Prevent Poor Performance
2023 started quietly and finished with some startling claims about employer behaviour in terms of the treatment of their employees. Competition for workers was high due to a consistently low level of unemployment not seen for several decades. The current government claims this as an achievement based on ‘good policies’ but expresses quiet concern that unemployment may rise.
No doubt, employers aspiring to differentiate their brand will face further challenges in 2024 around developing and sustaining their position as an employer of choice. Wise employers understand that proper preparation prevents poor performance.
Employer of Choice
Employers of all sizes are a vital source of wealth and social harmonisation in the world economy and for each nation. Therefore, when a democratic government proclaims that employers are significantly cheating the employed, it begs the question, is this perspective based upon political or democratic rhetoric?
Developing a reputation as an employer of choice is not easy, involving more than simply paying employees more than your competitors or plying them with numerous benefits, but the associated gains can be significant. Employers ideally want to attract and retain workers who need minimum management and supervision and who apply themselves to do the job to the best of their capability.
The essential expression by the employer to a workforce of diverse personalities is that the employer cares about employees beyond just doing their job. The proof of such care must be tangible within the endemic personality of the employer’s culture.
Large employers tend to appoint specialists within the rewards and benefits area, and the individuals who occupy such senior positions usually have a developed career in HR and understand that tangible initiatives positively motivate company morale and pride in one’s contribution to the nation’s wellbeing.
Regarding rewards and benefits, any company-funded cost must act as a continual positive statement of a caring and balanced company culture. Unfortunately, many of the initiatives required to create a positive company culture through all levels of the organisation often lack consistent and universal execution.
Super is an employer-funded employee entitlement but often its value is diminished due to the failure of employers and employees to treat it as a significant remuneration benefit. Most employers, irrespective of their size, generally lack the internal skills required to manage super effectively due to its complexity and many employees often lack the financial awareness required to successfully optimise their super benefit.
Over time, super regulations have become increasingly burdensome, with frequent and ineffective changes resulting in marginal improvements.
Within the financial services industry, the large corporations that dominate super management all claim to provide a personal service of value to super account holders. The truth is that individuals must substantiate any such claim by conducting independent and robust reviews.
Regulations passed after the 2018 Royal Commission saw profit margins within the financial services industry experience a significant reduction, such that most major super platforms reduced their cost structure by retrenching workers.
Although super platform providers have made substantial investments in technology, the resulting service is often an unexplained one-size-fits-all solution based on the registration of asset movement and an ongoing statement of balance.
The government recently started discussing super as a national asset in contrast to it being a personal asset needing effective management to fund an individual’s lifestyle in retirement. The government has also recently stated that the original intention of super was never defined. Former Labour treasurer and prime minister Paul Keating might disagree with such a claim.
Super has a multitude of stakeholders, which makes determining who is responsible for its effectiveness somewhat hazy. Employers are responsible for funding super, so does this mean their responsibility ends with the payment of super contributions? Historically, many employers organised super for employees around a dominant platform provider, a model that still exists but is less and less popular now.
Upon closer examination, it becomes evident that most superannuation service models are similar or even identical. Industry funds often boast about superior investment performance but fail to provide adequate transparency on why this is the case and what risks are involved. On the other hand, master trusts have started replicating industry fund investment strategies to counter these claims without necessarily considering what truly benefits individual investors.
Additionally, the government now talks about wanting access to the vast pool of super money to fund political agendas, which demands more scrutiny and explanation as it appears to approach the concept of nationalising the asset, which is a significant departure from super being a personal asset.
Unfortunately, all this attention does not mean that the management of super has improved or that ‘someone’ is taking responsibility for providing a wealth optimisation service to employees at an individual account level.
Employers should consult with employees about the kind of services they want to help them manage what will become a significantly important asset used to fund their lifestyle in their retirement.
It is apparent that super in Australia is now so large that everyone wants their slice of it. Employers must take responsibility and play their role along with employees to ensure that suboptimal super management practices and false claims (which can diminish the value of super benefits) are identified sooner rather than later.
A consultation team consisting of representatives from both management and the general workforce is the ideal environment to review meaningful analysis that clearly explains how super is currently managed, what improvements are available and ultimately, how every individual within the organisation can optimise their super asset into the future.
Conceptually, a consultation team should initially consider the number of times anyone asked their current super provider to improve or change the services offered. The consultation team must also understand how long the existing super provider has been in place and their value proposition measures.
As an employer-funded employee entitlement, super qualifies as a significant remuneration benefit but is consistently demoted to an initiative to look at ‘sometime in the future’ rather than a problem (containing significant opportunities) that requires urgent attention.
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