Contents Page: NZJER, 2017, 42(1)
Name

Title

Felicity Lamm and Changing of the Guard…
Erling Rasmussen
P. Matthijs Bal

Page
Numbers
1

Why
do
Employees
Negotiate
Idiosyncratic Deals? An Exploration of 2-18
the Process of I-Deal Negotiation

Geoff Plimmer, Jane The legacy of New Public Management
Bryson,Noelle (NPM) on workers, management 19-34
Donnelly,
Jessie capabilities, and organisations
Wilson, Bill Ryan andStephen Blumenfeld
Work-family conflict and Employee
Jarrod Haar
Loyalty: Exploring the Moderating 35-51
Effects of Positive Thinking Coping
Raymond Markey and Effectiveness of Trade Union Workplace
Gay Simpkin
Organisation:
52-71
A Case Study of the New Zealand Post
Primary Teachers’ Association

Nadia Dabee

A New Paradigm for Occupational
Health and Safety: Is It Time to Abandon 72-95
Experience-Rating Once and for All?

New Zealand Journal of Employment Relations, 42(1): 1

Changing of the Guard…
After almost 14 years of dedication, we wish to announce that Associate Professor Dr Rupert
Tipples has retired from Lincoln University and is standing down as editor of the New Zealand
Journal of Employment Relations. As editor of the New Zealand Journal of Employment
Relations, Dr Tipples was instrumental in broadening the scope of the Journal. He has also
been passionate about nurturing and supporting contributors to develop and refine their workand ease them through the sometimes daunting editorial process. We are very grateful to Dr
Tipples for reviewing a number papers and for providing contributors with valuable andconstructive feedback.
We would also like to take this opportunity to say that Dr Tipples has made an enormous
contribution to the twin disciplines of Employment Relations and Human Resource
Management. Moreover, his research has had a significant influence on scholars working
outside Employment Relations and Human Resource Management, in disciplines such as Rural
Economics and Sociology, Management Science, Entrepreneurship and small and medium
enterprises. What makes Dr Tipples’ research portfolio unique is his ability to undertake studies
on a range of topics and to continually challenge orthodox theory and practice. In particular,
his research on dairy industry topics has changed the way labour is conceptualised. He has also
undertaken seminal work on psychological contacts as well as developing the Human
Capabilities Framework which has influenced employment relations policies of a number ofgovernment departments. His research has shaped academic research, government policies andpractitioners.
We would also like to welcome aboard Associate Professor Dr Bernard Walker, University ofCanterbury, who will be taking Dr Tipples place on the editorial team of the New Zealand
Journal of Employment Relations. Dr Walker has had many years of research experience inwhich he is known for his studies on dispute resolution and, subsequent to the Canterbury
earthquakes, his analyses of organisational disasters and organisational resilience. Dr Walker
shares our passion for the rigorous inquiry into all aspects of Employment Relations andHuman Resource relevant to the New Zealand context.
Associate Professor Dr Felicity Lamm and Professor Erling Rasmussen

1New Zealand Journal of Employment Relations,42(1): 2-18

Why do Employees Negotiate Idiosyncratic Deals?
An Exploration of the Process of I-deal Negotiation
P. MATTHIJS BAL*
Abstract
This study investigated why employees negotiate idiosyncratic deals (i-deals) with theirorganisations, and interviews with 31 employees who successfully negotiated i-deals showedthat three main themes could be identified in the i-deal negotiation process: motives fornegotiating (i.e., earned and problem solving), enablers (i.e., relationships and flexibility), andinhibitors (i.e., secrecy, and culture and structure). The study shows that people may havedifferent motives for negotiating i-deals, and subsequently also experience different enablingand inhibiting factors in the process of obtaining i-deals.

Keywords
Idiosyncratic deals, i-deals, negotiation, motives, qualitative research.
Individualisation is a trend that has increasingly impacted workplaces across the world(Rousseau, 2005). On the one hand, valuable employees seek to negotiate individualised
working conditions with their employers beyond the practices that are generally available toemployees (Call, Nyberg, & Thatcher, 2015; Rousseau, Ho & Greenberg, 2006). On the other
hand, societal trends of individualism (Oyserman, Coon, & Kemmelmeier, 2002), and thedeclining role of trade unions (Godard, 2014) have caused employees to become more selfreliant in negotiating their work arrangements. Much research has been conducted on theimplications of these trends for employees and organisations, and in particular research on
idiosyncratic deals has flourished over the last decade (Bal, Van Kleef, & Jansen, 2015; Liao,
Wayne, & Rousseau, 2016; Rousseau et al., 2006).
Idiosyncratic deals (i.e., i-deals), are individually negotiated working conditions between theemployee and the organisation (Rousseau, 2005; Rousseau et al., 2006). Ample research on ideals has shown that they may benefit employees, as they are related to lower work-family
conflict (Hornung, Rousseau, & Glaser, 2008), more proactive work behaviors (Liu, Lee, Hui,
Kwan & Wu, 2013), and higher work motivation (Bal, De Jong, Jansen, & Bakker, 2012).
However, a meta-analytic review by Liao et al. (2016) has shown that the relationships of ideals with employee outcomes tend to be inconsistent, and that there are many unansweredquestions regarding the concept of i-deals (cf. Bal & Rousseau, 2015). While the majority ofstudies have focused on the effects of i-deals on outcomes (Liao et al., 2016; Liu et al., 2013),
little is known about the context of the negotiation process that leads employees to successfully
obtain i-deals. Hence, research has only focused on what happens after workers havesuccessfully negotiated an i-deal, without taking into account why employees start negotiating.
This is important, as negotiation processes may determine the outcomes (Mislin, Campagna, &Bottom, 2011), and may explain inconsistencies in the impact of i-deals on work outcomes.

*

Professor of Responsible Management, Lincoln Business School, University of Lincoln, United Kingdom2New Zealand Journal of Employment Relations,42(1): 2-18
Two central questions guide the paper: first, the study focusses on why employees startnegotiating, and second, the paper focusses on what employees experience during thenegotiation process. What types of barriers and facilitators do they perceive? As these questions
pertain to as yet unexplored facets of i-deals, the study takes a qualitative approach. Throughinterviews with employees across a range of industries who have negotiated i-deals, the researchquestions are answered providing new and important understandings of i-deal dynamics in theworkplace.
The study contributes to i-deals research and the broader literature on individualisation at work
(Jiang, Lepak, Hu, & Baer, 2012) as well as the negotiation literature (Druckman & Wagner,
2016; Reif & Brodbeck, 2014; Thompson, Wang, & Gunia, 2010). The study provides a better
understanding of why i-deals are negotiated in the workplace, and thus how both managers andemployees can manage their increasingly individualised relationships. The study will also shedinsights into the factors around i-deals negotiation. Not every i-deal will elicit higher motivationand performance, and this study shows the underlying causes. Moreover, the study also adds tothe negotiation literature, by showing why people start negotiating individual arrangements atwork. While there has been some conceptual research on the initiation of negotiation at work
(Reif & Brodbeck, 2014), this study shows the more specific motives that people have andwhich may affect the negotiation process.

Literature Review
Due to changes in employment relationships, exchanges between employees and theirorganisations are increasingly based on individualised negotiation and agreements (Bal et al.,2015). While collective representation seems to be in decline (Godard, 2014), employees areforced nowadays to individually negotiate their work arrangements. In effect, some employees
are increasingly focused on negotiation of i-deals. I-deals have been defined by Rousseau(2005; Rousseau et al., 2006: 978), as “voluntary, personalized agreements of a nonstandard
nature negotiated between individual employees and their employers regarding terms that
benefit each party”. I-deals are individually negotiated, and can be initiated by both employee
and organisation (Rousseau, 2005). I-deals are also heterogeneous (Rousseau et al., 2006), suchthat arrangements are negotiated that differ from the work conditions that other employees have.
Furthermore, i-deals should be beneficial for both employee and organisation. For employees,
i-deals fulfill the need for customised work arrangements that may facilitate motivation,
productivity or well-being; while, at the same time, i-deals benefit employers because they may
attract, retain or motivate valuable employees (Bal & Rousseau, 2015). Finally, i-deals vary inscope, such that some employees may negotiate a single idiosyncratic deal, such as thepossibility to vary working times during the workweek, while others may have fully
idiosyncratically negotiated positions (Rousseau et al., 2006). I-deals have different dimensions(Rosen, Slater, Chang, & Johnson, 2013; Rousseau, Hornung, & Kim, 2009), and can be
negotiated ex-ante or ex-post (Rousseau et al., 2009). Ex-ante i-deals are negotiated prior towhen one starts the job, and are normally negotiated during the hiring process. Ex-post i-deals
are negotiated after entering a job during an ongoing relationship (ibid).
The majority of the studies on i-deals have focused on the effects of i-deals on employee
outcomes (Hornung et al., 2008; Liao et al., 2016), such as commitment, motivation,organisational citizenship behavior (OCB), and voice (Conway & Coyle-Shapiro, 2015; Liaoet al., 2016; see also Anand, Vidyarthi, Liden, & Rousseau, 2010; Bal et al., 2012; Hornung et3

New Zealand Journal of Employment Relations,42(1): 2-18
al. 2008; Ng & Lucianetti, 2016). However, meta-analytic evidence shows that the correlations
between i-deals and outcomes are inconsistent and tend to be small (Liao et al., 2016). Researchon the predictors of i-deals is scarce (Hornung et al., 2008). The study by Rosen et al. (2013)
showed that LMX Leader-Member Exhange) and political skills were related to some but not
all types of i-deals. Moreover, Ng and Lucianetti (2016) showed that people high on
achievement and status striving were more successful in obtaining i-deals. These studies show
who are better in obtaining i-deals, but there is yet little known on why workers start negotiatingand how they experience the i-deals negotiation process.
It is, therefore, important to assess employees’ motivations for negotiation of i-deals (Rousseau,
2005). Previous research has argued that workers start negotiating when they perceive a
discrepancy between a current and a desired state (Reif & Brodbeck, 2014). In the context of ideals, there is actually very little known about these perceived discrepancies which may lead
workers to initiate a negotiation. Moreover, it is important to assess what the enabling andhindering factors are that people experience when they requesting i-deals. As these questions
tap into undiscovered areas of i-deals research, the research questions are addressed using aqualitative design focused on employees who successfully negotiated an i-deal. In sum, thestudy aims to investigate two main research questions:
1. What are the motives for employees to start negotiating i-deals?
2. What are the enabling and hindering factors employees perceive when negotiating ideals?

Methods
Research Design and Sample
In this study, the aim was to advance understanding of the process of negotiating i-deals.
Because of its exploratory design, a grounded theory approach (Glaser & Strauss, 1967) wasused to understand the relatively unexplored phenomenon of i-deal negotiation in organisations.
A broad range of employees working for organisations in the Netherlands were contacted andinvited for an interview. Moreover, snowballing techniques were also applied to find as many
employees who had successfully negotiated an i-deal with their employer, and still worked forthe same employer. This was the case for all participants, except for Interviewee #28, who wasmade redundant from her job just prior to the interview.
A short description was given of what was meant by having successfully negotiated an i-deal(see Rousseau et al., 2006), and provided they had negotiated such an arrangement, they could
be interviewed. In total, 31 employees were interviewed. On average, participants were 34 years
old (ranging from 22-65 years), 45 per cent were female, 26 per cent had finished vocational
training, and 74 per cent had higher vocational training or a university degree. On average,
employees had 13 years of work experience (ranging from 1-49 years), and 42 per cent worked
in healthcare, 29 per cent in the service sector, and 29 per cent in other sectors, such as educationor hospitality. Thirty-five per cent worked in small firms (less than 50 employees), 23 per centin medium-sized firms (50-250 employees), and 42 per cent in large firms (more than 250
employees). Table 1 presents an overview of all the participants.

4

New Zealand Journal of Employment Relations, 42(1):Table 1: Informant Information
Interviewee
no.
1
2

Age

Gender

SectorI-dealI-deal Type

Agent

Time of I-deal

Service
Service

Size of
Organization
Middle
Large

37
25

Male
Male




Pay Increase
Course for supermarket management

Financial
Development

Ex-postEx-postFemaleService

Large

FemaleHealthCare andService

Small






Flexibility
Financial
Task
Financial
Flexibility
Task

SupervisorFlexible working times
Additional pay
Larger projects within job
Additional bonus and public transport
reimbursement
Teleworking
Mystery visits as part of job

Supervisor
Supervisor andbranch manager
Supervisor

3

22

4

22







Flexibility in starting times
Variety in work tasks
Specific group of patients allocated to him
Teleworking
Expansion of tasks

Flexibility
Task
Task
Flexibility
Task

Branch manager

Ex-ante(teleworking)Ex-post (bonus
and mystery
visits)Ex-anteSupervisor

Ex-postSupervisor

Ex-post

Expansion of tasks
Paid college degree
Teleworking

Task
Development
Flexibility

Ex-postFlexibility in teaching schedule
Expansion of tasks
Flexibility in working hours

Flexibility
Tasks
Flexibility

Supervisor andmanagement teamSupervisor andmentorSupervisor anddirector
Supervisor and HR
department
Management
Supervisor anddirector
Director
Supervisor anddirector
Supervisor
Director

5

22

Female

Law

Small

6

23

Male

Middle722Female848

Female

9

22

Male

HealthCare
HealthCare
HealthCareCatering

1022

FemaleEducation

Large

11

49

Female

Large

12
13

65
39

Male
Male

HealthCare
Education
Education





Large
Middle

Course on leadershipTime to work on PhD

Development
Development

14
15

56
28

Male
Male

Education
Education

MiddleLargeExpansion of tasks
Teachers scholarship

Task
Development

16
17

28
27

Male
FemaleService
Health
Care

Large
Small




Teleworking
Flexibility in working hours

Flexibility
Flexibility
Task

Large
MiddleSmall

Ex-postEx-postEx-postEx-anteEx-postEx-postEx-postEx-postEx-postEx-post5

New Zealand Journal of Employment Relations, 42(1):

18

23

Male

19

51

Female20

37

Female21

28

Female

22

27

Male

23
24
25

34
51
24

Male
Male
Male

26
27
28

29
27
55

Male
Male
Female29

40

Female

30
31

42
29

Male
Male

HealthCare
HealthCare
HealthCare
HealthCare
HealthCare
Service
Service
Service

Large




Expansion of tasks
Teleworking

Flexibility

Supervisor

Ex-postLarge

Flexibility in work schedule

Flexibility

Supervisor

Ex-postSmall

Flexibility in work schedule

Flexibility

Supervisor

Ex-postSmall

Adapted working hours for breast feeding
Individualized pay arrangement
Adapted working conditions due to injury

Flexibility
Financial
Flexibility

Supervisor

Ex-postMiddleEx-post

Small
Small
Large





Reduced working hours
Additional holidays in quiet periods
Lease car for work and private use

Flexibility
Flexibility
Financial

Service
Catering
HealthCare
HealthCare
Service
Service

Large
Middle
Small
Small







Training
Management training
Reduced work hours
Course for HR officer
Flexible working hours

Development
Development
Flexibility
Development
Flexibility

Supervisor andcolleagues
Supervisor
Supervisor
Supervisor andcluster manager
Supervisor
Location manager
Supervisor
Director

Ex-post

Large
Small




Flexible working hours
Accounting Course

Flexibility
Development

Supervisor
Mentor, director

Ex-postEx-anteEx-postEx-postEx-postEx-postEx-postEx-postNote. Agent refers to the people in the organisation that the i-dealer directly negotiated with. Ex-ante refers to i-deals negotiated prior to hiringor during the hiring process and ex-post refers to i-deals negotiated during tenure (Rousseau et al., 2009).

6

New Zealand Journal of Employment Relations, 42(1):Data Collection
The interviews took place at Erasmus University Rotterdam, the Netherlands, or at theparticipants’ workplace. The interviews lasted, on average, between one and one-and-a-halfhour. A semi-structured interview was conducted using nine starter questions, which were
followed by in-depth questions to gain more understanding of the answers (see Appendix A for
the Interview Script). Interviews were recorded digitally, and subsequently converted totranscriptions to analyse the data. All interviews took place in Dutch, and the transcripts weretranslated into English for subsequent analyses.
Each interview started with an explanation of the purpose of the interview and the guarantee ofanonymity. Next, the interviewer explained what i-deals are (Rousseau, 2005). Subsequently,interviewees were asked to describe what kind of i-deals they had negotiated, what theirmotivation was to negotiate an i-deal, when that happened, who had taken the initiative tonegotiate, what the reasons were for the organisation to grant the i-deal, which barriers had tobe taken, which reactions they got from their environment, which impact the i-deal had on them,and finally how the i-deal was managed.
Data Analysis
The interview transcripts were analysed based on the grounded theory approach (Glaser &Strauss, 1967), which meant moving back and forth between the data and codes that weregenerated. Hence, an iterative process was followed, which meant moving from the data to thecodes, and rereading the transcripts to ascertain the validity of the codes. First, open codes weregenerated from the data, and subsequently, these first-order codes were grouped into categories.
The first-order codes resulted directly from the data, and were summaries of what theparticipants had expressed during the interviews. Examples are “agreements create flexibility”,
and “quality of relationships is important”. The next step was axial coding, in which the firstorder codes that were generated were clustered in conceptually similar second-order codes.
Finally, these second-order codes were combined in three general themes relevant for i-deal
research. After generating these codes and higher-order themes, the transcripts were reread andcompared with the codes (King, 2004).

Findings
The interviews produced accounts of 42 different successfully negotiated i-deals among the 31
participants (range 1-3 i-deals per participant). Table 1 shows that almost half concerned
flexibility i-deals (k = 19, 45 per cent), and the others were development (k = 9, 21 per cent),
task (k = 9, 21 per cent), and financial i-deals (k = 5, 12 per cent). 24 participants negotiatedtheir i-deals with their direct supervisor (i.e. agent), and in six cases, higher-level managers
were directly involved as well. In seven instances, the director of the organisation (or divisionof large organisations) was involved. Two participants negotiated i-deals with their mentor, andone participant explained that the HR department was directly involved in the negotiation
process. Finally, 37 i-deals (88 per cent) were ex-post, and five (12 per cent) were ex-ante ideals.
Analysis of the data revealed three main themes: motives, enablers, and inhibitors. Each ofthese dimensions consists of two subdimensions. Figure 1 shows the process of coding the data,
producing the higher-order factors. Table 2 shows illustrative quotes.
7

New Zealand Journal of Employment Relations, 42(1):Figure 1: Data Structure

8New Zealand Journal of Employment Relations, 42(1):Table 2: Additional Data Examples
ThemesIllustrative Quotes (No. of Informant)
Motives
EarnedBeing a high potential: “But the reason why these agreements were made, wasbecause they saw the potential in me, and more than in my peers who had thesame type of job as I had” (2).
“I was performing well, and people came to me with questions etcetera, so it
was a logical step for me to ask for the function of representative.” (10)Feeling entitled to an i-deal: “It is about rewards and real appreciation. Why am I
still in [pay scale] 12 and they in 13, while we do the same work. Moreover,and I have said this once, I outperform half of the people here who is in 13.
Why am I then in 12? It is about appreciation and money, but also about feelingappreciated.” (1)“It is not the case that my motivation substantially increased, because I find it
normal to ask for these things and get it. Hence, in that sense, no surprises, andno feeling of ‘wow, how cool is this’. Just go with the flow.” (23)
Problem Solving Corrective agreements: “When it did not go well, we decided to arrange tasks
differently. When I changed functions, we agree that I would do larger national
projects instead of smaller regional projects. That was agreed upon when Ichanged functions.” (3)“Flexible work schedules: that was related to my personal situation. Because
my partner came over to study here for five months, and I liked to spent timewith him in the evenings, that request was brought forward.” (5)Agreements create flexibility: “For me, it is very important to have a feeling ofautonomy in my work.” (17)“Concerning working times, there are opportunities to deal with it in a flexible
way. If suddenly, I have to arrange something serious, that is always possible.”(24)“It gives me rest. I do not feel pressure. Of course I do have deadlines, but thisway, it is just much nicer.” (3)Agreements enhance motivation and performance: “I got the opportunity to get a
promotion. But that had consequences. I had to follow training and had to work
more hours.” (3)Teleworking: “this was really motivating. I had the idea that I was so much
more productive at home. I am really a morning person, while others at theoffice really have to wake up in the mornings and are mainly chatting, but they
are not really working. At home, I really pushed forward, and got a lot of thingsachieved.” (9)Enablers
Relationships
Quality of relationships is important: “A lot is dependent upon the quality of yourrelationships, and your capabilities to build those relationships. That’s how it
works, I think.” (14)“I showed my colleagues what I had done at home, so they could see I did agood job. There was a lot of trust at work, so I got a lot of freedom.” (9)Colleagues may facilitate agreements: “The team is an important factor if you want
to arrange something, because if they agree, the supervisor has to come withvery good reasons to reject it.” (15)Extra tasks: “they reacted, oh that’s nice that you can do that, I would have
liked to do that as well. But in a positive way, not in a jealous way. And a lot of

9New Zealand Journal of Employment Relations, 42(1):Flexibility

Inhibitors
Secrecy

Culture &structurepeople offered me their help. Some asked me to substitute me when I was notthere.” (10)Agreements are flexible: “We make agreements about the subdivision and thatmeans in practice that we allocate tasks automatically among each other.” (3)“The management tasks have changed in content. First, it would be only for ayear, and then collecting documents and making minutes, and that has been
expanded over time, and has become more focused on content. (…) It does havean organic character and that’s why I have to consult a lot. And it does have an
ad hoc character, so news things keep popping up, or there has to be reaction
formulated to something. So I consult P. [the director] a lot, but colleagues aswell.” (17)I-deals are often secret: “They also said to me that it was exclusive, that I could nottalk about it with others. It was only for me.” (4)“My colleagues do not really know about this, because I do not really cooperatewith them. And I have to be aware, because they are careful with these
agreements, so I better not speak out loudly about this.” (6)“That happens in the office. Then, the door closes, and things get discussed.
There is a taboo about this. Especially in health care, I see that people easilyadjust to policies. Maybe they accept them too quickly.” (18)Interaction with law, CLAs and HR policies: “In the beginning, I found it hard toask, I felt uncomfortable, I did not want to lose my job. This agreement is not
written in black and white, so we had to agree upon it beyond the existing
rules.” (3)“A CLA is also an easy way for an organization to see it as a barrier, and to saythat it could be a problem. (…) Organisational culture and the CLA form a wallthat you cannot overcome.” (20)Organisation structure and culture can hinder agreements: “I sometimes do havethe idea that the institute I work for, (…), that the structures are veryhierarchical. While we are very used to flat organisational structures in the
Netherlands, this is not the case over here.” (17)“I think with the daddy-days, the culture of the organisation played a role, as it
was not done to work less, and moan about holidays. You live for your work,and the more you do that, the tougher you are. That was the approach.” (23)Agreements may create vulnerability: “The trees used to grow to the sky, but thecrisis has put the people back on their place, and people treated each other lessexuberant. People could get fired, and then there is a lot of tension. In such
periods, you don’t start about individual agreements.” (25)“Just because of these arrangements I made, it was easy for them to kick meout. If you look at it that way, then the special position has become mydownfall. My success was my weakness at the same time, to state it this way.”
(28)

10

New Zealand Journal of Employment Relations, 42(1):Motives for I-deal Negotiation
The first main theme that emerged was motives for negotiation. Two types of motives wereidentified: earned and problem solving.
Earned i-deal
Some participants explained that they negotiated an i-deal because they felt they earned it. For
instance, employees indicated that their organisation perceived them as a high-potential, or thatthey themselves felt being a high-potential and, therefore, they should be treated individually.
Interviewee #10, being employed on a temporary basis, negotiated a renewed contract withexpanded tasks and more flexibility, and explained that she was able to obtain this idiosyncratic
position as she was already performing at a higher level, and colleagues were already consulting
her on various work-related issues. Hence, employees may feel that they are entitled to receive
i-deals because they perceive themselves to be outperforming others. However, entitlement not
only arises from the perception that one is better than others, but also because one may perceivethat others, for no good reason, are treated better. Interviewee #1, who negotiated a pay raise,
felt he conducted his work at the same level as higher-paid employees and, therefore, earned an
i-deal (See Table 2).
Problem Solving
In contrast to an earned i-deal, employees indicated that they also negotiated an i-deal to solvea specific problem at work, such as a working schedule that did not fit school times of thechildren. On the one hand, participants explained that, when something had gone wrong atwork, i-deals could be negotiated to resolve the situation. Interviewee #3 negotiated a changeof tasks when things did not go well at work, and negotiated an i-deal to conduct larger national
projects rather than small projects as stipulated in her job description. On the other hand, i-deals
can be negotiated to facilitate employees more flexibility in their work. Interviewee #17
indicated that autonomy at work was very important to her, hence she negotiated an i-deal about
flexible hours. She explained that:
I perform less when I am distracted, or when I am not in a creative writing mood. Now
I can say I am going home, and when you are more inspired in the evening I can dosome work. And that there is nobody looking over your shoulder, because that really
impedes my sense of autonomy, and that makes me perform less well.
This shows that flexibility i-deals may solve problems, but for many employees flexibility isalso negotiated to prevent problems and, hence, flexibility is no longer a means to achieve
something, but also contributes to problem prevention. Accordingly, interviewee #24 indicatedthat i-deals may provide more leeway in the future to make decisions flexibly, and interviewee#3 explained that her i-deal ensured that she felt less pressure and more flexibility in dealing
with her deadlines. Finally, employees may initiate i-deal negotiation to enhance work
motivation and productivity, thereby solving a career-related problem, such as low motivationor productivity. For instance, Interviewee #3, who negotiated a particular training and to work
more hours, explained that this i-deal was a mean towards an end. The i-deal would help her tobecome more productive in her job, and to achieve a promotion and career advancement.
Interviewee #31 negotiated to follow an accounting course which would benefit both him andthe organization. He explained that: “To the director, I told him that I wanted to undertake
additional education next to my work, because I want to develop myself and grow along withadvancing knowledge.”
11New Zealand Journal of Employment Relations, 42(1):Thus, i-deals can serve as a mean to achieve higher motivation in the job. In sum, the first theme
shows that the motives people have for negotiating i-deals can be at least two-fold; people canfeel they have earned an i-deal, or they start negotiating an i-deal to solve or prevent a problem.

