People Smartz Blog

Recently I read a blog by a member of a large international coaching organization.  In the blog, the writer quoted W Edwards Deming (a guru of quality management and credited with the rise of Japan as a world powerhouse in manufacturing after WW2).

According to the writer, in the quote, Deming said that “that 94% of all failures in a business are the result of the “systems” in the business and only 6% of the failures are caused by the people in the business.”

I agree with Deming, however I disagree with the blog writer (who even managed to spell Deming's name incorrectly) who basically then went on to use this quote to explain why systems over people will create “leverage” in the organization.

The basic fault with the article was that it was designed to promote a systematic version of business coaching that is more concerned with short term gains rather than long term ones.  It is designed to encourage people to take a one size fits all approach to a business without taking into account the individual aspects of; or the people in, their business.  In short, it was an article designed to inform about how to save time, create a picture of short term success and promote their product.

Now, I’ll be up front and say that my blog is designed to raise the profile of my business.  I believe you were probably aware of this when you started reading; however my approach here is to ask you to think about the relationship between people and systems.

I believe that a business’s success is a result of the direct relationship between efficient systems and the people running them.  Systems are not the end, they are the beginning of the real process – that of creating a long term viable business.

See if you agree with the following comments:

• People run the systems, not the other way around.
• People make decisions, not the systems (the system can guide them in the right direction but in the end it is the people who make the decision). 
• People create relationships with People, not with systems. 
• A business succeeds because of the drive of the people running it – the systems make sure they are all on the same road.

I am not writing here saying that systems are not important.  In fact I believe they are important tools in maintaining consistency and quality, setting expectations and ensuring your business succeeds.  The more systemized a business is, the more likely it is to succeed.  Not because it is systemized, but because the systems create the time to concentrate on the important factors of business success. 

The important word in the previous paragraph is “tool”. Because that is what a system is - a tool that assists you, and your team, to achieve business success.  Imagine telling a carpenter that he didn’t build the shelf, the power drill did? Would he or she accept that? No way!  It is the same with your business, you need the systems as a tool towards the end product – and success for your business is the end product.

But regardless of the systems you have in place, it is important to have the right people to run them. This means becoming very good at knowing who the right people are in terms of attitude, skills and abilities.   Simply getting the right person in your organization, training them and working with them is probably one of the most important roles of a business owner or manager.

I know of one coaching organization that is so systemized in its recruiting approach that it advocates placing an answering machine on the phone, asking people to sell why they should get the job to the answering machine and then inviting the best answers to a “group interview” (Don't believe me - drop me a line and I'll give you the title of the book!)  The designers of this "system" know business owners are time poor, they know that saving time is attractive - so they have come up with a system designed to “save time” not to select the right person.  Ask yourself would such a system really work for your business?  Would you be confident of selecting the right person?

In the last week, I have received a call from a client of one of the bigger coaching groups.  They are looking for a business coach who is “people” rather than “system” orientated. 

They commented that they had commenced coaching on the same week as another business run by a couple they are friendly with.  They were in different capital cities, using a different coach from the same international coaching franchise.

The funny thing is that they had compared notes and found that the things they were being asked to do, the information they were being given and the advice they were being given was exactly the same – even to the point of them receiving exactly the same fax one day before a coaches visit on the same week of their program!  What’s more, they both saw red when advised that all future coaching sessions would be over the phone to “save them time” – and that advice was given in the same week! 

Maybe they were similar business you say?  No - one was retail and the other light manufacturing, one had 120 employees, the other 15.  One had been established less than a year, the other more than 10.  In short, they were being coached via a system with no tailoring for their individual needs.  Both companies are now in the process of finding a new coach.  Why - because it was the system that was coaching them, not the coach.

To end this article, I would like to go back to W Edwards Deming.  In his book “Out of Crisis”, he advocated a 14 point plan to save US industry in the 1980’s.  While Deming was a big (read this to mean big) believer in systems, he was criticized for providing a set of goals (his 14 points) without providing any tools to make them happen.  When asked about this by managers his reply was “You’re the manager, you work it out”. 

And to end, another quote from Deming – “A system must be managed. It will not manage itself” (The New Economics for Industry, Government, Education (1993))

Seems even the quality guru, Deming, believed that business was about a relationship between people and systems....

I can only say that business coaching and consulting is the same.  Think about this next time you look for a business consultant or coach – regardless of their specialty area!

P.S.  I have made several comments and criticisms in this article, If you would like details of where this information has come from (i.e. links, books etc.) please contact me and I will be happy to provide (except where it would break client confidentiality).

 

 

 

 

In my travels around businesses, I speak to a lot of businesses owners.  One of the most frequent responses I get when speaking to them about the new industrial relations laws is the title of this blog.

“We don’t need to worry about that” is a refrain that I hear quite alot.  The basic premise is that if they haven’t had a problem before, then they will not have one in the future.

