To start with…
…refresh your knowledge of managers’ titles on page 6 and managerial roles on pages 8 to 11 of the textbook. Then check out a recent decision by the ACCC. Organisations of many shapes and sizes are involved, so we have an opportunity to take a closer look.
So, to summarise…
Different organisations have different goals, and managers are the ones who translate those goals into employees’ actions. In this week’s story we’ll examine three different types of organisations: a for-profit business, an independent Commonwealth authority and the government.
The story features two main organisations: The Australian Competition and Consumer Commission (ACCC) and Careers Australia. ACCC has examined the operation of Careers Australia, deemed it illegal, and ordered it to amend the damages it has caused. That’s the simple story.
The ACCC is basically part of the Australian governmental structure (although it is independent of the federal government). It aims to “enforce the Competition and Consumer Act 2010 and a range of additional legislation, promoting competition, fair trading and regulating national infrastructure for the benefit of all Australians.” This means that the ACCC often represents and fights for individual consumers against large (or small) organisations, which can be driven by greed or other considerations. You can tell from this description that the ACCC shows a few things about the organisations’ goals and what managers would prioritise.
In contrast, we have Careers Australia, a private provider of vocational education and training, operates in a different environment. It competes against other providers of non-academic education, and, like most private organisations, aims to make a profit. But profit alone cannot be a motivator (we will learn more about this when we study about motivation). Notice how Careers Australia doesn’t actually specify its vision or mission in its description of itself. This leaves the public in the dark with regards to the company’s motivation and direction, and perhaps the employees too.
Careers Australia is in the business of enrolling students into practical courses, and it does so by sending agents door-to-door. Now, the system in Australia allows citizens to enrol in such courses and not pay for them directly, but have the tuition as debt. They later pay the debt once they get employed, as part of their tax. That’s what the higher level education and training scheme (VET FEE-HELP) is all about. So basically, Careers Australia could enrol students without them actually paying anything, which is not a hard sell. So that’s what they did. Between 1 August 2013 and 31 March 2015, Careers Australia received and processed applications from around 40,000 students for enrolments into its VET FEE-HELP courses. If you keep in mind that each course can cost about $10,000 on average, that is a lot of money. Indeed, Careers Australia received about $190 million from the Commonwealth for these students.
The problem was that sales people may have been too eager to close the deal and did not fully explain the debt issue. Yes, the debt may be paid in full with a marginal tax rate after you get a job, but what happens if you don’t get a job? Careers Australia representatives made it sound like a job is guaranteed once their courses are complete, but we all know that qualifications alone are not enough to secure employment. Also, many students were not really serious about their studies, and did not complete their courses. Still, they were enrolled, Careers Australia got the money for their fees, and the students ended up with the debt.
The ACCC was approached about this problem and found that Careers Australia did not operate according to the law. It therefore ordered Careers Australia to remedy the situation. In response, Careers Australia cancelled at least 12,130 of these student enrolments and either repaid or partially repaid to the Commonwealth amounts totalling at least $44.3 million, including cancellations made in the course of the ACCC investigation. They have also taken the following steps:
- informed students on its website and at its 15 campuses across Australia about the potential availability of having their enrolment and debt cancelled
- implemented an ACL Compliance Program, including training for staff and regular reviews, and
- not engaged in the conduct of concern in the future.
Careers Australia were not the only organisation in their industry to be examined by the ACCC. The ACCC has also taken action in the Federal Court against four other private colleges:
Australian consumers are very lucky to have such a strong and dedicated body on their side. Such actions send a clear message to businesses country-wide: take consumers into account, be fair, and comply with the laws. Consumers are not helpless and misconduct will be held liable!
Some issues to notice and pay particular attention to here are…
- Three characteristics of organisation
- Managerial titles
- Managerial functions
- Managerial skills
Consider the following questions for discussion…
- There are two different types of organisations involved in story. Identify them, and identify how they would vary across the three characteristics of organisations described in Figure 1.1, on p. 5.
- Identify the titles of managers who would be involved directly, and indirectly, in the actions of the organisations you’ve identified in the previous question.
- Think of the four management functions (p. 8-9). How would the managers in each type of the organisations you’ve identified in question 1 address each of these functions when they operate to achieve their goals?
- Have a look at the managerial skills listed on page 11. How would these skills be used by the different managers in the different organisations you’ve identified?
- How do you think managers across titles failed to identify the problem in Careers Australia’s conduct? In your view, what should they have done?