Guess what I just discovered? I have a job for life!

By: Natasha Hawker

We recently sent out a survey to a number of small businesses to ascertain how compliant they are around current employment legislation - and it made for stark reading. We had respondents from a wide range of industries such as travel, IT, finance, accountants, events, publishing and interior design to name just a few. The main issues centred on three key areas – Hiring, Performance and Culture.

The main results were as follows:

·      A significant number of businesses do not review salaries annually – although this is not a legal requirement it does ensure compliance with the Award and also benchmarks the business against competitors

·         86% of respondents had fired someone, predominantly for non-performance or fraud and 25% had received a complaint raised against them as a result through the Fair Work Ombudsman – this is a high proportion and could so easily be avoided by following some processes and having documented meetings. For everyone the experience meant a financial penalty

·         Over 40% did not know what Modern Award their business falls under – this is a legal requirement and it's therefore highly likely that you are at risk of a breach with fines of $52k per breach

·      Two thirds used recruitment agencies but only 50% felt that they got value for money for this  spend

·         60% did not have a Workplace Health and Safety Policy in place and many were unaware of their legal obligations in this space – this is a high risk approach and I would encourage this to be fixed ASAP

·      45% did not have a company policy on Sexual Harassment, Bullying and EEO and 86% had not appropriately trained their employees on appropriate workplace behaviour – this dramatically increases direct exposure to a claim and damages costs

·       55% did not understand their obligations under Flexible Work and almost half still believed that the parent on parental leave needed to return to work full time at the 12 month mark – this is not the case - employees can request a further twelve months. They can also request leave up until their youngest child is at school, flexible work which could mean part time, a compressed week or working from home

·       One great result - 85% of respondents felt that their employee morale was either good or really high – this is a fabulous result and one I would encourage you to continue to build and reap the rewards from

The good news is that this is all easily fixed and doesn’t have to cost very much. The best thing is that it will save you money and, not only that, you will make more money as a business by hiring the right people, firing the non-performers and building high performing teams. We have all the policies you require plus we can help you hire (and better still fire) effectively. Please call me if you would like to chat about this further.

Natasha Hawker owns Employee Matters Pty Ltd; an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management – find them at www.employeematters.com.au

FWA rule - you can't fire someone who publicly called the MD a 'wa....!'

Recently, FWA ruled that Home Choice had unfairly dismissed an employee who had emailed the entire company calling his MD a name (rhyming with banker!) and stating that one of his hobbies was masturbation. Pretty extreme I would say, so why couldn't they fire him and what can we learn from this case?

Culture - it might be alleged that the company has a culture that allows the sharing of images, bad language and verbal abuse among employees, with senior management, at worst actively involved and, at best, complicit. One of the issues with this type of culture is that employees tend to assimilate and follow the patterns of behaviour - or leave, so the culture gets stronger and stronger. I know of someone in the building game that was working within a similar culture and survived by towing the line. This was until he realised that he was coming home and speaking to his wife the same way. He promptly left!

Precedence - given that this type of behaviour was active across the business and at all levels you cannot single out one incident with different treatment. But had there been active management of this behaviour and strict control, this incident would have been far less likely to be ruled unfair

Policy - there were no policies in place to guide and manage employees' behaviour. If employees are not told that this type of behaviour is not appropriate you can't manage this retrospectively

So what was the ruling? - Well, the employee did not want to be reinstated although this was an option. He was initially awarded $30,000 compensation reduced to $20,000 because of his role in the situation.

This company has a major cultural change to undergo which will be painful and will need to be led from the top. They will experience high attrition levels but the irony is that a positive culture built around respect for the individual will ultimately increase their employee engagement and motivation levels and improve the customer experience leading to better financial results.

Exit Stage Right

You may or may not have ever thought about the end - the time when for a number of reasons you would like to sell your business. The frightening thing is, is that you are not alone - the majority of business owners haven't either - but if you would like to get 4 times your EBIT for the sale you need to be thinking about this now...

I met a guy who had run a very successful business for 30 years turning over approx. $30m p.a. and with a profit of $2m pa. His wife had worked in the business with him but she was keen to spend more time travelling now that they were hitting their sixties. So in theory, the sales price should be close to $8m - the problem was everything was in his head, there were limited detailed processes or employee records. His business was significantly devalued as a result and he is likely to walk away from it and not recover the pot of gold at the end of the rainbow. So what can you do to prepare for the end?

