Are HR Metrics important for Aged Care and Community Care providers?
The ageing of Australia’s population and its resulting ageing of the country’s workforce are set to create some significant challenges to all employers, in particular providers of aged care and community services.
In 2012, a census of the Aged Care (both residential and home care) workforce identified the following:
- More than 240,000 workers are employed in direct care roles in the aged care sector. Of these, 147,000 work in residential facilities, and 93,350 in community outlets
- The workforce is predominantly female with males representing around 10% of the workforce.
- The workforce is generally older than the national workforce and ageing further. The median age for residential direct care workers is 48 years while for community direct care workers it is 50 years. The median age for Registered Nurses in aged care was identified in the report at 52 years.
- Three quarters of residential facilities and half of community organisations reported skill shortages in one or more occupations with Registered Nurses representing 15 % of the reported shortages.
At the same time, the Productivity Commission, in their study titled “Caring for Older Australian” (which became the basis of the government of the days Living Longer Living Better reforms) further identified the increasing pressures facing Australia in maintaining a workforce capable of supporting older Australians.
By way of background, Realise Performance has for a number of years undertaken the Aged Care Remuneration Review.This review has been used by providers to benchmark the salaries of their senior staff to other providers in the aged care sector and the broader market.
In early 2016, Realise Performance broadened the benchmarking scope in the Aged Care Remuneration Review by undertaking an additional study to examine key HR metrics, in the Aged and Community Care sectors.The objective of this further work was to establish (from a provider perspective) where the pressure points were in the sectors with respect to workforce issues.
The HR benchmarking study was the first of its kind and over coming years Realise Performance will build on the information gathered to deliver providers with meaningful benchmark information to inform the management on their workforce strategies into the future.
The key themes that emerged from the 2016 Remuneration Review and HR Benchmarking study were as follows:
1. Despite the community and sector perception that aged care roles are lower paid than comparable roles in the broader market, the Remuneration Review clearly demonstrated that this was in fact not the case.In the analysis for this year’s Remuneration Review we benchmarked against normalised data, meaning tax benefits associated with organisations receiving the benefits associated with their not for profit status had those benefits grossed up for the comparison.It clearly demonstrated that once the tax benefits are included sector salaries are in line with roles at the same level in the broader market.
2. The HR benchmarking study identified that Board diversity in the sectors still reflect broader societal trends, being predominance of male directors. However the number of female Board members is slightly ahead of the broader market which is reflective of a sector dominated by female staff.
3.The HR benchmarking study also identified 15% of all not for profit Boards pay their Directors. This is a growing trend and reflects the increased requirement for Boards to focus on ensuring they have the right skill mix to effectively govern the organisation.
4. The HR benchmarking study identified that the top four HR challenges facing providers were identified as:
- Workforce Planning
- Ageing Workforce
- Workforce Recruitment
- Workforce Retention
These issues are not surprising as the aged and community care sectors are very much dependent upon having people to deliver support to residents and clients.Whilst organisations have identified the above challenges as being of great concern, there is not a lot of evidence to indicate that significant strategic workforce planning initiatives are being undertaken by providers to tackle these challenges.
5. Staff turnover continues to be a problem for the sector.The HR benchmarking study revealed that average staff turnover of survey participants was 22%.This is 3% lower than what is considered to be the normal sector benchmark of 25%.However, the study reflects turnover is 7% higher than similar benchmarks identified the broader market. With voluntary turnover representing 17% of the 22% average, this reflects the level of churn and represents considerable costs to providers.
In the Realise Performance HR Benchmarking report we provided an example of the costs using these percentages, and a standard aged care workforce profile.This example showed that the cost of turnover in the sector exceeded the broader market benchmark by $225,000 per annum.With continuing pressure on provider revenue streams, a conscious effort to reduce staff turnover has significant financial benefits to providers, but more importantly it is an opportunity to funnel any savings towards enhanced client/resident service provision.
6. The HR benchmarking study also looked at training and development.It was felt that analysis of this area was important to the sector’s future workforce requirements.Whilst management and soft skills education was provided by over 60% of survey respondents, the fact that education of this type was not provided by almost 40% of respondents demonstrates that the development of the workforce is not seen as a priority by many organisations.What it also demonstrates is that a large percentage of providers view the education of the workforce as being someone else’s problem and that they only want to employ people who can do the job.
Of particular concern is the lack of soft skills education being delivered to the aged care workforce.The relevance of soft skills education such as communication, negotiation, customer service, empathy, culture change, dealing with difficult people and executive coaching is being neglected by many providers.These skills will become critical as organisations try to attract and retain clients in the consumer driven market of the future.Further with the pressure on organisations to attract and retain competent and committed staff the development of these skills in the workforce will be essential if providers also want to stay competitive in the labour market.
7. The final area covered in the HR benchmarking study related to work health and safety.The benchmark data suggests that overall the sector is performing well in this area with the cost of claims as a percentage of payroll being less than 1%.This is not surprising as providers have, over recent years, committed significant resources to managing these areas due the financial pressures associated with workers compensation premiums.We will continue to monitor this area in future studies to determine whether this trend continues.
In conclusion the effective management and development of their people is of fundamental importance to quality service provision in the aged and community sectors.In coming years (as the benchmark data grows) this study will deliver forward thinking providers with meaningful base line information to help them plan and develop their workforce to maximise their competitive advantage.
The information identified in the inaugural Realise Performance HR Benchmarking Study delivers Aged and Community Care providers with a range of valuable information designed to set the baseline for future HR Benchmarks.
Registrations for the 2017 study have now opened and we look forward to analysing and comparing the data between the two studies to deliver greater insights to providers into how to maximise their people resources.We encourage providers to participate in the 2017 Remuneration Review and HR Benchmarking study as we expect that the additional information derived from this year’s study (because it will compare against data obtained in 2016) will provide even greater insights into how providers can maximise the human resource strategies.
We have been benchmarking pay and benefits across the Aged Care and Community Services sectors since the early 2000’s and this year we are changing our
approach to offer organisations even greater benefits.
In addition to the reports we have provided in the past, this year you will have access to a range of benefits and services for twelve months.
Please call us (02) 8624 3300 or
to download the information flyer and registration form.