FY20 has fundamentally tested our notion of sustainability. The incredible challenges that this year has presented have been all encompassing. From the bushfires that devastated so many Australian communities throughout late 2019 and into 2020, to the global COVID-19 pandemic that continues to dictate many of our daily interactions, we have all been impacted.
Regardless of size, businesses across the globe have had their very ability to survive called into question as immediate and sweeping events have impacted their communities, customers, teams and supply chains. Michael Hill has been no exception to this, and we have embraced the agility required to adapt to these events while remaining true to the values which serve as the very foundation of our business.
At Michael Hill, we want each of our team members to feel they are a valued part of our family. We want our customers to have confidence that their jewellery has been ethically sourced and produced, and that we will continue to strive for innovation in our products and the ways we offer them. We want our investors to know that we are willing and able to adapt to the rising and increasingly complex challenges facing people, communities and the planet. Accordingly, our sustainability strategy is driven by the three areas identified as most material by our key stakeholders during a materiality assessment we conducted based on the Global Reporting Initiative Standards for sustainability reporting. Key stakeholders consulted included: trade partners, customers, internal team members (from Board through to team member), academics and industry bodies.
PEOPLE: BUILDING TALENT AND TEAMS
Our people and our teams lie at the very heart of our brand. With the challenges that FY20 presented, so too came valuable opportunities and lessons in teamwork and responsiveness. Our leaders navigated new ways to maintain team connections and culture while working remotely and delivering outcomes in challenging and constantly changing environments.
Supporting this, our operational teams were rapidly developing processes and facilities to allow our teams to feel safe at work, ranging from the deployment of respirator masks to vulnerable team members in the Australian bushfires, to implementing safe operating protocols (for both team members and customers) following the COVID-19 pandemic.
FY20 saw the launch of several new programs and initiatives to measure and improve team member experiences, strengthen internal capabilities, and attract new talent. Early in the year we conducted our first Great Place to Work (GPTW) survey to measure team member experience across the key areas of: Trust, Engagement and Collaboration.
Just over half of our global team responded to the survey and overall, we scored 71% on the GPTW measurement scale. We have developed a clear plan of action to lift this score to 75% and to increase team member participation in the survey.
We aim for Michael Hill to provide exceptional experiences for all and to be a loved employer. Our People Promise is ‘Enabling you to realise your potential’. It’s what sets us apart as an employer to ensure we attract, develop and retain the right talent our business needs to succeed.
For us, being a loved employer is about making that connection, it’s about living our values, it’s about joining brilliance together. The Michael Hill Leadership Promise is ‘As leaders, we will create a high-performance, high-trust culture that is open, honest and committed to excellence’. We have commenced embedding our Leadership Promise, a statement with corresponding actions that show to our team members how we commit to interacting with them, into our culture. Respect, understanding, development, feedback, informing and empowering are all key elements of this promise.
In September 2019 we formally launched our Values, as outlined in the FY19 Annual Report. These values work cohesively with our People and Leadership Promises to form a clear framework for further building the Michael Hill culture.
Our focus this year has been to understand our employer value proposition touchpoints and to reinforce and embed our People and Leadership Promises into our employment lifecycle to further enhance our team member experience. Additionally, we equipped our team leaders with a clearly defined process for reviewing talent and planning succession; a critical step in building a high performing business for the future.
Pleasingly, FY20 also saw significant progress in the rectification of the historic underpayment to our retail workers identified in July 2019. While the discovery of this underpayment was deeply disappointing, we are proud of the commitment shown by our leadership team to remediate this. In early 2020, underpayments to impacted current team members were made. Our remediation work to rectify our former team members continues.
Diversity also remained a focal point, with the establishment of the Michael Hill Diversity and Inclusion (D&I) Council to support the business to bring the D&I strategy to life. Council members represent all geographic and operational areas of the business and span all levels of seniority. The Council meets monthly to identify barriers to inclusion and opportunities for improvement. Additionally, they support the execution of D&I initiatives throughout the year across all countries.
In terms of gender diversity, at the conclusion of FY20 85% of our total team mix was female (FY19: 84%). Women in leadership positions (defined as executive team, regional and store management, and support centre senior leadership) was 52% (FY19: 48%). Female representation on our executive team was 50% (FY19: 50%) and remained steady at 40% of the Michael Hill Board of Directors (FY19: 40%).