Enabling Factors in the Negotiation Process
The second main theme identified from the data concerned the enabling factors employees
perceived to exist in terms getting an i-deal. Two enabling factors were discovered:relationships and flexibility.
Relationships
The quality of relationships was important in whether one can negotiate an i-deal. Interviewee#14, who negotiated to do extra work (i.e., writing educational materials) for additional pay,
explained that he was able to obtain this attractive job because of his high-quality relationshipwith the organisation. Without having these relationships, he admitted that he would not havereceived the offer. Moreover, Interviewee #15, who had negotiated an individualised career
trajectory at his school, explained that because of training he underwent, he had to agree withhis colleagues on his teaching schedules such that it would allow him to follow training as well.
As he had informed his colleagues prior to negotiating the i-deal he wanted, they were actively
facilitating his proposal for the i-deal. There would be no conflicts between his careerdevelopment plan and his teaching schedule, which was an important requisite for hisorganisation to grant the i-deal. Hence, colleagues can actively facilitate the negotiation andsuccessful implementation of i-deals.
Flexibility
I-deals are perceived to be flexible in nature. They can be negotiated on a rather abstract level(e.g., the expansion of tasks within a job), but the day-to-day practical implementation of the ideal often has to be further negotiated. Interviewee #3, who had negotiated an i-deal to do larger
projects, explained that this i-deal was somewhat abstract and concerned the general allocationof work. In reality, however, she renegotiated how work was conducted with her manager andcoworkers on a daily or weekly basis. Interviewee #17, who negotiated expansion of her tasks,
also explained that the i-deal had an organic character, changing over time in content, and thedeal was in need of regular renegotiation with her director. Negotiated i-deals, therefore, may
serve as a general framework which guide the more day-to-day agreements between employee,coworkers, and management. Hence, i-deals are in themselves flexible, and can be renegotiatedover time.

Inhibiting Factors in the Negotiation Process
The third theme that was found pertained to the inhibiting factors towards i-deal negotiation,and consisted of two subdimensions: secrecy, and structure and culture.
Secrecy of i-deals refers to whether employees can freely communicate with coworkers about
the i-deal they have negotiated. Organisations often ask the employee to keep the deal secret,unless coworkers are directly affected by an i-deal. That is often the case with i-deals on flexible
working schedules, as they involve coworkers. Employees may be instructed to keep an i-dealconfidential, as senior managers may not want coworkers to know about the i-deal, so that
12

New Zealand Journal of Employment Relations, 42(1):coworkers do not start negotiating themselves, or to prevent feelings of unfairness amongcoworkers. Interviewee #18, who worked as a nurse in a large hospital, explained that whensomeone wanted to negotiate an i-deal, it happened behind closed doors, and it would not be
discussed openly. He perceived a taboo on negotiating i-deals, as people in healthcare are more
likely to adapt to existing policies. Hence, i-deals are generally not shared publicly, andorganisations refrain from freely communicating about which deals are negotiated by whom.
Employees are often put under pressure to remain silent about which deals they have negotiated.
The effect of secrecy is that i-deals cannot be materialised, as employees cannot openly discuss
their i-deals with others.
A second inhibiting factor found was culture and structure. Culture (both at organisational andnational level) could influence the extent to which people were able to negotiate i-deals as wellas the extent to which i-deals interact with existing structures, including law, labour agreements,and HR-policies. Often employees referred to existing rules as a foundation for the exchange
relationship between employee and organisation, and they felt they could not ask for morebeyond what was already available to them. For instance, Interviewee #3 explained that she felt
uncomfortable about asking for i-deals, the more as it could not be formalised on paper. Sincean agreement had to be made beyond existing rules, it could not be formalised, and remained
an oral agreement. Interviewee #20 explained that collective labour agreements were also usedby managers to reject i-deals, as they argued that i-deals would not fit with the existing rules.
For many managers, HR-policies and labour agreements shape their negotiation space, as wellas the boundaries around it. As i-deals may extend these boundaries, managers may reject ideal requests as they blur the distinction between what is possible according to the rules andtheir discretion to make decisions. However, employees also perceive existing rules as limiting
their need or potential to negotiate additional deals. Interviewee #12, who had been a supervisor
for some years and gave up his position recently, explained:
Most of the things I use at work are written in the CLA (collective labour agreement),such as a seniority day, which means I get additional leave. You can use that when you
are at a certain age. (..) Time for time and time for money arrangements are describedin detail in the regulations.
In addition, organisation culture may also hinder the potential to negotiate i-deals. Interviewee#17, working for a small health care company, explained that the organisational culture wasvery hierarchical. Being a young woman in an industry where men dominated in top positions,she felt she lacked the confidence to ask for an i-deal. She explained that:
While we are very used to flat organisational structures in the Netherlands, this is not
the case over here. I was the youngest and the lowest at the career ladder. (…) Often
they look at you as being the youngest, and that you are not capable yet. I struggled withthat in the beginning, because I had a low status, and some others did not manage thatwell. I do know a lot about some work-related topics, but because you are the mostjunior, it is a barrier for your confidence.
Interviewee #23, who negotiated reduced working hours to spend time with his family andchildren, experienced a hindering culture, as the dominant culture in his organisationemphasised the live-to-work mentality which did not fit in with his desire for reduced hours.
These findings indicate that structure and culture may hinder both the chances of getting an ideal, but also effective implementation and transfer of i-deals into the workplace.

13

New Zealand Journal of Employment Relations, 42(1):Other inhibiting factors appear when i-deals may create vulnerability for employees. As
employees negotiate special arrangements that differ from coworkers, a situation may becreated where i-deals negatively influence an employee’s standing in the organisation.
Interviewee #25 explained that after the outburst of the economic crisis, he was less willing tostart negotiating an i-deal, as there was a lot of tension within the organisation over potential
lay-offs. Hence, in a crisis, employees may refrain from such negotiations. However, it wasalso found that employees who had negotiated i-deals became more likely to be made redundantduring crises. Interviewee #28, who had negotiated a flexible work schedule so that she could
pick up her children from school, indicated that because of this arrangement, she had become
more vulnerable. As a consequence, in a recent reorganisation, she was made redundant andshe felt that this happened because of her special arrangements.

Discussion
This explorative study on the motives for i-deal negotiation shows that there are at least threemain themes relevant to i-deal negotiation. The first main theme pertains to the motives people
have to start negotiating. Two main motives were identified; earned i-deals and problemsolving. While i-deal conceptualisation has primarily been developed around the notion of‘superstars’ or high-performers in organisations (Guerrero, Bentein, & Lapalme, 2014;
Rousseau, 2005; Rousseau et al., 2006), this study clearly shows that it is not only the highperformers who negotiate i-deals. While employees may feel entitled to i-deals, it was also
found that i-deals may solve problems employees face at work. In sum, the motives that people
have to negotiate i-deals may differ, and determine the outcomes of the i-deal negotiation. In
addition to motives, there are two important elements in the negotiation process. First, enabling
factors may help to negotiate i-deals and to transfer them successfully into the workplace. Social
exchange relationships are important; when one has strong relationships with managers andcolleagues, i-deals are more accessible, while poor relationships with coworkers may impede asuccessful transfer of i-deals to the workplace. Moreover, i-deals are also flexible in naturethemselves through which they may create greater flexibility at work, and help a greater fit
between a person and the job.
However, i-dealers also experience inhibiting factors towards obtaining an i-deal as well as
implementing an i-deal successfully at work. First, organizations can explicitly demand workers
to keep their i-deal secret as they do not want to know coworkers about special arrangements
being agreed upon. This may hinder employees, as they are not allowed to openly communicate
about the agreements they have made. For i-deals theory and research, it is, therefore, important
to assess whether i-deals are publicly known in order to understand how they manifest in theworkplace and affect work outcomes. Moreover, i-deals interact with law, CLAs and HRpractices. Managers may decline i-deals on the basis of existing regulation, but employees
themselves may also feel hindered to negotiate within the existing structures and policies.
Theoretical Implications
The paper has a number of theoretical implications for research on i-deals, as well as theliterature on individualisation of work relationships and negotiation at work. Essentially, i-deals
are becoming ‘normalised’ in the workplace and more widely available to employee (Lee,
Bachrach, & Rousseau, 2015), and are not solely negotiated by star performers, but by others
as well. However, this may also may contradict with existing structures, such as managers whowant to be ‘in control’. Hence, it is not surprising to observe how managers may ask employees
14New Zealand Journal of Employment Relations, 42(1):to remain silent on their i-deals, or may even reject i-deal requests on the basis of existing rules.
This may be explained on the basis that, while employees have be more self-reliant in an
individualised world, not all organisations and managers are actually welcoming of negotiating
employees, and reducing control over their workers (Bal & Lub, 2015; Rousseau et al., 2006).
Hence, individualisation of work arrangements may also be perceived negatively byorganisations, as it indicates differential treatment of employees, reducing control, and more
active management of negotiated i-deals.
Motives for I-deals
Motives for granting i-deals to employees may include made contributions to the organisation,
being a high-potential, or because an employee threatens to leave the organisation (Rousseau,
2005). As the findings of the current study showed, managers may be inclined to deny i-deals
when they struggle with legitimising i-deals in the workplace, and refer to existing policies andlaw as the basis for managing the employment relationship. Not granting i-deals at all may beeasier for managers to sustain fairness across the organisation (Greenberg, Roberge, Ho, &Rousseau, 2004). An underlying explanation for this may be that managers are rarely educatedin and used to negotiating i-deals with individual employees. Therefore, managers may lack thenecessary skills and knowledge to successfully negotiate and manage i-deals in the workplace,through which they will be less inclined to grant them. Their reluctance may become a selffulfilling prophecy, as the findings show that employees may perceive that i-deals are
impossible to obtain, given the existing structures and culture in the organisation. Theory andresearch on i-deals should, therefore, integrate the boundaries that exist within and acrossorganisations that impede i-deal negotiation to fully understand the context in which i-deals arenegotiated and when they are not granted.
Motives for i-deal negotiation have clear theoretical links with the existing literature on i-deals.
Problem solving motives fit within a work adjustment perspective (Bal et al., 2012), as
preventive or corrective i-deals (primarily flexibility-oriented) are negotiated with the explicit
aim to create a better fit between work and family demands. Further integration of the motives
for i-deal negotiation with the theoretical perspectives on i-deals will enhance understanding of
how i-deals operate in the workplace, and how they affect attitudes and behaviors.
Finally, the findings showed that i-deals interact with law, CLAs and HR policies. Therefore,
the study also has implications for the wider literature on strategic HRM (Jiang et al., 2012).
Dominant models in the HRM literature primarily depart from a systems-perspective, which
postulates that the organisation has to implement HR-practices to increase employee andorganisational performance (Messersmith, Patel, Lepak, & Gould-Williams, 2011). This study
shows that beyond those HR-practices, employees negotiate individualised agreements which
enhance motivation and performance. Hence, strategic HRM does not only entail the
management of systems, but even more importantly, the management of people and i-deals.
Hence, what is commonly referred to as the ‘black box’ of HRM (ibid), not only refers to thepassive reactions of employees when they receive HR-practices, but also includes the active
management of how employees interpret existing practices, and how they complement thesewith i-deals.

15

New Zealand Journal of Employment Relations, 42(1):Limitations and Suggestions for Further Research
Despite the novelty of the findings and their implications for i-deals research, there are also
some limitations to the study. First, in line with previous studies (Liao et al., 2016), this study
focused on employee perceptions of the i-deal negotiation process, rather than organisational
agents, including line managers and HR-managers. While i-deals are negotiated between
employees and their organisations, the majority of studies have used the employee as theprimary informant of how i-deals are established. However, future research would benefit fromtaking into account organisational perspectives on i-deals as well, and to establish whether there
is agreement in the perspectives of employee and management.
Another limitation is that the focus was exclusively on employees who successfully negotiatedi-deals. There is insufficient understanding yet of the wider context around i-deals, including
perceptions of employees who requested but were not successful in obtaining i-deals (Lee etal., 2015), workers who perceive they lack the bargaining power or confidence to negotiate ideals, and workers who feel no need for individualised work arrangements. Another concern
pertains to the context of the study, as all of the interviewees were Dutch employees. As
Rousseau (2005) explained, i-deals will differ substantially across countries and cultures. As
norms of equality and negotiation are different across the world, it is not only the extent towhich i-deals relate to outcomes that will differ across cultures (Liao et al., 2016), but also theway i-deals are shaped and tolerated within organizations. Therefore, cross-cultural research on
i-deals would shed more light on these issues.
Practical Implications
The study has important practical implications as i-deals become more popular in contemporary
workplaces. First, the study shows that employees may feel hindered to start negotiating as
existing structures and practices are perceived to exclude the possibility of i-deal negotiation.
For organisations and managers, the study offers insights into the i-deal negotiation process. As
i-deals are now being requested by employees, organisations are advised to educate managers
in how to manage i-deal requests and how to grant i-deals. As secrecy of arrangements may
potentially increase perceptions of unfairness in the workplace (Greenberg et al., 2004),
organisations benefit from a transparent approach towards individualisation of work
arrangements. An important aspect is how organisations and managers communicate toemployees about the possibilities for i-deal negotiation, as openness about this may enhance
fairness and equality in the workplace. Moreover, managers may be aware that employees havedifferent goals when initiating negotiation, and thus the i-deal content should be aligned withthe goals of both the employee and the organisation. Finally, managers are advised to be awarethat it is, nowadays, not only star performers who negotiate i-deals. As more employees arenegotiating, they may have different motives for i-deal negotiation. Depending on thesemotives, i-deals may have different contents, but also effects on motivation and productivity.

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New Zealand Journal of Employment Relations, 42(1): 19-34

The legacy of New Public Management (NPM) on workers, management
capabilities, and organisations
GEOFF PLIMMER*, JANE BRYSON**, NOELLE DONNELLY***, JESSIEWILSON****, BILL RYAN***** and STEPHEN BLUMENFELD******
Abstract
Public servants want to work in good organisations, and management and organisational capability has
been a long standing concern of public sector unions. This study explores the long run impacts of new
public management (NPM) through worker experiences. Although NPM was introduced to improveorganisational performance, it may have been bad for workers and there is limited evidence thatorganisational performance is high. Survey results of 15,762 members of the New Zealand PublicService Association (PSA) found that public servants were committed and motivated, but do not rate
their managers or organisations highly. Results are discussed in terms of the long run legacy of NPM
in which the right to manage has not been matched by the responsibility to manage. This has led toorganisations poorly equipped to deal with emerging challenges.

Key words
New public management, worker experiences, management capability, organisational performance

Introduction
The performance of public sector agencies, as well as the wellbeing of workers, is of long standing
concern to public sector unions and the wider field of industrial relations (Colley, Mcccourt &Waterhouse, 2012; Haworth & Pilott, 2014)
New Zealand was an early and enthusiastic exponent of new public management (NPM), and eagerly
embraced the disaggregation of agencies, contractualism and performance measurement that it entailed(Pollitt, 2007; Hood & Peters, 2004). It primarily introduced NPM with the State Sector Act 1988,
which amongst other things formalised and strengthened Ministerial influence over the appointmentof chief executives, and introduced contractual and market-based principles between the principal*

Dr Geoff Plimmer
School of Management, Victoria University of Wellington, PO Box 600, Wellington, New Zealand
Geoff.plimmer@vuw.ac.nz**
Jane Bryson, School of Management, Victoria University of Wellington***
Noelle Donnelly, School of Management, Victoria University of Wellington****
Jessie Wilson, Allen and Clarke, Wellington*****
Bill Ryan, School of Government, Victoria University of Wellington******
Stephen Blumenfeld, School of Management, Victoria University of Wellington

19New Zealand Journal of Employment Relations, 42(1): 19-34(usually Ministers) and agents (departments and their CEOs). NPM is a loose term but, as well as
objectifying the relationships outlined above, it also commonly includes a grab basket of other ideas,such as a stronger focus on management and managerialism, customer focus and private sector
provision and style of management (Terry, 1998). It has resulted for many countries in thedecentralisation of public sector employment issues, from central personnel agencies and thedevolvement of operational human resource management (HRM) and employment relations (ER)accountability to line management of public sector agencies (Colley et al., 2012). In this paper, New
Zealand represents an interesting microcosm of how NPM has played out in terms of its effects on
workers and overall public sector capability.
NPM has gone through several iterations since it was introduced in New Zealand in the late 1980s.
These multiple changes, however, tend to be layered on top of, and tinker with, existing models rather
than be based on first principles or address underlying problems (Haworth & Pilott, 2014). A postNPM environment is emerging that includes demands for heightened responsiveness, accountability
and performance. Complexity arising from multi-actor governance and implementation is also
increasing (e.g. Fossestøl, Breit, Andreassen & Klemsdal, 2015). Despite widespread public sector
reforms, the effectiveness of many reforms is contested. The case that they have improved worker
experiences, management capability and organisational performance is not strong (Schick, 2001;
Haworth & Pilott, 2014).
This paper explores public sector worker experiences and capability roughly 25 years since the passingof the State Sector Act 1988. Drawing on large-scale survey data collected in 2013, workers’
experiences, managerial capacity and organisational capability are explored. The paper begins with areview of the legacies of New Zealand’s model of public management from the adoption of NPM,
highlighting the outcomes that led to more recent public sector reforms. The paper presents findings
from a survey of 15,762 public servants, demonstrating that while not entirely bleak, several significant
flaws exist in the organisation and conduct of work across public entities.

