CFMEU FORESTRY AND FURNISHING PRODUCTS DIVISION

NATIONAL DIVISIONAL POLICY ON ENTERPRISE AGREEMENTS, PAY RATES AND PERFORMANCE MEASUREMENT

ENDORSED BY THE NATIONAL DIVISIONAL CONFERENCE
2ND June 1994.


ENTERPRISE AGREEMENTS, PAY RATES AND
PERFORMANCE MEASUREMENTS POLICY


This document sets outs the Policy of the CFMEU FORESTRY AND FURNISHING PRODUCTS DIVISION on Enterprise Agreements, Pay Rates and Performance Measurements for the information of Members, Representatives and Officials.

Included with the Policy is an introduction which provides a background for the reading and application of the Policy.

This Policy is binding on all CFMEU FORESTRY AND FURNISHING PRODUCTS DIVISION Members and Officials.

Any queries about the Policy should be directed to the Branch or National Divisional Office.


1. INTRODUCTION

Since the mid 1980's the Union movement has been committed to the restructuring of Australia's economy and those industries that make up Australia's economy. Unions have seen this as one of the most vital issues to be addressed if wages, conditions and living standards of workers are to be maintained and improved.

Award and Industry Restructuring has lead to the development of enterprise agreements to implement further reforms at the work site level.

These agreements are now having an effect and improving the performance of enterprises. Interest has grown around the issue of how best to measure that performance to ensure it continues and doesn't return to inappropriate performance levels.

Unfortunately some employers have seized upon this issue of performance measurement and rather than adopting wider reforms and seeing the big picture have attempted to introduce it in a manner similar to the old 'bonus' or 'payment by results' systems.

Setting performance targets or 'Milestones' and requiring workers to meet them with the threat of not getting a promised wage rise, is the old bonus system dressed up. It once again tries to pretend that enterprises will be successful if only workers worked harder. The reality is of course that management of enterprises and work organisation issues are things that require improvements.

The Policy seeks to address this issue by explaining the way performance indicators should be used to measure the performance of reforms covered by the enterprise agreements.

It also seeks to educate members and officials so that they can once again reject the 'bonus' or 'payment by results' that some companies are once again dragging out of the past as carrots and whips.

2. AIM OF POLICY

The aim of this Policy is to ensure that the CFMEU FOREST AND FOREST PRODUCTS DIVISION members can participate in measuring the performance of enterprise agreements without being dragged into some sort of 'pay by results' system that will be detrimental to Forest and Furnishing Products Division members. This Policy provides details on the following points that form the basis of the CFMEU FOREST AND FOREST PRODUCTS DIVISION position on this issue.

  • Enterprise agreements are about improving the enterprise so that it is more efficient, productive, profitable improving the quality of work, work organisation and the working environment for Union members and providing for pay rises.
  • Whether agreements are actually achieving the above points is something that can and should be evaluated or measured.
  • Performance indicators can give a good feel as to whether enterprise agreements are improving the workplace and employment conditions.
  • The results from performance measurement can be used to help develop subsequent enterprise agreements.
  • Performance indicators or performance measurement monitors how well enterprise activities are progressing. They are NOT TO BE USED AS TARGETS THAT MUST BE MET FOR FUTURE PAY RISES.
  • THE Union reserves the right to review existing wage rates and future pay rises on a range of factors including how well a company is doing, inflation rates, pay rises in other industries etc.

3. POLICY DETAILS

This Policy will cover:

1. Access to Pay Increases
2. Enterprise Agreements
3. Performance Measurement
4. Performance Indicators

1. ACCESS TO PAY INCREASES

Enterprise agreements will be the key mechanism for most Australian workers to receive pay increases for the next few years.

Enterprise agreements will only ever be a 'top up' for wages, the bulk of members wages are based on the minimum rate set down in the Award. Pay rises gained through enterprise agreements will eventually be reflected in the Award.

The Union supports wage systems based on the skills and competencies a worker possesses, is prepared to use in the workplace and that are contained in the Award Grade Structure.