We continue to communicate the availability of a hotline available for team members to report instances of discrimination or harassment. This supports the Whistleblowing Policy endorsed by the Board.
Our health, safety and wellbeing initiatives gained momentum during the year. We launched our strategy roadmap to 2023, with a focus on five priorities: Risk Management, Systems and Compliance, Culture and Capabilities, Innovation and Enhanced Wellbeing.
The health, safety and wellbeing of our customers and teams became a critical area of focus during the COVID-19 pandemic. We were the first major Australian retailer to take action in terms of closing stores and while simultaneously increasing our online capabilities, allowing us to redeploy some of our retail team members to supporting those new digital initiatives. As many of our team members across all areas of the business were stood down, we accessed available government wage subsidies in all three countries. Additionally, we rapidly transitioned to flexible working arrangements as many of our working team members took on additional family responsibilities such as home schooling. As our retail business resumed trading, we took (and continue to take) a consultative response to restarting stores and transitioning team members back to our support office, whilst keeping team member and customer safety as the first priority.
Finally, in terms of safety performance FY20 saw a Lost Time Injury Frequency Rate (LTIFR) of 3.46 against a target of 7.01 and industry average rate of 6.0. This was a very pleasing improvement on our FY19 LTIFR of 7.65, however, we acknowledge that this improvement may be partially due to the COVID-19 shutdown period. FY21 will see a continued focus on improving the functionality and effectiveness of our Safety Management Systems, reporting processes and analytics.
PRODUCT: ETHICAL SOURCING
FY20 saw continued focus on ethical sourcing, a core and non-negotiable principle of our business. Our responsible sourcing program is supported by our Conflict Free Diamonds and Sourcing Policy, as well as our Code of Business Ethics and Code of Conduct for Suppliers, a copy of which is available on our Investor Relations Centre website.
As an international multi-channel jewellery retailer, we recognise the inherent supply chain risk exposures that come from operating within the global mining and extractives industry. Notably, in March 2020, we launched our online supply chain transparency platform enabling us to better assess our supply chain for risks of unacceptable practices. This new platform supports our analysis of risks within our supply chain such as unethical sourcing from conflict affected areas, corruption, and modern slavery, and extends on our existing measures to ensure responsible sourcing, including sound supplier due diligence and contractual requirements.
The launch of this platform incorporated sixty-five of our finished jewellery, component, raw material and packaging suppliers representing approximately 60% of company spend. The COVID-19 pandemic has impacted the broader implementation of the platform, however, we will continue improving our supply chain risk management framework as we look to further increase supply chain transparency through FY21.
The launch of the supply chain platform complemented additional work performed in preparation for our first Modern Slavery Statement. Michael Hill is committed to the ethical use of human resources in the supply chain and while no instances of modern slavery have ever been identified in our business, we continue to strengthen our supply chain controls. Our first Modern Slavery Statement will be publicly available in 2021 on the Australian Government’s Online Register and on the Corporate Governance section of this Investor Relations Centre website.
Product and service innovation is a key element of our sustainable business model. In August 2019, we became the first major Australian jeweller to offer a range of laboratory-created diamonds. Our expansion into this range, which is available throughout our global operations, was designed to offer a quality alternative to mined diamonds with competitive pricing and clear provenance.
In October 2019, we launched our new loyalty program, Brilliance by Michael Hill, which offers members access to exclusive promotions, product education insights, VIP sale events and new range product previews. Brilliance by Michael Hill provides another avenue to build meaningful connections with our customers and ensure our business evolves to meet their needs. As at 28 June 2020, there were 144,086 members of the Brilliance family. Since then, membership has grown to over 200,000.
Additionally, our Brisbane based manufacturing team continued to design and manufacture unique Branded Collections which continue to be popular with our customers. Our in-house manufacturing capability also enables the creation of bespoke pieces for our customers.
The evolution of COVID-19 also provided us with opportunities for innovation in the ways in which we reach and connect with our customers. We launched an online virtual direct selling platform, enabling group or one-on-one product viewing, styling and purchasing. We launched new digital applications to support increased customer engagement and developed the functionality to allow customers to shop directly from digital online catalogues. These developments enabled us to continue to serve our customers without an operational network of physical stores and have proven fundamental in sustaining our business through this challenging period.