Our people

A selection of NAB staff outside the Australian headquarters at Docklands, Melbourne.

Our people help us connect with our customers and other stakeholders, and are a valuable source of ideas and innovation. With this in mind, we are focused on making the NAB a great place to work and an employer of choice for talented people.

The unauthorised foreign exchange options trading in early 2004 acted as a catalyst for change. We recognised that we needed to think and behave differently. As a result, we re-evaluated our culture, and developed a new set of Corporate Principles and behaviours which we reported in 2004. In the past year, we have been working on embedding the corporate principles and behaviours and have invested significant time and energy in developing a high-performance culture.

While we are pleased with our progress, we still have some way to go. Cultural change takes time, but we believe our focus on developing our people, simplifying the way we do things and improving customer service will ensure we keep heading in the right direction. We believe that if our people are satisfied and engaged with us, then our customers and other stakeholders will be too.

The following section provides a profile of our people for 2005 and outlines some of our people management practices and initiatives. The ‘Progress on our promises’ highlighted below provides an update on our performance against the promises we made about our people and culture in our 2004 CSR Report.

Of our total workforce, 60% is female. The percentage of women in middle management and senior management and executive roles is shown in Figure 9. Women in senior management positions have increased from 19% in 2004 to 21% in 2005. The number of permanent employees has decreased from 95.6% of our workforce in 2004 to 93% of our workforce in 2005. This has been accompanied by a corresponding increase in the number of casual or temporary employees.

Elizabeth Hunter Executive General Manager, People & Culture

Throughout 2005 we have continued to introduce processes and procedures to build integrity and honesty in all that we do. We have focused on equipping leaders to make informed decisions to grow our business and role model the Corporate Principles throughout the organisation.

We have communicated clearly with our people about the organisation and their role — and are working with them to develop the skills and tools they need to do their job. Our leaders have been focused on embedding these changes and setting the direction for the future. A key element of our approach is to build an environment where people feel connected to the organisation.

We recognise that changing our behaviours is a core part of making NAB a great place to work. Highlights of these initiatives are provided on the following pages.

Our Corporate Principles are also being reinforced through our performance management system and through reward and recognition of employees who consistently model desired behaviours in the course of their work. The photograph at the beginning of this Report section features a number of employees who have been recognised for their demonstration of the Corporate Principles in practice.

Further cultural change activities focused on embedding our Corporate Principles included a series of senior leadership workshops in Australia, New Zealand and the UK. These workshops, held in early 2005, were forums for open discussion that resulted in 470 of our managers across the Group making personal commitments in regard to how they would demonstrate the principles in action. These commitments were then communicated to other staff in team meetings. We also continued our work to strengthen relationships between managers and their direct reports by encouraging more open and honest communications. Activities this year included coaching and skill building around role clarity, setting objectives, giving regular feedback, linking performance to pay, and realising people’s potential through development.

In late June 2005, a Cultural Transformation Program office was established within our Corporate Centre reporting directly to the Managing Director and Group Chief Executive with responsibility for cultural governance and capability development. This office is dedicated to working with our managers and executives to improve our culture. We will report on the work of this office in 2006.

NAB conducts a Group-wide satisfaction survey every two years, with a smaller pulse check every other year. In May 2005, we conducted our most recent full census. Every NAB employee was invited to complete the survey for which we had a record of 30,329 responses, which represents approximately 70% participation.

Since 2003, we have found that our staff satisfaction (total agree) and engagement scores (agree and strongly agree) have remained steady. The overall satisfaction score was 71% in 2005 and 71% in 2003, despite this being a difficult period for us with a large number of changes, restructuring and uncertainty.

The survey results help us to identify the issues that we need to work on to make NAB a better place for our people and our customers. In 2004, our leadership group made a commitment to focus on building a customer-focused organisation and to simplify our policies and processes. Table 8 shows that our people describe themselves as more customer-focused than in 2003 and that we have made some progress in simplifying our policies.

Our priorities going forward, as a result of the survey, are to:

• communicate our long-term goals as clearly as our short-term goals
• continue to improve and simplify our systems and processes to change the things that are frustrating our people and our customers
• further recognise and value the contribution of our people
• make sure that our actions match what we are saying.

