People Smartz Blog

I am often conducting compliance reviews for small to medium sized businesses.  These reviews are designed to identify any issues that may be placing a business at risk in regards to the many legislative areas that govern employment in Australia.

This is a large area - we are dealing with laws in industrial relations, Health and Safety, Discrimination, Equal Employment Opportunity, Independent Contractors and the list could go on.

For a small to medium sized business remaining compliant in an ever changing legislative environment is almost a full time job! This is highlighted in the reviews I do, where I am yet to find one business that is fully compliant.

The most common area I need to address with business owners is the lack of employment agreements.  These agreements describe the employment relationship and are essential for establishing the expectations of both parties in their relationship.

In Australia, a common excuse for not having agreements is that the employee is employed under an award and that is sufficient.  Unfortunately, it is not!

An award covers the minimum standards for employment.  It does not contain any clauses for the protection of the business, nor does it assist in the maintenance of standards within the business.  It is designed to protect the employee not the employer.

To explain this I often say to my clients the following: "if you were establishing a relationship with a client, would you ensure that your expectations and their expectations were clearly defined and easily understood".  For the majority of my clients the answer to this is "Yes".  When I follow on with the question "well, why shouldn't it be the same with your employees?" - the penny finally drops!

Another major reason for having employment agreements is for the protection of your business. Clauses should be inserted regarding things like confidentiality, the protection of intellectual property, protection of client lists and employees responsibility to obey company policy.  These and other clauses are essential protections for your company and are definitely not contained in an award.  

At People Smartz, we are more than happy to assist you in putting employment agreements in place for your business.

Contact us to discuss your requirements.

If you already have agreements in place, we currently are offering free compliance reviews for small to medium sized business which include a review of one of your employment agreements.

Book your compliance review today.

Yesterday, while I was talking to a business collegue, she made a good comment - "why are business owners so willing to accept a risk when it is so easy to fix".

This comment got me thinking.  I am meeting with business owners everyday and I see them making such decisions.  For most it is simply a matter of whether they can afford to fix the problem or not - regardless of the level of risk.

The question for me is whether they are asking the right question.

Now we all know that the level of risk is a combination of the likelihood of something happening and the consequences if it does occur. 

It worries me that businesses often do not protect themselves against a risk until they actually get caught out by that risk.  When that happens the cost is often substantially more than than any risk control would have cost proactively.
 
This is particularly relevant with employment and workplace risk. Business owners can be reluctant to take measures to protect their business when it comes to their employees and their employment. 

I am yet to find an business owner who has not taken measures to protect their business against theft, fire, public liability etc.  Policies for these are in place and renewed annually.  When dealing with clients they ensure that their and their clients expectations are managed through appropriate agreements and procedures.  In short, in these areas, they manage their risk.

However, the number of business owners who do not manage the risks in employment should be a concern.  It is not unusual for me to come across businesses:

• Without employment agreements and other tools to manage expectations (such as position descriptions).
• Who are unaware of the appropriate award or agreement for use in their industry
• Without appropriate OH&S practices
• Without appropriate policies and procedures in regards to legislative requirements
• Who do not understand the unfair and unlawful dismissal laws
• Who do not understand the risk and cost of employee turnover.

This list could go on.  The truth of the matter is that the cost of a breach of any of the above would far out weigh the cost of implementing easy processes to alleviate them.

In that respect, the question should not be "can I afford them", it should be "can I afford not to have them controlled".

At People Smartz, we are currently offering a Free Compliance Review for businesses to enable them to assess their levels of risk. 

I have met with a potential client in the last couple of weeks, who was not concerned over the level of turnover he was experiencing in his business.

His turnover levels were around 50% a year and he had managed his business on this sort of rate for many years - his comment to me was that it was just what happened in his industry.

Well a little bit of research did tell me that turnover was high in this particular industry, but 50% was almost double the industry average!

Unfortunately for this gentlemen I needed to point out to him the cost of this turnover to him in time, effort, experience and, of course, profit.  When they were calculated, to say he was shocked is an understatement! 

The actual cost of replacing an employee can be calculated at somewhere between 50% and 200% of an employees salary.  This amount is a result of the time and effort required for recruiting (advertising, shortlisting, interviewing, time for all of the above), the loss of productivity, the cost of training new employees and many other, incidental, factors.

But high turnover can also be an indicator of other problems with your business - and with the cost of replacing employees, these can not be ignored!