As far as the industrial relations laws are concerned, thinking this way is not a smart move for business owners and managers.  Over the last couple of months, I have seen an increase in the number of businesses calling me for assistance after having received a letter from the Fair Work Ombudsman regarding a complaint from an employee.  On nearly every occasion, the business concerned had, until now, a belief that “We don’t have to worry about that”.

In a recent article, Judith Radisich from the Council of Small Businesses of Australia, in a response to a survey of small businesses said the following: “I am surprised that a higher proportion of small business respondents did not report complying with IR and OH&S laws takes up a higher proportion of their “people” time.  Perhaps the main reason for this is that survey respondents don’t spend much time on compliance because the laws are simply too complex and virtually impossible to get on top of for most small business owners”.  So, yet another reason for businesses to say “We don’t have to worry about that” – it is simply too hard to say otherwise!

One business I am currently working with has received two complaint letters and has been requested to provide payroll records.  The danger for this company is that the complaint, if found correct, could result in a large amount of back pay being ordered that the company cannot afford to pay.  Now the owners are not bad people, they have not set out to deliberately underpay their staff and are quite distressed that they may have.  But even they admit that they thought “We don’t have to worry about that”.

The fact is that we have recently gone through one of the biggest revamps of industrial relations in a long time.  When this is combined with an active workplace ombudsman (The Fair Work Ombudsman) with the power to order back pay, award fines and commence prosecutions then you have to wonder whether businesses can really afford to say “We don’t need to worry about that”.

Happy New Year!

Listening to the news last night here in Brisbane, the reports were on many new laws/changes being introduced in the new year.  Bus Fares were going up, politicians were going to be paid more etc.

But there was not one mention of some of the most wide spread changes to the working lives of Australians.  Effective today, Australia's new system of modern awards and the National Employment Standards (NES) will now govern the way businesses employ and manage their staff.

Over the past 6-8 months, I (and many others) have been seeking to raise awareness of these changes and urging businesses to prepare.

Today, the time for preparation is over - from today it is time to act......

If you haven't already identified your new award, it is time to do it.

If you haven't looked at the New Employment Standards (NES), it is time to do it.

If you haven't already identified the changes to your employment practices that will need to be made, it is time to do it.

If you haven't already put in place policies and procedures to protect your business, it is time to do it.

If you haven't already ensured your employment agreements are consistent with the new laws, awards and standards, it is time to do it.

If you haven't got appropriate processes in place to mitigate risk in areas such as harassment, discrimination, Health and Safety etc, it is time to do it.

If you haven't got a engagement plan for the unions relevant to your business, it is time to do it.

If you haven't got a plan for "good faith bargaining" and consulting with your staff, it is time to do it.

If you haven't looked into how to introduce flexibility into your business through "individual flexibility agreements", it is time to do it.

Not a bad list is it?  And this is only the start! 

For more information, visit the members section of our website today!

End of year/Christmas Office parties - a great time to unwind, rub shoulders with workmates and other great antics.  They can be a fun time!

But end of year parties have a very serious side as many of these antics lead to "regrets" after.

Recent research in Australia found that 70% of people believed that hitting the booze led to a more "personal" feeling amongst staff.  Nearly a quarter of females interviewed admitted that their boss had made a pass at them at an office party.

Such behaviours can present many problems for businesses, particularly if the "antics" involved lead to a complaint from a member of staff regarding the behaviour of another.

It would be easy to say "no office party" or "its too risky", but sometimes the advantages of holding the party far outweigh the negatives.  The decision to have or not have one is one for the business alone. 

I would recommend a level headed approach to this years Xmas party - making sure the party is well planned and your staff are aware of the required behaviours before hand.  This way you can have the fun while managing the risk!

To help you plan for your businesses party, download our Christmas Checklist today from our members section.

Laws regarding the use of Independent Contractors have been around for quite a few years now.  These laws are designed to provide increased protection against employers who try and avoid their employment obligations by using what are called "Sham" agreements.

Independent contractors run their own business and should be free to negotiate their fees and working arrangements.  They may provide their services to any number of clients.

Employees have set minimum entitlements (payment of wages, annual leave, personal leave etc) and are subject to the control and direction of their employer.

A "sham" agreement occurs when an employer deliberately disguises an employment relationship as an independent contracting arrangement in order to avoid paying an employee his or her entitlements.  It is possible that an employer who makes arrangements in this way could be fined up to $33,000. 

Many businesses I work with enter into independent contractors agreements in order to "benefit" both the business and the person doing the work. There is no intention to deceive or avoid obligations - just an intention to "do the right thing by all" by improving the return to the "employee" and to save the company money.

Unfortunately, this could be opening up a minefield for the business and the independent contractor.  If the arrangement has been made with the intention of avoiding obligations on the businesses part, it can result in fines, back taxes and other costly penalties.  There can also be tax ramifications for the independent contractor.

