restructuring

The Warehouse Group says its moves to reduce labour costs and improve productivity were not significant enough to warrant a separate disclosure to the sharemarket.

But the National Distribution Union estimates the labour savings will be the equivalent of about 600 full-time jobs at The Warehouse. The Warehouse is running a productivity and labour costs initiative called Project Invigorate.

Chief financial officer Luke Bunt said the scheme was partly to train staff to generate more sales. It was also about labour scheduling and having the right number of staff on the shop floor at slow and busy times. "The result of Invigorate will be higher sales, but rather than redundancies, it could conceivably mean that people would be paid for fewer hours.

"It's partly about cost reductions and it's partly about increased sales, but what it isn't is about is wholesale redundancies," Bunt said.

In response to Businessday comments that the eventual reduction in hours of work at one of the country's largest retailers was a matter of public interest, Bunt said: "If we felt the number of people that may lose their job as a result of any initiative within the organisation was going to be significant we would do so [make an announcement] and we haven't said so."

Bunt said chief executive Ian Morrice had said the company was aiming to reduce costs by $30 million out of its costs base over three years. "But what he has also said is that much of that will go against offsetting inflationary pressures in the other parts of the business."

Reduction in the costs of goods, freight, productivity improvement and control of inventory were all contributing to the $30 million.

Asked about the total of labour hours that might be saved, Bunt said:

"If we felt it was so significant that it warranted separate disclosure because it was of interest to the public then we would be [disclosing it]. Unfortunately this isn't helping your story because it isn't that significant."

National Distribution Union general secretary Laila Harre said the union had a broader concern that the reduction in working hours in the retail sector would be disguised by company restructuring that took place largely through attrition.

This made it difficult for those outside the process to suggest ways retail jobs could be protected. Attrition and non-replacement of staff were just as significant in the labour market as losing jobs through redundancies. "It is true that Project Invigorate itself is not leading to redundancies, but it is also true Project Invigorate will result in a significant reduction in labour hours worked in The Warehouse."

The union's estimate of 600 full-time positions was based on the nine stores in which Project Invigorate was first implemented in Christchurch.

That was using the difference in the current funded hours and the ideal "invigorated" hours and applied to the rest of The Warehouse operation.

Bunt said The Warehouse Group did not report labour costs separately in the annual report because it was a commercially sensitive figure. There was a line called "employment costs" but that was employment costs across the entire group. Asked if they had a plan and target to reduce labour costs Bunt said,

"We do but it's not something I can comment on."

There was a plan around productivity but there were conversations for individual stores and individual people which the National Distribution Union was involved in.

Auckland ferry company Fullers is assuring its thousands of passengers and 174 staff that service levels and fare concessions will not be cut under new ownership.

That includes free travel on NZ Bus services throughout mainland Auckland for holders of monthly passes for the Waiheke ferries, Fullers chief executive Douglas Hudson said.

His assurance followed an announcement yesterday by Infratil - which also owns NZ Bus - that it had sold the 11-ferry Fullers operation for $40 million to Souter Holdings, the private investment arm of Scotsman Brian Souter. Mr Souter was also chief executive of multinational public transport operator Stagecoach, which sold its New Zealand bus and ferry operations in 2005 to Infratil for $250 million.

Since that sale, he had returned to New Zealand to buy Howick and Eastern bus company in Auckland and a 74 per cent stake in Mana Coachlines in Wellington.

His New Zealand-based executive chairman Bill Rae said there would be no retrenchments or restructuring of the Fullers operation and his firm had full confidence in the management.

Campaign for Fairer Ferry Fares spokeswoman Cathy Urquhart, whose group was continuing to push for a reversal of fare rises imposed last year on the Waiheke Island runs, said she feared having to deal with yet another tier of decision-makers and wondered about the future of the free bus travel for monthly ferry ticket holders.

New research from Celerant Consulting suggests that over half of UK business leaders find winning the hearts and minds of employees the most difficult aspect of delivering change within companies.

A survey of over 600 senior executives across Europe and the United States, carried out by the Economist Intelligence Unit, suggests that the majority of change programmes - structured approaches to implementing and managing change within a company - fail. 64% of UK leaders questioned said that half or fewer of the change programmes they have undertaken in the past five years have been successful.

The most significant challenges faced by UK companies in executing change programmes include winning the hearts and minds of staff (51%) and overcoming a lack of buy-in from local management (36%). UK bosses recognise that 'effective communications' (25%) and 'employee buy-in' (21%) are the most important factors in successful implementation, compared to global averages of 19% and 17% respectively.