In 2005, NAB’s Performance Management System was reviewed and Scorecards were progressively implemented across approximately 6,000 employees in executive and management positions. In the performance planning process for 2006, this will extend to all employees Group-wide. Our Scorecards aim to align employee performance with the Group Strategy. This is achieved by cascading the outcomes that will deliver strategic goals through the organisation from top to bottom. In doing this, we provide employees with greater clarity on performance outcomes required.

All our Scorecards include behavioural and compliance requirements, known as ‘quality gates’, to ensure that performance results for staff take into account not only what was achieved, but also how those results were achieved. All employees are required to complete regular training to meet their compliance quality gate requirements. This includes training in our Code of Conduct, privacy, trade practices, occupational health and safety, discrimination, disability, and relevant consumer credit and financial services requirements. This training supports the implementation of the Code of Conduct, as well as Group and business-specific policies.

At NAB, our remuneration philosophy is based on the concept of a total reward package. Our remuneration comprises both fixed and variable pay, plus any non-monetary rewards received through various recognition programs. In terms of variable pay, our revised incentive program is structured to reward employees’ achievements against key individual, business and Group annual performance outcomes. If compliance and behavioural requirements have been achieved, an individual’s performance determines their share of the available incentive pool.

Our policy is to appoint people to positions based on merit and we provide equal pay for equal work and responsibility. See Figure 11 for a comparison of male and female salaries across the Group. The underlying differences with the comparisons are mainly due to there being more males in senior management, with historically higher remuneration. Given the current policy, these differences are expected to reduce over time.

Our senior executives and executive directors receive additional long-term incentives to ensure they maintain a long-term focus when setting our strategic direction.

The Board reviews performance and sets the remuneration packages for our executive directors following recommendations from the Board’s Remuneration Committee. In 2005, this Committee considered the role of long-term reward in helping to drive appropriate management behaviours and reinforcing cultural change. The Committee obtained external advice on remuneration best practice in the Australian and international markets to assist it in setting remuneration packages. The Managing Director and Chief Executive reviews the performance of the Executive team, in conjunction with the Board’s Remuneration Committee.

The Remuneration Report within our 2005 Concise Annual Report and Annual Financial Report includes further details on the Board’s policy regarding remuneration of executive and non-executive directors and other executives, including information on performance rights, shares and performance options, as well as detailed information regarding remuneration paid to each specified executive and director. Refer to page 81 to 100 of our 2005 Annual Financial Report available on our Group website .

All employees are required to have individual development plans (IDPs). In 2005, our learning and development process was aligned with our performance management system to enable employees to frequently review their plans for professional development and career advancement with their immediate manager. This also aligns individual employee development with organisational needs. Opportunities for professional development are based on merit, open to all, and are dependent on the employee’s ability, performance, behaviours and contribution to the Group’s success.

Employee development also includes mandatory learning to provide employees with the appropriate knowledge and skills to meet all legal and regulatory requirements of doing their jobs. Our combined training and development spend, by region and across the Group is shown, in Figure 12.

This year we have placed significant emphasis on compliance training across the Group. In Australia, we used our internal TV network, National Vision, to assist in raising employee awareness of compliance issues. We also launched a new online training facility in Australia. This enables employees to complete training courses and provides reporting functionality to enhance learning-related management decision-making. Since its launch in March 2005, there has been strong use of this system, with over 22,800 hours of training competed. A large component of this has been the completion of compliance training. We are now working towards making similar systems available in other regional businesses within the Group.

The transition into a new leadership role offers a great opportunity for learning as it can immediately be put into practice. These leadership development programs are available to employees as part of their IDP. In 2005, 926 employees participated in our Leadership Essentials suite of training programs, while 140 leaders of leaders had commenced our Leadership Journey program.

NAB embraces diversity of thought, style and working arrangements to ensure our workforce is representative of the community that we serve. We value the contribution of all our employees and recognise the benefits of having a diverse workforce. By truly valuing diversity, we will access a broader talent pool, which will lead to improved innovation and problem solving, stronger customer relationships and improved productivity.

We recognise that to develop a more diverse workforce, we need to provide flexible working arrangements to assist employees performing certain functions in balancing their work and personal responsibilities and to create opportunities that encourage the participation of particular minority groups that may otherwise be excluded or limited. Figures 7 and 8 on page 9, provide a picture of the diversity profile of our workforce.

