This is the sixth in a series of blogs by Alison Gaines FAICD IDPC global Chief Executive Officer Gerard Daniels. She provides board governance tips for BCCM members.
When talking to the client, who is often the chair or the CEO, we spend much of our time articulating the value proposition that would tempt talent from other sectors to join the CME sector.
There are many reasons why the sector is attractive. Firstly, it is a ubiquitous sector. CMEs are found in many parts of our community and commerce. Eight in ten Australian adults are members of at least one CME. CMEs, including mutual superannuation funds, account for 8% of Australian GDP. The sector directly supports more than 110,000 employees.
All CMEs share a common culture of putting members first, operating locally and a commitment to long term sustainable performance.
Far from being a traditional business model from a bygone era the CME sector is building its own unique employment brand – partly because it is ubiquitous and many potential employees have experience of the sector as members. But more importantly its cultural values represent many things that are important to employees.
The 2019 Edelman Trust Barometer – the largest global survey and foremost authority of trust in business, government, media and NGOs – found a loss of faith in the system, with less trust in government, the media and non-government institutions. The relationship that has bucked the trend is the growing trust in “my employer”. A trusted employer is often identified as an employer who has values that align with the employee, provides a sense of meaning and purpose for employees and provides contemporary well-designed jobs, proper recognition for performance and career prospects. Flexibility and convenience (especially jobs that are close to home) are also sought after. Fair pay remains an underlying motivation for Australian employees. Good leaders and managers are critical to the quality of the workplace.
CMEs are therefore in a commanding position to claim a clear value proposition of purpose – to serve members – and a commitment to sustainable jobs and local communities. The Board and executive need to reflect on whether jobs are well designed, offer flexibility and are paid competitively.
Because CMEs are clearly values based it is very important to ensure the recruitment process for executives provides fair process for internal candidates.
CME Boards are concerned that they can’t offer remuneration packages that compete with the ‘big end of town’. To attract competitive executives and managers remuneration should at least remain within the range of the for-profit sector. Ideally the Board and CEO should agree on a remuneration philosophy that approximates the median (50th percentile) for similar size organisations (by revenue and employment size). For executive roles boards should also consider designing an affordable incentive scheme that recognises exceptional performance. Performance should be based on metrics that are meaningful to a CME – revenue growth and surplus, membership attraction and retention, member satisfaction, organisational culture performance. The incentive should be affordable (drawn from the surplus), it should encourage behaviour that aligns with purpose and strategy and it should also address executive retention.
In summary a CME Board or CEO who wants to attract executive talent should craft an engaging description of the organisation, its purpose and strategy and its expectations of its leaders. A well-crafted job description with explicit performance standards and a fair remuneration and reward system will demonstrate to candidates that you are a thoughtful employer. A fair, well organised recruitment process will also serve your employment brand.
Alison Gaines will be a speaker at the BCCM Summit this November in Perth. She will join a roundtable discussion about what candidates look for beyond salary – leveraging CME values to attract the best and brightest.