Background - The New Zealand Model of New Public Management (NPM)
NPM has evolved into various hybrid forms within different jurisdictions (Terry, 1998). Within New
Zealand it has been through several stages of reform (see Boston, Martin, Pallot & Walsh, 1996;
Bryson & Anderson, 2007). The first phase, heralded by the State-Owned Enterprises Act 1986,
separated various government and quasi-government organisations from central government functions.
The next and arguably most important phase removed the notion of a unified public sector andintroduced a new vision of state sector employment focused on individual departments and their
management. The State Sector Act 1988 implemented this vision. Following this, a new centre rightgovernment in the early 1990s introduced the Employment Contracts Act 1991 which sought toweaken worker voice and collective bargaining in both the private sector and public sector. In the early
2000s, a centre left government sought to address emerging problems in the public sector, such as low
organisational capability, poor co-operation between agencies, and a short-term outlook based on
meeting output targets rather than longer term outcomes. However, reforms of that era were piecemeal
and unconvincing (Halligan, 2007).
The Better Public Services programme, started with an advisory group set up in May 2011, recognisedthat public sector managers had a short-term focus and heightened responsiveness to ministers
20

New Zealand Journal of Employment Relations, 42(1): 19-34(Wevers, 2011). They also did not maintain organisational and system capacity, or deal with the
management of long-term strategic issues. There were subsequent commitments to improve matters(e.g. Rennie, 2013) and some important amendments in 2013 to the State Sector Act and the Public
Finance Act.
Two major events in New Zealand encapsulated failures in the New Zealand model of public sector
reform (a mine explosion and a flawed software payroll project)1. Separate inquiries into these events
both concluded that senior public servants had misrepresented the true (shabby) state of affairs toministers (Ministerial Inquiry into the Novopay Project, 2013; Royal Commission on the Pike River
Coal Mine Tragedy, 2012). As well as pointing to poor organisational performance, they also pointed
to generally low management capability and poor worker experiences – including a limited ability ofstaff to speak up about concerns.
Commentators have recently called for a more radical agenda for change than the incremental steps
that the Better Public Services initiative entails. In particular, Haworth and Pilott (2014) argue for a
first principles state sector reform, including new structural and legislative change that will better
address the problems of a “state sector that is fragmented, unable to solve intractable problems, slow
to innovate, and performing poorly in terms of leadership and response to change” (ibid: 74). Of more
relevance to this paper they also call for the state to be an exemplar employer with clearer expectationsof human capability and organisational performance. This is to particularly address:“Command and control” management styles, a “right to manage” mentality, and a cult of(senior) leadership are rife across the sector. Lost in this package are the positive workplacearrangements that promote improved organisational performance and productivity, better
workplace cultures, and high-trust relationships (ibid: 75).
This paper discusses the gap between current workplace arrangements, and the positive workplacearrangements described above. It does this in sections that briefly cover worker outcomes,
management capability and organisational performance. Each of these sections summarises pertinentinternational and local literature around the importance, consequences and dynamics of these topics.
Worker Outcomes
Worker experiences have become increasingly central to understanding the relationships between
HRM practices, organisational performance and worker wellbeing (Boxall & Macky, 2009), and the
purported command and control, and right to manage mentality mentioned above do not bode well for
employee experiences. Workers who have little autonomy, are not informed of organisational goals or
rewarded for good performance, and who receive inadequate development are more likely to beunmotivated, uncommitted, and dissatisfied (Boxall & Macky, 2009). Poor HR practices andorganisational climates result in higher stress, lower motivation and greater likelihood of turnover.
Similar findings apply in government, where it has been found that organisational factors, such asprocedural constraints and organisational goal conflict undermine worker motivation, commitment,
and job satisfaction (Wright, 2004). Teamwork, employee involvement and trust in line management
have a positive impact on worker motivation, and HR practices and outcomes are reliable predictorsof public sector performance levels (Gould-Williams, 2007). Flexibility and voice also help employee
experiences, and in turn often help organisations (Landy, 1989).
21

New Zealand Journal of Employment Relations, 42(1): 19-34

A report by the State Services Commission (SSC) (2012) in New Zealand notes that public sector staff
engagement remains lower than comparable private sector organisations. In sum, although goodworker experiences are important to organisational performance, poor worker experiences are
expected in public services. They are likely to be reflected in low levels of: motivation, commitment,
job satisfaction, autonomy, information, rewards and training, security, flexibility, influence, andincreasing job pace and work overload.
Management Capability
The need for managers to have technical, human and conceptual skills has been known since Katz’s
seminal work in 1955 (Peterson & Van Fleet, 2004). While many managers are hired and promoted
for their technical skills – it is the human and conceptual skills that are needed for effective
management performance. Technical skills are crucial, but human skills, such as conflict resolution
are needed to effectively apply technical skills at a senior level. Conceptual skills, in particular theability to see the organisation as a whole, or to take a systems view of the job, team, organisation andcontext are necessary to manage work outcomes (ibid).
While NPM has reinforced management’s prerogative to manage, it has not been associated with the
responsibility to manage well, instead it is linked with an over-reliance on restructuring as the prime
tool for change, a lack of innovation and poor leadership skills (Norman & Gill, 2011; Plimmer,
Norman & Gill, 2011). Within New Zealand, the consequences of this lack of responsibility include
leadership teams focused on individual components of the business at the expense of government
issues, or those who are good at managing up but do not know the business (English, 2012). Alongside
this, management teams appear to be unable to provide robust strategic advice; fail to work effectively
across organisational boundaries; struggle to manage people and change elements of their role; fail touse information effectively to drive their business, and lack the metrics to determine the effectivenessand efficiency of their business model and operations (Wevers, 2011). Defensive and rules-based
cultures are also said to prevail (McCarthy, 2009). In sum, low levels of managerial capability are
signalled by centralised, hierarchical authority, weak goals, weak work processes and low trust andresponsiveness toward staff.
Organisational and Sector Capability
Poor worker experiences and poor management capability limits organisational capability (GouldWilliams, 2007). According to Diefenbach (2009), while efficiency gains have been found in a few
concentrated areas as a result of NPM, the overriding search for efficiency has damaged organisational
capacity – with associated long term costs. Despite the decentralisation rhetoric of loosening theadministrative framework, and enabling managers to manage, practice has actually led to greater
centralisation, re-bureaucratisation and compliance behaviour. Hood and Peters (2004) argue that theseunintended organisational outcomes are widespread across a number of jurisdictions. In New Zealand,
identified public sector weaknesses include being poor at sustaining capability and performance in themedium term, and low allocative efficiency (Te Kawa & Guerin, 2012). Agencies are also poor atworking together to achieve outcomes and also often have a weak sense of purpose, or goal clarity.
In addition to prevailing concerns about long-term organisational capability, emerging problems are
becoming harder to solve; public expectations are rising, policy designs are becoming more complex,
22

New Zealand Journal of Employment Relations, 42(1): 19-34

and require full-scale collaboration (Bourgon, 2011). Budgets are tight. These challenges essentiallyconcern dilemmas between doing more with less, and being both innovative and efficient.
Empirical research on organisational ambidexterity provides a useful alternative frame to look at thedilemma facing public administration of how to be both efficient, and also adaptable to stakeholders.
Ambidexterity seeks both i) adaptability, or rather exploration and innovation, and ii) alignment –requiring both efficiency and effective resource utilisation (Jansen, Tempelaar, Van Den Bosch, &Volberda, 2009). Traditionally, these two management goals have been seen to be mutually exclusive.
However, more recent research regards them as compatible and even mutually reinforcing. In effect,organisations can be innovative and then use efficient processes to deploy them, and efficient processes
can free resources for innovation (Raisch, Birkinshaw, Probst, & Tushman, 2009). Ambidexterity
requires management skill and when embedded in individual jobs, worker experiences are important.
Organisations can be ambidextrous yet still maintain silos through effective co-coordination andintegration at the executive level (Jansen et al., 2009). However, for this to work, management teams
must also be competent and well integrated, and work group tasks must be naturally discrete. In
government, however, much of the work is inherently co-produced with clients, and in collaboration
with other work groups and agencies (O’Leary & Vij, 2012). Integrated health, education and social
services for hard to reach clients are examples where cross unit co-operation is important. In sum, lowlevels of organisational capability are signalled by low incidence of: cross-unit co-operation, change
and innovation, adaptability, alignment, ambidexterity and performance.

Research Design
An online survey was distributed to the full 49,611 membership of the PSA (Plimmer et al., 2013). To
ensure the fullest representation of this group, two follow-up reminder emails were sent to members
and further invitations to voluntarily participate were included in union newsletters and othercommunications. Members without email access were offered alternative ways to participate. In total,
15,762 complete responses were received, representing a response rate of 32 per cent. Respondents
were in the core public service, crown agencies, district health boards, and local government.

Participants
All those who responded were both employed in public services and members of the PSA. Two-thirdsof those who responded were female (68.5 per cent), reflecting the rise of female participation rates
across New Zealand during the early 1990s, a trend that has continued over the past two decades (State
Services Commission, 2012). The respondent group were found, on average, to be older. Most
respondents were aged 45-54 years, with an average age of 48 years (Table 1). This compares to 28
per cent of similarly aged public service workers, with an average age of 45 years in 2012 (ibid).
Alongside the decreasing number of workers in the 25-34 and 35-44 year age groups, these results
indicates an ageing workforce in New Zealand’s public service.
The majority of respondents identified as New Zealand European Pākehā (65.2 per cent) with just over
30 per cent of respondents identifying with at least another ethnic group, broadly matching that of the23

New Zealand Journal of Employment Relations, 42(1): 19-34

New Zealand population (Statistics New Zealand, 2013). The vast majority (>70 per cent) ofrespondents have a post-high school certificate or higher, and 43.22 per cent have a Bachelor’s degree
or higher.
Job and employer demographics
Public service agencies employed 44.8 per cent of respondents. Others worked for state sector
agencies, district health boards, local government, and other types of organisations.
The majority (96.9 per cent) of PSA members surveyed were employed in permanent work. 90 per
cent of respondents worked full-time and the remaining 10 per cent worked part-time.
Over half of those who responded have worked in their organisation for five years or more (66 percent), with 35.4 per cent indicating that they had worked with the same employer for at least 11 years.
This reflects general public sector employment tenure trends in which the average length of service
for public service employees was 9.2 years (State Services Commission, 2012). Respondents
represented a range of occupations, the biggest group being clerical and administrative workers. See
table 1.
Table 1. Occupational types
ANZSCO occupational category
Level 1: Manager
Level 2: Professional
Level 2: Registered Social Professional
Level 2: Scientist
Level 3: Technician/Trader Worker
Level 4: Unregistered Service Worker
Level 5: Clerical/Administration
Level 5: Contact/Call Centre
Level 5: Inspection/Regulation Worker
Level 6: Sales Worker
Level 7: Machinery Operator/Driver
Level 8: Labourer

n
1,306
2,574
2,513
526
646
1,870
4,028
853
827
64
30
139

%
8.5
16.7
16.3
3.4
4.2
12.2
26.2
5.5
5.4
0.4
0.2
0.9

Most of those who responded defined their jobs as non-managerial (80.9 per cent), with just over 1 percent identifying themselves as an executive or senior-level manager. This was reflected in participants’earnings. The majority (43 per cent) earned a gross annual salary of between $40,000 and $60,000.
The median salary range was between $50,000 and $60,000.
Research Instrument
Based on national and international work, this survey explored workers’ experiences; management
practices and capabilities; work processes; and organisational capability and performance. Most survey
24New Zealand Journal of Employment Relations, 42(1): 19-34

questions were quantitative and closed-ended using five-point Likert scales (from 1 for strongly
disagree to 5 for strongly agree).
Organisational goal specificity was measured using Wright’s (2004) scale. An example item is “Thisorganisation has objectives that are specific and well defined”. Both cross unit cooperation andorganisational processes were measured using scales from Langford (2009). Example cooperation
item: “There is cooperation between different sections in this organisation”. Example organisational
process item: “There are clear policies and procedures”.
Trust and support was measured using the Gibson and Birkinshaw (2004) scale. Sample item:“Managers in this organisation give ready access to information that others need”. Employees’
perceptions of HR practices were measured using a measure of autonomy (power), information,
rewards, and knowledge (Vandenberg, Richardson, & Eastman, 1999). Example items: “I havesufficient authority to fulfil my job responsibilities” and “Management takes time to explain to
employees the reasoning behind critical decisions that are made”. Example Change and innovation
item is: “Change is handled well in this organisation” (Langford, 2009).
A Working time flexibility example item was “My hours are fixed by the organisation with nopossibility for change” (EWCS, 2010). Job pace and Job influence was measured in a similar way
using EWC survey items.
General commitment was measured with a scale comprised of items concerning the target ofcommitment: to current job, team, organisation, or society. Example Organisational commitment item:“I am willing to put in extra effort for this organisation” (Langford, 2009). Example job satisfaction
item was: “I like the kind of work I do” (ibid). Example Job security item was “I might lose my job in
the next six months.” (EWCS, 2010). Example work overload item: “There is too much work to do
everything well” (Macky & Boxall, 2008).
Bullying was measured using a question by (O’Driscoll et al., 2011)2. Respondents then responded onan ordinal scale ranging from “No, never” to “Yes, almost daily”.
Adaptability (Gibson & Birkinshaw, 2004) concerns whether the organisation responds to changing
circumstances or new opportunities. Example item: “The management systems in this organisation are
flexible enough to respond quickly to changes”. Alignment (ibid) involves how efficient organisational
systems are, or whether organisations are wasteful and working at cross-purposes with each other.
Example item: “My organisation wastes resources on unproductive activities”.
Ambidextrous organisations are those that “are capable of simultaneously exploiting existing
competencies and new opportunities” (Raisch et al., 2009: 685). Ambidexterity was, therefore,
calculated by multiplying the means of the alignment and adaptability scales. Work motivation was
calculated by using the same scale as Wright (2004) used to measure public sector work motivation.
Organisational performance was measured using four items from Gibson and Birkinshaw (2004).
Example item: ‘This organisation is achieving its full potential.’ This scale’s validity was confirmed
by correlating, where data was available, organisational performance with ratings of organisational
management as rated by the State Services Commission’s Performance Improvement Framework(Spearman’s correlation = .65, p=.038).
25

New Zealand Journal of Employment Relations, 42(1): 19-34

Managerial trust and responsiveness was measured using a scale from the British Workplace
Employment Relations (WERS) Survey (Chaplin, Mangla, Purdon, & Airey, 2005). Respondents were
presented with the proposition ‘Managers at this organisation…’ related to statements such as ‘Canbe relied upon to keep to their promises’.

Results
Overall, results indicated high levels of scale reliability with alphas above .7 apart from work
motivation (.68), employment security (.36), and organisational alignment (.67).
Table 2. Standard deviations and alphas
Standard
Scaledeviation
Worker experiences
Work Motivation
0.54
Organisational Commitment
0.88
Job Satisfaction
0.785
Power
0.79
Information
0.79
Rewards
0.9
Knowledge
0.91
Job clarity
0.7
PIRK – Total
0.7
Employment Security
0.65
Work Flexibility
0.83
Job Influence
0.9
Job Pace
0.66
Work Overload
0.78

Cronbach’s
alpha
0.68
0.88
0.83
0.92
0.92
0.91
0.95
0.75
0.96
0.36
0.74
0.83
0.84
0.84

Management capability
Organisational goal specificity
Management support and trust
Organisational Processes
Managerial Responsiveness

0.81
0.83
0.871
0.941

0.85
0.93
0.82
0.93

Organisational capability
Cross Unit Co-operation
Change and Innovation
Organisational Adaptability
Organisational Alignment
Organisational Ambidexterity
Organisational Performance

0.92
0.86
0.89
0.79
0.74
0.81

0.85
0.85
0.82
0.67
0.81
0.83
26

New Zealand Journal of Employment Relations, 42(1): 19-34

Mean results indicate a motivated, committed and satisfied workforce (see figure 1 worker experiences
items), but working for managers, and organisations, of limited capability (see figure 1 management
capability and organisational capability items). The rate of reported bullying experiences was high (32per cent).

27

New Zealand Journal of Employment Relations, 42(1): 19-34* All scales except bullying were measured on a standard 5 point Likert scale. Responses above 3
indicate agreement, below 3 indicate disagreement.
Bullying was measured using a different scale type and so is reported separately. 26 per ent reported
being bullied now and then, 1.6 per cent monthly, 2.4 per cent weekly and 2.2 per cent almost daily.
An exploratory factor analysis (EFA) was conducted to better understand the underlying relationshipbetween the many variables in this study. EFA allows researchers to understand how variables
correlate together, in patterns or ‘factors’, that reveal underlying processes. Using principal axis
factoring, two factors were identified. The first factor contained 13 strongly loaded variables that wereprimarily concerned with organisational and management characteristics (42 per cent of the variance).
The second factor contained four variables that were primarily concerned with workers’ subjective
experiences of their job including motivation and commitment (8 per cent of the variance). Five scales
did not load strongly on any of the two factors: work overload, employment security, workplace
flexibility, job influence, and job pace. The Kaiser-Meyer-Olkin measure of sampling adequacy was
0.945 and the p-value of Bartlett’s test of sphericity was below 0.001, indicating the data was suitablefor factor analysis.

Discussion
These results paint an ambivalent picture of the public sector. Overall, the results indicate that New
Zealand public service workers are motivated and satisfied, but do not rate their managers’ and theirorganisations’ performance well, as shown in figure 1. The two highest means concerned work
motivation (M=4.04).and general commitment (4.11). The two lowest concerned cross unit cooperation (2.73) and organisational performance (2.79). The NPM reforms and its subsequent
iterations do not seem to have led to organisations being particularly well run, despite the emphasis on
private sector management practices and decentralisation rhetoric that accompanied the introductionof NPM (Haworth & Pilott, 2014).
Although comparisons across studies are difficult and controversial, a look at comparable means where
identical items and rating scales have been used corroborates the generally dismal picture of the current
results. Several of the scales were borrowed from Langford (2009) and used the same rating scales asthat study. Grand means in the Langford study of Australian workers in over 1000 organisations are
generally higher than the means reported here, apart from job satisfaction. Public servants generally
rate their employers, workplaces and work experiences worse than their private sector counterparts
and this may explain the differences (Wright & Davis, 2003). Regardless, it corroborates themediocrity in public service management that has been reported globally (de Waal, 2010).
The factor analysis identified that the organisational and management capabilities go together and thatthey are inter-related. It points to a single factor of organisational health, rather than organisations thatmight be, say, good at processes and managerial responsiveness but poor at cross unit co-operation for
instance.
Results for worker job conditions were mixed. Although workers have reasonable autonomy in theirjobs, a more detailed item level analysis showed that items concerning upward flow of information
scored lower than items concerning downward flow, indicating a lack of worker voice, even on mattersof benefit to the organisation. This is consistent with the prevailing command and control style in New
28

New Zealand Journal of Employment Relations, 42(1): 19-34

Zealand’s public sector criticized by Haworth and Pilott (2014). Rewards were another area of
weakness. Items concerning ‘knowledge’ covered training and development which, although rated as
sufficient in terms of amount of training, analysis revealed perceptions that the quality could be
improved. Workers also reported an above-neutral level of autonomy, including the ability to choose
the methods and pace of their work. Conversely, the ability of workers to choose their working timearrangements was given a below-neutral rating. This matches previous research indicating low levelsof work flexibility despite the ‘right’ to request it (Donnelly, Proctor-Thomson, & Plimmer, 2012).
The bullying measure was subjective, so may have under or over reported the true rate. However,negative workplace interactions are not infrequent. The rate reported in this study (32 per cent) roughly
tallies with other data sources such as the State Services Commission’s Integrity and Conduct Survey(2013) which reported that 25 per cent of State servants had personally experienced bullying or
harassment in the last 12 months, and 11 per cent experienced it in the last 6 months.
The overall impression of public service workers under NPM is of motivated workers getting on with
their jobs, despite limited recognition, voice and flexibility. It may be that the altruistic nature of many
public servants acts as a buffer against weak managers (Bakker, 2015). The results provide barely
moderate support for management capability, and provide support for Haworth and Pilott’s (2014)
argument that management skills are controlling but not necessarily high. Ratings for management oftrust and support, and managerial responsiveness are only just above the neutral point. The clarity oforganisational goals are rated higher, as are the quality of processes. Overall, these findings indicatethat managers are slightly better at the task and process aspects of their jobs than the softer behaviours
around trust and climate for performance.
These results indicate support for earlier criticisms that the public service is poorly equipped to deal
with emerging challenges, and is impeded by many challenges including an inability to collaborate
across units (Te Kawa & Guerin, 2012). These latter responses also point to weak skills at the executive
level, because it is at this level where the tone and organisational capability is developed (or not).
Results indicate a stronger focus on efficiency (alignment) rather than effectiveness (adaptability) andweak skills at integrating them (ambidexterity).

Conclusions
The picture that emerges here is one where public service workers are motivated and committed despite
the limitations of their managers and organisations. Criticisms of organisations being unable to address
more complex, emerging problems seem valid (Te Kawa & Guerin, 2012). This problem does notseem unique to New Zealand (Pollitt, 2007). Possibly some answers lie in the fit between HRM, NPM
and the nature of public sector work.
Despite the uptake of market models and private sector management techniques, public sector work
differs from private sector work in profound but often immeasurable ways (Colley et al., 2012), thatmakes HRM more difficult. Just as NPM type market-based systems have become both entrenched,and had new layers added, public sector HRM has had a similar journey. The ‘traditional career service
model’ of personnel management has had a variety of hybrid HR models layered over pre-existing
practices (ibid). These lead to inherent contradictions and tensions across a range of practices andaccountabilities (Truss, 2008). Examples of these contradictions and tensions includes the devolvingof HRM without adequate training, monitoring or auditing, and the fragmentation of HRM delivery
29

New Zealand Journal of Employment Relations, 42(1): 19-34

coupled with ‘fad following’ and institutional isomorphism rather than useful innovation. These canpossibly be discerned from the results which show high levels of organisational goal clarity (an NPM
condition) but weak rewards, and unsupportive and untrusted managers. The ‘right to manage’ has notalways been supported by the responsibility to manage.
Findings here support the case for the first principles approach sought by Haworth and Pilott (2014).
As well as carrying out legislative change, the state could be an “exemplar employer” (p. 75). It could
include less command and control, more upward worker voice, and higher trust relationships.
After over two decades of piecemeal reform, these problems are increasingly recognised. In fact,
legislation – in the form of the State Sector Amendment Act 2013 – makes CEOs accountable forlong-term organisational capacity, allows designated CEOs to become sector leaders and for budget
allocations (and accountabilities) to be made on a sector, rather than agency basis (English & Coleman,2014). Successfully implementing the legislation will require collaboration, leadership and efficient
processes. It will also require dealing with a mature workforce that might be somewhat jaded by earlier
reform attempts.
A limitation in this research is that it is confined to union members, and may not be reflective of thewider public service. The results, however, are broadly comparable with other studies (e.g. McCarthy,
2009; State Services Commission, 2012).
This survey identified that public servants are generally motivated and satisfied, despite having
mediocre managers and organisations. This paper hopefully provides a benchmark for tracking future
improvements in public sector worker experience and performance.

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Notes
For an overview of these issues see http://pikeriver.royalcommission.govt.nz/Volume-Two--Contents andhttp://www.minedu.govt.nz/theMinistry/NovopayProject/~/media/MinEdu/Files/TheMinistry/Novop
ayProject/MinisterialInquiry/MIN130501InquiryReport.pdf
1

2

The text of the question is: Workplace bullying refers to situations where a person is (a) repeatedly
and over a period of time exposed to negative acts or mistreatment from colleagues, superiors or
subordinates, and (b) has difficulty defending themselves against this mistreatment. With thisdefinition in mind, do you feel you have experienced bullying in your workplace within the last six
months?

34

New Zealand Journal of Employment Relations, 42(1): 35-51

Work-family conflict and Employee Loyalty: Exploring theModerating Effects of Positive Thinking Coping
JARROD HAAR*
Abstract
This paper extends the job-related outcomes predicted by work-family and family-work
conflict by exploring employee loyalty. Employee loyalty is defined as active behaviours,
whether through voice or actions, that express pride and support in the organisation.
Despite the importance of employee loyalty, it is a seldom explored outcome in the workfamily field. With a sample of 203 New Zealand Government department workers,
conflict of both types (work-family and family-work) was found to be negatively
associated with employee loyalty. Furthermore, positive thinking coping was explored asa moderator of these negative relationships. Positive thinking coping was found to havesignificant moderating effects, with respondents with low levels of positive thinking
having lower levels of employee loyalty than those with higher positive thinking whenboth types of conflict increased. The implications for future outcome related studies ofwork-family conflict are discussed.

Keywords
Work-family conflict, employee loyalty, positive thinking coping, moderating effects.