The Forest and Furnishing Products Division is opposed to any form of wages system similar to 'bonus' or 'payment by results'. Mast results in a workplace are not controlled directly by workers but are affected by a range of factors usually controlled by management eg; machine technology, machine maintenance, work organisation, training, quality of raw materials, staffing numbers, quality of supervision etc.

Pay rises gained through enterprise agreements have many other factors influencing them besides the changes outlined in the agreements. Pay claims May be one part of an enterprise agreement but the various changes outlined in an agreement that workers will participate in are not the only reasons for a pay rise. The Union reserves the right to review and establish claims for pay increases included in the enterprise agreement based on other issues such as:

  • How well a company is doing;
  • Inflation rates;
  • Market rates;
  • Comparison with other industries etc.

2. ENTERPRISE AGREEMENTS

The CFMEU FOREST AND FOREST PRODUCTS DIVISION supports Enterprise Agreements that are developed with consultation between Union members, Union Officials/Representatives and Management.

The objectives of good Enterprise Agreements should be to:

a. Develop better consultation between workers and management through effective discussion and negotiation;
b. Improve all facets of the enterprise;
c. Improve the earning capacity of the enterprise and its employees;

Enterprise Agreements should do the following:

Outline a range of activities/changes to be undertaken at an enterprise level to improve the workplace in terms of:

  • Efficiency;
  • Productivity;
  • Profitability;
  • Working environment;
  • Work and management practices;
  • Meaniful work for Union members.

They should outline appropriate pay rises for Union members over a period of time based on such issues as:

  • Market rates;
  • Inflation;
  • Wage trends;
  • How well is the company doing financially.

3. PERFORMANCE MEASUREMENT

With the previous section outlining the Union's position on what an enterprise agreements should do, it makes good sense to have some way of checking, evaluating or measuring the activities outlined in the agreements to determine if in fact improvements are being made at the workplace.

It must be recognised that accurately measuring any of the above mentioned objectives will be very difficult. Even measuring point C, employees' wages, which might seem the simplest of objectives to measure is almost impossible.

For example measuring that wages increase by say, 15% over the last two years, does not mean much until the cost of living increases have also been calculated. It is highly debatable whether an accurate cost of living measurement can be achieved. In any case these would have to be different for each person.

How do you measure whether consultation has improved? There is no ruler for consultation however, it is vital to ensure that workplace consultation is highly effective.

Despite these issues, performance measurements though not accurate can be made and can be useful for the enterprise by giving an 'indication' of performance. This allows the ECC to check that activities taking place, relating to changes outlined in an enterprise agreement to improve the workplace, are in fact doing that.

PERFORMANCE MEASUREMENT CANNOT MEASURE INDIVIDUALS CONTRIBUTIONS OR CONTRIBUTIONS TO THE WORKFORCE AS A WHOLE. IT MEASURES THE PERFORMANCE OF THE ENTERPRISE AS A WHOLE, WHICH INCLUDES ALL MACHINES, WORK PROCESS, MANAGEMENT DECISIONS AND PRACTICES ETC. PERFORMANCE MEASUREMENT WILL NOT BE ACCURATE BUT CAN GIVE AN INDICATION OF PERFORMANCE.

When these issues are examined the total absurdity of linking performance measurement to workers pay becomes apparent.


4. PERFORMANCE INDICATORS

An Enterprise Consultative Committee (ECC) can choose to measure a range of activities that can be called performance areas. Performance indicators are based on performance areas/enterprise activity that are chosen by the ECC as areas that need to be measured/monitored to see if they are improving.

Performance Indicators could be applied to any area/activity the ECC thinks appropriate to measure. eg:

  • Performance area agreed to be measured for evaluation of improvement might be 'Safety';
  • An indicator chosen to measure this area may be recording the incidence of accidents;
  • The indication of whether incidence increased or decreased, the reasons why and the influence of any other factors would be evaluated by the ECC;
  • Based on the evaluation the ECC would then determine any necessary further changes.

Enterprises should select performance areas and indicators through the ECC which ensures that ALL Union members have a say.

GOOD PERFORMANCE INDICATORS WILL:

  • Be simple to understand;
  • Based on every day ordinary activities;
  • Be things in which the enterprise has a significant control over;
  • Be related to activities listed in the Enterprise Agreement;
  • Be relevant to improving the enterprise.

