TOP 200 : Kensington Swan Ethical Governance Award New Zealand – NZ Aluminium Smelters

While the boards of most New Zealand businesses could be expected to say they believe in ethical governance and are supportive of it, many struggle to identify specific examples of ethical leadership within their companies. Rather than having business ethics front and centre on the board agenda, for many it is nice idea that is left to management where it may happen – but not as part of board-led strategic imperative.
A shining example of board truly committed to ethical governance is New Zealand Aluminium Smelters (NZAS), which takes top honours this year for engaging employees in co-creating an exemplary response to address the global financial crisis.
This crisis that started unfolding in 2008 made significant impact on NZAS, with the aluminium price dropping staggering 60 percent, coupled with an unexpected transformer failure resulting in the loss of 28 percent capacity. It was imperative that cost savings were made immediately.
NZAS was faced with number of options. The fastest track to gain immediate cost savings would have been to cut jobs without facing the medium to long-term consequence of such an approach. This was not, however, viewed as sustainable strategy.
Therefore the decision was made to empower the workforce to develop response to the crisis themselves. Communicating openly, seeking input and acting on the advice given ensured everyone working at the NZAS site was on board.
“Idea Generation Sessions” were carried out throughout the NZAS site, with all employees attending. More than 1400 ideas were developed by employees, with $7.5 million in savings ideas accepted and taken forward for implementation. Contractors were also requested to make savings. This approach recognises that engaging all employees and contractors to identify value improvements is crucial and will result in changes being accepted in the workplace lot more readily.
Around 90 people, ranging from those with young families through to those nearing retirement, took up the option of the “leave without pay” and “reduced working hours” programmes. The “extended leave without pay” programme offered employees the opportunity to try other jobs elsewhere or take an extended holiday, with the advantage of knowing they could come back to NZAS at the end of their leave period.
An early retirement programme was also implemented, giving long-serving employees who had completed over 20 years service the option to retire. total of 32 people took up the voluntary offer.
The company believes that these and other options have enabled NZAS to provide flexibility, create an inclusive environment and reduce costs, all of which will lead to recovering the company’s financial position.
NZAS was the only site within the Rio Tinto Alcan group to actively promote these voluntary programmes and completely engage the workforce to develop the solutions. It gave employees choice. Significant forced redundancies occurred at other parts of the business. This was something that NZAS certainly did not want to do and it has done everything in its power to ensure this doesn’t happen.
The outcome is stronger, more resilient business that is better poised to meet future challenges.

JUDGES COMMENTS
WINNER : NZ Aluminium Smelters
Empowering Employees
Whilst others may struggle to understand ethical governance, NZ Aluminium Smelters has yet again shown that principles pay.
This is company that has regularly appeared in the Top 200 Ethical Governance category – winning in 2004 for its workplace safety programme and in 2007 for tackling the climate change challenge from board to smelter floor. Last year it was again finalist for its support of local people with disabilities. Since then, it has demonstrated that pursuing strongly ethical stance in the face of tough external conditions helps create business that is more resilient to changing market conditions.
Its creative and inclusive response to the 2008/2009 financial crisis is great example of ethical governance in action.
It is worth noting that NZAS employees have been very accepting of the changes made during the last months of 2008 and throughout 2009. This reflects the excellent culture at the smelter where people share common set of values and beliefs about who they are as an organisation and where they are going.
From the board to the factory floor they recognise the importance of everyone supporting each other through difficult times.
The NZAS Strategic Map identifies six “Key Result Areas” the business needs to focus on in order to achieve its vision, and management is required to report progress to the board monthly and annually.
These include People Commitment: “NZAS is place where all people feel valued and want to be part of winning team.”
Its response to the global financial crisis demonstrated that this commitment is fundamental part of the NZAS culture. The company has reaffirmed through ethical governance its position as flexible, resilient business, poised for better future for its employees and the community in which it operates.

FINALIST : Vodafone New Zealand
Employee Engagement in Innovative Giving
To Vodafone, social investment is not an add-on to business activities, but at the heart of how it engages with the communities where its customers, employees, investors and suppliers live.
Vodafone’s commitment to the community is reflected in its ‘Hands Up’ programme which gives Vodafone employees the opportunity to work with youth-related organisations for up to two weeks while still receiving their salary. All Vodafone permanent staff are eligible to apply for one of the many positions working with organisations that they feel passionate about, helping to make difference to the lives of young Kiwis.
In 2008, Vodafone employees contributed over 1000 hours of their specialist skills to youth-related charities.
The ‘Double your $’ programme allows Vodafone employees to apply for matched funding to support their fundraising activities for any cause they feel passionate about. In the 2008-2009 financial year, more than $60,000 of funds were matched to New Zealand charities reaching diverse range of causes.
This commitment extends to the Vodafone New Zealand Foundation which manages the Grant Making Programme and the World of Difference Programme.
The Foundation also promotes best-practice employee engagement, leveraging the skills of Vodafone employees to meet the needs of its community partners, which currently include Youthline’s initiative to establish community centre in Papatoetoe and Odyssey House’s prevention work targeting youth at risk of school exclusion due to drug use.
Social and environmental and KPIs are integrated into the Vodafone business plan, and members of the executive team (the Vodafone NZ board) are responsible for the sustainability initiatives which fall under their operational leadership.

FINALIST : Cavalier Bremworth
Measuring Ethics
Cavalier Bremworth, subsidiary of NZX-listed Cavalier Corporation, has demonstrated leadership in ethical governance by undergoing an independent audit of its ethical standards.
The board wanted to determine if this leading carpet manufacturer with spinning plants in Napier and Wanganui and tufting plant in Auckland, was living up to its standards and behaving in an ethically responsible manner. The company’s values include the intention to “Be good corporate citizen in terms of social and environmental responsibilities, and conduct business with consistency and absolute integrity at all times” and it wanted to ensure it was walking the talk.
The ethical audit in mid 2009 involved an online survey of 156 of the company’s 500 employees along with customers and suppliers, on-site questionnaires with factory employees, and one-on-one interviews with community and environment stakeholders. The results showed practices where the company was strong as well as areas of concern where improvements could be m