To ensure our long term success, we are focused on having the right people in the right roles and ensuring we provide the environment for our people to perform to the best of their ability to help IAG deliver on its purpose and corporate strategy.

Engagement

We measure this through our annual engagement survey, undertaken across the Group by an external provider Towers Watson.

Engagement across the Group for the past year was 82, which represents an increase on last year (80). This reflects our on-going commitment to engaging with our staff and we are particularly pleased with the improvements in engagement that we have seen in our Australian and New Zealand businesses. To have our people more engaged and committed to our business gives us a competitive advantage.

We also continue to exceed the benchmark for global financial services companies as set by our survey provider.

Turnover and absenteeism

FY11 saw a consistent reduction in employer initiated turnover. Interestingly, even though the employment market has continued to improve, we have seen little or no increase in employee turnover. Importantly, we have reported a reduction in employee initiated turnover less than one year as a result of initiatives that have been put in place across the business, including the provision of training for managers to assist them in the recruitment process and on-boarding of new staff members.

Absenteeism has remained relatively stable and is an area on which we continue to focus. The slight increase that has occurred in our New Zealand business can be attributed to a number of our own people being affected by the Canterbury earthquakes and needing to take some personal time.

Diversity

The diversity of our workforce is a key area of focus for IAG. IAG is committed to creating a workforce and culture where we respect and value the different experiences of our people, and harness the opportunity and business benefits that diverse ideas and perspectives bring to our organization and stakeholders. Diversity is fundamental to helping us deliver on our ambition to be the world's most respected group of general insurance companies; by attracting and retaining disciplined business leaders who are passionate about our customers and have a broad range of skills, experiences and frames of references, it will drive innovation within our organisation and in turn, deliver an improved financial performance.

At IAG, we're concentrating on improving gender, age and ethnic diversity in our organisation. We believe that improvement in these areas supports our workforce sustainability and builds competitive advantage by leveraging thinking and aligning more closely with our customer base.

IAG's Diversity Working Group, chaired by the Group CEO, which includes the Chairman and a representative from each of IAG's operating divisions and the Corporate Office, is responsible for diversity policy and philosophy and the application of that policy is the responsibility of each of the divisions. Each division is provided with its data so tailored and additional programs can be designed

IAG has for some time reported transparently on metrics to illustrate gender diversity and going forward, we will build on these to reflect our broader Diversity commitment.

The IAG Diversity Working Group will be putting together a program of initiatives relating to these goals, to support our people through the different stages of their working life. During FY12, we will also hold focus groups in Australia, Thailand and the UK to learn more about the experiences of our people and gather suggestions about how IAG can assist through these stages.

Safety

Safety at work is a basic right and expectation of our people and at IAG we are all responsible for this. Our health and safety policy and framework identifies the actions we take to create a safe work environment for our employees, contractors and visitors.

In FY11 IAG Australia revised our occupational health and safety (OH&S) data validation process for reporting of lost time injury frequency rate (LTIFR) and lost time injury severity rate (LTISR), which resulted in improved data capture and greater accuracy in the rates reported. IAG's safety performance is not where we would like it to be in our Australian business, and it is an area of high focus for IAG executives and their operations. IAG's approach is to strengthen our OHS risk management programs to better target the causes of our lost time injuries and the severity of these injuries, and improve performance going forward.

Last year we realigned our health and safety management system to fit the devolved business model. The system incorporates a framework outlining the company commitments, management system, roles, and responsibilities. Divisional health and safety management plans ensure priorities are assigned and targets set for improvement. The program and management plans are reviewed annually as part of the normal business planning process.

In FY11 IAG's focus has been on reviewing our OHS governance framework and management system in preparation for the new harmonised legislation. Governance standards have been developed and a large part of our program for 2011-2012 is aimed at review and alignment of our safety management system with the new harmonised legislation. This is underpinned by the commitment of IAG executives to ongoing improvement of our health and safety programs across the Australian operations.

CASE STUDY

Our diverse workforce

In FY11, IAG conducted a diversity census throughout our businesses to learn more about our people's different experiences and perspectives and give us a benchmark for the current diversity of our organisation. 64% of our employees completed the survey. High level insights include:

• our people have 130 different countries of birth;
• 71% of people have worked in an industry other than insurance;
• a quarter of our people have worked for us for over 10 years; and
• 34% speak more than one language.

These results show the high level of diversity that IAG already has across the business. The census also confirmed that age, gender and ethnicity should continue to be our primary areas of focus.

IAG New Zealand receives culture transformation award

In September 2010, IAG's New Zealand business received a Culture Transformation Award from Human Synergistics, an organisation that researches and measures the relationship between human behaviours and performance. The awards celebrate Australian and New Zealand organisations that have created and sustained great, constructive, work cultures. This award recognised the cultural improvements the have been made within our New Zealand business.

In 2008, our New Zealand business identified culture transformation as a priority due to lower than expected business results and a decrease in engagement scores.

Consequently, life at IAG's New Zealand organisation has changed significantly over the last two years; through the design and implementation of an ambitious and diverse range of change initiatives, there have been positive changes in culture, engagement, retention, absenteeism and profitability.

One of the initiatives implemented includes a coaching framework to encompass the more than 2,000 staff across 28 sales centres and eight branches, with coaching capability positioned as a key component within the Leadership Development program.

The coaching program included consulting, setting clear program objectives in line with business strategy, a tailored training program, communication of the program benefits and successes, coaching skills for all people managers, training of internal coaches and aligning coaching with other human resource processes. The program was integrated into existing frameworks, including remuneration and reward and performance management. Coaching now forms part of all people manager job descriptions and 94% of people managers now report using coaching skills every week.