STAKEHOLDER RELATIONS

The company’s primary responsibility is, and always will be, to its shareholders, the people who, through a willingness to invest, place their confidence in the Board and employees to successfully manage the business operations. But in an era of increased focus on both government and corporate accountability, greater attention is being paid to the relationship between public companies and a broader group of stakeholders.

Wesfarmers does not believe there is a case for extra regulation aimed at ensuring listed entities formally take into account the interests of those other than shareholders who have an interest in the activities of the corporation. This would merely add to the already substantial compliance responsibilities faced by listed entities without any guarantee of making a material difference.
One of the reasons for Wesfarmers’ rejection of a legislated response is that, from its earliest days as a farmers’ cooperative, the company has recognised the need for and desirability of fostering and maintaining good relations with a broad constituency of interests.

Foremost amongst this group are the company’s employees. As the Managing Director noted in his overview remarks, the competition for talent has emerged as a major determinant of ongoing business success. The Wesfarmers group employs more than 30,000 people on a permanent and part time basis. To attract the best available skills, the company aims to be an employer of choice. Some of this relates to the terms and conditions offered but there are other important aspects contributing to the perception of a company in the employment marketplace.

These include the provision of safe working conditions, an environment where discrimination on any grounds is not tolerated and where openness is encouraged without fear of retribution. All the company’s operating businesses have well-developed safety systems and the group’s Code of Ethics and Conduct provides a framework for behaviour internally and externally, including specific protection for whistleblowers.

The main safety measurement used across the group is the lost time injury frequency rate (LTIFR). The LTIFR is a mechanism which relates injuries that result in lost time to total hours worked, although businesses are encouraged to use other indicators of safety performance, such as the number of all workplace injuries. Unfortunately in 2006/07 the company’s overall LTIFR increased from 9.5 to 10.5. Wesfarmers has a group-wide target of a 50 per cent annual reduction on the way to a zero outcome. Part of senior management remuneration is linked to safety performance.

Career development opportunities are another important aspect in enhancing the attractiveness of an employer. With the very great sector and geographic spread of the Wesfarmers’ businesses, most training and development responsibility logically resides with the operational units. There are some group-wide programmes which supplement the business level activity.

A co-ordinated succession planning process monitors the progress of more than 100 of the group’s most senior people with a view to identifying candidates for internal promotion as well as being part of a broader strategy to retain key people. A number of management development programmes are open to participants from across the group. The biggest group gathering of senior managers, the Best Practice Conference, is held about every two years. The last such event was in September 2006 with around 250 delegates coming together in Perth to hear and interact with internal and external speakers on the theme “Sustainable Success – Integrity, Implementation & Innovation”.

With such a range of business operations there is a mix of arrangements covering terms of engagement and conditions of work. Wesfarmers recognises the right of individuals to negotiate in their own right or as part of a collective approach which may or may not involve third party participation. The company’s aim always is to maximise flexibility at the workplace level with an emphasis on cooperation and mutually beneficial outcomes. Extensive use is made of enterprise bargaining agreements which are negotiated with unions. Individual contracts under common law are also used and a relatively small number of Australian Workplace Agreements are in place.