Our teachers are actually well paid by NZ standards, just not by international ones

This is why you need to be careful about making comparisons.

A couple of weeks ago I posted on how the Post Primary Teachers’ Association, in support of its latest pay claim, stated: “After 15 years experience, a NZ secondary school teacher’s salary is 17% lower than the OECD average.”

Well that’s true, but an international report provides context here – our teachers are among the best paid in the OECD relative to our wealth.

After 15 years of work, a teacher’s pay is 1.4 times New Zealand’s per capita GDP. Of the other 31 OECD countries, only Germany, Korea and Spain had significantly higher figures.

The report also shows teachers’ pay is closer to the national average for tertiary-educated workers than in most OECD countries.

But in raw dollars(the stuff Kiwi teachers actually earn) New Zealand teachers are among the lowest-paid in the OECD.

Hat tip – Radio NZ news

Teachers need lesson on comparative wealth in pay claim

The Post Primary Teachers’ Association says, in support of its latest pay claim: “After 15 years experience, a NZ secondary school teacher’s salary is 17% lower than the OECD average.”

Ummm that’s roughly how much our national gdp per person is below the OECD average.

I think the nurses ran a similar argument a year or so ago.

The PPTA’s complaint is a bit like Zimbabwean teachers complaining that their salaries are 0.5% of the OECD average.

You need to put pay in the context of overall national wealth. By and large you get paid what your country can afford.

BigCake’s not disagreeing that teachers shouldn’t be paid and valued more – they have a critical part to play in lifting NZ out of its economic mess.

But till the economy starts growing to a meaningful extent, any pay rise they get has to come at the expense of someone else.

Baby boomers eating the future – the “great social conflict” of pensions versus education, old versus young

"Thank you, sir, and now the check."

As a baby boomer, I’m starting to feel increasingly uncomfortable about the way my generation is eating away at our children’s and country’s future.  

Calling gen Y the ‘me’ generation is a bit of a sick joke. If you do this, and are aged between 46 and 64, get a grip.  

As a generation we boomers benefited hugely from the generosity of the inter-war generation (our parents) who sacrificed opportunities to increase their own personal wealth (for example, accepting high tax rates and living on, by today’s standards, stingy pensions) to set up, crucially, a free universal education system.  

This they saw as an investment in the future – a path leading to greater personal and national wealth.  

Now “free” and “universal” education is another Kiwi myth as governments cast about for ways to cut spending so they can protect past and present political debts of the politically powerful baby boomers, like the guaranteed right to able to retire young (at 65) for whatever reason, and protecting inflated property prices.  

This generational angst has been pinging away in BigCake’s head for a while, set off by things like political intransigence over raising the retirement age, events in the property market, education cuts…  

And last week I met up with a friend who broke the news that he’d just turned 65 so was now eligible for a pension – if he wanted to, he could simply stop working for a living and go on welfare.  

As my friend is in good shape, and has all of his faculties (and hair), this struck me as a form of madness. (BTW – he’s going to continue to work).  

But like many Kiwis he could have stopped contributing in the workplace, and paying taxes, and become a beneficiary of the state, for dumb reasons such as:
• not liking work,
• wanting to do other things,
• not getting on with the boss and
• being unappreciated at work.  

(Common responses – ie. 20% plus – to a Ministry of Social Development survey asking why people retired. Note: health was the big one).  

Even now, the cost of this is horrendous. A quarter of government spending goes on the over 65s (12% of the population). In 2009, spending on NZ Super was $7.7 billion.  

But it’s estimated the 65 pluses will eventually be 25% of the population, accounting for half of government spending.  

Something has got to give. Economic growth, unless we can put in a China-like burst, won’t save us.  

Anyway, on the way to meet my newly pensionable friend, I’d read a column by the excellent Anatole Kaletsky from The Times on how the struggle between generations was going to be the “great social conflict” worldwide over the next 20 years.  

He too had just had a birthday – he turned 58 – and pointed out that if he was Greek he could have gone on a pension equal to between 75 and 90% of the average Greek salary.  

“If you want to know why Greece is going bankrupt …look no further.”  

Someone has to pay for this benevolence towards (I was going to write elderly) people fully capable of looking after themselves.  