Some hints for improving your turnover rate are as follows:

1. Hire the right people - not just in terms of qualifications or experience but also in terms of motivations and values.  Attempt to ascertain the drivers of your potential employee prior to employment and make sure you can meet them before offering them a job.
2. Remember those motivators as you deal with them during their employment - these are the things that are going to keep them interested. For example - people who are goal/career motivated need to be treated differently to people seeking security.
3. Our workforces today are more mobile - acknowledge this and find ways of making it work for you.  If a person feels it is time to move on, then find ways to make it easy on you and them. 
4. Find ways to improve communication and continuously improve the workplace.  Keep your employees engaged by involving them in developing their own goals and targets.  Communicate your goals and targets for the business - don't keep them in the dark!

Reducing turnover is a long term goal but worth it in terms of your time, effort and profit.  If you require assistance, People Smartz can provide you with a number of services to improve your results.  Contact us today!

It suddenly occurred to me that the one blog I had not written so far was the one about our People Smartz tag line "People Drive Results".

The one thing every business has in common is that people are involved.  Whether we are talking one person hanging out their own shingle or a company with 100's of employees - people are always involved.

Regardless of the business, regardless of its purpose, it is people that make things happen and it is people that work to make that business a success.  It doesn't matter what tools you put in place, what processes they follow or  who they are, it all comes back to the people who work in and on the business.

On Monday, I attended a seminar and met a gentlemen who ran his own company in landscape design.  Now I will admit, I have two brown thumbs, but this man even had me excited about his company, his industry and him!  He was a perfect example of "people drive results". Regardless of the tools, regardless of the processes, regardless of the client, it was he who made the company what it was - a successful business.

I meet many businessman who spend money on new software programs, consultants, marketing programs etc.  These are all essential and important to the productivity of their company and should not be forgotten.  But when I start talking to them about the ways they can improve on the gains from this further by spending money on their people many look at me like I am delivering something astonishingly new! 

The most basic asset of any business is the people, the area where the most gain can be made is through people and the most cost effective way of having a successful business is through developing yourself and your people. 

Yes - regardless of the business, it is people who drive results.  Why not talk to us about how we can help you drive your business? Contact People Smartz today.

The HR Coach Research Institute has released its latest quarterly index of business in Australia.

The HR Quarterly Index provides a summary of employment confidence in the business sector. The Report identifies a rebound in business confidence; however businesses need to be aware of management fatigue.

The 3 critical issues for business has remained the same over the past 3 quarterly results – Lack of work or sales, cash-flow and economic climate. Participation rate of employment is being upheld with the increase in part time employment – indicating that businesses are shedding hours, not jobs. This is a healthy indicator for long term sustainability of knowledge and skills in hope of a turnaround in the market.

Businesses are in need of clear communication strategies internally and management structures. This is placing pressure internally on the employment relationship in the current market.

Employers are concerned about employee focus on the job at hand. Employees are looking for direction and clear planning with communication relating directly to the individuals future.

Management fatigue is currently critical for both employers and managers as they navigate through managing in uncertain times.

All these factors combine to provide business with a great opportunity to create a competitive advantage through their people. Contact us today!
> Download the HR Quarterly Index July 2009

Over the last two days we have seen one of the final institutions of Work Choices demonstrate one of the basic differences between Work Choices and our new Industrial Relations laws.

The Fair Pay Commission has decreed that there will be no increase in the minimum adult wage.  The Fair Pay Commission is a Work Choices Institution given responsibility for the setting of minimum wages etc.  When making decisions regarding minimum wages, the Fair Pay Commission is required under the Work Choices Legislation to take into account the economic effect of any wage increase on the Australian economy.  It is also required to take into account the effect of tax cuts or additional family payments that may have occurred in the period since its last decision.

Given the current economic environment, the raising level of unemployment, recent tax cuts, the introduction of stimulus handouts etc it is not surprising that, given its legislative instructions, the Commission decision was for no increase at all.  It was felt that increased wages would result in additional pressure on small business with an increase in the unemployment rate likely.

The new wage setting body, Fair Work Australia, is beginning now to look at Modern Awards for implementation from 1 January 2010.  It will also be responsible for setting the next minimum wage increase.   Fair Work Australia’s main objective in this regard is to “establish and maintain a safety net of fair minimum wages”.  In performing this objective it must also take into account the performance and competitiveness of the national economy.

It remains to be seen how the new body will operate in this respect, but judging by the reactions of the two different sides of politics and industry it’s going to be an interesting ride....

In a lot of businesses, appraisal time is one of tension and sometimes confusion. 

At times, employees are surprised to be told about "issues" which have been around for a long time, but have not been addressed.

Manager's are stressed because they have to sometimes handle unpleasant realities.  They are further annoyed by the amount of time the appraisals take them away from their "real job".

It is particularly stressful for everyone when a person's salary,commission or bonus has a dependance on the appraisal.

