Over the last few weeks Mindset’s talent division started to receive an unusually high number of applicants from a large American medico-pharma company with a significant presence in Australia. This was unusual as this company has until recently had a high reputation for good HR practices and high staff engagement. Their employees have been hard to attract!

Our consultants started to probe deeper as to the reasons for the sudden change. It seems that with the GFC the company’s margins were being eroded so the accounting department had been asked to start clawing back money where ever it could be found. Being a listed US company, short-term quarterly reporting is paramount. Actions to make the books look better can often contradict good long-term HR policy. This was just such a case.

Mindset was given two clear examples of this;

1. Earlier in the year, high achieving salespeople, as a reward, were given the opportunity to travel to an international convention in Asia. These junkets are common in the industry. They were flown there, accommodated, entertained etc. Before they departed they were given the HR spiel about being on their best behaviour as they were representing the company etc. They travelled and had a good time. Some months later all the attendees received an invoice for Fringe Benefits Tax (FBT), and not insignificant amounts. Naturally they were all mortified. Most would not have gone had they known they’d be billed for it. Great reward huh? It turned out that the accountants had decided after the event that the FBT should be paid by the employees and not the company as would be the normal practice.

2. The head office has a gym on site that all staff can use. Some years ago for fairness it was felt that interstate staff should also have gym access, so memberships at local gyms were sourced and paid for by the company. This year, for the first time, those interstate with company-paid gym memberships got charged FBT. Naturally those head office staff with the in-house gym didn’t get the FBT bill. So much for fairness!!

Both these actions by an errant runaway accounts department have now resulted in a significantly disengaged and demotivated professional sales team, many of whom are now looking for work elsewhere. This company’s annual revenue in Australia is in the $100m+ range and by any measure is very profitable. Further the Australian business probably accounts for less than 5% of their global income so the local FBT savings are insignificant compared to the long-term damage the accounting policies and actions have caused. The costs to the business will be significant as recruiters can now easily place these staff into their competitors.

According to the applicants, the HR department seems blissfully unaware or incapable of overturning the decision. Based on this observation alone it is clear that the company’s publicised vision for HR/employee of choice is nothing but corporate doublespeak.