Greece expects to be bailed out by fellow EU countries who, as a German in the Kaletsky story suggests, may have to lift their own retirement ages to raise the cash.  

Like Greece, NZ has a V8 superannuation scheme and an inadequate amount of gas in the economy’s gas tank to fuel it, unless you believe this engine has superior needs to others.  

Someone has got to pay to bridge this shortfall. The recession (and it’s unwanted monster offspring, growing government deficits) is just ramming this point home a bit sooner than expected.  

And who’s going to cough up this country – not the Germans. BigCake fears it’s our young.  

Kaletsky says the “rational solution” to all this is to cut pension spending. He also adds healthcare (I think he means only for the elderly) and long-term care, but BigCake thinks these should be pretty much out of bounds.  

Governments have ring-fenced this spending, Kaletsky says “even as other government programmes are ruthlessly cut.  

“Young people will realise that different categories of public spending are in direct conflict – if they want more spending on schools, universities and environmental improvements, they must vote for cuts in health and pensions.”  

As Kaletsky says schools and universities are more important for a society’s future than pensions.  

“Yet every democracy around the world has made the opposite judgement.”  

BigCake is not sure about this. Some countries, including Australia, have decided to lift the age of retirement.  

But not New Zealand where the current Government has ruled it out, saying it won’t happen while John Key is PM. I think the reason was that the level of spending on NZ Super is not yet a serious issue.  

Tell that to someone who’s just had their homecare cut, missed out on a place in university or lost their public sector job.  

Another thread to BigCake’s anxiety is over housing.  

Another baby boomer Bernard Hickey seems to have similar angst. He asks: “What will happen to income taxes and home ownership rates if we leave the retirement age at 65 and keep our pay-as-you-go and universal pension system?”  

Our family situations are similar – the Hickeys and BigCakes started families offshore and returned to NZ so the kids could enjoy the Kiwi childhoods of their parents, so maybe we feel what is happening now more acutely.  

On the housing front, Hickey points to research by Motu Economic and Public Policy Research that shows the young face rising income taxes and the prospect of living in ever smaller rental properties, while the older generations stay in their large houses and invest in rental properties.  

He says his “nagging fear is that my children, and the many other youngish New Zealanders entering the workforce in the next 20 years, will decide that after-tax wages here are too low, that home ownership under their own steam is an unaffordable dream, and there are better options overseas”.  

This is not the way it’s supposed to be.  

Crap management (4) – supply and demand the problem?

There’s no shortage of training programmes for NZ managers with a mind to improve their leadership skills to tuck into.

A MED report in 2009 identified 546 programmes run by 59 organisations.

On the demand side there is also quantity wise no problem. In a Massey University survey more than 80% of small business manager/owners said they saw managerial skills and leadership as key to company growth, performance and competitive advantage. (2% didn’t see any relationship)

But as a University of Technology Sydney (UTS) report points out many larger business owners (and most likely smaller ones as well) are delusional about their abilities – they think they are better than they are.

So judging by the fact that at best our managerial quality is marginally improving, though still mediocre by international standards, somehow supply and demand are not connecting.

And this disconnect has been known about for sometime.

But not all the issues behind NZ’s poor management performance can be fixed bv sending managers back to the classroom. A big factor is that NZ’s economy is dominated by small businesses and it’s hard for these business’s owners and managers to find the time and capacity (though too often also the inclination) to do some training.

Other issues not amenable to a training fix include:
• The best managers leaving.
• Difficulties in getting rid of bad managers.
• Lack of ambition.

The Government has a Skills Strategy, one stream of which is improving management and leadership capability. This includes trials of training partnerships between tertiary organisations and industry along with a commitment to streamline government training activities and improve links with the private sector.

Government agencies offering training include Trade and Enterprise, MED, FoRST, the Department of Labour, the Tertiary Education Commission, the Ministry for the Environment, the Ministry of Social Development, Te Puni Kokiri, the Ministry of Agriculture and Forestry and Treasury.

Hah, but this issue is primarily the responsibility of businesses and their representatives to fix, though there’s also an argument that there’s a market failure going on here.

