spending more time with my children even helping them with homework’ (cell-room operator) ‘I can’t wait to show my kids where I work, I never thought I’d say that, I have real pride in my work now’ (tradesman electrician). These were not isolated examples.

Figure 20.6 New Zealand Aluminium Smelters Employee Numbers

Figure 20.7 New Zealand Aluminium Smelters Overtime Hours Paid (%)

Figure 20.8 New Zealand Aluminium Smelters Off-Specification Metal (%)

Figure 20.9 Comalco Aluminium (Bell Bay) Limited Overtime Hours Paid (%)

Figure 20.10 Comalco Aluminium (Bell Bay) Limited Metal Products – Hours Worked / Saleable Tonne

Figure 20.11 Boyne Smelters Limited Hours Worked / Saleable Tonne

Figure 20.12 Boyne Smelters Limited Off-Specification Metal

The process was applied at the other two smelters with similar results, as shown in Figures 20.4 to 20.12.

Many of these run charts are not directly related to the ‘people’ systems. They are deliberately chosen to show the effect that changes in leadership and systems can have on operational technical processes.

The overall analysis of Comalco Smelters is summarised in the chart reproduced as Box 20.1, and which was prepared independently.

Hamersley Iron

A full account of this process is contained in a paper by Joel Barolsky (1994) of the Graduate School of Management, University of Melbourne.

The Western Australian iron ore industry was characterised by industrial disputes in the 1980s – see Figure 20.8, which documents the dramatic effect after the change processes were implemented.

In June 1991 Terry Palmer was appointed managing director of Hamersley’s operations. He saw the need for change and articulated it as follows:

The 1980s had been a period of ‘winning back the farm’. We wanted to restore management’s right to manage and, to a large extent, we were very successful in realising this goal. Through this process, however, we in some ways encouraged the development of a very directive management style; we reinforced the ‘us and them’ and basically gave the unions a reason to exist. It became apparent that we had gone about as far as we should down that path. If Hamersley wanted to realise its full potential and become a truly great company, management had to effect a dramatic change in the culture of the organisation. We had to bring everyone on board; playing for the same team and by the same rules; all working together. The planning process was started so as to articulate and document this new vision for the company and to develop a coherent strategy around it. Once we had something on paper that managers could talk to, that people could relate to and get excited about, then we could really start leading the change towards a culture of commitment, continuous improvement and shared goals and values.

(Barolsky, 1994)

This was not simply a matter of a general statement. Palmer then embarked on a detailed programme of change. This was largely on three fronts: systems (especially safety and HR systems), capability and team leadership and membership. He and his team outlined key strategies:

• developing a ‘customer-focused’ culture;

• securing the company’s resource base;

• restructuring the product mix;

• consolidating market leadership;

• improving the company’s cost position;

• reorienting external affairs (Barolsky, 1994).

Joe Grimmond, who was at the time Hamersley’s chief employee relations’ consultant, explained that:

Figure 20.13 Pilbara Industrial Disputation

We recognised that many of these systems had been around for decades and were very much part of the Hamersley way of doing things. While we realised it would be difficult to fight against this momentum of the past, the senior management team had a strong resolve to succeed. This success wouldn’t be measured by actual modifications to the systems themselves but rather by what behavioural change resulted from the changes to these systems.

The team identified several key systems that were in box B (authorised but counter-productive – see Chapter 10):

• seniority system of promotion;

• command and control task assignment;

• overtime system used as reward consequently encouraging inefficiency;

• pre-agreed leisure days off and personal days off, sick leave and stop work meetings;

• demarcation between unions and staff, for example, supervisors could not help in hands-on work;

• award pay increases on the basis of qualification not use of skill;

• active encouragement of new employees to join the union.

Palmer studied and learnt from the Comalco work, especially in New Zealand, and sent employees to the NZAS site. He started with key work around safety to build trust and implemented a new safety system. This initiative was led by managers in Level III roles and the general managers.

He then initiated the Working Together programme and, with Macdonald, co-ran courses for his team (roles at Level IV) and all people in Level III roles – thirteen courses in all. He used these to explain what he wanted to achieve and how he intended to achieve it. These courses (as mentioned in Chapter 18) covered all the topics of values, culture and mythologies; work complexity and capability; and the steps and traps of team leadership and membership. He and his team then reviewed the leadership roles and who was suitable.

Then the GMs in Level IV roles presented the plan of work strategy in person to all employees. What was specifically emphasised was the need to be world competitive and 100% reliable in supply, a target some thought was impossible. The use of the systems leadership theory in detail was complemented with business improvement projects including quality initiatives.

In June 1992 there was a major strike over refusal of an employee to join the union, which the company was no longer making compulsory. Despite the fact that enforced closed shop was illegal, the mythologies of the union leadership predicted that Palmer and the leadership at Hamersley Iron would give in. There was huge dissonance created when Palmer backed the individual’s rights.

