Red Wagon and the case of the endless rabbithole
What we found, here at Red Wagon, was that we had entered an industrial relations snowball.
This case study is a dramatic lesson in why your compliance is such an important part of your business.
When Brijesh Rojo joined Spark Life as its first CEO, she was facing an organisation that had grown at speed. Emerging in 2011, Spark Life was governed by a board, which was mostly comprised of volunteers.
In 2016, just prior to Rojo joining the organisation, the board had commissioned a review of Spark Life’s structure. Rojo’s task was to help the board realise its vision for the organisation.
Spark Life provided flexible learning options for disadvantaged young people. It had grown to about 80 team members in under five years. The board had recognised that it needed strategic leadership.
The CEO’s role was therefore to ensure that Spark Life had the full range of skills it needed to carry it into the future. This meant:
- diversifying its revenue stream
- helping it become a sustainable organisation
- enabling it to function in a highly competitive environment
- driving success despite tightly held and difficult-to-acquire funding.
To turn Spark Life into the sustainable organisation the board envisioned, Rojo needed to make sure that its core was really strong.
This meant going beyond the restructure and considering greater rigour in its human resources management. This rigour included contracting arrangements, and the terms and conditions under which its people were employed.
‘One of the major issues with the organisation was that, because it had grown so quickly, the infrastructure and the governance, and the policy and procedures, need to be fairly quickly reviewed to make sure that they were workable for the organisation’s size,‘ Rojo explained. ’The infrastructure had to catch up.’
A compliance audit and verification was necessarily part of this work, so that any risks could be surfaced and removed or mitigated.
While a local legal team helped with the contracting and terms review, the greater scope required additional skills. The legal team introduced Spark Life to Red Wagon Workplace Solutions’ Director, Susan Sadler.
While Brijesh Rojo’s tasks seemed fairly straightforward, their complexities started to become obvious as each element was addressed. It was vital that every element in a new, cascading structure was carefully considered, from the senior leadership downwards. Then, the change throughout this transformation needed to be carefully managed. Staff had to be taken through the creation of new positions, new contracts, position transitions, and the inevitable redundancies that come out of higher efficiency.
‘Susan helped me to make sure that we were very cognizant of the impact of the change on the staff,‘ explained Rojo. ’She helped with the existing staff, the remaining staff, the staff who exited. And her services helped me and the board to manage the risk around that as well.’
Because there was so much change to be made so quickly, the changes weren’t all received with thanks.
A number of industrial relations issues emerged as a result.
‘Susan actually assisted with the communications and liaison with the Union,‘ explained Rojo. ‘Some staff welcomed the changes open-heartedly and saw how they would be beneficial to the organisation, to clients, and to themselves going forward. Whereas others found it difficult. Their transitions out of Spark Life were difficult, and we had some staff whom we needed to manage every carefully because of under-performance and conduct issues.’
‘Everything snowballed,’ recollected Susan Sadler, Director at Red Wagon. ‘The more that we tried to fix, the more it turned into an onion. It was just extraordinary.’
During the unravelling process, Brijesh Rojo discovered that the organisation hadn’t been paying its team members in line with National laws. It was a small error, but it lead to devastating outcomes.
Of concern was that it hadn’t been picked up either by the previous management or the organisation’s financial auditors.
This problem became visible thanks to the position and contract changes that Red Wagon helped Rojo put in place.
When staff contracts were changed during the transformation, some team members contacted the union to verify that they were correct. The union did its job and conducted a short investigation into Spark Life’s compliance with the terms and conditions of its award.
The result? They all learned that some staff members’ pay rates had been incorrect for quite some time.
Although the difference was small on an individual level – about one dollar per hour – over a number of years, it added up to a substantial sum.
Hundreds of thousands of dollars ended up having to be paid out in back pay. It was the straw that broke the camel’s back and caused the organisation to close its doors.
‘It was really disappointing, because we were on our way,‘ sighed Rojo. ‘If the financial situation and the back pay hadn’t crushed us, we would have built a really good organisation.’
The services that Red Wagon Workplace Solutions delivered to Spark Life ran the gamut of structure, workforce organisation, human resources and industrial relations. A highly people-centric business, Red Wagon wasn’t just about compliance and risk.
‘When I was looking for someone to assist, I was looking for someone who could manage difficult Human Resources and Industrial Relations issues,’ explained Rojo. ‘They also needed to be available at short notice as urgent issues arose. They had to have up-to-date knowledge about National Employment Standards, and the activities of Fair Work Australia and the Fair Work Commission. And they also had to be able to help me with documentation, because I didn’t have any support to do that.‘
But it was Red Wagon’s strategic foresight that became of immense value to Spark Life.
‘A good understanding of strategic direction, and how to put the right HR processes, procedures and workforce in place was critical,’ said Rojo. ‘As well an ability quickly to understand the organisational culture.‘
Red Wagon was brought in to assist Spark Life in what was effectively an emergency situation. It was because of our ability to understand the situation from the very first phone call, and provide solutions to Rojo’s immediate challenges, that we were engaged for the work.
The technical capabilities were important. But they were dramatically different from the success criteria that Rojo had in mind.
‘My criteria for success was that there would be integrity,‘ she said. ‘And what I mean by that, is that we had someone who could communicate with integrity to staff.‘
Rojo went on, explaining that integrity in this sense meant transparency, timeliness, dignity and respect.
‘To me it means transparency, and to be able to do it in a timely way, which we managed to do. In everything that Susan did in terms of what actions we needed to take, particularly when we had to address the underpayment issue, and when we had to announce that the organisation was going to cease trading, was to treat staff with dignity and respect.‘
Before Rojo was employed to help Spark Life to get onto the right track, there were no qualified HR staff employed in the business. This may have been part of the reason why its workforce issues spiralled out of control.
However, Rojo pointed out that it highlights an excellent lesson for other organisations.
‘The lesson to be learned is to ensure right from the start that there’s a rigorous compliance program in place, which somebody like Susan could help with,’ Rojo pointed out. ‘Even if you’re somebody like me who’s had years of experience in managing staff. I highly recommend that somebody who sits outside of the organisation is brought in to provide you with the information, updates and strategies you need to manage a modern workforce.’
The lesson for CEOs is something that Susan Sadler at Red Wagon echoes.
‘The thing that you need to do as a new CEO or a new senior manager going into an organisation, is to look at the people who you’ve got in there,’ she advised. ‘I mean internally — who is reporting to you — but also the people who are within your network and your external advisors. Make sure that you are really comfortable with the quality of advice and support that you’re getting.’
Even though Spark Life ended up closing its doors, that wasn’t because of the transformation.
The transformation, as difficult as it was, put the organisation into the best shape it had ever been. By the time that Spark Life was facing the back-pay issue, its workforce was highly aligned with its values, and the quality of its services had substantially increased.
‘The regulatory environment is becoming more complex and litigious,’ Rojo pointed out, adding that working with Red Wagon Workplace Solutions now gives you a mission-critical advantage. ‘Any organisation that’s going position itself well to deliver on its core purpose and mission, and particularly with its main resource being people, needs to invest in some good advice and support from somebody like Red Wagon.’