Introduction
Work-family conflict (WFC) is defined as “a form of interrole conflict in which the rolepressures from the work and family domains are mutually incompatible in some respect”(Greenhaus & Beutell, 1985: 77). Work-family conflict research has emerged out ofchanges in the workplace over the past half a century, including longer working hours,
more women in working, working mothers and working parents and the importance ofdual-career couples (Haar, Roche, & Taylor, 2012; Haar, 2006a, 2008). This is further
exacerbated with technology, where organisations can intrude on employees’ afterhours,for example through smartphones and emails. This has prompted France to adopt newlegislation that allows employees to ignore emails outside standard work hours (French
workers earn ‘right to disconnect’, 2017). Thus, the ability to sufficiently juggle work andfamily roles is difficult and ultimately leads to greater WFC (Haar, 2006a). Ultimately,
the pressures on employees to juggle these roles has led to Haar (2007) stating that“balancing work and family issues have become increasingly important for both
employees and employers, and are a universal worldwide phenomenon” (p. 69).
Employee loyalty – despite decades of downsizing – has still been found to be an
important factor in the performance of individuals and ultimately their firms. Yee, Yeung,*

Professor of Human Resource Management, Department of Management, AUT University, Auckland,
New Zealand35

New Zealand Journal of Employment Relations, 42(1): 35-51

and Cheng (2010) noted that many researchers focused on the links between employee
attributes, such as loyalty, and job performance of the employee (Hunter & Thatcher,2007; Meyer, Becker, & Vandenberghe, 2004). Thus, a loyal employee is likely to expend
additional effort and perform better than co-workers with less loyalty. Yee et al. (2010)
notes that the links between employee loyalty and firm performance are understudied andwhile some researchers have explored employee attitudes and firm performance linkages(e.g., Sun, Aryee, & Law, 2007), Yee et al. (2010) found empirical evidence that
employee loyalty was part of a path model to influencing firm performance. Thus,
employee loyalty builds service quality, which in turn influences customer attitudes andbehaviours, and ultimately firm performance (ibid). Thus, employee loyalty is an
important construct to be exploring.
The present paper explores the links between work-family conflict and employee loyalty
and makes a number of contributions. First, work-family and family-work conflict are
tested towards employee loyalty and found to be significant influences. Second, positive
coping strategies are tested and supported as a way for employees to buffer the
detrimental influence of conflict on employee loyalty. Overall, the present study provides
insights into not only how work and family roles can be detrimental to an important
outcome like employee loyalty, but how employees can cope with the role interference tominimise the detrimental effects.

Work-Family Conflict
The WFC literature has established the methodology of exploring conflict from both thework and the family roles. Earlier studies focused on a single-directional approach toconflict, where workplace issues interfering with the home was the sole focus. However,this earlier approach has been criticised as being a limitation (Frone, Russell, & Cooper,
1997) because it cannot be assumed that relationships from one domain (e.g. workplace)are similar for the other domain (e.g. family). In response, WFC studies have establishedwork-family conflict (WFC) and family-work conflict (FWC) as the acceptable norm
(Kossek & Ozeki, 1998). For the present study, WFC is defined as conflict from theworkplace interfering with the home, while FWC is conflict from the home interferingwith the workplace, and Haar et al. (2012) highlighted the importance of testing bothdimensions of conflict towards work outcomes.
A major focus of the WFC literature has been to explore what influence conflict from
employees two central roles (work and family) has on outcomes. While a number ofstudies have included and life satisfaction (for a review see Kossek & Ozeki, 1998), andpsychological distress (e.g. Frone, 2000), the dominant focus has been on job-related
outcomes. Of particular interest has been job satisfaction (Mesmer-Magnus &Viswesvaran, 2005; Adams, King, & King, 1996; Kossek & Ozeki, 1998) and turnover
intention (Mesmer-Magnus & Viswesvaran, 2005; Anderson, Coffey, & Byerly, 2002).
The focus on job-related outcomes has been important because understanding that family
issues interfering into the workplace can reduce job-related outcomes has undoubtedly
influenced the adoption of work-family practices into the workplace (Haar & Spell,2004). Further, understanding that employees with workplace issues interfering with their36

New Zealand Journal of Employment Relations, 42(1): 35-51

family lives may be more likely to leave an organisation, or be less satisfied and lessproductive, may also encourage organisations to address workloads and job design issues.
Consequently, the importance of WFC studies on job-related is well established.
However, while many job attitudes have been explored, employee loyalty appears to havebeen neglected as a potential outcome of work-family conflict (see Mesmer-Magnus &Viswesvaran, 2005; Eby, Casper, Lockwood, Bordeaux, & Brinley, 2005). This paper
considers whether WFC will have a negative influence on employee loyalty, and whether
how employees cope with general workplace issues helps reduce the negative influencesof WFC. This focus is important because while many organisations discourse theimportance of a loyal workforce, few studies have explored how this outcome may be
influenced by conflict.

Employee Loyalty
Rusbult, Farrell, Rogers, and Mainous (1988) defined employee loyalty as “passively but
optimistically waiting for conditions to improve-giving public and private support to theorganisation, waiting and hoping for improvement, or practicing good citizenship” (p.
601). Haar (2006b) defined employee loyalty “as giving public and private support forthe organization” (p. 1944). Thus, employee loyalty might be shown by publicallywearing an organisational-branded article of clothing, and privately by sticking up for theorganisation when someone criticises it. Similar to Niehoff, Moorman, Blakely, andFuller (2001), the present study takes an active and applied focus towards employee
loyalty, and defines employee loyalty as active behaviours, whether through voice or
actions, that express pride and support in the organisation.
It is important to note that loyalty and organisational commitment while similar are
distinct constructs. According to Jaros, Jermier, Koehler, and Sincich (1993), loyalty andorganisational commitment are both attitudes about an organisation and a set of
behaviours. These authors noted the faithfulness towards an organisation (employee
loyalty) does not have to be related to a deep emotional attachment to the organisation(organisational commitment). Consequently, an employee might exhibit employee
loyalty to their organisation by speaking positively about it; however, they may not becommitted to the organisations values.
Social exchange theory is about a relationship of mutually contingent, tangible andintangible exchanges (Dyne & Ang, 1998). Haar (2006b) states that: “Social exchange
theory suggests that employees who value benefits received from their organization, suchas pay, fringe benefits or working conditions, will reciprocate with more positive work
attitudes” (p. 1944).
Similarly, those who receive detrimental influences – such as greater WFC – are likely toresult in lower employee loyalty. Lambert (2000) described social exchange theory as
recognising conditions under which an employee may feel obligated to reciprocate to theirorganisation when they personally benefit from an action (e.g. pay rise, value practiceetc.). This employer-employee exchange is conditional in nature, because it has not been
established beforehand (Blau, 1964).

37

New Zealand Journal of Employment Relations, 42(1): 35-51

The related norm of reciprocity (Gouldner, 1960) suggests this ‘give and take’ may
produce benefits for both parties. Recently, studies have used social exchange theory andthe related norm of reciprocity to explain why work-family practices elicit improved
employee attitudes (Haar & Spell, 2004; Lambert, 2000). Similarly, social exchange
theory has been used to explain employee loyalty (Roehling, Roehling, & Moen, 2001).
Thus, employees who personally benefit from some action, resource, or reward, may
reciprocate with increased loyalty. In effect, the felt obligation is repaid by exhibiting
greater loyalty, such as frequent positive comments about the organisation to friends andfamilies. Remembering that employee loyalty can ultimately influence firm performancethrough a process of enhanced service and customer satisfaction (Yee et al., 2010).
Schalk and Freese (1997) noted that employee loyalty links with a number of behaviours,
including organisational citizenship, attendance and turnover. While social exchange
theory has been used to explain positive attitudes linked to work-family practices, thispaper suggests feelings of obligation and reciprocity may diminish as conflict from theoffice and home increase. While distinct from employee loyalty, organisational
commitment has been explored as an outcome of work-family conflict (Good, Sisler, &Gentry, 1988; Good, Page, & Young, 1996; Eby et al., 2005). Shaffer, Harrison, Gilley,and Luk (2001) noted that organisational commitment is related to social exchange
theory. Hence, there is some previous justification to exploring attitudes relating to social
exchange theory (employee loyalty) as work-family conflict outcomes.
It might be expected that employees with increased workplace issues interfering in thehome will be less likely to expound the virtues of the organisation. For example, an
employee working over the weekend on some urgent work report might be less positive
about the organisation and its workload to family and friends. Similarly, an employeewith increased family issues interfering with the workplace might have less time forcitizenship related behaviours, thus also reducing employee loyalty. The employee mightalso blame the organisation for failing to support their family issues, as such support is
noted as having a positive influence (Haar & Roche, 2008; 2010).
While employee loyalty is a related solely to feelings from the work domain, a metaanalysis by Kossek and Ozeki (1998) found that both WFC and FWC consistently were
negatively related to a work domain attitude (job satisfaction). As there is evidence thatconflict from both the home and office can negatively influence job-related attitudes; thepresent study explores employee loyalty as an outcome for both types of conflict. The
present study suggests that employees reporting greater interference from their work role
into their family (and vice-versa) will report lower employee loyalty. Thus, the first
hypotheses.
Hypothesis 1: WFC will be negative related to employee loyalty.
Hypothesis 2: FWC will be negative related to employee loyalty.

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New Zealand Journal of Employment Relations, 42(1): 35-51

Positive Thinking Coping
In addition to the direct effects of WFC on employee loyalty, how employees generally
cope with work situations is also explored as a potential moderating effect. It has beensuggested that few WFC studies have considered moderation effects (Fu & Shaffer,
2000). Positive thinking coping, which is defined as recasting work situations positively(Armstrong-Stassen, 1998), was chosen as a potential moderator because active coping
strategies, as opposed to inactive strategies, provide the best buffering effects (Jex, Bliese,
Buzzell, & Primeau, 2001). This is because active coping strategies may allow employees
to circumvent the stressor or amend its effects (Carver, Scheier, & Weintraub, 1989). For
example, an employee with a weekend work assignment (WFC) might recast the work as
an opportunity to show their boss ‘what they can do’, thus putting a positive spin on theevent, and perhaps telling disappointed family members that this is ‘a big opportunity’?
This is distinct from other coping strategies such as acting with passive resignation(Armstrong-Stassen, 1998).
In effect, the interference of work into the home becomes nullified because the situation
has become positive rather than negative. Similarly, when a family crisis interferes withwork (FWC), the employee may recast the situation positively (e.g. ‘I’m a winner and I
can handle this’) and thus buffer potential FWC effects. As such, it is expected that
positive thinking coping will weaken the negative relationships between conflict andemployee loyalty because an employee with higher positive thinking coping strategies
casts themselves as being able to manage any situation positively, and thus they will
minimise the detrimental influences of conflict. This leads to the last set of hypotheses.
Hypothesis 3: Positive thinking coping will weaken the negative relationship between
WFC and employee loyalty.
Hypothesis 4: Positive thinking coping will weaken the negative relationship between
FWC and employee loyalty.

MethodSample and Procedures
Data were collected from a New Zealand Government department in the financial services
sector. The 622 employees were spread over a wide geographical region. There were atotal of 203 participants (32.6 per cent response rate) between the ages of 18 and 65 years,
who responded to two matched surveys sent through the organisation’s Intranet. Twosurveys were administered, with a four-week time lag, to reduce the possibility ofcommon method variance. The first questionnaire contained demographics, criterion andmoderating variables, while survey two contained the predictor variables. On average, theparticipants were 40.5 years old, Caucasian (88 per cent), married (81 per cent), female(75 per cent), parents (74 per cent) and union members (67 per cent). Average tenure was
12.6 years, with 73 per cent blue collar and 27 percent white collar. On average,
respondents earned between $30,000-$40,000 and 40 per cent held some tertiary or
university qualification.
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New Zealand Journal of Employment Relations, 42(1): 35-51

Measures
WFC was measured using the 14-item Inventory of Work-Family Conflict (Greenhaus,
Callanan, & Godshalk, 2000), with statements divided equally (7 each) between work andfamily interference, with anchors 1=strongly disagree, 5=strongly agree. WFC items
included “After work, I come home too tired to do some of the things I’d like to do”, and“My job makes it difficult to be the kind of spouse, partner or parent I’d like to be”. FWC
items included “My family takes up time I would like to spend working”, and “At times,
my personal problems make me irritable at work”. The Cronbach’s alphas for thesemeasures were respectable at α= .73 (WFC) and α=.86 (FWC).
Employee Loyalty was measured using seven items by Rusbult et al. (1988), coded
1=strongly disagree, 7=strongly agree. Sample questions are “I will speak highly of theorganisation to friends” and “Employees shouldn’t criticise this organisation”.
Exploratory factor analysis (principal components, varimax rotation) was conducted, andall seven items loaded onto a single component with an eigenvalue of 2.90, accounting
for 41.4 per cent of the variance. This scale had a good reliability of α=.74.
Positive Thinking Coping was a 4-item scale by Armstrong-Stassen (1998), coded 1=did
not at all, 5= did this a great deal. Respondents were asked how they cope with general
workplace situations. A sample item is “Tried to think of myself as a winner-as someone
who always comes through”. A high score indicates a coping strategy based on being
more positive. This scale had a good reliability of α=.76.
A number of demographic variables that have been found to influence WFC were
controlled for (Fu & Shaffer, 2000; Erdwins, Buffardi, Casper, & O’Brien, 2001; Major,
Klein, & Ehrhart, 2002; Haar et al., 2012). These variables were gender (1=female,
0=male), marital status (1=married/de facto, 0=single), family size (total number ofchildren), and total hours worked (on average per week).
Analysis
To examine the direct effects of WFC and FWC on employee loyalty (Hypotheses 1 and2), and the potential moderating effects of positive thinking coping (Hypotheses 3 and 4),
separate hierarchical regression analysis were conducted. Control variables (gender,
marital status, family size, and total hours worked) were entered in Step 1. There wereseparate equations for WFC and FWC in Step 2. The potential moderator (positive
thinking coping) was entered in Step 3, and the interaction effects (predictor multipliedby moderator) were entered in Step 4. Following Aiken and West’s (1991)
recommendation, the centering procedure was used where interaction variables are zscored. Consistent with Cohen and Cohen (1983) recommendations, regression
coefficients for the control effects were obtained from Step 1 in each analysis, predictor
effects were obtained from Step 2, moderator effects were obtained from Step 3, andinteraction effects were obtained from Step 4.

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New Zealand Journal of Employment Relations, 42(1): 35-51

Results
Descriptive statistics for all variables are shown in Table 1.
Table 1. Correlations and Descriptive Statistics of the Study Variables

1. Total Hours Worked
2. WFC
3. FWC
4. Positive Thinking Coping
5. Employee Loyalty
N=203, *P< .05, **P< .01

Mean
38.3
2.5
2.1
3.1
4.4

SD
5.4
.80
.61
.70
.95

1
-.09
.02
.08
-.02

2

3

4

5

-.67**.04-.20**--.02-.20**-.05--

Employee loyalty was significantly correlated to both WFC and FWC (both r= -.20, p<.01). This supports examining employee loyalty as an outcome of work-family conflict.
Further, WFC was significantly correlated with FWC (r= .67, p< .01). While thiscorrelation is high, it is below the threshold of concept redundancy (Morrow, 1983).
Results of the regressions for Hypotheses 1 to 4 are shown in Tables 2 and 3 below.

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New Zealand Journal of Employment Relations, 42(1): 35-51

Table 2. Hierarchical Regression Analysis for WFC Predicting Employee Loyalty Moderated by Positive Thinking Coping

Variables
Controls
GenderMarital Status
Family Size
Total Hours Worked

Employee Loyalty
Step 1

Step 2

Step 3

Step 4

.29**
-.07
.20*
.07

.27**
-.11
.20*
.09

.28**
-.12
.21*
.09

.30***
-.12
.21**
.06

-.24**-.25**-.26***.08.04

Predictor
Work-Family Conflict (WFC)
Moderator
Positive Thinking Coping
Interaction Effect
WFC x Positive Thinking Coping
R2 change.12**2
Total R
.12
2
Adjusted R.10
F Statistic
4.71***p< .05, **p< .01, ***p< .001 Standardised regression coefficients.

.24**
.06**
.18
.15
5.83***

.01
.18
.15
5.05***

.05**
.24
.20
5.94***

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New Zealand Journal of Employment Relations, 42(1): 35-51

Table 3. Hierarchical Regression Analysis for FWC Predicting Employee Loyalty Moderated by Positive Thinking Coping

Variables
Controls
GenderMarital Status
Family Size
Total Hours Worked

Employee Loyalty
Step 1

Step 2

Step 3

Step 4

.29**
-.07
.20*
.07

.25**
-.09
.20*
.06

.25**
-.09
.21*
.06

.27**
-.08
.23**
.04

-.27***-.27***-.23**.06.08

Predictor
Family-Work Conflict (FWC)
Moderator
Positive Thinking Coping
Interaction Effect
FWC x Positive Thinking Coping
R2 change.12**2
Total R
.12
2
Adjusted R.10
F Statistic
4.71***p< .05, **p< .01, ***p< .001 Standardised regression coefficients.

.20*
.07**
.19
.16
6.34***

.00
.19
.16
5.38***

.04*
.23
.19
5.74***

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New Zealand Journal of Employment Relations, 42(1): 35-51

WFC was significantly and negatively related to employee loyalty (ß= -.24, p< .01),
which supports Hypothesis 1. Likewise, FWC was also significantly and negatively
related to employee loyalty (ß= -.27, p< .001), supporting Hypothesis 2. From Step 2,
WFC accounts for 6 per cent of the variance of employee loyalty (p< .01), while FWC
accounts for 7 per cent of the variance (p< .01). Positive thinking coping had a significant
interaction effect on employee loyalty and WFC (ß= .24, p< .01), as well as FWC (ß=.20, p< .05). These findings support Hypothesis 3 and 4. Finally, amongst the control
variables, gender (ß= .29, p< .01) and family size (ß= .20, p< .05) are significantly related
to employee loyalty, indicating female respondents and those with larger families are
more loyal towards their organisation.
To facilitate interpretation of the interaction effects for WFC and FWC, plots of theinteractions are presented below. Plotting the interaction terms (Figure 1) illustrates those
respondents with low WFC have similar levels of employee loyalty, although respondents
with low positive thinking coping have slightly higher employee loyalty than those withhigh positive thinking coping. However, as WFC increases, respondents with low levelsof positive thinking coping experience a significantly reduction in employee loyalty while
respondents with high levels of positive thinking coping report a flat line (no decrease) in
employee loyalty, supporting the hypothesis. Plotting the interaction terms (Figure 2)
illustrates that similar to WFC, with respondents with low FWC having similar levels of
employee loyalty irrespective of whether their reported use of positive thinking coping ishigh or low. However, as WFC increases, those with low levels of positive thinking
coping experience a significant drop in employee loyalty, while those with high levels of
positive thinking coping experience stable levels of employee loyalty, supporting the
hypothesis.
Figure 1. Interaction Effects of Positive Thinking Coping towards WFC and
Employee Loyalty.

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New Zealand Journal of Employment Relations, 42(1): 35-51

Figure 2. Interaction Effects of Positive Thinking Coping towards FWC and
Employee Loyalty.

Discussion
This paper sought to expand the job-related outcomes predicted by WFC. This wasimportant because attitudes that explore employee loyalty or commitment to theirorganisation have not been well explored in the WFC literature. Furthermore, empiricalevidence suggests that loyalty is not only related to job performance of employees but
also their organisation (Yee et al., 2010). Overall, the findings support the notion thatboth directions of conflict (work-family and family-work) can be negatively associatedwith employee loyalty. Consequently, employee active behaviours, whether throughvoice or actions, that express pride and support in the organisation, are detrimentally
influenced by conflict from the office and home.
Consequently, the extent of job-related outcomes predicted by WFC can be expanded toinclude employee loyalty. In the present study, the findings also indicate that WFC and
FWC are relatively even predictors in strength, with similar variances accounted for byeach (WFC=6 per cent, FWC=7 per cent). This is important because recent meta-analyses(Shockley & Singla, 2011) suggest work-family predictors might be best at predicting
outcomes associated with the same source, thus WFC to work outcomes. However, thereis evidence that in some unusual cases that FWC can be an important predictor of work

45

New Zealand Journal of Employment Relations, 42(1): 35-51

outcomes (e.g., Haar et al., 2012) so the influence on employee loyalty from both WFC
and FWC is not unique.
What influence employee loyalty has on other job-related outcomes, including job
satisfaction, turnover and performance is currently poorly understood. While employee
loyalty has been linked with organisational citizenship behaviours, attendance andturnover (Schalk & Freese, 1997), empirical studies are somewhat limited. Since WFC
influences employee loyalty (at least in the present organisational setting), more studies
that explore the outcomes of employee loyalty are encouraged. This would allow a greater
understanding of the role employee loyalty might play on other attitudes and behaviours.
In this manner, a recent meta-analysis of perceived organisational support has highlighted
its role as a major predictor of a number of job-related attitudes and behaviours (Rhoades& Eisenberger, 2002). More studies of employee loyalty are required to allow suchanalyses, and further studies with respect to WFC would improve the generalisability ofthese findings. For example, Haar (2006b) found perceived organisational support wassignificantly correlated to employee loyalty. Consequently, if employee loyalty is foundto be consistently a major predictor of job-related outcomes, then understanding theinfluence on WFC on this attitude becomes more important. Furthermore, it might allow
for more sophisticated models to be tested such as work-family conflict predicting
employee loyalty which, in turn, predicts turnover intentions or job performance.
The present study also supports the concept of positive thinking coping acting as a bufferof the negative influences of WFC on employee loyalty. Those using positive thinking
coping for general workplace situations weakened the negative influences of WFC and
FWC on employee loyalty at high levels of conflict. Therefore, employees who recast
challenging and/or detrimental situations in a positive way are less likely to decrease theirexpressed pride and support in the organisation when conflict from either major domain(work and family) intrudes into the other. Of particular interest was the graphedinteraction effect when conflict levels (WFC and FWC) increased. While those with low
positive thinking suffer decreased employee loyalty, those who recast situations morepositively maintained stable levels of employee loyalty for both WFC and FWC.
Perhaps these respondents are better able to manage their role conflict by dealing with itin an active and positive manner. For example, someone who manages situations bythinking of it as an opportunity to show what they can do may see that dealing
successfully with family issues in the workplace will allow them to show how they are agood working parent. Consequently, their active behaviours in expressing pride andsupport in the organisation remains unchanged because they see themselves as a winner,
who always comes through. This effect was support for both WFC and FWC providing
an indication of the usefulness of this type of coping strategy for employees to utilise as
well as work-family researchers.

Limitations
Like most studies, there are a few limitations that offer caution towards the findings. Of
major significance is the limitation of WFC studies exploring employee loyalty as an
outcome. In spite of this, employee loyalty has been noted as being related but different

46New Zealand Journal of Employment Relations, 42(1): 35-51

from organisational commitment, which has been found to be significantly predicted by
WFC. However, this finding encourages further studies to explore employee loyalty as
an outcome of WFC. In addition, the use of a single government department limits thegeneralisability. Further studies, particularly in the private sector, are needed. As such,these findings should be viewed with caution until more evidence indicates
generalisability.
A typical limitation of WFC studies is the use of self-report data. This limitation issomewhat tempered by collecting data at two time periods, with a four-week gap between
collection of predictor and criterion variables. Consequently, the links found between
WFC and employee loyalty are not likely to be influenced by common method variance,
where answers given to one set of questions might influence other answers. This improves
the overall strength of the findings in the present study. Finally, a comment must also bemade regarding the high correlation between the work-family conflict measures (WFCFWC, r= .67, p< .01). While the bi-directional separation of conflict has been established,these measures are typically significantly correlated but not to the extent found here.
However, another study using this same measure (Haar & Spell, 2001) also found thesevariables highly correlated (r= .70, p< .01), and suggests the measure needs further
refinement. That said, concept redundancy – where two constructs might actually be one– does not occur until r> .75 (Morrow, 1983), suggesting they are distinct constructs but
perhaps needing further refinement to remove any overlap.