Despite the high possibility of failure, the survey suggests that UK leaders spend more on change initiatives than their counterparts in any other country. The average expenditure by UK leaders in the last year (£5.43m) was 36% higher than the global average. This comes against a background of an estimated UK spend on consultants of £10bn in 2007, according to the Management Consultancies Association.

The survey also reveals that 57% of UK business leaders say their planned change programmes for the coming year are a direct response to the credit crunch. Accordingly, over a third (40%) of UK leaders plan to increase their spending on change initiatives over the next 12 months, while only 12% intend to spend less.

The quest for operational efficiency is driving change programmes. Almost two-thirds (64%) of UK business leaders say that improving their company's operational efficiency is the top issue on their agenda. In a further sign that the credit crunch is impacting on the corporate agenda, reducing costs (58%) is seen to be significantly more important than increasing revenues (43%).

Ian Clarkson, chief executive at Celerant, said: "A slowdown always put the question of 'how do we respond?' on the table - and frequently the answer becomes 'we need to change'. Yet, as leaders themselves admit that the majority of initiatives do not work, what should they do to ensure they successfully manage the process of change? "Our survey shows that companies fail in the execution of change initiatives because they are unable to win the hearts and minds of employees at all levels of their organisation. This happens when people do not trust their managers or understand what values the management team stands for. Too often a change programme is seen as an excuse to make people redundant. In order to successfully deliver change, leaders need to inspire people with a sense of urgency, have a clearly communicated vision and plan and continually motivate staff. As change management becomes part of day-to-day management, only those leaders who can successfully execute it will survive and flourish."

Ralph Hargrow, global chief people officer at Molson Coors Brewing Company, said: "Change for the most part is personal. You have to speak to people personally, to have them understand and embrace the promise of change. That requires a lot of work. Broadly speaking, the easier it is for individuals to understand and embrace the personal benefit of a change for themselves, the easier it is to win their hearts and minds. The more difficult it is to paint a vision, the more difficult it is to effect and embrace such change."

Consulting Times July 2008

Press Release: Toll New Zealand
January 31, 2007

Toll NZ Update
As a result of a number of changes occurring in the Toll Holdings Group and the current trading outlook, an update is provided in respect of the Toll NZ business.

Impact of Restructure
On 13 December 2006, Toll Holdings' directors announced a planned restructure of the group. The impact of the restructure will be the separation of port and rail infrastructure assets into a separately managed Infrastructure Company (Infrastructure Co). Remaining aspects including Toll Australia, Toll NZ, Toll Asia and the investment in Virgin Blue will continue with the network and supply chain business of Toll Holdings. It is expected that the proposal for the restructure will be put to the Toll Holdings' shareholders for approval via schemes of arrangement during the first half of 2007.

The current New Zealand port and stevedoring operations of Toll Holdings conducted through the Toll/Owens joint venture between Toll and Port of Tauranga will be owned by Infrastructure Co. Toll NZ and Toll Owens have co-operated effectively in the past to support major customer solutions, for example the use of port and rail operations to deliver imported coal by the Huntly Power Station. It is expected that the same level of cooperation will prevail following the restructure, where Toll NZ can bring its land based logistics capability to produce highly efficient customer outcomes.

Board of Directors
The Board of Toll NZ has appointed Mr John Ludeke to its Board. Mr Ludeke is currently director of Australian transport operations for Toll Holdings.

Upon implementation of the Toll Holdings' Group restructure, current Chairman Mr Mark Rowsthorn plans to resign in order to take up the position of Infrastructure Co Chief Executive. It is anticipated that Mr Ludeke will thereafter assume the role of Chairman of Toll NZ.

Trading Update
As advised at the Toll NZ AGM, trading has been impacted by the slow down in the NZ domestic economy combined with persistently high exchange rates affecting export levels, and lower margins particularly in the Interislander and Toll Rail businesses. Underlying EBIT to 31st December 2006 is currently ahead of budget, however it will be lower than the previous corresponding period. Whilst economic conditions remain patchy, based on current forecasts, it is expected that the second half result will be improved through a range of initiatives being implemented.

Negotiations with the Crown
Toll NZ has been involved in ongoing discussions with the Crown in order to design a long term sustainable track access regime which will encourage greater use of rail and support long term capital investment horizons.

Whilst discussions are generally positive Toll NZ is still concerned that the Crown appears to be unwilling to recognise the inequality of the funding support between road and rail and the need to adopt a more commercial approach to track access management.

Toll NZ stands ready to implement a major rail fleet re-equipment programme once viable long term track access arrangements are established.