All the details of this strike are not covered here. However, the highly significant and symbolic battle to protect the right of people to work and to prevent harassment created many new mythologies – not least that the ‘management’ was prepared to be courageous and respectful of the law. The Australian Industrial Relations Commission ordered a return to work on 19 June backed by the prime minister of Australia and the federal minister of industrial relations. The strike continued. On 29 June, workers voted to return to work.

In early 1993, the company was restructured. The workforce reduction of almost 20% was unusual in that proportionally as many ‘staff’ roles went as roles covered by the ‘award’. Voluntary separations were accepted by nearly all to whom they were offered. In fact a greater number left than was intended through the voluntary scheme.

This led to an opportunity to improve many systems, including a new recruitment system using input from shop floor team members. A fair treatment procedure was introduced and the Working Together course rolled out to all employees. Paul Piercy, a GM, commented:

Using these courses to introduce team concepts also provided us a chance to emphasise to supervisors the importance of their role in the new Hamersley. It was also a chance to start engendering a management style that was more participative and attuned to the needs of team members. For the shop floor employees it was a way for us to communicate Hamersley’s vision and strategies and to start building some trust and commitment to them. Most importantly, the courses were the beginning of creating more effective teams on the shopfloor.

(Barolsky, 1994)

Piercy and all the GM operations co-ran these courses as did leaders in Level III roles alongside Macdonald Associates’ co-presenters.

Smaller symbolic changes were made, including no preferential parking for staff, and supervisors eating with their crews.

Eventually staff offers of employment were made at the end of 1993. By 1 January 1994, 89% had accepted. The results were similar to those at Comalco – production increased and costs fell (Figure 20.9).

In 1995, there was not as dramatic a change as was seen in the move to staff at the end of 1993 because the new systems had been introduced prior to this change. The staff employment was a consequence of change, not a cause. This demonstrates again that signing a piece of paper does not change behaviour, nor does simply leaving the union-negotiated employment conditions. It is the improved quality of leadership and the underlying work systems that provide real change.

Figure 20.14 Hamersley Iron – Productivity

It was the detailed, hard work of the leadership applied in a thoughtful, disciplined way that led to the change. In turn the new culture provided a platform for other important changes in work practices, quantity, safety and cost reduction. This is detailed in Rio Tinto annual reports from 1994 onwards. These later initiatives were more effective because of the work done in 1992/1993, in the same manner that the systems leadership work was more effective because of the earlier work of restructuring of all CRA operations in the 1980s based on stratified systems theory.

The effect of the cultural change was highlighted by independent reports. In a March 1996 report in Industrial Relations Magazine, the following was written:

Without doubt, Hamersley Iron is the jewel in CRA’s crown. In the six months to June 30, 1995, iron ore contributed $157.6 million to CRA’s coffers. This was an 8% increase over the six months in 1994 and was due to increased sales tonnages and marginally higher prices.

First half shipments were at a record 26.4 million tonnes – a 9.5% increase over the previous record of 24.1 million tonnes set in the first half of 1993. Total production for 1995 was 52.2 million tonnes and total shipment 54.8 million tonnes. For ’95, Hamersley’s iron ore production and total shipments were the highest on record, despite the fourth quarter being adversely affected by a cyclone. Shipments to China and Europe were at record levels … the change in company performance has been nothing short of incredible. Productivity has jumped from an average 15,000 tonnes of ore railed per employee per annum to 24,000 in 1995. The labour force has fallen from 3,000 to 2,500 and labour costs have gone from $186 million to $166 million.

Maintenance crews now work 12-hour shifts. There have been zero hours lost to industrial disputes and safety has improved markedly. For every million hours worked, there are now only seven injuries compared with 47 in the past.

(IRM, March 1996)

The changes were highly public and the subject of press and media attention. Channel 9 in Australia ran a Business Sunday report (on 26 November 1995) on the changes, where in an interview Paul Anderson explained that he was still a union member and stated: ‘I have never had anybody even intimate that I had to give the union away … production is through the roof and that’s great’.

At no time in either Comalco or Hamersley were people asked, required or told to give up their union membership as part of the deal. They did have to change behaviour, but the biggest change was the behaviour of the leadership. As Geoff Neil, the manager of the rail division, said, ‘the ball is in our court now, they have given us their trust, we must not let them down’.

People were not bribed. For many there was not much financial gain, given that there was no overtime and the removal of leisure days off and personal days off. Absenteeism dropped dramatically and people had, for the first time, a guaranteed income. The changes included the opportunity to do different work; one GM’s personal assistant trained as a truck driver and many were able to use capabilities they had not been allowed to under old systems.