Conclusion
The present study supports the bi-directional examination of WFC towards employee
loyalty, and expands the number of job-related attitudes that are detrimentally related to
WFC. Furthermore, the findings offer new direction for the moderating effects of positive
coping strategies. Overall, the present study finds that conflict occurring in one domain(office/home) and interfering with the other domain (home/office) is negatively
associated with employee loyalty but that employees who use positive coping strategies
more can buffer this negative influence. The present study should signal to researchersthat employee loyalty is a worthy outcome for WFC studies, while employers should
understand how employees deal with conflict from both the office and home may leadthem to express less pride and support in their organisation. Researchers might also see
the value in exploring positive coping strategies towards the detrimental influence ofWFC. Overall, the present study highlights another outcome for WFC studies, and offers
new directions for research.

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New Zealand Journal of Employment Relations, 42(1): 52-71

Effectiveness of Trade Union Workplace Organisation:
A Case Study of the New Zealand Post Primary Teachers’
Association
RAYMOND MARKEY* and GAY SIMPKIN**
Abstract
Union effectiveness at the workplace level has been neglected in the literature. This study
develops measures for evaluating union effectiveness at the workplace, or branch level in
New Zealand state secondary schools. These measures take account of a hybrid employment
relations structure, whereby a national industry level collective agreement in secondary
public schools determines pay and conditions for the sector, but substantial flexibility
operates at the school (branch) level in implementation of key clauses.
The study evaluated union effectiveness at the workplace level in eight schools. It gathered
the perceptions of the three main employment relations actors at school level: branch chairs(union delegates) and principals (workplace management) through interviews, and branchmembers through survey. The results indicated the union’s overall effectiveness at workplacelevel in all schools. However, there were variations in the degree of effectiveness between
schools, and across different measures. Most importantly, the study confirms the importanceof developing measures for union effectiveness that suit the specific context for individual
unions.
Keywords
Union effectiveness, trade union organisation, workplace organisation, teachers’ unionism,
New Zealand employment relations

Introduction
Trade unions attract a significant degree of academic attention in contemporary industrial
relations literature. Much of the attention given to trade unions relates to their declining
membership density in most countries, their consequent decline in influence, and union
strategies to address these problems (e.g. Frege & Kelly, 2004). Only a small part ofindustrial relations literature directly relates to their effectiveness, although this is implicit instrategic debates concerning declining membership. Virtually none of the literature relates tounion effectiveness at a workplace level, except in terms of maintaining delegate structures.
*

Raymond Markey, Honorary Professor of Employment Relations; Former Director, Centre for Workforce
Futures, Faculty of Business and Economics, Macquarie University, NSW Australia**
Dr Gay Simpkin is a former Research Associate, NZ Work Research Institute.
NB: Dr Simpkin passed away in early 2016, Prof. Ray Markey’s eulogy for her was published in the NZJER
41(1). She had been an organiser for the PPTA prior to becoming a Research Associate at the Institute in 2007
and wrote a PhD entitled Moments of Rupture. Changing the State Project for Teachers: a Regulation
Approach Study in Education Industrial Relations (Victoria University of Wellington, 2002).

52

New Zealand Journal of Employment Relations, 42(1): 52-71

This gap in the literature is surprising because union effectiveness, especially at a workplacelevel, is intimately related to membership density. Union effectiveness is, to a large extent,
dependent upon membership density. But at the same time, union effectiveness is also likely
to impact upon unions’ organising ability. Effectiveness at the workplace level in particular
might be expected to impact on union organising ability as well as being dependent on
membership density.
Our article contributes to filling this gap with a case study of an important New Zealandprofessional union, the Post Primary Teachers’ Association (PPTA). The central researchquestion that this study seeks to answer is: how effective is the PPTA at the branch level ofthe school, particularly in relation to regulation of working conditions?
We apply measures suited for evaluating effectiveness at the workplace level for the PPTA.
The union is party to a national industry level collective agreement in secondary publicschools that determines pay and conditions for the sector. However, substantial flexibility inimplementation of some of the industry agreement’s key clauses occurs at the school(workplace) level, mediated by interaction between PPTA branches and workplace
management, or school principals. The measures for effectiveness adopted to take account of
this employment relations structure were:






Workplace membership density,
Union democracy and participation at workplace level,
Branch members’ engagement with the union more broadly,
Regulation of working conditions, andRelationship between workplace representatives and management (principals).

An explanation for the measures chosen in this study follows from a review of the existing
literature on union effectiveness. The second section describes the union and its industrial
relations setting, particularly explaining why the workplace focus is important in the sector.
Subsequently, the methodology is outlined, the results are presented and discussed, and thearticle concludes with more general implications.

Literature review
The literature on union effectiveness is limited and lacks agreed measures of effectiveness.
The literature that exists is based on the perceptions of union leaders, officials or members,
but not all of these in any one study. Broadly, this literature has adopted three main measuresby which to measure effectiveness, although there are numerous subsets to these categories:

Ability to organise new members,
Outcomes of collective bargaining, andEffect on society as a whole (Clark, 2000; Clawson & Clawson, 1999; Fiorito, Jarley,& Delaney, 1993; 1995; Fitzgerald & O’Brien, 2005; Rose & Chaison, 1996).

In applying these general measures, the focus of most of this literature is at a national sectorallevel, although the outcomes of collective bargaining may be at an enterprise level dependingon the nature of the industrial relations system. Much of this literature also focusses
relatively narrowly on the effectiveness of the organising model in arresting union decline in53New Zealand Journal of Employment Relations, 42(1): 52-71
the context of neo-liberal policy settings (for a review of the organising literature see Heery,2015). Union density is a key variable in this literature, as both consequence and determinantof effectiveness.
Some other examples of national level approaches to union effectiveness are more broadly
based. Burchielli (2004) developed a typology of union effectiveness based on interviews
with Australian union officials at the centralised state level. The typology has three
dimensions:

Representation – measured by responsiveness to members, recruitment, achievementof key union goals;
Administration – measured by structure and strategy, innovative practices, goalclarity, leadership, staff accountability;
Ideology – social values, cohesiveness, active members, union commitment, politicial
commitment.

However, the typology is complex, with many of these categories themselves requiringdefinition and measurement by a range of variables. The wide range of variables are also noteasily transferred to the level of the workplace in their entirety.
Boxall and Haynes (1997) take a more focused approach, arguing that effectiveness shouldbe evaluated by the degree to which unions meet their members’ expectations regarding
better pay and conditions, influence over relevant workplace decisions, and protection against
arbitrary management action. Success in achieving these objectives depends on the strategic
choices that unions make regarding worker and employer relations within the constraints
specific to industry sectors and national industrial relations systems. This approach is basedon national level research, but can be applied more readily than others to the workplace level.
Specific workplace level studies of union effectiveness are particularly rare and share thepreoccupation of national level studies with falling membership density and the role of theorganising model in addressing this. For example, Peetz and Pocock (2009) surveyed uniondelegates’ perceptions of union influence and power in relation to union membership. Someof their findings could be related more broadly to union effectiveness: they found a strong
association between perceptions of union democracy and union power; and support fordelegates from the union office and organisers was associated with higher levels of union
power at the workplace level. However, this study was not specifically focused on
effectiveness, nor on what unions actually did at the workplace level.
Two important US studies of teachers’ unions focus at the lower level of the union local. In
the US context, teachers’ union locals comprise union members from a regional grouping ofschools. Typically, these union locals undertake collective bargaining. Maitland andKerchner (1986) based their study on union leaders and 450 teachers in three California
school districts. Their results indicated separate standards between union leaders and teacher
members for judging union effectiveness. For union leaders, legitimacy derived fromwinning concessions from management as well as developing a cooperative relationship withmanagement. Teachers, however, prioritised acceptance of the union as their representativeby the school board, which, in the US context, plays a key role in management of the school.
Hammer and Wazeter (1993) employed organisational goals to develop a model of union
effectiveness based on five dimensions in 511 Pennsylvanian teachers’ union locals:54

New Zealand Journal of Employment Relations, 42(1): 52-71






Member participation,
Union preparation for negotiations,
Union involvement in political and civic activities,
A union mentality, andUnion leadership.

Their survey of union members and leaders found that all of these dimensions except
involvement in political and civic activities contributed significantly to perceptions of union
effectiveness. Hammer and Wazeter (1993) also emphasised that models for evaluation ofunion effectiveness should be tailored to specific unions to take account of organisationspecific goals and environments. This resonates with the approach of Boxall and Haynes(1997).
The measures developed for evaluating union effectiveness in this study incorporate a range
of indicators from the wider literature where relevant for a workplace, rather than national
level focus, but also reflect Hammer and Wazeter’s (1993) emphasis on union specificmeasures. Hence, we do not focus on political activity, which is included in some models ofunion effectiveness, because this is undertaken by the union at a national level in a small
democracy with a unitary system of government.
Our first measure, membership density, is a determinant and an outcome of effectiveness inmost models in the literature regarding effectiveness. The PPTA claims over 90 per cent of
New Zealand secondary teachers across all schools as members. This indicates a high level of
effectiveness at a national level, especially in comparison with other unions. However, somevariation in membership density occurs between different schools, which may impact on
effectiveness at workplace level.
Our second measure is membership participation. This relates to the democratic engagementof members in the organisation. Participation and democracy were major themes in most of
the literature already cited, particularly Burchielli (2004), Boxall and Haynes (1997) andHammer and Wazeter (1993).
The third measure that we have adopted is members’ broader union engagement. It isstrongly related to democracy and participation more generally in the union. It also
incorporates major themes in the literature on union effectiveness referring to participationand commitment (Burchielli, 2004) or ‘union mentality’ (Hammer & Wazeter, 1993).
Since focus on the workplace and collective agreements are negotiated at a national industry
level in public school education in New Zealand, we have focused on regulation of working
conditions as our fourth measure, rather than bargaining itself. This particularly aligns withthe approach of Boxall and Haynes (1997). Our fifth measure, relationship with management,
relates directly to a key indicator identified by Maitland and Kerchner (1986), but also
incorporates leadership attributes and the ability to achieve union goals identified by others(Hammer & Wazeter, 1993; Burchielli, 2004).
In evaluating the relationship between workplace representatives and management, we haveincluded an additional measure of the perception from management that does not appear
elsewhere in the literature. We argue that management perceptions of effectiveness,particularly in the spheres of workplace union leadership and achievement of goals, is a
critical measure. The absence of management perceptions of an interactive relationship with55

New Zealand Journal of Employment Relations, 42(1): 52-71
union representatives has weakened existing literature that focuses entirely on union leadersand members.

Context
From the late 1980s, the New Zealand employment relations system was decentralised to
become based on collective bargaining at enterprise level and individual contracts. Union
membership and collective bargaining coverage declined substantially, particularly in theprivate sector: union membership now stands at about 18 to 19 per cent of the workforce, andcollective bargaining coverage at about 17 per cent (Statistics NZ, 2016; NZ Companies
Office, 2016; Rasmussen, 2010).
In the state school sector, however, a hybrid system of employment relations emerged. The
Ministry of Education is responsible for negotiating the pay and conditions of employees
centrally with the union party. Other employer powers over individual teachers, relating toappointments, dismissals, performance, and enforcement of the provisions of the Collective
Agreements, became the responsibility of schools’ Board of Trustees, with the principal
defined as the Chief Executive Officer. Matters affecting the environment in which teachers
work, such as curriculum, qualifications and assessment, remained with the Ministry of
Education.
The PPTA covering secondary school teachers is one of two teacher unions. The union
traditionally had a strong centre, but weaker branches at schools as this level of employment
relations became more important in the new system. The goal from 1989 was to build a union
where the centre was strong enough to negotiate centrally with the government’s agent, andwhere branches were strong enough to interact with the local employer successfully in termsof enforcing the Secondary Teachers’ Collective Agreement (STCA) and in representing theinterests of employees at the school level.
This article seeks to evaluate the effectiveness of the PPTA at the branch, or school, level
because of the rapid enhancement of significance in this level of employment relations in thesystem post 1988. The union’s branch level interacts with school boards of trustees as
employers, via the principal, in implementation of the agreement. The branches, therefore,
are much more than mere administrative units or recruitment agents for the union, although
they do not negotiate formal agreements themselves. In recent years, there has been anemphasis on negotiating provisions into the STCA that deal with individual teacher
workload, and implementation and interpretation of the STCA require substantial degrees ofnegotiation. Consequently, there is increasing pressure on the branch to enforce the schoolbased provisions of the STCA. At the same time, there has been increasing awareness in the
PPTA that branches may differ in their ability to carry out the union function in schools.

Research Design
We utilised a multi-method research strategy capturing and analysing perceptions ofworkplace union representatives, union members and workplace management (principals).
Branch chairs of the union and school principals were interviewed, and teachers who were56

New Zealand Journal of Employment Relations, 42(1): 52-71
members of the union were surveyed. This range of perceptions enabled triangulation of
results to enhance validity of our observations.
Data was gathered from eight comprehensive secondary schools chosen from 72 in thegreater metropolitan Auckland area. An acknowledged limitation of the research is that it
may not be possible to generalise from this region to New Zealand as a whole, where many
schools are based in rural or small town environments. The schools were selected on arandom basis within two specifications: they were required to reflect a range on the basis ofsize and union membership densities, because it was considered that both these variables
could impact on union branch effectiveness. In terms of size, two schools were large (> 2,000
pupils); four were medium-sized (1-2,000 pupils), and two were small (< 900 pupils).
In each of the schools chosen, the principal and branch chair of the union were approached
for a semi-structured interview and cooperation with the staff survey. Both parties agreed toparticipate in seven schools, but the principal was unavailable due to ill-health in another. In
total, seven principals or their deputies (2) and eight branch chairs were interviewed. Of the
branch chairs, seven were male, and five had 20 or more years as union members. All
principals or deputies were male.
The survey of teachers at the schools was designed to elicit perceptions of the effectivenessof the branch and quality of working conditions in the school. The questionnaire was postedon the SurveyMonkey internet website and sent to the PPTA branch chairs at all schools inthe sample. The branch chairs then forwarded an email invitation from the researcher tobranch members.
A total of 96 teachers responded to the survey in eight schools, out of a potential 553 union
members, representing an overall response rate of 17 per cent. However, this varied between
8 and 40 per cent, with most schools in the lower ranges. It is not clear why there was suchvariation, as there was no clear pattern in the schools between the response rate, union
membership and how positive the responses were about the branch. It is generally
acknowledged that web-based surveys produce lower range response rates than other formats(Fan & Yan, 2010), but there is no clear-cut evidence that low response rates necessarily
detract from validity of results; some research has suggested precisely the opposite (Visser,
Krosnick, Marquette, & Curtin, 1996) and some that it makes little difference (Curtin,
Presser, & Singer, 2000; Keeter, Kennedy, Dimock, Best, & Craighill, 2006; Choung, Locke,
Schleck, & Ziegenfuss, 2013). It may be that this response introduced a bias in the results, for
it is possible that the most committed unionists and the most electronically literate were more
likely to respond, and we qualify our findings accordingly. On the other hand, engaged union
members are also well-placed to evaluate branch effectiveness.
Low survey response rates may impact on demographic representativeness, but the
respondents to our survey were broadly representative of state teachers as a whole, as shown
below in Table 1. There were slightly more females, more older teachers, and somewhat
more part-time and fixed-term employees in the national workforce than amongst survey
respondents. However, the statistics for the national teaching workforce include primaryteachers, who are more likely to be female, and Auckland region teachers are more likely tobe younger than their rural counterparts. It may be also that part-time and fixed-term teachers
were less likely to participate in the survey. Nevertheless, as with the national workforce, thesurvey respondents were predominantly female, relatively mature in age and permanent fulltime employees.
57New Zealand Journal of Employment Relations, 42(1): 52-71

Table 1. Demographic profile of survey respondents and total national state school
teaching workforce (primary and secondary schools) 2016
Characteristic
Respondents %Gender:Male
32
Female68
Age(years):
<30
19
30-49
55
50+
26
Job status:
Permanent 94
Fixed term
6
Full-time96
Part-time4* Source: NZ Ministry of Education, 2016.

National workforce %*
28
72
11
48
41
81
19
81
19

Results
Interviews
Membership density
The PPTA claims a union membership density of over 90 per cent in state secondary schools.
We asked both branch chairs and principals what the approximate membership density was intheir schools, and their responses were quite precise. The average membership density of 88
per cent in the schools studied is close to that claimed across the sector by the PPTA, butthere was considerable variation between the schools. According to branch chairs andprincipals, three schools had 100 per cent membership of the unions, and four had 80-90 per
cent membership. Only two schools could be considered as having low union membership
density by industry standards, one at 75 per cent, and another at 60 per cent.
Relationship between principal and branch
All branch chairs interviewed had a sophisticated understanding of workplace employment
relations, and that negotiation involving ‘give and take’ between themselves and the principal
was essential to the running of the school. Their guiding questions tended to be ‘What is fair
to both staff and school?’, ‘What will work?’, and ‘What will people accept?’. There was also
an emphasis on finding agreed local solutions to issues in legislation and national
agreements. The branch chairs considered that the best principals took a similar approach.
The branch chairpersons interviewed emphasised the importance of building a harmonious,
open and honest relationship with the principal, involving genuine negotiations over local
issues and ‘give and take’. Principals had a similar view overall, considering that the branchchair needed to be practical, able to concentrate on the issues and someone whom they could
trust and be open with.
58

New Zealand Journal of Employment Relations, 42(1): 52-71
Relationships were presumably assisted because the principals had all been teachers
themselves. In five schools, they were PPTA members, as were the majority of their senior
management teams. In three schools, they were former PPTA activists.
The relationship between principal and branch was identified as working well by both parties
in six of eight schools. Where interviewees indicated good relationships based on mutual
trust and respect, they also tended to indicate positive working conditions.
Most principals appreciated that the PPTA played an important role in the school’s operation.
At one school with 100 per cent membership density, the principal relied on the branch chairto act as the conduit for feedback from the staff. The chair was typical of others in the sample
in having a well-developed sense of site-based unionism and of his role. Both parties recalled
an earlier period when workplace relations were more negative, and were anxious to avoid arecurrence through developing skills to achieve their goals without antagonism. Theirrelationship was the most positive of all indicated in interviews.
At another school, the deputy principal emphasised the role of the branch as a forum forbuilding positive workplace culture through providing a process for agreement even whensome had been dissatisfied with some issues. One principal stated:
I think it’s important that the two share a broad understanding of what’s happening inthe school, the vision, what people are trying to achieve. … The branch chairperson isa key person in communicating that to the wider staff and hopefully it removes thepotential for friction.
The advantage of having a good relationship with your branch chair is that I don’t mind
having an open book. We can sit down and say, well, this is what’s happened to thefunding, this is what we’re having to grapple with and try to come up with solutions
together.
However, this perspective contrasted with those in two schools where relationships between
principal and branch chairperson were less productive than the others; these are identified
here as S1 and S2. In S1, the principal adopted a paternalist attitude. He considered that there
was little role for the PPTA because he observed the Collective Agreement and looked after
teachers, but he acknowledged that he needed to listen to the union. The branch chairperson,
however, believed that the principal wielded managerial power to exclude the union from therunning of the school. At the second school, with a less positive principal/branch chairrelationship (S2), the branch chairperson considered that she needed to be assertive to beheard by the principal, but that he respected her right as spokesperson for members. In these
two schools, branch chairpersons feared reprisals from the principals if they were considered
too assertive. In S2, the branch chairperson considered that her predecessor’s careeradvancement had suffered.

Key components of an effective branch. A broad consensus existed amongst branchchairpersons regarding this issue. An effective branch needed:
1. A branch leader with school knowledge and ability to discuss issues with theprincipal to communicate staff concerns; and2. School management that adhered to the Collective Agreement and was open about
management processes.
59New Zealand Journal of Employment Relations, 42(1): 52-71

Effectiveness was not necessarily seen as literal application of the Collective Agreement at
all times, thus confirming the ‘give and take’ approach.
Workload was generally seen as the greatest constraint for branch effectiveness. Branchchairs struggled with time management since they also had normal teaching duties. Individual
approaches from members for advice could take up considerable amounts of time, especiallyin larger schools. Members also often struggled to find time to attend meetings, and a branchchairperson referred to low membership energy levels as a constraint. This resonated with thecomments of one former activist principal that the union membership lacked fire comparedwith earlier days, partly because members were busy, but also because of more consultative
management styles. One deputy principal believed that PPTA senior leadership was more
important than the branch in maintaining awareness of major educational issues, because thebranch tended to be focused on local matters.
The two schools with a less positive relationship between principal and branch chairperson
were also not considered effective by their chairpersons. S1 had the lowest union
membership of 60 per cent, which the chairperson interpreted as a weakness. He
acknowledged that the Collective Agreement was adhered to, and even exceeded in someareas, such as terms of leave, but felt constrained to avoid splits between members and nonmembers in the staff room over operational issues. He also described an ideological climate
where the union was depicted as left wing and associated with the Labour Party, whereas heconsidered management to be very right wing. At the second school considered ineffective(S2), the main reason related to autocratic management style. The principal practised policies
of favouritism and divide and rule amongst staff, according to the branch chair.
General observation of the Collective Agreement is not contested in any of the schools
studied, but some clauses require interpretation or ‘best endeavours’ resulting in nonadherence, misunderstanding or lack of priority. Examples are timetabling policy, class size
and middle management allowances. Branch chairs often needed to be pragmatic in terms ofstrict enforcement of all clauses so as to protect relationships with principals when it was
clear that central funding did not provide adequate resources to meet obligations under theCollective Agreement. Principals emphasised these constraints, although some principals andbranch chairs acknowledged that higher levels of management – the Ministry and the schoolboard – sometimes abdicated responsibility by claiming the other was responsible forshortfalls in resources.
Links with the wider union occurred on a number of levels. Information is received
electronically and branches forward this on to an email list of branch members. Hard copies
were also distributed via staff pigeonholes. The quality of material from national office wasappreciated. The impression was gained, however, that unless there were local issues needing
to be dealt with by the branch, the branch chair was the most knowledgeable of any branchmember and a high level of overall knowledge of the national union or even interest in it was
not expected.
The most immediate backup to the chair for site-based issues and enforcement of theCollective Agreement are the field officers. They deal with union representation forcompetence and disciplinary cases. One branch chairperson complained that members often
went directly to field officers because he was seen as a ‘stooge’ owing to his working
relationship with the principal.
60

New Zealand Journal of Employment Relations, 42(1): 52-71
Regional meetings were used for information only. Three of the schools interviewed did notsend representatives to these, because of lack of time and involvement in other community
activities, and the distance required to travel at night. PPTA executive members did not havea significant role in the branch. National union events were spoken of highly, particularly interms of building solidarity and networking, even if they were not accessed often. Chairs
were aware of national office, but as a background, not as directly affecting the branch on an
everyday basis. Interestingly, principals, more than chairs, saw the union still primarily in its
role of negotiating pay and conditions and acting politically in national lobbying overresources in schools. They saw the branch more pragmatically and less politically than thenational body.
SurveyThe survey sought responses relating to four of the five measures of branch effectiveness.
Space prevents a school by school analysis, but significant departures from the general
response are noted below.
Participation
The survey enquired of members’ level of participation in branch activities. Frequency of
branch meetings varied, ranging from fortnightly, to once per term, to seldom. There was also
great variety in the issues discussed at branch meetings, ranging from the national level
regarding education policy and negotiations for the Collective Agreement, to local issues,
including implementation of the Collective Agreement regarding workload, health and safety
and general school governance. Table 2 shows a high degree of attendance at branchmeetings, with 84 per cent claiming they attended most of the time or always. Three quartersof respondents felt that they could speak freely and were listened to at branch meetings, as
shown in Table 3, although almost a quarter felt it depended on the issue. Overall, theseresults indicate a substantial degree of activity at branch level, and fairly high levels ofmembers’ participation and engagement.
Table 2. Branch meetings attendance
Response
Per cent
Always49
Most of the time
35
Half of the time4
Occasionally
12
Never
0
Total
100
Question: Do you attend PPTA meetings at school?