Our Group Executive Committee has recently endorsed a series of diversity initiatives for implementation in 2006 to deliver on this strategy. One of the first actions implemented in September 2005, was the employment of two diversity specialists – one in the Australian region and one to work on a Group-wide basis within the Cultural Transformation Program office. These specialists will be responsible for further developing, refining, and project-managing our diversity action plan.

In 2005, three diversity areas were highlighted for consideration prior to the development of our new strategy; women in management, flexibility and balance, and role distribution and gender. These areas formed the basis for development of qualitative diversity targets and are supported by our Corporate Principles, one of which provides a specific commitment to diversity.

Specific initiatives which underpin these diversity targets included significant senior management appointments of women: the Chief Executive Officer for our UK operation, our Group and Australian Executive General Manager – People and Culture, the Chief Information Officer – Australia and the Group General Manager – Cultural Transformation Program Office. In relation, to flexibility and balance, there were a number of initiatives undertaken including a 48/52 pay-averaging pilot (refer to page 29) within our Australian technology area. In the area of role distribution and gender, we have provided external executive coaches for women in senior management and conducted some targeted research into women’s experience at NAB, which we will be considering in the coming year.

In New Zealand this year, we invited employees to complete a parents’ survey run by the New Zealand Equal Employment Opportunity Trust. The survey explores the challenges that parents face in the workplace. The results will be available late in the 2005 calendar year and we will use them to further inform the development of our flexible workplace practices.

Our collaboration with DEWR is supported by our work with Mandala – Career Brokers, a consulting organisation that assists work placements for indigenous applicants. Mandala also facilitates a mentoring relationship between our indigenous employees and their people managers, and they act as a cultural mentor to both parties. Additional assistance from Mandala is provided in the form of cultural awareness training on an as-needs basis. The long-term aim of this program is to develop and implement systematic cultural change, create employment pathways and maximise the employment prospects of indigenous people within NAB.

In 2003, NAB, together with the Australian Government and the Melbourne Business School, endowed a new higher education scholarship for indigenous students. This annual scholarship is awarded to a student entering a full-time Masters of Business Administration at the Melbourne Business School. In 2005, Glen Brennan, PSM, was the recipient of this award.

In Australia, NAB is also a participant in the Willing and Able mentoring program for university students with a disability. Students are matched with a mentor who has a role in an area of interest to the student, and meet regularly across a semester. Mentoring activities involve assisting the students with networking opportunities, career information and advice and practical guidance on résumé writing and interviewing skills.

New Zealand has an accident insurance and compensation system, which is overseen by the Accident Compensation Corporation (ACC). Our health and safety management system is accredited to tertiary level under the ACC Partnership Program and we take part in an annual, comprehensive, random audit of our workplace safety management processes and systems, accident claims, and case management. This audit is conducted by an independent third-party provider.

In Australia, NAB is a workers compensation self-insurer in each State and Territory. To maintain self-insurer status we must demonstrate through annual audits that we have in place a H&S management system that meets the requirements of the self-insurer standards applicable in each jurisdiction. NAB was successful in maintaining self-insurance status in all Australian States and Territories in 2005.

In addition, we commissioned independent audits of the H&S management systems of four of our primary contractors to ensure their compliance with relevant standards.

In the UK, our H&S system complies with the HSE Guidance Note Document HSG(65) ‘Successful Health and Safety management’. Compliance with HSG(65) is tested by random audit carried out by an independent auditor, National Britannia. Usually, about 10 audits are conducted in different sites each month.

Each of our regional businesses has at least one H&S Committee, which meets regularly to consider H&S matters. In Australia, we have a number of State-based H&S Committees. Employee, management, and union representatives make up the membership of these Committees and provide a regular consultation forum for discussion and resolution of workplace health, safety and well-being issues.

Our Board receives quarterly health and safety reports from all regions. These reports provide information to the Board on issues such as H&S governance, regulation, prosecutions, improvements, audit outcomes, health and safety performance and strategic initiatives. Table 3 on page 13, provides information on the number of H&S-related audits that have been undertaken in 2005.