When reviewing whether the working relationship is one of employment or independent contract, the Fair Work Ombudsman will look at the circumstances.  Things such as how the work is performed, who bears the commercial risk, whether the work is results based or not, who sets the hours of work, whether the individual has a right to delegate work and who provides the equipment used are some of the many factors which can be taken into account.

I strongly recommend to my clients before entering into independent contractors arrangements that they closely review the relationship they are forming.  While the benefits of utilising independent contractors are significant, if not structured properly, they also introduce an element of risk to the business.

People Smartz is able to assist businesses with the process of employing independent contractors.  If you have, or are considering, independent contractors in your business - contact us today.

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The Australian Industrial Relations Commission has been releasing over the last couple of months the new Modern Awards to cover employment within Australia from 1 January 2010 .

The process is continuing and by the time January 1 comes along, all employees under $108,000 per annum will be covered by one of the new modern awards.  This includes professional occupations who previously had not been covered by an award - some of them under a new "catch-all" award created for the purpose of ensuring they are covered.

While not all the awards have been released, a list of the one's released so far (with a copy available for download) is available from http://www.airc.gov.au/awardmod/fullbench/awards.htm

I would strongly recommend that you review this list and download the award applicable to your industry.  From 1 January 2010, when the awards become effective, you will be required to be complying with the award applicable to your business.  The time to start preparing is now not on 31 December!

The businesses I am working with on preparing for the new awards vary in the amount of work they need to do to prepare for the changes.  It really does depend on the individual business.....

If you want to know more, as well as a suggested list of activities you can undertake to help yourself prepare for the changes - visit out website by clicking below and downloading our information sheet.

Australia's New IR Laws - Information Sheet

If you have any questions about the changes, please feel free to contact us or post a question on our forum page!  Our forum is also hosting a discussion on what effects you believe the new laws are going to have on your business - why not give us your thoughts today!

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The People Smartz Forum

Sometimes the fundamentals of business are the same whether you are looking internally or externally. Unfortunately sometimes we don't realise it!

We work hard on making sure our customers know what they can expect of us, when we will do things, when we will do it by, who will do it etc.  We put this information into writing and ensure that their expectations of us are clear.  If we have expectations of them, we make them clear as well - for example, when we expect them to pay the invoice by!  It makes sense and makes for good and happy customers!

The same can be said for our own team members.  Often when dealing with performance issues in business, what I see is a mis-understanding in regards to what is expected of the team member with a differing expectations on both sides of the equation.

So like with our customers we need to work on expectations with our team.  So how do we do this?

First, there is the basic aspects of establishing the expectations of their behaviours and performance.  These are the sort of things that are covered in employment agreements, position descriptions, policies and procedures. Not only do they cover the idea of what the job is, they also lay out the your expectations of what is acceptable in regards to dealing with other team members, management, customers and others.  To have these documents in place puts you one step ahead in the expectation management game.

The next step is ensuring you have good strong two-way communications structures in your business.  Regular meetings with your team and feedback sessions (formal or informal) are good ways to begin this process.  Having a regular, proactive and systematic performance management and development systems also aids your aims in this area by putting in place forward looking goals and targets for your team.

Ensure your team are aware of your goals for the business.  Unless it is commercially sensitive, don't leave them in the dark about where you are taking the business and make sure they know how they can help you achieve this. Think about how you can bring them into the game.

Finally - do you know their expectations of you??  What is it they want out of work?  What gets them to work every day?  By finding out about these expectations, you can find ways to encourage them to achieve their own goals - its not only about your success, its about their's as well....  

So think about how you can become an expectation manager with your team!

Contact us if you would like any information on how People Smartz can assist you and your team achieve your expectations!

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This will be a short blog entry but probably the most important you will read!

Australia's new IR Laws come with a kick.  If you are non compliant you can be fined and forced to pay back pay, credit accruals, pay additional superannuation guarantee payments and additional pay roll tax - and that is only the start of the list!

Here are some examples of the ramifications if your business is found to be non-compliant:

• Non Compliance with Modern Award Conditions - a fine of $33,000 for a company for each breach plus the cost of back wages etc to the employee.
• Non Compliance with National Employment Standards - a fine of $33,000 for a company for each breach plus the cost of making up the breach to the employee.
• Avoidance of Employment Obligations (Sham Contracting) a fine of $33,000 for a company for each breach plus back taxes plus superannuation guarantee payments plus possible implications for payroll tax.
• Unfair Dismissal - back wages if found to be an unfair dismissal plus possible superannuation to the employee.  in addition, legal costs and lost opportunity costs in regards to time and effort to defend the claim.  Cost = many 000's of $$$.

The cost of being compliant is minimal compared to the costs of being caught out! 

Contact us today to arrange for a Free Compliance Assessment for your business.

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.