There are two main service types funded by the Australian Government to provide employment services for people with a disability. The first are the Disability Employment Services (DES). A DES is a specialist employment agency that specifically provides support for people with a disability to prepare for, find and maintain employment in the community. These services include both non-profit and commercial operators, and are funded by the Department of Education, Employment and Workplace Relations (DEEWR).

The second are Australian Disability Enterprises (ADE) who are funded by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to provide supported employment.

An ADE specialises in establishing and operating a business in order to provide employment and are predominantly non-profit organisations, providing employment for people with high support needs where community employment through a DES would not be the best option.

Although DES and ADE services meet the same ends (employment), they provide support for very different groups of people and in very different ways. Yet funding models for both services are almost identical, focusing solely on the direct cost of human service provision. While this works well for DES providers, the same can’t be said for an ADE, as it assumes there is no relationship between the cost of operating a business and the provision of human services.

However, if a comparison is done between an ADE and their main-stream commercial counterparts there are many differences. This is due to their social purpose activities which have a marked affect on operating overheads, regardless of how efficient or well managed the ADE business maybe. Consequently, why all ADEs are non-profit enterprises as business revenues must be re-invested back into the organisation in order to fund the cap that FaHCSIA funding does not cover.

Examples where differences can be measured include:

Capacity- (The equipment and labour required to meet demand for products and services.)

The primary purpose of an ADE is to provide employment for people with a disability; particularly employment for people where a DES, is not currently the best option, due to ongoing or intensive training and/or support needs.

Typically the overall productivity of a work force will be lower than that of their mainstream counterparts regardless of how effective management is or what industry they operate. Consequently this directly affects an their capacity to produce and consequently their overhead costs are higher.

For example in order for an ADE to produce the equivalent output to their mainstream counterpart. An ADE with workforce that has an overall productivity of 50% would need to deploy twice the personnel to achieve the same result. Consequently, the on-costs such as the plant & equipment, administration and other facilities required to support a larger work force would also be of an equivalent magnitude.

Office/Factory/Warehouse - (The office and/or factory space required to accommodate equipment and personnel)

The size, type and location of premises chosen by an ADE require different priorities to that of their mainstream counterpart. Requiring not only larger premises to accommodate a larger workforce, staff, equipment, and facilities, as outlined above. They also have a greater need for access ramps, accessible toilets, and also need to be situated in locations where suitable transport and community services are easily available.

Management - (The people required to affectively manage, supervise and maintain plant, equipment and personnel)

ADE’s have a dual-role, and consequently so too does Management as these roles are intertwined and can not happen without the other.

1. First to ensure that an appropriate level of training and support is provided for people to meaningfully participate in the businesses activities.
2. The other is to ensure that its’ products and services are marketed appropriately, costed viably, and produced effectively, meeting customer expectations for quality and price.

Correspondingly, production methods and practices must be designed or modified to ensure that supported personnel can effectively complete tasks to customer quality expectations, and within specific time frames.

This demand requires greater complexity and increased management skills, particularly in production management, scheduling, and capacity planning. Moreover, as the number of personnel increase, so too, do the levels of supervision, training, maintenance and support.

Business Choice - (The type of products or services supplied by a business in order to generate employment and commercial income)

All businesses aim to make a surplus from their commercial activity, and this is equally important for an ADE, the difference is every cent raised is re-invested back in. However due to the social purpose of an ADE it is equally important to identify business opportunities that can also offer the greatest employment opportunities for people with a disability.

For many good reasons an ADE may choose labour intensive, low skilled industries that require minimal capital to establish, such as sub-contract assembly, packaging, cleaning, and horticultural services.

However, the entry point to this type of business is equally accessible to anyone else and consequently they are highly competitive. Even more difficult for an ADE as they are publicly accountable and must address additional cost restraints such as premises, management practice, duty of care and employment conditions. Compared with many of their competitors who maybe small or family business owners and would not necessarily need or want to comply.

Alternatively, an ADE may choose to pursue more skilled based and profitable businesses, such as product manufacturing, design, or IT-based industries, but will face just as many other challenges such as:

o High equipment establishment costs and maintenance
o Securing adequately trained professional staff to manage operations
o Adapting to continuous work task changes, requiring high levels of ongoing training
o Complex production scheduling and work place modifications
o Research and development to remain competitive.

Sales and Marketing - (The sales and marketing activities required to maintain and expand demand products and/or services)

Unfortunately, even with many social changes in community awareness over the last 25 years, ADEs still face many long-standing stereotypes.

For example, that they are sheltered workshops, and provide cheap un-skilled contracting services and as a result they are not generally regarded as providers of skilled, innovative, or quality products or services. Regardless of being able to demonstrate these competencies.

Consequently, ADEs must continually work against these stereotypes by working actively to change community attitudes and by providing either better services for the same cost or the same service for less cost.

Training - (The training required to maintain personnel skills and the business’ competitiveness.

The majority of personnel employed in mainstream business will generally come to a position trained; requiring smaller amounts of periodic training to maintain the businesses’ competitiveness. Some positions will require higher levels of training such as traineeships, but these will constitute a much smaller percentage in a business’ overall personnel population.

However, as ADE’s function and purpose is to provide employment for people who do not have skills and in most cases no previous experience in the roles in which they will be employed. The training requirements are quite the reverse to that of a mainstream business, as the majority of personnel will require higher levels of ongoing training to maintain employment. While staff may require similar levels of training as their for-profit counterparts, they also need additional training to meet their human service and duty of care obligations due to their duality of purpose.

Administration - (The administrative requirements such as accounting, budgeting payroll and Human Resources)

ADEs are often physically two to three times the size of mainstream businesses for the same level of sales turnover. As a consequence, its accounting, payroll and administrative activities are considerably greater than mainstream businesses.

Further, as ADE is generally an incorporated non-profit body and may also rely on funding or fund raising they equally have greater accountability responsibilities. Also along with normal accounting, payroll and industrial relations requirements, they must comply with additional administrative and accounting practices, such as regular full account reporting, annual auditing, periodic Board reporting and the reporting requirements of their stake holders and funding bodies. It could be said these reporting practices are common in many businesses but when comparing the annual sales turnover this is rarely is the case for mainstream businesses of a similar turnover.

Finances - (Cash flow to maintain operations and borrowings or capital required to expand operations or to improve its competitiveness)

ADEs have higher overhead costs and have limited access to normal commercial finance. Board Members of non-profit organisations are volunteers, and as such, are more likely to avoid personal or public risk.

Consequently, non-profit organisations have a very restricted ability to provide security for borrowings, as they are unable to provide personal Director Guarantees. As a result Board Members are less entrepreneurial and may also actively discourage management from being entrepreneurial.