1. Systemisation - every process, procedure and practice - so that someone else can pick it up and run with it and the business is not totally dependent on key personnel. This activity will also protect against attrition

2. HR - have detailed personnel files and contracts, job descriptions and annual reviews. Your employees are often part of the transaction and the potential buyer will want to understand their skills, annual leave and long service leave liability plus the performance records that they will inherit

3. Practice run - know that your business can run without you for extended periods of time - take some lengthy breaks, try and switch off and then come back and learn from the experience - what were the issues and how can you protect against those issues in the future?

4. Plan & prepare early - look to maximise your profits in the three years leading up to your sale but, more importantly, start an exit strategy document now to think through issues such as prospective buyers, financial and legal advisors and, importantly, your life post the sale. Any prospective buyer is likely to complete a thorough due diligence review too

It is really important that you start your business with the end in mind - sounds counter intuitive I know but it will also help with the everyday business decisions if you are always linking decisions, strategy and operations to the day of exit.

The Secret Sauce

By: Natasha Hawker & Caroline Ross

Why do some people want to desperately work for some businesses and avoid others like the plague? Mostly it can be put down to culture or the managers’ reputation. But how do you make or create a culture? Why would you bother? My thinking is that if more businesses focused on their cultural strategy, many of the other metrics such as performance, productivity, attrition & engagement would increase as a result.

Recent research shows categorically that employees want to work for authentic leaders. So what does this mean? Is it as simple as being a decent human being? No, I am afraid not - as the authentic leader also needs to be coupled with an authentic organisation. The good news is that as an entrepreneur or small business owner, you can determine the culture of your organisation.

 So how can you do this?  You can break it down into these six key cultural factors:

1. Vision: A great culture starts with a vision or mission statement. These phrases guide a company’s values and provide it with purpose. That purpose in turn, orientates every decision employees make. When they are deeply authentic and prominently displayed, good vision statements can even help orient customers, suppliers and other stakeholders.  A vision statement is a simple but fundamental element of culture.

2. Values: A company’s values are the core of its culture. While a vision articulates a company’s purpose, values offer a set of guidelines on the behaviours and mindsets needed to achieve that vision.

3. Practices: Values are of little importance unless they are enshrined in a company’s practices. If a business professes, 'people are our greatest asset', it should also be ready to invest in people in visible ways. Whatever the company’s values, they must be reinforced in review criteria and promotion policies, and fully lived and incorporated into the operating principles of daily life in the business.

4. People: No company can build a coherent culture without people who either share its core values or possess the willingness and ability to embrace those values. That’s why the greatest firms in the world also have some of the most stringent recruiting policies.  One study found applicants who were a cultural fit would accept a 7% lower salary and departments with cultural alignment had 30% less turnover. People stick with cultures they like and bringing on the right culture carriers reinforces the culture a business already has.

5. Narrative: Any company has a unique history — a unique story. And the ability to unearth that history and craft it into a narrative is a core element of culture creation. The elements of that narrative can be formal — like Coca-Cola, which dedicated an enormous resource to celebrating its heritage and even has a World of Coke museum in Atlanta — or informal, like those stories about how Steve Jobs’ early fascination with calligraphy shaped the aesthetically oriented culture at Apple. But they are more powerful when identified, shaped, and retold as a part of a firm’s ongoing culture.

6. Place: Why does Pixar have a huge open atrium engineering an environment where business members run into each other throughout the day and interact in informal, unplanned ways? And why do tech firms cluster in Silicon Valley and financial firms cluster in London and New York? There are obviously numerous answers to each of these questions, but one clear one is that place shapes culture. Open architecture is more conducive to certain office behaviours, like collaboration. Place — whether geography, architecture, or aesthetic design, impacts the values and behaviours of people in a workplace.

There are other factors that influence culture. But these six components can provide a firm foundation for shaping a new organisation’s culture. Identifying and understanding them more fully in an existing organisation can be the first step to revitalising or reshaping the inherent culture in a company looking for change.