Spanning the public and private sectors is the Business Capability Partnership which represents government, businesses and unions.

In the private sector trainers include Business NZ, Employers and Manufacturers Associations, Chambers of Commerce, the NZ Institute of Management, the NZ Council of Trade Unions, ITOs etc etc

The 546 programmes teach:
• Communication skills – 228
• Leadership skills – 196
• Employment relations – 122
• Influencing skills 110
• Team building 94
• Workplace culture 63…

Funnily enough given the above’s focus on soft skills, our managers do most poorly in people skills according to the UTS report.

And while we do relatively well in process skills in that report, on the ground there’s a dearth of training programmes that focus on this.

So …maybe the training market is sorting itself out, though no one seems to have a clue about the how effective many of these programmes are.

Crap management – the elephant in the office (3). More evidence of the size of the problem, but maybe what we are ignoring is not the problem, but the solution

When BigCake started this series on the disastrous state of business management in NZ, he thought of the elephant as being a problem.

Which it is. A report out yesterday shows more of our firms are poorly managed than well.

But maybe a better way to view our beast in the office is to think of him as a solution. That’s what we have really been ignoring.

And in terms of kicking business growth up the arse, it’s bigger than tax cuts.

A report commissioned by the MED indicates that basic improvements to management leadership, capability and skills would be massively more beneficial to business productivity than big increases in staff numbers or capital.

And our managers are delusional about their management skills. The report found managers consistently overrate their firms’ management performance. Also their self assessments “do not align well” with an external tests.

The report, Management Matters in New Zealand – How does manufacturing measure up? Findings from the New Zealand Management Practices and Productivity global benchmarking project, shows that NZ business managers are a lot like our school kids – at the top as good as anybody, but with a long ‘tail’ of mediocrity.

It was written by University of Technology Sydney using methodology developed by the London School of Economics and McKinsey & Company that is in use in 16 other countries. It was paid for by NZ Trade and Enterprise, the Department of Labour and Treasury.

The authors point out businesses and managers themselves must take primary responsibility for upgrading their management skills and improving their practices.

Based on a survey of management practices in 152 medium and large sized manufacturing firms in NZ during mid 2009, the report shows the average New Zealand business, in terms of management performance, is below the top 59% of Australian, 64% of Japanese and 75% of the US manufacturing firms.

That’s three of our top four export markets. Our average business is also below the top 30% of Indian and Chinese firms taken together.

The report’s findings suggest that firms would need to increase labour by 41% or capital by 77% to increase their output to match a lift in their management score from the 25th to the 75th percentile of the other 16 countries.

Surprisingly what mostly lets us down is our managers’ people skills. They are not so bad at operations and performance management.

The key drivers behind this situation according to the report are:
o Firm size – larger New Zealand firms significantly outperform smaller firms. BTW – The New Zealand economy is dominated by small and medium sized firms.
o Ownership – multinational corporations adopt and spread better management practices compared to domestic firms. Publicly listed companies are also better than privately owned firms, family owned firms and cooperatives. Family run firms tend to under perform.
o Higher levels of education and skills among both managers and non-managers makes a difference.

The results show better managed firms are likely to be more productive, larger, and have greater sales.

Other survey results include:
o We rank 10th out of the 17 countries for operations management.
o In performance management, New Zealand comes 9th out of 17.
o In people management we’re on par with France, Ireland, Italy and developing counties such as Brazil, India and China

There’s interesting stuff on which sectors do better than others:
o Overall petroleum, coal, chemical and associated product manufacturing perform significantly better than other sectors.
o Machinery and equipment manufacturing is tops in operations management.
o Printing, publishing and recorded media and other manufacturing are the worst in people management practices. (Haven’t seen any mainstream media coverage of this report!)

Still to come – what’s being done to fix all this.

Crap business management – the elephant in the office (2). Where’d he come from?

Probably the bowls club. The bad manager elephant we like to ignore at our cost is likely to be male, and an old one at that.

Woman and the young (well, under 55 – nice to be called young) are more inclined to improve their management skills than anyone else, according to a Massey University study into management capability in NZ’s small businesses.