Table 3. Participation in branch meetings
Question

Do you feel you can speak freely at meetings?

Response per cent
Yes
Sometimes/
usuallydepends on issue
74
21

No

5
61

New Zealand Journal of Employment Relations, 42(1): 52-71
Do you feel you are listened to when you do 75
speak in meetings?

23

2

A democratic mentality is confirmed with the results in Table 4 relating to who respondents
considered constituted the PPTA branch at their school. The overwhelming majority
considered that it was the branch members and/or attendees at branch meetings, although asignificant number also included branch officers.
Table 4. Whom do you think of as ‘the PPTA branch’ in your school?
OptionBranch chair
Branch officers
Attendees at branch meetings
All branch members
Multiple responses allowed.

Per cent
19
13
29
69

Table 5. Appropriate level of decision-making authority for branch chair in negotiating
issues with principal
Response
Limited to solutions branch has already agreed
Able to discuss other solutions but needs branch endorsement before
agreeing
Able to make agreements on behalf of branch that s/he believes are inbest interests of branch members
Total

Per cent
11
73
16
100

Table 5 shows a strong commitment amongst members for branch participation anddemocracy in members’ direction of the branch leadership; 73 per cent believed that the chairneeds members’ endorsement of agreements with the principal following discussions overworkplace issues.
Broader union engagement
General engagement of members with the union was evaluated in two questions in thesurvey. Table 6 shows a high degree of wider union participation amongst respondents, with
75 per cent having attended a local PPTA meeting and 49 per cent having sought assistancefrom a union field officer.

Table 6. Involvement with PPTA
Involvement type
Attended a PPTA employment relations course
Attended a PPTA ward/regional meeting
Attended a national PPTA event (e.g. annual conference)
Asked for assistance from PPTA field officer
Asked for assistance from PPTA national office

%
17
75
15
49
6
62

New Zealand Journal of Employment Relations, 42(1): 52-71
Multiple responses allowed.
Table 7 shows a very high positive response regarding the impact of the PPTA as a whole onjobs: 78 per cent considered it would make their job more difficult if the PPTA did not exist.
Table 7. If the PPTA didn’t exist what difference would it make to your job as ateacher?
Response%
More difficult78
Less difficult2
No difference
20
Total
100

Another potential indicator of engagement and of trust in the union is whom members would
consult if they needed assistance over workplace issues. Table 8 shows responses relating to
two key issues in schools: non-contact time entitlements and carer’s leave. Significant
variation occurred in responses for the different issues, partly reflecting different
management responsibilities. In the case of not receiving their proper entitlement for noncontact time, the department head was first choice by almost half of respondents, and thetimetabler was first choice for almost a quarter. The branch chair was the third choice,followed by the principal. In the case of being denied carer’s leave, the branch chair was thefirst choice for the largest group of respondents, closely followed by the principal. This issue
might be more adequately dealt with at the principal’s level, whereas non-contact time ismore likely to be simply a matter of timetabling.
For both issues, however, the branch chair is by far the most likely person to be approached
for assistance if an approach to a supervisor (department head) or management (principal) is
unsatisfactory. Overall, strong majorities of respondents would approach the union forassistance, but there was a strong trend for attempting to resolve in a non-adversarial mannerby approaching supervisor or management in the first instance. In the case of carer’s leave,
44 per cent of respondents would also approach PPTA field or regional officers forassistance. This all indicates a high degree of engagement with and trust in the wider union.
Table 8. Who would consult for assistance?
Agent

Branch chair
Department headPrincipal
Timetabler
Field officer
Regional officer
Other
Total

Re entitlement tocontact time %
1st
2nd
18
48
43
12
11
22
22
5
1
10
1
3
4
0
100
100

non- Re carer’s leave %
1st
39
13
38
2
7
1
0
100

2nd
42
1
13
0
22
22
0
100

Regulation of working conditions
63

New Zealand Journal of Employment Relations, 42(1): 52-71

The third set of questions related to respondents’ perceptions of the effectiveness of the union
branch in regulating working conditions. Table 9 indicates a general assessment of brancheffectiveness in representing the rights of its members. The response was quite positive, with
70 per cent assessing the branch as either very or mostly effective.
The responses regarding observation of the entitlements of the Collective Agreement at
school level were consistent with those for assessment of branch effectiveness, as shown in
Table 9. Again, 70 per cent considered that the agreement was observed in all or most
instances.

Table 9. How effective branch is in representing rights of members to school
management?
Response
Very effective
Mostly effective
Effective some of the time
Mostly ineffective
Ineffective
Total

Per cent
32
38
20
9
1
100

Table 10. Observation of Collective Agreement in school
Response
All entitlements
Most entitlement
Some entitlements
Don’t know
Total

Per cent
25
45
13
17
100

Perceptions of the quality of working conditions are another indicator of the union’s
effectiveness in regulating working conditions at branch level, although not all conditions are
subject to school level control. Almost two thirds of respondents considered conditions goodto very good and only 14 per cent rated them as below average or poor, as indicated in Table
11. Table 12 shows an even stronger positive response regarding satisfaction with the safety
and physical comfort of working conditions, with 88 to 92 per cent either satisfied or usuallysatisfied.
Table 11 Quality of working conditions
Quality
Very good
Good
Average
Below average
Poor
Total

Per cent
18
46
22
10
4
100
64

New Zealand Journal of Employment Relations, 42(1): 52-71

Table 12. Satisfaction with safety and comfort of working conditions
Response
Yes
UsuallyNo
Total

Safety %(physical & emotional)
36
52
12
100

Physical comfort %
44
48
8
100

A further question sought respondents’ perceptions about the overall impact of the branch on
running the school and their jobs, with results shown in Table 13. Almost half considered thatthe branch made running the school easier, although 52 per cent did not know.
Table 13. Whether the existence of the branch makes the running of the school easier ormore difficult
Response
EasierMore difficult
Don’t know
Total

Per cent
44
4
52
100

Relationship with school management
A fourth set of survey questions concerned relationships between branch members orofficials and school management. Table 14 shows that over 80 per cent of respondents
considered they were treated with respect by management. This positive response, however,
did not fully translate into a perception that members were consulted over decisions
impacting on their jobs, with 56 per cent considering that this was the case only sometimes ornever.
Table 14: Consultation over decisions that impact on job and respect from management
Response
AlwaysMost of the time
Sometimes
Never
Total

Consultation
6
38
42
14
100

Respect
38
43
18
1
100

Table 15 demonstrates a generally positive series of responses regarding the branchrelationship with the principal. Large majorities considered that the branch membership andbranch chair had effective relationships with the principal at least usually, 76 and 81 per cent,respectively. Similarly, large majorities considered that the principal respects the branch (77per cent) and branch chair (82 per cent) and their role at least usually. The central importance65

New Zealand Journal of Employment Relations, 42(1): 52-71
of the branch chair is a strong theme in these responses, with 96 per cent confirming that therelationship between principal and branch chair is important at least usually.

Table 15: Branch’s effective relationship with and respect from principal
Response

Effective
branchrelationshipwithprincipal%

Effective
branch chairrelationshipwith principal%

Principal
respects
branch &its role%

Principal
respects
branchchair&
their role%

Yes
Usually
Sometimes
No
Total

40
36
15
9
100

51
30
15
4
100

49
28
14
9
100

54
28
15
3
100

Relationshipbetweenbranchchair&
principal isimportant
%
90
6
3
1
100

Variations between schools
Significant departures from the general trends in survey responses occurred at three schools.
At one of the schools (hereafter S3) that was identified in interviews as having an effective
branch with an effective relationship with the principal, responses relating to participation,
regulation of working conditions and the relationship with the principal were all consistently
higher than the general trend. At those two schools identified as less effective in interviews
the pattern diverged. At S1, the responses were consistently and substantially more negative
than the general trend regarding participation in branch meetings, observation of theCollective Agreement, how effective the branch is, consultation, and the branch and branchchair’s effective relationship with and respect from the principal. However, at S2, survey
responses followed the generally positive trend. In contrast, at one other school whereinterviews indicated an effective branch with a positive principal/branch chair relationship,
responses regarding participation and regulation of working conditions were significantly lesspositive than generally.
Other variables were not associated with trends in survey responses to any significant or
consistent degree. Size of schools did not appear to be a factor. The school indicated as mosteffective by survey and interviews (S3) had the highest survey response rate (40 per cent),
which may confirm a high level of branch participation by membership. However, the branchindicated by survey and interviews as least effective (S1) had the second highest response
rate (21 per cent).

Discussion and analysis
Overall, the results indicated that union branches at the school level were reasonably
effective and well-adapted to local employment relations, using the measures that we
adopted. Most of the interviews were positive in this respect. They also confirmed a high66

New Zealand Journal of Employment Relations, 42(1): 52-71
union membership density, although this did vary somewhat between schools. The survey
further indicated a strong positive response from members as a whole across the other fourmeasures.
The survey confirmed a high degree of participation and democratic engagement amongst
members. This was evident in terms of attendance and participation at branch meetings, thefact that members mainly considered themselves rather than officers as constituting thebranch, and the related fact that most respondents considered that branch chairs needed toconsult with members over decision-making with workplace issues. High levels ofparticipation are noteworthy because of the pressures of time and workload alluded to bysome branch chairs.
These positive responses also carried over to our second measure of branch effectiveness,broader union engagement. The vast majority of branch members engaged with the PPTA ata regional level, although branch chairs at three schools indicated a lack of engagement atthat level by branch members; at the remaining schools, therefore, a very high proportion ofmembers attended regional meetings. Almost half of survey respondents had contact withfield officers. Most respondents also considered that the PPTA made their job easier than if it
did not exist. This was much higher than for the branch itself, which indicates strong
commitment to the union as a whole.
When asked who they would consult for assistance with specific workplace issues, whilst thevast majority of survey respondents would go to their branch chair over both issues, half
would also consult field or regional officers of the union regarding carer’s leave. A majority
would also try to resolve issues at an early stage with the appropriate level of management,
particularly in the case of entitlements regarding non-contact time. This indicates awillingness to resolve such issues directly in the first instance, but also a confidence indifferent levels of the union, as appropriate to the issue, for support if necessary.
Survey respondents were very positive about the success of the branch and the PPTA more
widely in regulation of workplace conditions, confirming the positive accounts in most of theinterviews. Two thirds or more considered that the branch was generally effective inrepresenting the rights of members with school management, that the Collective Agreement
was observed in their school, and that that the quality of working conditions was good. About
90 per cent were satisfied with the safety and comfort of their working conditions. Overall,these indicate a high degree of branch effectiveness, especially in the context of ‘give andtake’ in interpretation of the Collective Agreement that was indicated in interviews. This
meant that some variation in strict interpretation of the Collective Agreement occurred
between branches, without necessarily impacting on perceptions of branch effectiveness.
The importance of the final measure for branch effectiveness, relationship with school
management (the principal), was acknowledged as critical by all parties. Most principals andbranch chairs considered that they had achieved this positive relationship. Large majorities ofthe members surveyed also considered that the relationship between principal and branchchair was important and that it was positive.
However, some variation in effectiveness of the branches occurred within this overall
positive assessment. One branch, S1, was consistently less effective than the others,
according to interview and survey data, regarding participation, regulation of working
conditions and relationship with the principal. It also had the lowest membership density.
67

New Zealand Journal of Employment Relations, 42(1): 52-71
Others variations in the data were less consistent. At S2, we noted negative assessments of
the relationship with the principal and general branch effectiveness by the branch chair.
However, members surveyed generally indicated satisfaction with the performance of the
branch and working conditions, although union membership was the second lowest (75 percent). At one other school, interviews were more positive than members’ assessment ofbranch effectiveness. Here, the comparatively low indications of membership participation in
the survey indicate problems in this area.
At the other end of the spectrum, one school (S3) was consistently more effective that others
according to interview and survey data; union membership density was also 100 per cent.
Two main determinants of branch effectiveness appeared in the data. The level ofmembership in the branch, our first measure, was one key determinant. Judging by all sourcesof data, the least effective branch overall had the lowest membership density, and the mosteffective had one of the highest densities. Another less effective branch according tointerviews also had the second lowest membership density. The second main determinant
indicated strongly by the two less effective branches was the management style of the two
principals, both of whom were authoritarian and intimidatory, even if this did not necessarilytranslate into poor conditions or an overtly hostile attitude towards the union.

Conclusions
New Zealand state schools have developed a unique hybrid employment relations structuresince 1988, whereby a Collective Agreement is negotiated by the union and Ministry of
Education, but its implementation requires negotiation between union branches andprincipals. This study has shown that the PPTA has developed the capacity at the school level
to be effective in implementing the Collective Agreement and maintaining its integrity.
However, it was found that there was a need for pragmatism and flexibility from all parties ininterpretation and enforcement of clauses in the Collective Agreement in ways suited to thebranch. One of the greatest areas of success demonstrated for the union was the ability of its
branch chairs at schools to work constructively with principals in this process to acknowledge
on-the-ground realities that underlay these variations. In most of the schools studied, theimportance of this was acknowledged by branch chairs and principals, and usually they andbranch members considered that a positive relationship was achieved in this regard. The
success of this process also requires acknowledgement from the central union of the need forflexibility in interpretation of the Collective Agreement.
The workplace focus for this study of union effectiveness was significant, because it departs
from most of the literature that focuses at the national level of unions. Central negotiation ofa Collective Agreement covering all state secondary schools in New Zealand in one sense
supports this traditional approach. However, the hybrid system of employment relations in
New Zealand state secondary schools defines two employers – one at the central Ministrylevel, and the other in the school workplace where principals are the managers. This system
places great emphasis on the school level for the effective implementation of the Collective
Agreement. For all of these reasons, the school workplace was the most appropriate level forthis study.
The measures employed for evaluating effectiveness here were adapted to suit this particularunion and its specific employment relations context. This follows the approach recommended
68New Zealand Journal of Employment Relations, 42(1): 52-71
by Hammer and Wazeter (1993) and Boxall and Haynes (1997). Nevertheless, the measuresfor effectiveness employed here were consistent with many of the dominant themes in themain literature on union effectiveness, particularly by encompassing membership density,
outcomes of collective bargaining (in terms of local implementation), workplace participationof members, and wider union participation.
Perhaps the most substantial innovation of this study has been to include the perceptions of
three different actors at the workplace level: union members, union delegates (branch chairs)
and workplace managers (principals). None of the existing literature attempts thisinclusiveness, concentrating usually on only one of these actors, and this has never been theworkplace managers. Since the relationship between branch union representatives and school
management was found to be important, it confirmed the utility of this measures. It was
equally critical to include the perception of the workplace union delegates (branch chairs),
who are rarely included in studies in union effectiveness, with Peetz and Pocock (2009)
offering a significant exception.
However, it was the combination of the perceptions of the three sets of actors that wasparticularly important and provided a triangulation of data. Focusing on any one of themwould have led to somewhat differently nuanced conclusions. For example, at two schools
members’ evaluation differed from that of branch chairs regarding branch effectiveness:members were more optimistic in one case, and in another less pessimistic, than therespective branch chairs.
The relationship between the different measures employed here is also instructive. Of all thefactors associated with branch effectiveness in terms of regulating working conditions, threeseemed important. The most important was the relationship between principals and branchchairs, which was also seen as critical by branch members. This highlights the importance ofincluding this as a measure of effectiveness, and of gaining management perspectives on thisissue.
Union membership density is more commonly recognised in the literature as a determinant ofunion effectiveness. There was support in the findings of this study for this perspective, but
principally at the extreme ends: the least effective branch overall had the lowest membership
density, and the most effective had one of the highest densities. However, this association
was not consistent: the second weakest branch in terms of membership density did not
perform poorly according to members, and two other branches with 100 per cent membership
density did not perform significantly better than others. It is also possible that any causal
relationship in this association occurs in the opposite direction, i.e. that effectiveness assists
union membership. The outcomes here, therefore, seem more likely to confirm Rose andChaison’s (1996) perception that membership density is both cause and consequence of union
effectiveness.
Participation by members in the union and opportunities for this may be a mediating variable.
Members of the most effective branch indicated high levels of participation. Conversely, theleast effective branch indicated lower than average levels of participation by members. Most
importantly, however, this study demonstrates the importance of a range of measures ofeffectiveness and the interaction between them.
Finally, our study suggests the need for further research at the workplace level, focusing on
the implementation of collective agreements. The situation that the PPTA occupies in relation
to central collective bargaining with local branch negotiation of the interpretation and69

New Zealand Journal of Employment Relations, 42(1): 52-71
implementation of the central agreement differs substantially from the role of US union
branches studied in the existing literature; this is because the US locals undertake collective
bargaining themselves. However, this hybrid two-tier situation is not unique. A similarsystem to New Zealand operates in teaching in Australian states, and in the public sector
more generally at the state level in Australia. It is also similar to arrangements in Denmarkand Sweden, where collective agreements are negotiated at industry level, but considerable
latitude is allowed union branches in negotiating implementation (Knudsen 1995; ETUI2014). Further studies would need to develop measures of effectiveness appropriate for thesector that include a range of perspectives from management, union leaders and union
members.

References
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Burchielli, R. (2004). “It’s Not Just Numbers”: Union Employees’ Perceptions of Union
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Clark, P. (2000). Building More Effective Unions. Ithaca, NY: Cornell University Press.
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Curtin, R., Presser, S., & Singer, E. (2000). The Effects of Response Rate Changes on the
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review. Computers in Human Behavior, 26(2): 132-39.
Fiorito, J., Jarley, P., & Delaney, J.T. (1993). National union effectiveness. Research in theSociology of Organisations, 12: 111-37.
Fiorito, J., Jarley, P., & Delaney, J.T. (1995). National union effectiveness in organizing:measures and influences. Industrial and Labor Relations Review, 48(4): 613-635.
Fitzgerald, I., & O’Brien, P. (2005). Like taking coals to Newcastle: A new era for tradeunionism in the North East of England? Capital & Class, 29(3): 17-27.
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Hammer, T.H., & Wazeter, D.L. (1993). Dimensions of union effectiveness. Industrial andLabor Relations Review, 46(2): 302-319.
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Knudsen, H. (1995). Employee Participation in Europe. London: Sage.
Maitland, C., & Kerchner, C.T. (1986, April 16-20). The Tone of Labor Relations in Schools:
Correlates of Teacher Perception. Paper presented at the 67th Annual Meeting of theAmerican Educational Research Association, San Francisco CA
New Zealand Companies Office. (2016). Union membership return report 2016. Retrieved
26 April 2017 from http://www.societies.govt.nz/cms/registered-unions/annual-returnmembership-reports/2016
New Zealand Ministry of Education. (2016). Teaching Staff. Information on Teaching Staff inschools from 2004-2017. Retrieved 27 April 2017 fromhttp://www.educationcounts.govt.nz/statistics/schooling/teaching_staff.
Peetz, P., & Pocock, B. (2009). An Analysis of Workplace Representatives, Union Power and
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71

New Zealand Journal of Employment Relations, 42(1): 72-95

A New Paradigm for Occupational Health and Safety: Is It Time
to Abandon Experience-Rating Once and for All?
NADIA DABEE*
Abstract
This article argues that both the practical consequences and the theoretical underpinning ofexperience rating are misaligned with the values and goals of the occupational health and safety
legislative framework in New Zealand. Some perverse practical consequences of experiencerating are employers discouraging employees from making claims or forcing a too-early return
to work after an injury. These practical consequences are out of step with goals of thelegislation. Experience rating is based on the assumption that occupational health and safety
can be viewed as a commodity. Some of the underlying principles in the Health and Safety at
Work Act 2015 challenge the notion that safety is merely a cost centre and places safety as acore business value or perhaps, even as a fundamental right of workers.

1. Introduction and Methodology
The introduction of the Health and Safety at Work Act (HASWA) 2015 signals a paradigm
shift away from thinking of occupational health and safety (OHS) as a commodity or as aseparate cost centre, to being a core organisational value. The extent to which a paradigm shift
can be achieved in practice will depend on the way the HASWA 2015 is implemented (Dabee,2016). The existing framework that currently surrounds the HASWA 2015 also needs to be
examined, and commonly-held beliefs now need to be challenged.
Part of the framework surrounding the HASWA 2015 is the funding of compensation costs forworkplace accidents. These costs are covered by the Accident Compensation Corporation(ACC). The ACC uses experience rating (ER) on the levies that fund its Work Account fromwhich compensation to injured workers are paid out. Under an ER system, levies on employers
are loaded or discounted depending on their past claim rates for workplace accidents.
The underlying assumption of ER is that OHS is a commodity. This view of OHS as acommodity should now be abandoned, in light the paradigm shift signalled by the HASWA
2015. The latter treats OHS as a core value of a business, which is in contradiction with ER
which treats OHS as a commodity. Moreover, the practical consequences of ER do not alignwith the stated objectives of the legislation.
The ACC introduced ER in 2011 to “provid[e] financial incentives to prevent injuries”, to“encourage appropriate return to work programmes” and, to make “levies fairer” so that lower
risk employers do not subsidise higher risk employers (Accident Compensation Corporation,2010). Experience rating means that levies imposed on employers are loaded or discounted
based on the number of claims an employer has made in the past three years.

*

Nadia Dabee, is a Professional Teaching Fellow and PhD Candidate, Department of Commercial Law, Facultyof Business and Economics, University of Auckland.