Natasha Hawker owns Employee Matters Pty Ltd; an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management – find them at www.employeematters.com.au

Biased ? Not me

By: Natasha Hawker

I was visiting McDonalds yesterday on the behalf a client and, as I was leaving with my host, the lift opened and a women entered - average height probably in her late thirties - my host exchanged the usual type of pleasantries with her, as you do in a lift, so I assumed that she was a colleague and mentally pitched her at middle-management level. When we exited the lift and were out of earshot, my host said proudly 'that is our CEO, Catriona Noble. '

Well, my Unconscious Bias was working overtime as always - you see, as much as I pride myself on the 'women can do anything' mantra and the need - no, the criticality of getting more women to the boardroom - I envision, unconsciously, a CEO as male, in their 50s and over 6ft tall!

So my apologies and my admiration, Catriona - I only hope that you mentor and encourage more women to the top, during your time at the top of the Golden Arches.

Natasha Hawker owns Employee Matters Pty Ltd; an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management – find them at www.employeematters.com.au

HR data....Yawn!! - but wait - you do need to know this

By: Natasha Hawker

HR has long had a 'touchy feely' reputation but this is fast changing and in my view will continue to do so. At the big end of town, bit by bit the data is changing or improving the decisions made around what is often one of the most expensive costs to a business - your people.

I believe that SMEs need to watch, learn and take best practice from the corporate world, but use it if, and only if, it works for your business. That said, I believe that you can learn from their mistakes but also apply it in a way that makes sense for you.

For example - what is the current employee turnover of your business as a percentage of your total headcount? As a guide, a healthy turnover is about 10-20%, depending on your industry. Why does this matter? - because it is damn expensive and time-consuming to replace people, but it also means you are not focused on what you should be! Not only that, there will be a dip in productivity as a result.

How would tracking the trends help? Well, for a start you might see the following:

• cost management opportunities
• identification of roles that are particularly difficult to retain and so develop strategies to address this
•  identify management issues
• determine whether you are struggling to identify what you really need
• improve your company's attractiveness to the market- why would someone want to work for you?

 There are a number of beneficial pieces of data that are worth capturing as this will enhance your decision making ability - some other metrics you might want to consider are: 

• workforce mix - permanent full / part time, temps, casuals & independent contractors
• annual leave liability vs. scheduled annual leave
• managed attrition vs. unmanaged attrition
• absenteeism trends / issues

 All the above are costs to your business but also they are levers that you can pull to reduce costs.

What metrics are you measuring and how has this impacted your business?

Natasha Hawker owns Employee Matters Pty Ltd; an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management – find them at www.employeematters.com.au

Merger anyone?

By: Natasha Hawker

Now things seem to be looking up are you thinking about a merger or acquisition? Many SMEs decide one of the quickest ways to grow your business is to buy another one.

There is a lot of due diligence required around the financials, compliance and other legalities - but there are also the legal requirements if you want to take on the seller's employees - if you are considering this I would recommend that you complete the following checks:

• review all employment contracts - it's likely you will find a wide variety of them - which,  as the new owner, you will need to meet the BOOT test (more on this later)
• personnel file audit - what are the performance levels of the current employees
• what are the absenteeism rates like? - if high, there may be an underlying problem
• what is the current percentage rate of attrition? - is this managed or unmanaged
• what type of training is recorded? What's the frequency of this
• what are the accident or near miss rates like?

 Collecting and analysing this information will provide you with a wealth of knowledge about the employee footprint and will also provide the value proposition of the employees, (or alternatively the problems you are about to inherit).

Example - I knew of a company that had casual employees on permanent contracts - not great but not the biggest problem - these employees had upwards of twenty years service. The buyer did not check the personnel files, so has just inherited a massive liability in terms of long service leave and redundancy payouts. Now obviously the seller did not share this piece of information and had they, the sale may have proceeded but it would have likely affected the price.

If you are looking at transferring employees across to your company and a warning up front - this is a complex area of employment law, you must pass the ‘BOOT’ or the Better Off Overall Test. This effectively means the employees transferring across cannot be made to settle for employment conditions less or lower than their current situation. This is beyond compensation and could cover conditions such as additional annual leave or guaranteed training budgets. A further consideration is - how will this impact your current team when they find out the new guys are on a better deal?

Have you had any experience positive or negative experiences in this area?

 Natasha Hawker owns Employee Matters Pty Ltd; an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management – find them at www.employeematters.com.au