Finally, the worth to Hamersley was demonstrated when a comparison was made between Hamersley Iron and a competitor organisation’s operation. This is as close as like to like in industry and in fact the competitor’s resource base is arguably slightly better than that of Hamersley Iron, as can be seen in Table 20.1.

Many commentators in Australia saw this as a CRA conspiracy. In fact, managing directors had significant discretion. In other businesses many of the concepts were introduced without an ‘all staff’ programme. Macdonald Associates have worked with the Rio Tinto, Anglesey Aluminium smelter in North Wales since 1993 where the leadership has implemented many new systems and gained improvements not only with a unionised workforce of operators and tradespeople – but also with a staff union!

Les Cupper, the CRA vice president of organisational effectiveness, explained the changes at Comalco and Hamersley in the context of the business as a whole:

A key reason is that in all of our industries we don’t control the exchange rate (a 1 cent movement in the Australian dollar against the US Dollar means a 22 million change to the bottom line). So what we had to do is concentrate on things we have control over – the work environment.

(Way, Business Review Weekly, 31 January 1994, pp. 34–39)

The fear is that discipline can become dogma; that the purpose is lost in the process. This can happen in any initiative, be it organisational, implementing an IT strategy or merging companies. It is a concern that underlies the need for controls, audits and measures on any process. In these case studies our process and the companies output has probably been scrutinised more closely, at least in Australia, than any other. In the article ‘The Art of War’ in the Sydney Morning Herald (8 December 1997), Helen Trinca wrote:

By the time Carnegie left in 1986 his impact had been profound. By then, as J.T. Ludeke says in his book The Line in the Sand, Dr Ian Macdonald, a British consultant psychologist who had worked with Jaques at Brunel University in the United Kingdom, had begun working with CRA.

He formed an alliance with Karl Stewart, the Managing Director of Comalco Smelting, developing training courses and preparing personnel strategies. Both men were crucial players in the ideas behind the push for contracts at operations in Bell Bay, Boyne Island and Weipa in the 1990s.

While this was the case, the article also links these processes with earlier work of Jaques and Hilmer, a consultant for McKinsey’s. All of this work is connected – as Cupper pointed out in the BRW. It is long-term, hard work and builds upon previous stages, just as new initiatives can build on this work further.

Rio Tinto is an example of a learning organisation. Many years ago Sir Roderick Carnegie expressed the view that gains would only become apparent when operators changed their behaviour. It was only when the systems work was integrated with the structural changes that such obvious changes could be expected and were found.

These case studies have both been from one corporation and a very particular one. This is not to imply that only mining or smelting industries can use these concepts. The breadth of organisations (see the case studies on the website) that have used systems leadership theory demonstrates this clearly. The case studies in the body of this book were chosen because:

• They had a very high public profile at the time.

• Data is available that is already publicly accepted as evidence in law.

• There were no other major changes occurring at the same time (for example, technological process change).

• The case studies come close to meeting the ideal process outlined at the beginning of Part 4.

• The leadership of the companies was fully involved during the process. (The leadership of these companies was actually developing the theory as part of the process.)

When we started working in Comalco and Hamersley, people would ask why theories developed in health and social services at Brunel University were relevant in mining; when we worked in the financial sector people asked us why are we using theories from mining.

Our work in other countries in similar industries is questioned: ‘Why do we use ‘Western’ theories?’ We hope to have demonstrated the general applicability of systems leadership theory. It is a theory about people in organised, purposeful activity – not ‘just in mining’, but in teaching, worshipping, healing, policing, learning, banking, running local councils, providing energy and many other activities. All are concerned with universal human values, culture, mythologies, teamwork and systems, symbols and leadership behaviour that influence all of our behaviour and our willingness to use our capability to the full.

Conclusion

The evidence above clearly demonstrates that Systems Leadership can and does make a significant difference and help to create a positive and productive organisation in any sector. As can be seen, if used in its entirety, it can make a huge difference. However, that does not mean that if you cannot adopt it in its totality it is not of help or it cannot make a difference. Other case studies on the website show how more limited use of Systems Leadership has still been very useful. Even just using it to understand why current practices are not working well can be extremely helpful.

We have been able to help take the unfair pressure from leaders when it is clear they are having to work with counter-productive systems or cannot remove people who are not capable of the work of the role. Just being able to say ‘it’s not your fault, you can’t fix this now’ can make a difference.

We have looked at how Systems Leadership can make a difference at an organisational level but we also recognise and enjoy the difference it can make at an individual level. Hearing people say such things as ‘I really enjoy going to work now’ or ‘at least we are working as a team’ or ‘I now go home feeling I have achieved something’ and one person said ‘I am proud of my work and I look forward to the open day when I can show my children … I never felt that before in all the years I worked here’ is testament to the positive effect these ideas can have for people.

We spend much of our lives at work; these ideas can make that experience enjoyable, challenging, creative, productive and even fun.