72

New Zealand Journal of Employment Relations, 42(1): 72-95
Section 2 of this article explains how the ACC uses ER and, that the underlying premise of ER
is to treat OHS as a commodity (Kankaanpaa, 2010). The section also provides other reasons
to abandon the use of ER, namely that the practical effects of using ER do not align with thestated goals of the ACC. ER also does not achieve the legislative aims of the Accident
Compensation Act (ACA) 2001 and of the HASWA 2015.
New research into OHS that suggest that to improve OHS, OHS should be core organisational
value through management commitment and involvement of workers. The cost of OHS should
also be a secondary consideration. Section 3 explains how some of the rules in the HASWA
2015 align with the findings of this new research. For example, the HASWA 2015 imposes due
diligence duties on officers (S 44, HASWA 2015).
Methodology
A search for previous empirical studies (quantitative, qualitative and mixed) and, case law andlegal commentary, was carried out in selected databases (EBSCOhost, HeinOnline, Jstor,
PubMed, ScienceDirect, Scopus, LexisNexis NZ,Westlaw NZ and Austlii). The titles andabstracts of articles, and case summaries, were read to determine the relevance of each article,
or case, to the themes examined in this article. The articles were selected on the basis of theirrelevance to the topic examined here.
To show that the underlying assumption of any ER scheme is that OHS is a commodity, theliterature explaining the use of ER was examined.
To explain the practical effects of ER and assess the extent to which ER meets the objectivesof the legislation, studies on the effects of ER were organised into the themes addressed in thisarticle. The themes were based on ACC’s stated objectives for the ER scheme (ACC, 2010).
The following themes were searched for:- Research testing the hypothesis that ER to provide financial incentives to invest insafety;- Research examining the effect of ER on the rehabilitation of injured workers;- Research examining the degree to which cross-subsidisation of high-risk industries by
low-risk industry occurs.
The ACC has a good store of statistical data which would be impossible for a researcher toreplicate. Where appropriate, the data available from the ACC were used.
Limitations of the Evidence Used
The limited availability of data is an impediment to carrying out empirical studies into OHS
and ER (Brath, Klein, & Krohm, 2008). Also, a particular study can only look at a number oflimited factors at a time, whereas workplace safety is affected by a multitude of factors. Finally,
most of the empirical evidence comes from jurisdictions where the no-fault compensation
system is limited to workers’ compensation. In the United States, all States, except Texas, have
opted for a no-fault compensation regime. Australia has a hybrid system where the injured
employee can either sue or opt for no-fault workers’ compensation. The United Kingdom has
a no-fault system with most employers having to purchase compulsory insurance. This meansthat some of the conclusions from studies in other jurisdictions may not always be directly
applicable to the New Zealand Context.

73

New Zealand Journal of Employment Relations, 42(1): 72-95
Statistics from the ACC on accident rates was also used. The ACC website explains that thesedata are approximate (ACC, n.d.a)
While the equivalent Australian legislation, the Model Work Health and Safety Act (Cth) 2011is very similar to the HASWA 2015, Australian jurisprudence is not binding in New Zealand,but is merely persuasive. However, due the similarity of the two pieces of legislation,
Australian jurisprudence can aid in the interpretation of the HASWA (NZ) 2015.

2.

Experience Rating
2.1. Background: The ACC Compensation Scheme

The ACC pays out compensation to people who suffer injuries caused by an accident, whether
at work or not, for “treatment injuries” or injuries following a medical procedure and for workrelated gradual process diseases or infections (ACA 201, s 21 and Schedule 3). Mental injuries
following certain criminal acts like rape are also compensated (ACA 2001, s 20).
Work-related injuries are defined in section 28 of the ACA 2001 as personal injuries suffered
while at “any place for the purpose of his or her employment”. Cover is available for employeeson breaks or travelling to and from work if the employer provided the means of transport.
Work-related mental injuries are also covered (ACA 2001, s 20).
The ACC has five different accounts that fund compensation for five different types of injuries.
The ACC accounts are “fully-funded” which means that, each year, the ACC collects enoughin levies to cover the costs of the full lifetime of a claim (ACA 2001, s 166A; ACC, 2015).
Only the work account is experience-rated.
Account

Cover for:Levies paid by:Work AccountWork-related injures

Employers and the self-employed

Motor Vehicle Account Motor vehicle injuries on Motorists through licensing fees
public roads
and petrol levies
Earners’ AccountNon-work injuries suffered Through the Pay-As-You-Earn tax
by people in workon salaries

Non-Earners’ AccountNon-work injuries suffered The government
by people not in work

Treatment
Account

Injury Injuries that occur as a result Earners’ and non-earners’ accountsof medical treatment

Table 1: The Five Funding Accounts of the ACC

74

New Zealand Journal of Employment Relations, 42(1): 72-95
The ACC Experience Rating Scheme (ERS)The ACC loads levies on employers that had a poor accident claims record in the previous three
years and gives levy discounts to those with good claims records. Looking at the previous three
years prevents a costly incident in any one year from distorting the claims figures (Chelius &Smith, 1993). An employer with medical claims greater than $500 per year or with a single
fatal injury claim in one year faces an increase in levy of up to 75 per cent. The ACC can also
require those workplaces with high claim rates to undergo prescribed safety programmes orface a 50 per cent increase in levy. The ACC also gives levy discounts to employers who havetaken steps to improve workplace safety.
The ERS programme only applies to employers who pay levies beyond the “minimum liableearnings”. The liable earnings refer to how much employees earn. For example, in the tax year
1 April 2014 to 31 March 2015, the minimum liable earnings were $28,600 (Accident
Compensation Act (Experience Rating) Regulations 2016, Reg 6). Setting this threshold isnecessary because ER can only applied to larger businesses where a large amount of data canbe gathered. The data for larger organisations is more reliable and consistent than the data thatcan be gathered for smaller businesses (Sugarman, 1985). A couple of accidents in a small firmwith few employees would change its rate more significantly than a couple of accidents in alarge company with many employees. Small businesses are left out of the ERS.
For those employers that do qualify for ER, levies are adjusted not just according the numberof claims and deaths, the risk management component (Accident Compensation (Experience
Rating) Regulations 2015, reg 15(12)-(19)), but also according to how long the claims last –the rehabilitation component and the size of the employer (Accident Compensation(Experience Rating) Regulations 2015, reg 13, 15(4)-(11)). There is also an “off-balance”
adjustment so that the “aggregate value of discounts equals the aggregate value of loadings”(Accident Compensation (Experience Rating) Regulations 2015, reg 15(2)(c)(i)). Which meansthat overall (across all businesses), discounts on premiums must offset loadings, so that the
ACC can receive adequate funding from levies. Offsetting levy discounts with premiumincreases means the overall revenue of the ACC does not change (ACC, 2010).
Safety Programmes
The ACC currently has in place four programmes that tack onto of the ERS, but is planning to
get rid of the two “voluntary” programmes (ACC, 2016a). That decision was made because
these two voluntary programmes focus on “compliance rather than on outcomes” (ibid). Thereis no reason why the compulsory programmes should not be scrapped as well for similarreasons. A Research New Zealand pilot study indicates that the other programmes are also
focussed on “paper compliance” (Research New Zealand, 2016).
Compulsory Programmes
For each of these programmes, an ACC inspector goes through the audit with the employer.
The focus of the audit is on compliance which is determined by what is reflected on the forms
provided by the ACC for the employer to fill in. Recommendations are made by the ACC
inspectors.
The “No-Claims Discount” ProgrammeThis programme applies to small businesses that have work levies of less than $10,000 in anyof the three previous years. The levy discounts are based on the number of weekly
75New Zealand Journal of Employment Relations, 42(1): 72-95
compensation days paid in the three previous years. If there were no weekly compensation days
paid, the business gets a 10 per cent levy discount. If there were between one and 70
compensation weekly days paid, there is no levy adjustment, and more than 70 weekly
compensation days results in the levy being loaded by 10 per cent.
The “Workplace Safety Evaluations” ProgrammeThis is a compulsory programme for employers who have “poor injury statistics” (ACC,
2016b). Claims data is used to identify employers who have twice the number of claims as theindustry average. Employers must work with the ACC to meet required safety standards andimprove workplace safety. Failure to participate or to complete agreed actions the workplace
will be audited. Failing the safety audit may result in a 50 per cent increase in levy.
Under the programme, the ACC inspector will help the employer discover the causes of themost common accidents, followed by a plan to implement practices that will reduce accident
rates (ibid). A follow-up by the inspector is done after six months, where the inspector canorder a further safety audit if the business has not been able to improve its safety practices. The
focus of the audit is to make the business compliant with hazard management standards
prescribed by the legislation, staff training and incident reporting under the health and safety
legislation.
The ACC reported that 53 per cent of employers who were deemed to be high risk, that is, witha loading of 15 per cent or more on levies, received help to put an action plan into place toreduce workplace accidents (ACC, 2012).
Voluntary Programmes
The next two programmes are voluntary and offer the reward of a premium discount forundergoing a safety audit.
The “Workplace Safety Discounts” ProgrammeThis is an optional programme aimed at businesses with 10 or fewer full-time employees andthose who are self-employed, in the areas of agriculture, forestry, construction, motor trades,
road transport, fishing and waste management industries. The employer first undergoes an
ACC safety audit. An employer who passes the audit gets a 10 per cent levy discount.
The “Workplace Safety Management Practices” ProgrammeThis voluntary programme is aimed at medium-sized businesses. Discounts on work levies areapplied for 24 months and can be renewed as long as safety standards are met. There are threelevels of safety performance: primary, secondary and tertiary. To get into the tertiary level
requires the employer to meet the highest safety standard of all three tiers. An employer who
reaches the tertiary level (highest safety level) gets a 30 per cent discount in premium.
Employers who reach the secondary level get a 20 per cent discount. The discount is 10 per
cent for those who reach the primary level (lowest safety level).

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2.2.The Rationale for Experience Rating
Equity in Premiums
The levy paid by each employer is differentiated on two bases (ACA 2001, ss 167, 169;
Accident Compensation Act (Experience Rating) Regulations 2015). Firstly, the risk profile ofthe industry the employer is in. Industries where workers statistically suffer more injuries areperceived to be higher-risk industries and so employers pay higher levies. Secondly, thepremiums vary among individual employers within an industry group based on the actual
number of claims, the duration of the claims, the number of fatal claims, the number of claims
exceeding $500 in treatment claims (Experience Rating Regulations 2015, Reg 4), the levyrisk group and (Experience Rating Regulations 2015, Schedules 1-3), the size of the industry(ACA 2001, s 13).
Differentiating premiums creates a sense of equity. The impression is then that industries withlower claim rates do not subsidise industries with higher claim rates. (This claim is disputed
later on in this article.) The accurate classification of industries into high-risk and low-risk
industries is vital to calculate premiums accurately.
SafetyPart of the rhetoric on ER is that it helps promote workplace safety: the threat of a higher levy
may motivate an employer to invest in workplace safety (Klein & Krohm, 2006). As explained
below in section 2.3.1, this reasoning is overly simplistic.
The Underlying Assumption that OHS is a Commodity
Flemming (1967) argues that insurance premium adjustments make up a reliable “pain-andpleasure” system that rewards employers with low claims and punishes those with high claims.
The aim of this “pain-and-pleasure” system is to incentivise employers to make investmentsthat would prevent accidents.
Underpinning this idea is the fact that employers respond rationally to incentives ordisincentives (KanKaanpaa, 2010). That is, they can anticipate the increase in cost following
an accident, and make a rational decision to invest in safety to prevent that accident. It follows
that the investment in safety would have to be optimal, such that cost of investment in safety
would not exceed the direct cost of the accident. This way of looking at OHS assumes thatOHS is a “good” that requires resources to “produce” it (ibid).
A system that assumes its participants will act rationally requires employers and workers tohave perfect knowledge of all the risks in the business and of all the steps required to eliminate
or minimise the risks (ibid). In practice, such perfect knowledge is impossible to gain.
There is also the assumption that the cost of an accident only involves direct cost, such as
paying increased levies and replacing machinery or workers. Indirect costs or externalities areoften borne by victims and their families (ibid). Indirect costs can be as high as 20 times the
direct costs of an accident (Mansfield et al., 2012). For example, a severely injured worker may
no longer be able to work in their chosen profession and have to settle for a lower-paying job.
There is also the cost of increased administration that goes into managing claims (Ison, 1986).

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It is possible to require employers to assume the full cost of the accident, but that may lead toincreased costs being passed on to consumers. Alternatively, employees could ask for wage
premiums to compensate for the higher risk they face (KanKaanpaa, 2010). However, this is
only possible when bargaining is possible between employer and employee. Employees areoften economically vulnerable and unable to bargain with employers. Wage premiums will notalways reflect the danger inherent in the job due to lack of knowledge about the inherent
dangers of a job, inequality in bargaining and, the costs requiring the employer to set up
prevention measures (Chelius, 1982). Transaction costs also exist in practice and include“ignorance, psychological factors, fundamental inequality of the employer-employee
relationship, distribution of costs, and the…structure of workers’ compensation system”(Speiler, 1994: 238).
All these traditional, economics-based arguments are based on the premise that OHS is acommodity and that increasing the “supply” of OHS requires increasing the “demand” byproviding the right incentives. This way of thinking contradicts modern research into OHS.
The modern way of looking at OHS involves looking at OHS as an organisational value thatshould be at the core of every business (Healy & Sugden, 2012), rather than as a cost centre orcommodity.
A parallel can be drawn with the trade of “carbon credits”. Splash (2010) argues that focussing
on the economic aspects of reduce carbon emission reduces the incentives to change behaviour
that would actually reduce carbon emission overall. Similarly, focussing on the costs of healthand safety can detract from the changes in behaviour that need to occur to improve OHS.
2.3.Workplace Safety Culture (Viewing OHS as an organisational value)
The hypothesis that organisational structure can influence OHS is relatively recent. One of thefirst literature reviews in this area was done by Osborn et al., (1983), to study health and safetyin nuclear plants (Osborn et al., 1983; Oien, Utne & Herrera, 2011). The authors were among
the first to recognise management and other organisational factors as contributing to workplacesafety.
The link between organisational structure and safety has since remained at the forefront of thesafety debate. Investigations into disasters have put managerial shortcomings, poor safety
culture, inadequate safety systems and, inability to take corrective measures, into focus(Kongsvik, Almklov & Fenstad, 2010). Thus, the concept of “workplace safety culture” began
to emerge.
An organisation’s safety culture is part of its larger culture. Fernandez-Muniz, Montes-Peon &Vazquez-Ordas, 2007) propose the following definition of “safety culture” after undertaking
an extensive literature review on the link between safety culture and the reduction in workplace
accidents
A set of values, perceptions, attitudes and patterns of behavior with regard to safety
shared by member of the organization; as well as a set of policies, practices andprocedures relating to the reduction of employees’ exposure to occupational risks,
implemented at every level of the organization, and reflecting a high level of concern
and commitment to the prevention of accidents and illnesses (p.628)
Workplaces that have good OHS cultures exhibit certain characteristics. Namely, that OHS isviewed as an integral part of developing work processes, equipment and plant rather than a78

New Zealand Journal of Employment Relations, 42(1): 72-95
separate cost centre. Other characteristics of workplaces with good OHS are: management
commitment to OHS, leading by example, good reporting systems from worker to management
and, flat organisational hierarchies with a “no-blame” culture (Fernandez-Muniz et al., 2005).
Hudson (2001) has suggested five types of safety cultures. The worst type of safety culture isa “pathological” culture, where not being caught for violations is more important than safety.
The “reactive” culture is where the organisation recognises the importance of safety, but only
reacts when there is an accident. The “calculative” culture is where safety hazards aremanaged through the use of cost-benefit analyses of the cost of safety measures against thebenefits to be gained from those safety measures. In a “proactive” culture, organisations areconstantly working on solving safety problems that crop up. Finally the “generative” stage isreached. Safety then becomes part and parcel of how the organisation runs its business (ibid).
An organisation has a “generative safety culture” when management holds health and safety
as sacrosanct, there is good employee participation in workplace safety, and constantimprovements on existing safety protocols are being made. An example of a “generative
safety” culture in practice was the way the London Olympic construction was managed. Work
was stopped whenever a danger was identified, and workers told not to worry about costs andtargets. There were no deaths during the construction and non-fatal injury rate below thenational average and, the project was delivered on time (Healey & Sugden, 2012).
Link with the HASWA 2015
The HASWA 2015 principles reflect the actions that are needed to have a “generative” culture(see section 3 below). However, it will not be possible to effect the paradigm shift proposed by
the HASWA 2015 until employers and workers shift their mind-set as well. Unfortunately, as
long as employers view OHS as a cost centre and a regulatory requirement, it will be difficult
for most businesses to reach a “generative” culture.
While giving premium discounts as an incentive to undergo safety audits may appear to be apositive, ER turns can inculcate the mind-set that workplace safety is a cost that needs to be
managed like any other business cost. Employers usually plan along shorter time-frames andso are unlikely to be attracted to invest in safety measures that eat into short-term profits (Brathet al., 2008).
At the moment, the ERS turns the employers’ minds to the costs of safety, and theaccompanying safety programmes focus on compliance rather than on improving the overall
safety culture. These are the characteristics of a “calculative” culture. Getting rid of the ERS
could signal that thinking about OHS as a separate cost centre or as a commodity is now
obsolete.
2.4. Does the ERS Help the ACC Achieve its Stated Goals?
As explained in section 1 above, the aims of the ERS are to “provid[e] financial incentives toprevent injuries”, to “encourage appropriate return to work programmes” and, to make “levies
fairer” so that lower risk employers do not subsidise higher risk employers (ACC, 2010).
2.4.1. Does the ERS Provide Financial Incentives to Prevent Injury?
If changes in levy prices are to motivate employers to invest in workplace safety, thenemployers need to know in advance how levy hikes and discounts will be imposed. Koning
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New Zealand Journal of Employment Relations, 42(1): 72-95(2005) showed that employers who were aware of how ER works were more likely to invest in
workplace safety. The ACC provides extensive information on the ERS on its website. The
website also has an online calculator and there are hotlines to call for employers who would
like more information. So arguably, for those employers who are interested, the information isreadily available.
Under ER, most of the incentives to invest in safety are ex post. Konig (2005) also found thatthe incentive to “increase … preventative activities” only eventuates after there was a“substantial” increase in levy for an employer. The ACC is decreasing levies on employers by
10 per cent for the 2017-2019 period while increasing levies on workers by three per cent(ACC, n.d.b). Employers now shoulder even less of the cost of compensation, which means
reduced ability to motivate employers to invest in safety through the threat of increased costs.
Another study by Pascale Lengagne (2016) also found that an increase in premiums can leadto employers investing more in safety training and education ex post. She carried out an
econometric study that correlates actual safety practices (rather than claim rates) withincreasing or decreasing premiums; the dataset used was the manufacturing sector in France
for the period 1999-2005. High premiums were a signal to employers to address OHS issues,and fewer OHS breaches were observed after a premium increase. Premium decreases did notlead to reduced efforts to maintain good OHS.
However, there are a number of confounding factors. Levy hikes may not be the direct causeof an increase in safety investment. A levy hike is usually accompanied by other events. For
example, monitoring by the regulator could increase, good employees may leave, fines may be
imposed and, the firm subject to negative publicity (Brath et al., 2008). Those other events may
be a more significant cause of a change in attitude towards safety than a levy hike.
Increasing premiums means that employers have less to spend on improving OHS. A highclaims rate could still act as a flag for an employer to improve their OHS. But a tax break could
also be used as incentive, while freeing up money for employers to invest in OHS.
Smaller businesses are not experience-rated, so there is no financial incentive to invest in safety
tied in with premium hikes or discounts (Boden, 1995). This is an issue because workers insmaller businesses have more hazardous work environments and smaller businesses have lessmoney to invest in safety management systems (Sorensen, Hasle, & Bach, 2007). Small
businesses (with less than 20 employees) make up 97 per cent or our economy (MBIE, 2016).
What do Decreased Claims Actually Mean?
Brath et al., (2008) found that ER is more effective at reducing the number of claims in larger
employers. But they placed a caveat on their study and explained that the study does not“demonstrate” that experience rating creates an incentive to improve workplace safety, but onlyshows that claims decrease as a consequence of experience rating. The data is insufficient tosuggest a causal relationship between increased premiums and an improvement in workplacesafety (Brath et al., 2008).
A decrease in accident claims does not necessarily mean that fewer accidents are occurring.
Instead, it could be that employers are getting their employees to make fewer claims, even if
the numbers of accidents remain the same (Lengagne, 2016). It is often impossible todetermine whether lower claims are due to better investment in safety or due to employers
discouraging injured employees from making claims (Mansfield, 2012). The studies are
80New Zealand Journal of Employment Relations, 42(1): 72-95
severely limited as no direct data is available to measure the effects of experience rating (Bruce& Atkins, 1993).
Indeed, one of the more severe consequences of experience rating is that some employers may
discourage injured employees from filing a claim, or tell the employee to report an accident asa non-work accident (Tompa et al., 2013; Strunin & Boden, 2004). In New Zealand, this does
not leave the worker with no compensation as it may in other jurisdictions (Strunin & Boden,
2004). The ACC will cover the cost of any accident, no matter the cause. Employers may
discourage employees from making claims under the work account, but the cost of the claim
will be picked up somewhere else. There is no evidence as to the whether this is, indeed,
happening.
Injury Statistics in New Zealand
Workplace injury claim rates have declined steadily since 2002 to 2015 by 14.5 per cent. The
introduction of the ERS in 2011 coincided with a drop of the incidence rate of workplace injury
claims from 120 to 114 (a five per cent drop). The rate has since then been stable at 111 injury
claims per 1000 full-time equivalents (FTEs) from 2012 to 2014, dropping slightly to 110 in2015 (a 0.9 per cent drop) (Stats NZ, 2016). The introduction of the ERS also coincided with
the Pike River Mine disaster in 2010 after which Parliament started the process of changing
the law relating to OHS in 2011(Health and Safety Reform Bill 2011).

Incidence of Work-related Injury Claims per 1000 FTEs
180
160
140
120
100
80
60
40
20
0
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Figure 1: Rate of Work-Related Injury Claims per 1000 Full-Time Equivalents the period
2002 – 2015
The data in Figure 1 reflects the injuries that occurred in a particular year (not the date when
the claim was made to the ACC).
A crude picture of what has happened since the introduction of the ERS in 2011 can be gathered
by looking at the number of work-related claims against the total number of claims in the period
2011 to 2016 (ACC, n.d.a). The number of work-related claims is relatively stable, but the
total number of claims across all accounts has gone up. The data on its own does not show thatinjured workers are moving their work-related claims to other accounts. The data indicates that
more accident claims are being made to other accounts.

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New Zealand Journal of Employment Relations, 42(1): 72-95

Total Number of Claims against Total Number of WorkRelated Claims Made to the ACC
4500000

4000000
3500000
3000000
2500000
2000000
1500000
1000000
5000000
Jul 2011-Jun 2012

Jul 2012- Jun 2013

Jul 2013-Jun 2014

Jul 2014- Jun 2015 Jul 2014- Jun 2016

Total Number of Claims (New Claims and Active Claims)
Total Number of Work-Related Claims (New Claims and Active Claims)

Figure 2: Total Number of Claims against the Total Number of Work-Related Made to
the ACC in the Period July 2011- June 2016
The ratio of the total number of claims to the total number of work-related claims has increased
since the introduction of the ERS in 2011 (ACC, n.d.a). This suggests that, relatively, moreclaims are being made to non-work accounts than to the work account. It could be thatworkplaces are becoming relatively safer when compared to other places where accidents occur(such as at home) or that work-related claims are being pushed to other accounts. It is
impossible to determine what is actually going on without further research.
Year Range

Ratio of Total Number ofClaims to Total Number of
Work-Related Claims
Jul 2011-Jun 2012 7.4
Jul 2012- Jun 2013 7.6
Jul 2013- Jun 2014 7.7
Jul 2014- Jun 2015 7.6
Jul 2015- Jun 2016 7.8
Table 2: The Ratio of the Total Number of Claims Made to the ACC to the Total Numberof Work-Related Claims Made to the ACC for the period July 2011 – June 2016.