Nearly everyone who took part in an associated survey said they didn’t do much formal management training (with woman doing slightly more), but when it came to the more popular “informal” and “incidental” training, woman were much more committed.

Same for age. The so-called young were into it, those over 55 markedly less so. The age thing is concerning because a large percentage of our managers and owners (62% for larger business) are “old”.

If our managers were as crap as everyone else in the world, it wouldn’t matter, but they are, despite apparent improvements of late, at the back of the field.

There are reports of international business deals falling through because of a lack of confidence in the New Zealand management end. New Zealand businesses are seen as having low business capability and acumen by their foreign counterparts according to New Zealand Trade and Enterprise research into perceptions of New Zealand businesses in leading international markets.

So why so bad? In no particular order or attempt at completeness (basically just what BigCake finds interesting):

• Do it yourself: The predilection for informal and incidental training – good old Kiwi DIY – must be part of it. According to the Massey survey, 61% of small business owner-managers learn by doing and being a bunch of tight wads spent an average $1000 a year on developing their managerial skills. The Massey report comments that this cold-shouldering of formal training in large numbers is of continuous concern for policy makers, but it adds the informal stuff also needs to be acknowledged.

• The best managers leave. Too many of the most competent, most ambitious, most forward thinking just scarper. This is mostly anecdotal, but BigCake’s seen it in many enterprises. The best leave and all too often, because the talent pool is so shallow, are replaced by lesser mortals. New Zealand is seriously haemorrhaging managers. Specialised managers topped a list of occupations of Kiwis heading for Australia by 30%.

• Businesses can’t get rid of bad ones. Even “reasonable” employers shy away from sacking incompetent managers because of the fear they’d lose any challenge to the dismissal. Most small businesses don’t have the resources to put up a fight, so they just suck it in.

• The 3Bs. I’ve got my boat, BMW and bach so ‘why the hell would I need to go to the trouble of doing any training?’

Soon I’ll look at what our managers are bad at.

Crap business management – the elephant in the office

Are our business owners and managers deserving of the faith – and dosh – the Government handed over in last week’s Budget?

Don’t think so. There’s stacks of evidence that too many are just not very good at running their businesses.

Of course there are some great managers out there who’ll repay the Government’s faith and others will have more reasons to get their act together. In many cases though, it’ll be trust,expectation and money down the tubes.

A screed of reports and surveys show many of our bosses can’t foot it internationally, though there is evidence that the situation is improving.

For some reason this issue largely gets ignored in debates about how to drag this country out of its economic rut.

Evidence of the problem includes:
• “Few firms have yet to match leading international benchmarks – no more than 2-3% of firms appear to be approaching international standards of performance on practices such as strategic planning and leadership, supplier relationships, employee performance management and benchmarking, or actively pursue strategies of innovation.” (MED)
• “New Zealand suffers a dearth of high quality managers and entrepreneurs. This lack of managerial talent could be affecting both a firm’s ability to internationalise and also the average firm’s ability to identify new opportunities and grow.” (Treasury)
• “[Despite some good news] the downside is that the Canadians have now joined a slowly growing list of countries whose managers outperform ours.” The New Zealand Institute of Management.

We also rate poorly in international surveys such as the World Economic Forum’s Global Competitiveness survey.

And then there’s the circumstantial stuff:
• “What is holding New Zealand back is a widespread lack of management and leadership skills among SME owners, which translates to disengaged workers and low productivity,” (Grant Hally, chairman, Independent Business Foundation)
• “The low productivity is mostly from significant mismanagement: The greatest differences identified here are in: GroupThink; “number 8 wire and not learning from others”; hostility to constructive criticism; discounting of formal qualifications; ignorance of both quantitative management and systems-approach management; “the old boy network”, and many more.” (2025 Taskforce)
• “Something I have noticed peculiar to New Zealand is a lack of commercial impetus due to dire motivation. I am frustrated by the isolatory and timorous attitude of NZ’s senior management who appear closeted within a fall-out shelter of “tried & tested” cladding, as if sticking their heads above an imagined parapet would render them terminally radioactive.” (UK immigrant to New Zealand commenting on the NZ Institute’s NZ Ahead website)

Over the next few days I’ll post on what may be behind this situation and what’s being done to fix it.