In Australia, lost-time injuries (LTIs) are recorded as soon as an employee misses one whole day of work. In New Zealand, an employee must be away from work for a period of five days before one LTI is recorded. In the UK, an LTI is recorded for each day away from work. However, because of the different compensation system, which requires employees to use common law litigation to make a claim for compensation, employees tend to use their sick leave rather than make a claim. This means that the number of recorded LTIs is much lower than actual and a key focus of our H&S program in the UK is to encourage employees to formally report and record their LTIs in incident reports. Also in the UK, certain injury types, such as stress, are not reportable under legislation.

The three main causes and types of injuries recorded as LTIs are common across all our businesses. These are manual handling activities resulting in sprain and strain type injuries — slips, trips, falls resulting in superficial injuries – and work-related stress resulting in psychological injuries.

Our LTIFR in Australia has reduced by 28% to 4.1 (2004: 5.7). Our Australian business has adopted a zero harm philosophy — which views all injuries as preventable. In keeping with this view, a goal has been set to achieve an LTIFR of 2 or less by 2008.

In New Zealand, our LTIFR has reduced by 20% to 1.2 (2004: 1.5). In the past year the New Zealand region has had an increased focus on early intervention strategies for the prevention of gradual process injuries. Occupational therapists have conducted work station assessments and provided advice to manage early symptoms. This has resulted in a significant reduction of work injury claims and associated costs.

This year, in the UK our LTIFR has increased by 25% to 0.8 (2004: 0.64). This may be attributable to the steady promotion of health and safety during the year. This promotion was undertaken to raise awareness particularly around the reporting of accidents and resulting lost time. This promotion has been achieved by an increased presence of OH&S representatives in the branch network and employee training. Currently in the UK, there are 30 live employer’s liability insurance claims under common law, dating from the previous five years.

In Australia, we also provide employees with access to EapDirect. This is a confidential on-line service offering employees access to high-quality counselling support, self-assessment tools and reference material 24-hours per day. Additionally, people leaders have access to ‘Manager Assist’ through EapDirect. Manager Assist provides access to a psychologist to help people leaders with people management issues.

In Australia, NAB has a strong and constructive relationship with the Finance Sector Union (FSU). Our relationship is maintained through frequent, open and honest dialogue across a broad range of issues. We welcome FSU support for employees where the member wishes to be represented or supported by an FSU official. Additionally, NAB Enterprise Bargaining Agreement (EBA) 2002 contains a consultation clause specifically referring to workloads, relief staff and overtime to allow our employees to raise concerns in conjunction with the FSU. The FSU currently represents around 40% of our employees in Australia.

In New Zealand, staff can be represented by the Financial Sector Union or “Finsec”. Currently, Finsec represents approximately 29% of all BNZ employees. Pre-management employees who are Finsec members are covered by a collective employment agreement, which is negotiated annually. The BNZ engages with Finsec openly about issues that may impact on its members. This occurs in a variety of forums, including working groups.

In the UK, NAB has a strong and constructive relationship with Amicus, who represent approximately 70% of employees. We welcome Amicus support for employees where the member wishes to be represented or supported by an Amicus official.

Under New Zealand legislation, BNZ must consult with any relevant unions where their members may be adversely affected by restructuring proposals. In addition to this, we have an agreement with Finsec that we will engage with them when a restructure will occur that will result in redundancies.

In the UK, our regional business has a formal regime of consultation meetings with Amicus and those meetings take place at least fortnightly. These meetings discuss a variety of issues including H&S matters and are complemented by regular contact on an informal basis with union officials.

Employee grievance processes
In all businesses, NAB has dispute resolution procedures through which employees can raise disputes and issues of concern.

The Group also has informal and formal processes for dealing with complaints of harassment, discrimination and bullying. Where an employee is dissatisfied with the outcomes of an investigation or a complaint of discrimination, harassment or bullying, they can appeal the outcome with our industrial relations team or take formal steps under local laws and regulations.

• placing greater emphasis on improving organisational leadership capability as part of our ongoing training and development program
• taking actions to further our diversity strategy
• continuing our program of cultural transformation, based on our Corporate Principles
• continuing our focus on improving health and safety outcomes through increased awareness and prevention strategies.