2.4.2. Does the ERS Foster Rehabilitation?
In order to lower the number of claims being made, employees who are unfit to work may be
kept on the payroll and discouraged from making a claim. (In New Zealand, workers have theoption of making a claim for the injury as a non-work injury). Or, employers may ask a worker
to come back on light duties so that the number of days off work can be recorded as being
lower than what it ought to be (Mansfield, 2012). This then distorts the data on the number ofsevere injuries occurring that ought to be reported. The HASWA 2015, s 23 requires all serious

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injuries to be reported to WorkSafe. Workers have sometimes been forced back to workwithout having fully recovered (Mansfield et al., 2012; Tompa et al., 2013).
Campolieti, Hyatt and Thomason (2006) showed a decrease in claim rates following the
introduction of ER in British Columbia, Canada. The study showed that, while claims involving
medical care decreased, claims that involved time off work (suggesting a serious injury) or
claims for fatalities did not decrease. The reason could be because less serious injuries were
not being claimed for, but claims for fatalities cannot be discouraged.
The real downside to the employer discouraging an employee from making a claim is theensuing strain on the employer-employee relationship. Employees feel victimised, which thencauses resentment and anxiety in the injured employee. These negative feelings also inhibit
the employee’s rehabilitation (Ison, 1986).
When an employer is worried about rising premiums, they may subject workers to unnecessary
tests to prove that the injury is not work-related. To challenge claims, employers may resort tomore adversarial attitudes towards their employees who make claims. Doctors may bepressurised to certify workers as fit to return to work when there is no suitable work available(Mansfield, 2012). All these factors can compound the stress on the worker, and inhibit theirlong-term well-being.
Dew and Taupo (2009), in a safety study of a meat processing plant in New Zealand, foundthat workers faced unsafe working conditions daily and felt compelled to turn up to work evenwhile suffering from injuries. The company doctor pushed employees back into work evenwhen they were not fit to return to their duties. Workers still turned up for work while not fully
recovered from work injuries due to threats from management of lost earnings or of job losses.
There was also a lack of bargaining power for employees due to production pressures and lackof opportunities to get other jobs. Moreover, workers knew their colleagues would have to pickup the slack if they were absent.
2.4.3. Does the ERS Ensure that High-Risk Employers are Not Subsidising Low-Risk
Employers?
A first fallacy is to assume that ER accurately reflects a business’ safety track record. The timelag between the employers making the investment in safety and the employers finally seeing a
reduction in levy is long (Sugarman, 1985). An empirical study by James Chelius estimatesthat there is a delay of two years between the investment and a partial decrease in premium;and up to and five years to see the full reduction in premiums (Chelius & Smith, 1982).
Lamm, McDonnell & St John (2012) give an ironic example of ER in practice. Air New
Zealand received a rebate in its levies in November 1980, under the then current experiencerating scheme. The rebate was given to the airline after one of its planes crashed in the Antarctic
in November 1989, killing 237 passengers and 20 crew members. This is an example of acompany killing 257 people, but not having to immediately bear the full cost of those injuries.
A second fallacy is to assume that no cross-subsidisation occurs. There will always be a degreeof cross-subsidisation as the aim of insurance is to spread out the costs of claims over all those
insured. The final levy an employer has to pay always has a fixed component that covers the
fixed cost of injuries across all firms and a fixed administrative cost (Lengagne, 2016).

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Cheluis and Smith (1982) found that ER tends to penalise smaller firms by imposing “higher
costs per dollar loss on them”. That is, for every dollar lost due to a workplace accident, smaller
businesses spend more on insurance premiums than larger businesses. But despite the higher
costs per dollar loss for smaller businesses, it was found that larger businesses do subsidise thecost of insurance for smaller businesses. This is because insurance companies have fixed
overheads that they need to spread out over all of their clients. Larger businesses tend to pickup more of the tab.
Moreover, smaller individual businesses cannot be successfully experience-rated because thefluctuations in accident rates can vary wildly due to the small sample size. The risk is thenpooled across a particular sector and the premiums averaged out across all the small businesses
in that sector. Therefore, “less risky” small individual businesses do end up subsidising “morerisky” businesses (ibid).
2.5. Is the ERS Consistent with the Underlying Philosophy of the ACC?
The original aim of the ACC scheme was to provide compensation to all those who sufferedinjury by accidents, regardless of fault (Oliphant, 2007). In setting up the ACC scheme, theRoyal Commission of Inquiry, headed by Owen Woodhouse, in 1967, proposed five guiding
principles: community responsibility, comprehensive entitlement, complete rehabilitation, realcompensation and administrative efficiency.
The value of “community responsibility” underpins the New Zealand accident compensation
legislation, and entails “the community … protect[ing] all citizens … from the burden of
sudden individual losses when their ability to contribute to the general welfare by their work
has been interrupted by physical incapacity” (Royal Commission on Accident Compensation,1967).
While the ERS rhetoric of not having safer workplaces subsidising more dangerous workplaces
seems appealing to the business community, it shifts the burden of the cost of accidents to those
who can afford the least. Meeting the increased costs of premiums means that employers,
already struggling with poor workplace safety, have even less money to spend on investing in
OSH. Imposing more financial burdens on those who can least afford it goes against thefundamental philosophy of community responsibility that underpins the ACC.
The ACC wants to decrease levies on employers by 10 per cent (ACC, 2016c), but increase
those on workers by three per cent (ACC, 2016a), thus, shifting more the cost of compensation
onto workers, rather than spreading it out evenly across the whole community. Following from
that, the rhetoric of incentivising employers to invest in safety through costs seems to makeeven less sense if workers are to bear more of the costs as the latter can often do very little on
their own to improve workplace safety.
The Woodhouse Report stated three other goals for the ACC. Rehabilitation that enables
injured workers to recover sufficiently from their injuries and allow them to start work as soon
as possible. Real compensation that provides injured workers who cannot work with a decent
standard of living. Finally, “administrative efficiency” to make up a speedy, consistent,
economical and contention free administration (Royal Commission on Accident
Compensation, 1967)
As argued above, the ERS does not foster rehabilitation. The ACC still provides compensation
for all accidents, so even if accident claims are being moved to other accounts, then at least
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New Zealand Journal of Employment Relations, 42(1): 72-95
injured workers are receiving compensation. But, if employers are urging workers to work
while injured or to move their claims to other accounts, then that is hardly “contention free”.
2.6. Is the ERS Consistent with the Legislation?
To be in line with the legislation, the ERS should also promote measures that reduce both thenumber and severity of personal injuries, focus on rehabilitation that “restores to the maximum
extent a claimant’s health” (ACA 2001, ss 3 (a),(c)). If injured workers are being forced backto work, then clearly this goal is not being met.
The ERS objectives must also be viewed in light of the overarching purpose for which the ACC
was set up. The ACC’s work should “enhance the public good” (ACA 2001, s 3). In addition
to providing compensation for personal injury, the ACC’s legislative goals are to work “tominimise the incidence of injury in the community” as well as manage “the impact of the injury
on the community” (ACA 2001, s 3). The injury reduction must be done in a “supportive
environment” (ACA 2001, s 263).
As shown above, the ERS leads to employers focussing on managing claims rather than on
improving safety. The ERS can also create an adversarial environment, and could also becreating incentives that may push workers from claiming from other accounts would go against
the legislative purpose of the ACC is to reduce personal injuries overall. Moreover, theavailable data show that ER does not meet the legislative purpose of restoring claimants’ healthand well-being to the “maximum practicable extent” (ACA 2001, s 3). Overall, it appears that
ER does not promote the aims of the legislation.
If employers start questioning or legally challenging claims made by employees to avoid a levy
increase, then a certain element of “fault” is being reintroduced subtly into our legal system.
This goes against the ideology of the ACA 2001, which places a statutory bar on actions for
personal injury (Mansfield, 2012).
There is no mention of equity in funding in ACA 2001. The Act requires that any “funding
policy statements” by the Minister be consistent with section 262 of the ACA 2001 (ACA 2001,s 166B). Section 262 states that services must be “cost-effective” (ACA 2001, s 262(3)(b)).
There is a lack of evidence that the ERS gives a return in terms of savings on meeting
compensation costs, the programme does not meet the funding requirements in the legislation
either.
Another of the legislative functions of the ACC is to collect personal injury information (ACA
2001, s 3). An integral part of running the ERS programme is the collection of and analysis of“injury-related” information (ACA 2001, s 3(b)). The data collected by the ACC is currently
being used for information on levy discounts and loading. The ACA 2001 states that
information collected by the ACC should be used “to facilitate the achievement of theGovernment’s overall injury management objectives”. Under the ERS, the information
gathered by the ACC could be used to identify workplaces that are in need of assistance toimprove their OHS systems, but without using ER.
2.7. ACC’s Suggestions to Improve the ERS
The ACC has recently re-examined its ERS. The ACC identified three reasons for “enhancing”
the ERS: improving the motivation to improve OHS performance; make the link between OHS
performance and levy rates “understandable” and “improve how quickly” the levies respond to85

New Zealand Journal of Employment Relations, 42(1): 72-95
changes put in place by the business. The ACC has suggested two new approaches: an increased“responsiveness” approach, and an increased “transparency and responsiveness” approach(ACC, 2016c).
The first approach suggests five main changes. The experience period would be shortened
which would mean that the levy rates would fluctuate more rapidly. This may exacerbate
problems with claims management as employers may have more incentives to manage claims
to prevent fluctuations and to “ride out” shorter levy periods. More focus would be put on thenumber of claims than on the duration of the claims, the reasoning being that businesses havemore control over preventing accidents than helping workers return to work. More severe
injuries require workers to take longer periods off work; so this approach may shift the focus
away from preventing more severe accidents and focus on decreasing the number of minor
accidents.
Under the first approach, the ACC has also suggested only using the business’ experience
without reference to the industry they belong to and without reference to the size of thebusiness. Both of these changes will make the levies more volatile for a particular business.
There is also a suggestion to setting the final premium after the experience period. The
employer would have paid a deposit, and a final premium is calculated at the end of experience
period, based on number of accidents. The effect of these changes could be two-fold: employers
would have problems with financial forecasting, which could be a problem when drawing up
tenders, and it will put more pressure on employers to manage claims to avoid paying extra
premiums.
The second approach suggests two main changes. One being the removal of the claim durationconsideration when calculating levies, with the possible consequences just described. The
premiums will be increased and decreased according to a set “sequence on a ladder” (loaded
premiums at the top and discounted levies at the bottom), coupled with the application of rulesthat determine the movement of the ratings “up or down a number of steps on the ladder”.
Many rules could be applied at the same time. There is no explanation of what these rules
would be except to say that they would be based on “performance” and that the rules would beknown in advance to allow businesses to plan.
Neither of the suggestions cuts to the core of the issue, which is that OHS should no longer beviewed as a separate cost centre, but as a core value of the business and an integral part of theway work processes are designed.
2.8. Retaining Equity in Funding the Work AccountRemoving the ERS would remove the perceived equity of the funding system for the ACC
work account. While low-risk employers may not want to “subsidise” high risk employers, theupside is that, with reduced costs, high risks employers, for example in forestry and fishing,can be more competitive in a global market. Also, all employers would pay the same premium
which would be more straightforward to administer.
Another possibility could be to retain levy differences between industries, with higher risk
industries paying higher premiums but not differentiating levies within an industry. This would
retain some equity at least across industries.

86New Zealand Journal of Employment Relations, 42(1): 72-95

3. The Health and Safety at Work Act 2015: A New Concept of OHS?
Australia passed the Model Health and Safety at Work Act (Cth) 2011 as part of the process of
updating its OHS legislation to be in line with the International Labour Organization’s (ILO)
Occupational Safety and Health Convention, of which New Zealand is also a signatory, and to
be consistent with the ILO’s 2003 Global Strategy on Occupational Health and Safety (National
Review into Model OHS Law, 2008; ILO, 2003). The ILO’s Global Strategy recognises that“new strategies and solutions need to be developed” in order to manage OHS, and that OHS
needs to be given a “higher priority” and engage the whole community. The ILO advocatesthat workers have “the right to a safe and healthy working environment” (ILO, 2003).
Oldfield (2014) has argued that OHS should be considered as a human right. This approach
would be a good strategy to fight against the abuse of workers that leads to hazardous working
conditions. Human rights in the workplace is not a new concept. For example, under the Human
Rights Act (HRA) 1993, employers are forbidden from discriminating against individuals on
the basis of certain “prohibited grounds of discrimination”, such as age and sex (HRA 1993, ss
21-22). The HRA 1993 was passed to implement New Zealand’s obligations under the
Universal Declaration of Human Rights. Cost is hardly ever at the forefront of any human rights
debate. If OHS is to be viewed as a “right”, then cost can no longer be a major consideration.
Here are some provisions in the HASWA 2015 which could be interpreted to mean that OHS
is a priority and cost should no longer be an overriding consideration in achieving good OHS
culture.
3.1. The “reasonably practicable” test
Most of duties in the HASWA 2015 are subject to the “reasonably practicable” test (HASWA
2015, s 22). For example, a person conducting a business or undertaking (PCBU) – such as acompany, a partnership or a sole proprietor – has to “so far as is reasonably practicable” ensure
the health and safety of the workers who work for it (HASWA 2015, s 36). Doing what is“reasonably practicable” requires the PCBU to “weigh up all relevant matters”. The PCBU
must have regard to the likelihood of the hazard or risk occurring and the risk that could result.
In doing so, it must consider what a reasonable person knows or ought reasonably to know
about the hazard or risk, and the ways of eliminating the hazard or risk and the availability andsuitability of those ways. The very last consideration is whether the “cost is grossly
disproportionate to the risk”. The cost of eliminating or managing hazards and risks is the very
last consideration in determining what is reasonably practicable.
Cost was also the last consideration under the “all practicable steps” test in the previous
legislation, the Health and Safety in Employment Act (HASEA) 1992. The test looked at “theavailability and cost of those means [to eliminate or minimise harm]” (HASEA 1992, s 26A).
The term “grossly disproportionate” in the HASWA 2015 suggests a much higher threshold.
The case of WorkSafe New Zealand v Ministry of Social Development (CRI-2015-0825002309; [2016] NZDC 12806, per Doogue J.) was decided under the HASEA 1992. The Court
explained that “in order for cost to outweigh the risk of harm, the cost must be ‘disproportionate
to the risk.’” The court also explained that the law had evolved and the cost must be “grossly
disproportionate” to the risk to justify the organisation not taking steps to eliminate/minimise
the harm.
The risk in this case was the violence by clients against staff. The Ministry knew that there wasa real risk that their staff could be attacked by a client armed with a firearm. The steps thatwould have adequately protected the staff would have involved a significant redesign of the87New Zealand Journal of Employment Relations, 42(1): 72-95
offices, according to current best practice, at a cost of $13.1 million - $27.3 million for all theoffices. The operating budget was $400 million, so the cost of putting in place safety measuresagainst firearm attacks would have been as much as 6.75 per cent of the operating costs. The
court did not think the cost was “grossly disproportionate” to the risk faced by the employees
and that the Ministry had failed in its duty to keep employees safe.
Clearly, the safety of the worker needs to come first, by eliminating or minimising risks andhazards, and the cost of protecting workers comes last. OHS can no longer be viewed as acommodity that responds to market forces (Kankaanpaa, 2010).
3.2. Duties on Officers
When the leaders of an organisation exhibit behaviours that send out messages that OHS isimportant, then that attitude infiltrates the rest of the organisation (Zohar, 1980). For example,
in the Olympics, management gave a clear signal to stop work if it was unsafe, regardless ofcost. Ironically, not worrying about cost meant that the project ended up being completed ontime and within budget (Healey & Sugden, 2012).
The directors of a company have always been distinct from the company itself and, thus,
traditionally not liable for any wrong-doing of the company. This changed under the HASEA
1992, directors would have only been liable if they had “directed, authorised, assented to,acquiesced in, or participated in” the breach of the company (HASEA 1992, s 56). It was veryrare for a director to be found liable. In McGall v Dominion Bookbinders Ltd (CRI-2009-090503893, CRI-2009-090-503896, CRI-2009-090-503291, CRI-2009-090-503297, CRI-2009090-503894, 31/3/2010, per Blackie J), the company had failed to maintain an entrance gate
and an employee’s child was injured while climbing the gate. The company had breached s 50of the HASEA 1992 by failing to provide a safe workplace for “any other person”. The director,
being aware that the gate was defective, had “participated” in the breach and was personallyliable under s 56 of the HASEA 1992.
The HASWA 2015 puts separate duties on officers of the PCBU (such as directors andpartners), (HASWA 2015, s 18) which require officers to put OHS at the centre of what theydo. Officers have a duty to exercise “due diligence” to ensure that the PCBU complies with its
duties. Officers must first educate themselves about OHS matters relevant to their industry, andthen find out about the hazards and risks in their particular business (HASWA 2015, s 44).
Businesses with good OHS tend to ensure that production pressures do not come in the way ofsafety (Hudson, 2001). Officers need to ensure that there are adequate resources available for
OHS (HASWA 2015, s 44). Flat hierarchies are associated with good OHS (Hudson, 2001),
and the officer must ensure that there are appropriate processes that work in practice for
employees and contractors to provide feedback on hazards and that steps are taken to eliminate
those hazards (HASWA 2015, s 44). Finally, good OHS requires constant monitoring andchecking (Hudson, 2001). Officers have to ensure that there are processes to audit OHS in theirbusiness and to verify all the processes in place are viable (ibid).
Officers, thus, need to dedicate more time to OHS as they would traditionally in order to beaware of what happens on the shop floor, to keep up-to-date with OHS trends in their industries,
and to carry out regular safety audits. A lack of time and other resources will no longer be an
excuse for an officer to not turn their minds to OHS, even for an officer overseeing a very large
company (See the Australian case of Inspector Kumar v Ritchie [2006] NSWIRComm 384 (6December 2006) , per Haylen J.). Nor can the busy officer delegate this responsibility to focus
mainly on the profitability of the business (HASWA 2015, s 31).
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New Zealand Journal of Employment Relations, 42(1): 72-95

3.1.Contractors and Sub-Contractors
The fragmentation of the workforce means there are less stable employment contracts, andorganisations increasingly rely on the work of contractors (James, Johstone, Quinlan, &Walters, 2007). This, in turn, meant more hazardous working conditions for workers in thoseless stable employment arrangements (Quinlan, Mayhew, & Bohle, 2001a;b)
It had been the law that contractors were responsible for their own OHS (Perritt, 1988). Thus,
making use of contractors was a way for organisations to avoid the responsibility and costs ofputting in place adequate safety systems. Hiring contractors is no longer an acceptable way ofmanaging risk-liabilities and of reducing cost. The HASEA 1992 introduced changes thatmeant that principals had some responsibilities towards contractors and their employees.
The HASEA 1992 imposed a duty on a principal to “take all practicable steps to ensure that no
employee of a contractor or subcontractor” or “no contractor or subcontractor” is harmed“while doing work… that the contractor was engaged to do” (HASEA 1992, s 18). However,the principal had less responsibilities than the contractor towards the contractor’s employees(Central Cranes v Department of Labour [1997] 3 NZLR 694, (1997) 5 NZELC 95,733, [1997]
ERNZ 520 per Blanchard, Gault, Henry, Keith and Thomas JJ). Under the HASWA 2015, theprincipal (a PCBU) owes the same duties to the employees of the contractor as it does to its
own employees.
Under the HASWA 2015, PCBUs owe duties to keep their workers safe (HASWA 2015, s 36).
The definition of “PCBU” in the HASWA 2015 is wider than the definition of “employer” in
the HASEA 1992. A PCBU is a person that conducts a “business or undertaking alone or withothers”, whether or not for profit or gain (HASWA 2015, s 17(1)(a)), whereas an employer wasa “person who employs any other person to do any work for hire or reward” (HASEA 1992, s
2).
In the HASWA 2015, the definition of “worker” includes contractors and subcontractors andtheir employees (HASWA 2015, s 19). Under the HASEA 1992, employees only covered those
who worked directly for an employer (HASEA 1992, s 2).This change in the law is to reflect
the fragmentation of employment and to impose duties on businesses that create risk and thathave the ability to protect workers and other persons (Johnstone, 2015).
Also, under the HASWA 2015, main contractors and sub-contractors have a duty to “consult,co-operate… and co-ordinate activities” if they owe the same duty to the same person(HASWA 2015, s 34). Principals and contractors owe the same duties to the employees ofcontractors under the HASWA 2015. This duty to consult had only been part of a code ofpractice under the HASEA 1992 (MBIE A Principal’s Guide to Contracting to Meet the Healthand Safety in Employment Act 1992, May 2010).
The laws under the HASWA 2015 seem to suggest that PCBUs now have a higher obligation
to manage the risks and hazards that contractors and their employees face than employers
would under the HASEA 1992. The law recognises the fragmentation of the workforce andthat all workers need protection, regardless of their employment status. While market forces
may have pushed for the fragmentation of the workforce, the intent of the HASWA 2015 is topush against these forces and provide protection for all workers, regardless of their status.

89New Zealand Journal of Employment Relations, 42(1): 72-95

4. Conclusion
From the available empirical evidence, it is possible to draw the conclusion that it is notpossible to achieve the aims of the ACA 2001 and the HASWA 2015 by using ER. Tying
financial incentives to preventing injuries encourages employers to focus on managing claims
rather than on preventing injuries. Levies are loaded, also, according to the severity of the
injuries claimed for, so the longer an employee is off work, the higher the premium becomes.
This may mean some employers try to get employees back to work sooner than they are readyto do so. There is also evidence that low-risk employers do end up subsidising high-risk
employers because there is a fixed cost that needs to be met that is spread out evenly over all
premiums. Moreover, by increasing levies on employers with poorer OHS, the amount manyof these employers have to invest on OHS is reduced, making it even less likely that they will
be able to make changes to improve OHS.
With its focus on providing incentives to invest in occupational health and safety (OHS)
through costs, ER is conceptually inconsistent with the fact that OHS should not be viewed asa separate cost centre but as part of the cost of properly designing work processes and plants etcaetra… In spite of the countervailing evidence and logical inconsistencies, the ACC would
still like to retain ER, albeit in a modified form (ACC, 2016d). The modifications would notremove the fundamental problems associated with ER, but more importantly, the message thatsafety is a cost centre would remain at the forefront.
The evidence shows that the ERS does not lead to improved workplace safety. Perverse
outcomes, such as employers discouraging employees from making claims and reporting nearmisses, can occur. Moreover, the “stick” approach does not sit naturally with the nonthreatening, supporting role the ACC is meant to have in our community.
The HASWA 2015 represents a possible paradigm shift in the way of thinking about OHS. The“reasonably practicable” test, the due diligence duties of officers and, the emphasis on ensuring
the safety of contractors and their employees signal new way of thinking about OHS. Cost canno longer be a driving factor, and, as the evidence shows, shifting the focus from costs to goodpractices does lead to improved profitability.
The implementation of the HASWA 2015 and the infrastructure surrounding it need to be instep with the changes represented in the HASWA 2015 if the way we think about OHS in New
Zealand is to change, but that can only occur if attitudes shift. Employers need to change theirmind-set, and retaining ER is a way of clinging onto a way of thinking that does not belongwith the new OHS regime.

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