BAD PERFORMANCE INDICATORS WILL:

  • Be difficult to understand;
  • Be based on accountants' figures
  • Measure things that the workplace doesn't significantly control;
  • Have no relation to the enterprise agreement;
  • Not be relevant to improving the enterprise.

The ECC can choose a range of activities to measure, based on the above criteria and on workforce endorsement.

The ECC should REJECT and REFUSE any performance indicators that fit into any part of the 'BAD' group.
The process of measuring enterprise activities will not improve productivity, in fact a reduction in productivity can be expected as resources are put into the measuring activity,

It is the changes listed in the enterprise agreement that will improve the workplace. Measuring just checks to see if they are working or not.

4.1 What enterprise activities should be measured?

The CFMEU FORESTRY AND FURNISHING PRODUCTS DIVISION believes it is appropriate to measure the following activities:

(ECC's should choose on indicator from each group to ensure a balance on what is measured).

Area of Measurement Performance Indicator

Work Organisation eg
  • How bored are workers
  • Allocation of higher duties
  • Employee satisfaction
  • Job rotation
  • Absenteeism and labour turnover
  • Enlarging Jobs
  • Industrial disputes

Consultation eg
  • adequate time to consult prior to ECC meeting
  • Opportunity to be heard at ECC
  • Effective minute taking
  • Adequate time to distribute minutes and give report back to members
  • Provision of information
  • Provision of Award facilities

Safety eg.
  • Accident rate
  • Seriousness of injury
  • Amount of near misses
  • Record of safety improvements (equipment improved)

Management eg
  • Quality of supervision (based on confidential employee surveys).
  • Amount of information conveyed
  • Amount of bad decisions
  • Do management listen?
  • Management accessibility
  • ECC Performance
  • Enactment of ECC recommendations

Skills Development eg
  • Amount of structured training
  • Amount of Nationally recognised Units of Competency held by the workforce
  • Amount spent on skill development
  • Amount of money/time spent on skill development

Production eg
  • Volume
  • Downtime
  • Orders overdue
  • Plant utilisation

Financial eg
  • Profit/Loss
  • Investment in plant and equipment
  • Value Added
  • Turnover

Quality eg
  • Amount of waste
  • Customer complaints
  • % of A grade product
  • % of defects

Management will usually want to measure the last three groups. The first four groups are equally important and Union Representatives must insist that they are included.

Workers and management must agree on the appropriate indicators and how information about them will be collected and how it will be recorded.

The ECC can evaluate the measurements which allow the ECC to develop new changes for further improvements to the enterprise to be included in the next enterprise agreement.

If the measurement process identifies that further changes are necessary they should NOT be acted upon until a NEW Enterprise Agreement covers them. This will ensure that all changes are agreed to, well thought out, not harmful to members and Union members should and will be PAID for implementing further changes.

Policy Summary

  • Enterprise agreements detail agreed changes aimed at improving the workplace;
  • Enterprise agreements contain pay rises for workers;
  • Performance indicators agreed upon by the ECC can assist the ECC to evaluate the Enterprise Agreement, to check the workplace is improving;
  • Using performance indicators to evaluate the effectiveness of Enterprise Agreements will allow for more superior Enterprise Agreements and better enterprises in the future;
  • Performance indicators do not measure workers efforts or work performance of workers. They should not be linked to pay rises;
  • Pay rises are part of an enterprise agreement but should not be linked to the success of implementing the agreement;
  • The Union reserves the right to make pay claims for a number of reasons as part of an agreement.

5. IMPLEMENTATION

The National Divisional Office is responsible for:

  • Distribution and explanation of this Policy to Branches;
  • Ensuring that Union Training on this issue is consistent with this Policy by the provision of a National Training Package;
  • Address any issues that Branches may refer to National Office.

Branches are responsible for:

  • Ensuring all Officials are aware of and understand the content of the Policy;
  • Ensuring that this Policy is followed in enterprise negotiations and agreements and by Forest and Furnishing Products Division Delegates generally;
  • Educating Union members through briefing sessions when necessary.
HomePoliciesEnertprise Agreements Policy