This case study was prepared by Geoff Bell the former Chief Executive Officer of Sydney Markets Limited. Geoff currently provides services in Business Planning, Coaching and Mentoring. He can be contacted at 612 6656-2429.

Background

• Sydney Markets are Australia’s largest fresh produce and community markets, and arguably one of the top five wholesale fresh produce markets worldwide.

• Brands include Sydney Fresh Produce Market, Sydney Flower Market and Paddy’s Markets (Haymarket & Flemington).
• High intensity, 24/7/365 operations:
• 250,00m2 of trading, warehousing, shopping, office & parking facilities under management at two sites.
• > $3.0 billion worth of commercial activity generated annually.
• Approx 2 million tonnes of fresh produce traded annually.
• Approx 70,000 vehicle movements per week.
• > 100,000 customer visits per week.
• Markets privatised in 1998 following a long period of management by a NSW government statutory authority. Sydney Markets Limited (SML) was incorporated at that time with the market traders as the shareholders of the company.

(NB: SML turns over approx $50m pa, derived mainly from rents and management fees. The company employs just under 100 fulltime staff, supported by approx 30 contractors who augment security and market operations, and provide specialist trades & technical functions.)

The Problem

A poor workplace culture was clearly evident at the point of changeover from government authority to private sector business. This culture was characterised by the following:

• Process driven workplace with lack of focus on outcomes and low productivity.

• Lack of positive interaction between staff and customers (ie, the market traders who were now also the owners of SML).
• Poor relationship between staff and public visitors to the Markets.
• Punitive environment not conducive to developing people or efficient systems.
• Lack of accountability resulting from unclear lines of responsibility and a failure to properly define job specifications.
• Poor utilisation of staff knowledge and experience to generate ideas and improve efficiency.
• Very little training & development of staff – what did exist was unfocused.
• There was an Award in place for all employees except executive management. This caused a split within the management structure of the company that needed to be addressed.




The Solution

The solution was to implement a comprehensive leadership and personnel management system as part of an overall strategic plan for the company. People outcomes were directly linked to the company’s strategic intent and associated strategic objectives.

• Markets operations were restructured to clarify staff roles and remove inequities. Job descriptions were completely revised for all employees. Career paths were defined in most functional areas. A new rostering system was introduced thereby enhancing work/life balance for many staff.

• A comprehensive recruitment system was introduced to help ensure that people joining the company were of the highest possible quality. At the same time, managers were expected to pay close attention to the retention of their high quality staff so that over time, the quality of the SML workforce would improve. High quality managers were identified and supported.
• The existing Award was renegotiated with the following important changes being included:

  - Pay scales were increased, partly offset by removal of penalty rates. Overall this delivered those on the Award with an improved financial outcome, albeit at a cost to the company.

  - As a result we were able to negotiate the extraction of supervisor level positions from the Award and place them within the company’s contracted managers. This meant far greater flexibility in how we were able to relate with all our management level people.

  - We were also able to negotiate the inclusion of all Award employees in an annual staff appraisal system, with bonuses (if any) to be paid at the complete discretion of SML. This provided us with an essential tool for influencing change in behaviours.

• New operating procedures were introduced to remove some anomalies and empower people through all staff levels. This was an extremely important element in changing the culture of the place.
• A simple, easy to use staff appraisal system was introduced for all employees. This system was based on 4-5 clearly expressed objectives and associated performance measures, which were related directly to an individual’s job description. (NB: These objectives were not necessarily dollar-related, because effective market operation was more about getting things like customer service right rather than screwing every last dollar out of people). All managers were also assessed on a range of leadership skills and attributes.
• A training & development plan was developed on an individual basis for each employee. This included partial or sometimes full payment of course fees by the company. In addition, managers were given training in leadership, and all staff received training in customer service.
• Team objectives and associated performance measures were introduced for all teams within the company structure.
• Managers were left in no doubt that they were expected to lead their people and not merely manage them. Line managers were made responsible for all dealings with their people, which left our small HR staff to work on policy matters and ensure HR systems were being followed correctly.
• A remuneration policy was introduced, based on remunerating people at about the median point for businesses of our size and type. We didn’t want to be market leaders, but nor did we want to be seen as paying under par.
• An annual employee survey was conducted and feedback provided personally by the CEO at staff meetings where everyone had opportunities to comment and seek additional feedback.
• A simple and concise code of conduct was introduced for all employees.
• An Employee of the Month award instituted. This award comprised both a strong public recognition element and a small financial reward. Employee of the Year and Team of the Year awards were introduced along similar lines, but with significantly larger financial rewards.

[NB: These awards were very well accepted within the workforce, undoubtedly because great care was taken in selecting winners based on merit.]

The Results

• The us and them culture disappeared, customer service improved significantly, and significant efficiencies began to be made as a result of innovative ideas from staff at all levels. Examples of the latter include a 33% reduction in waste management costs; an 18% reduction in repair and maintenance costs and a 12% reduction in security costs. [NB: These three measures alone took well over $1M from SML’s operating cost base at that time, which more than covered the additional personnel costs required to effect the cultural change.]

• Poor performers were quickly identified and weeded out. This included several management level staff who had worked at the Markets for a long time. Some of these people were unwilling to embrace the new system, whilst others were simply not performing for a variety of reasons and had to go. This provided new opportunities for promotion and development of talented people – such opportunities had largely been missing under the previous system, where promotion depended more on time served rather than merit.
• Staff satisfaction levels [morale] as measured by the annual surveys showed a consistent upward trend.
• Market operations were significantly enhanced, leading to improved handling of fresh produce on its way to consumers, as well as safer and cleaner markets. These changes also led to 20-25% increase in public attendance at the community markets, which made for some very happy traders.

The Main Lessons

• A comprehensive approach is essential, and it must be based on collaboration and engaging staff through open and honest communications. This will help build trust during the change process.

• Strong leadership from the top is also essential, and those at the top must continually inspire and reassure people about the future.
• Patience is needed to see it through – don’t expect immediate results.
• Simple systems are essential – don’t over complicate things.
• Fairness and objectivity must apply, and must be seen to apply.
• Key people at all levels in the organisation need to be identified early and well looked after. These people will help sell the change, which will assist in minimising the associated risk. Conversely, potential saboteurs should be identified and if necessary removed.
• Consider your people as an investment not a cost. Identify and promote the leaders within the group and then, if necessary, give them training in how to manage better.

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