In such organisations, the appraisals are a time to look back on performance and as a result what develops is a reactive approach to business and individual development.  Appraisals are seen as a chore that "most be done".

It has been well know for many years that such an approach is basically bad for business for all these reasons and more.  Where this is occurring, or where there is no process at all, business owners and managers are missing a great opportunity for driving their business forward.

By initiating a proactive, goal orientated performance management system (rather than backward looking appraisals), business owners and managers can drive activities to achieve strategic aims.  Individual and business progress towards goals can be monitored and communicated ensuring everyone is aware of this progress.  Corrective action can be taken to address performance, knowledge or experience issues as they are identified.  In the end, everyone is what is expected of the business as a whole and themselves as individuals.

More importantly - once a year appraisal time becomes an all year round, "the way we do things" process which is forward looking and driving the business.

Doesn't that sound like the right way to do things?

Such systems are not the domain of big business or corporate.  In fact in small to medium size businesses the development of such programs can have impressive impact, encourages participation and spreads out accountability throughout the business.  This is particularly important in small business where the owners are always spread thin!

At People Smartz, we can help you develop a system suitable for you business, regardless of size or industry.  As an added extra, our coaches can further assist you in the implementation by coaching owners and managers in how to deal with performance and productivity issues as they appear. 

Learn more about our HR Coaching Programs and then contact us for assistance!

It is interesting the way businesses handle performance issues with employees. 

Some handle them promptly, professionally and in a way that encourages improvement.  Others handle them poorly, carry a big stick and get what they want through an aggressive approach.  Finally you have a group that do nothing at all - at least until the problem becomes so bad that it can't be ignored!

Avoiding conflict is human nature, generally managers and business owners don't want conflict within their business.  However, poor performance has effects on business performance, team morale and may result in conflict anyway.

It is important for Business Owners or Managers to undertake regular two way communication with employees.  Performance issues should be addressed as a matter of course, not as an exceptional circumstance.  If it is done correctly, then it can be seen as a learning event rather than a disciplinary issue.

My children have been taught at school that if they have a problem to do something about it - maybe this is a lesson we should all take on when it comes to performance issues.

Some hints to you in regards to managing performance:

1. Ensure your employees are aware of your expectations.  This can be in the form of position descriptions, goals and targets, employment agreements or various other instruments.  Talking to them regularly is another way of letting them know your expectations.
2. Make sure your employees know the effects of failing to meet your expectations in regards to business performance.
3. Ensure your employees know what to expect if their performance fails to meet these expectations. Ensure you have aprocess of communication and counseling for such issues in place and that everyone is aware of it.
4. Make sure your process initially is designed to encourage improvement in performance in a educational manner (so that they learn from their mistakes)
5. If they continue to perform poorly, have a system in place to manage the issue through to a positive outcome but with the recognition that continued poor performance may result in termination of employment.
6. Finally - if it does come to the point where the situation is no longer tenable - have a strong process in place to terminate employment.

Systems to encourage positive outcomes are your best defence against poor performance.  It is much better to manage performance in a positive manner than manage poor performance in a negative one - for you and your employees.

People Smartz Coaches can assist you with performance issues or with putting in place the systems you need to encourage positive outcomes.

Contact People Smartz today.

A few blogs ago, I told you about the new unfair dismissal laws and how they affect small business.

The new legislation becomes law on Wednesday, 1 July.  With these laws comes a revamp of the Australian Industrial Relations Framework.  With Australia's political landscape this is not really new - it regularly changes with changes of government!

As already stated, the new laws change the unfair dismissal laws.  Other areas that are affected are:

• The expansion of Workchoice's 5 minimum standards of employment to a 10 minimum standards.  With the new modern awards, these will form the new Safety Net for employees from 1 January 2010
• A change to the definition of small business
• Increased Union Right of Entry into workplaces for investigation, discussions and OH&S matters
• Significant changes to the manner in which industrial relations is governed with the creation of Fair Work Australia - a one stop adviser, mediator and arbitrator of the new laws.
• The abolition of AWA's (no surprise there!)
• An "emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations"
• The introduction of an additional discrimination jurisdiction under the Fair Work Act.
• Redundancy and Termination changes including the setting of minimum redundancy payments and notice periods 
• Maternity and Paternity Leave

With these new laws it becomes more important than ever to ensure your workplace has procedures and policies in place to respond to employee complaints and lay down expectations in the event of a dispute or issue.  In addition, you employment agreements may now contain clauses that contradict the new laws.  I recommend strongly that you seek some assistance to ensure you are ready!

Should you need any further information on the new laws, contact People Smartz and we will be happy to assist.