Human Resource Management
At the beginning of each calendar year, the Western Australia’s Small Business Development Corporation (SBDC) surveys a sample of small business operators to determine how they expect their business to be impacted over the coming 12 month period (Link to SBDC survey results http://www.smallbusiness.wa.gov.au/business-in-wa/what-is-a-small-business/business-expectations-survey-2015/ ). This got me thinking about, now that we are 3 months into the calendar year and with 3 months left to the start of the 2015-2016 financial year (to plan and develop strategies), what do business owners think the next 12-18 months will look like? – what are the impacts on Small to Medium Enterprises (SMEs) and what should SMEs be focusing on to survive and proper?
Here’s what the brain trust (that is the Albany Creek Business Contacts) discussed.
- Cashflow Management: there was general agreement that cashflow management would still be a high focus for SMEs ensuring that a long term management of expected cash in and cash out is managed.
- Price of Service/Product –v- price of materials/supply: with fluctuating fuel prices, increased electricity prices etc discussion highlighted the need for SMEs to monitor the price of materials and other services/products purchased to ensure margins are maintained in the supply of the SME’s product or service. Comments focussed on ensuring sound buying behaviours to ensure viability of the business.
- Service: generally, consumers will not haggle over price if they believe they are getting value for money and good service. Maintaining good client/customer service and relationships will continue to be a vital point of difference for SMEs. We all know what it is like dealing with large Telcos/large organisations – being smaller and more personable can be a significant advantage.
- Technology: technology will continue to be a focus for most businesses. With the continuous rapid change in technology, SMEs need to be constantly monitoring what is available, and what will cost effectively add value to the business.
- Change: the old adage that “the only things certain in life are taxes and death” has a new room-mate – change. All industries are under constant change and the challenge for SMEs is to keep on top of it and determine what to respond to, what not to respond to and, if appropriate, how to be the change initiator and/or leader.
- Diversity: SMEs need to continuously monitor their client/customer needs and diversify (if need be) to remain relevant. By way of example, with many businesses moving towards “paperless” stationery suppliers have diversified to offer broader “office supplies” such as cleaning products and safety equipment in addition to traditional stationery supplies.
- Overseas Outsourcing: SMEs need to be monitoring the growing opportunities to source services and products overseas. Again, SMEs need to understand and be able to communicate their point of difference to compete.
- Be a Hunter: the market is the market of the day. SMEs need to invest time, resources and strategies in continuously sourcing new clients/customers. Complacency will not win the race.
(Blog contributors – Leonard Whittaker (Action Cycle Learning) Rob Carmody (Australian Integrated Communications) Sally Balwin (Balanix Solutions) Kathy Patterson (Brendale Stationery Supplies) Matthew Fox (Brisbane hosting & Web Design) Kirsty Newbery (Caring Cottage) Brad Davies (Conquest Pest & Termite Control) Scott Deaves (David Deane Real Estate) De Wet van der Nest (Express Air Con Cleaning) Oriano Giammichele (GT Racing, Mobile Mechanic) Stuart Bywater (Bywater Design) Rhennen Ford (Streten Mason Lawyers) Tracey Carter (Scrub Mutts) Jason Matthey (Insurance Web) Bruce Hall (Wombat Electrical)
Albany Creek Business Contacts consists of local quality and reliable businesses who provide a wide range of services from home and residential services to B2B and commercial services. Our service areas cover primarily Albany Creek, Eatons Hill, Brendale, Aspley, Warner, Chermside, Strathpine, North Lakes. However many members will cover greater areas.
Albany Creek Business Contacts meet fortnightly on a Wednesday morning for a 7am breakfast and networking meeting.
Balanix Solutions – Taxation | Accounting | Business Advise.
Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.
Call us today … we can help (07 3264 4783)
Did you know that at least 18% of Australians work in their pyjamas when they work from home – more than any other nation.
So if you deal with a client who works from home make sure you give them a call before dropping in or be prepared to face the consequences!!
But on a more serious note, if you are considering the option of working from home be aware that it is not for all people. It sounds great, but unless you are very disciplined and well organised it can lead to disaster.
There can be many distractions that you think you can handle without too much hassle, but in reality it is not that simple.
Working from home maybe one of those things that you want to try before jumping in the deep end. It can work and be very enjoyable, but you need to look at it from all angles.
- If you have or need clients to come to your workplace how do they feel about it?
- Can you separate home from work hours; that is instead of giving you a more balanced lifestyle would it in fact take the balance away.
- Do your clients understand that simply because you work from home does not mean you are available 24 hours a day seven days a week?
- How do you feel about the isolation of working from home?
- Are you the kind of person who is energised by the interaction with colleagues and the social aspects offices provide?
The other key areas to consider, when considering working from home, are the taxation, other legal/regulatory requirements and insurance/workplace health and safety implications. I hear many comments from people who work from home about what they think they can claim in tax, relying on home insurance coverage even though they are operating a commercial business, not realising some local councils have strict rules on home base businesses etc etc. It is imperative professional advice is sought, before setting up a home base business, from an accountant, lawyer, the local council and insurance broker (to name a few) to get the facts and make sure all the right things are in place and no nasty surprises arise down the track.
If you are considering working from home, take the time to talk to a number of people who have done it or are currently doing it and ask them for honest feedback as to what the benefits and downsides are for them so your decision can be well informed.
I spend most of my time working with and talking with small business owners … after all, it is my passion. One thing that never ceases to amaze me is the lack of time and money small business owners invest in their support areas.
What do I mean by “support areas” – things like financial management, IT management, planning and forecasting and human resource management. These are all critical parts of every business however are mostly ignored until crisis requires engagement.
As a small business owner, how many of the following can you say yes to:
- I tend to ignore unsatisfactory performance of staff until it is at a point where it can’t be ignored anymore.
- I generally recruit staff when I really really really need them for a particular job and not before.
- I generally make staffing choices in rushed and stressed situations.
- I generally engage IT, Accounting and other support services providers based on price.
- I rarely take time to plan and undertake forward thinking in relation to my business and its support services.
- I don’t have a business plan.
- I don’t have a cashflow or budget.
- I don’t have an IT plan.
- I really only know the bare minimum in relation to laws around staff.
- I avoid having to use an accountant or solicitor unless I absolutely have to.
- I have experienced significant interruption to my business due to something going wrong in relation to one of my support areas (eg, issues with Tax & BAS, major cashflow issues, major staff issue, major IT issue, major legal issue).
I am hoping as a business owner you don’t have any ticks above. However, in reality I know most will.
So, at the recent meeting of the Albany Creek Business Contacts (ACBC), which is a networking group of local small businesses who get together to support and help each other through referrals, I asked the question – “why do small business owners neglect their support services”. The answers fell into five responses:
- Poor time Management – too much time working on the tools that there isn’t time to work on the business.
- Focus is on Money making activities – the inference here was that the support services do not “make money” from a billable perspective and therefore were not the focus.
- Lack of knowledge – many small business owners are very good in relation to the product or service of the business however do not invest in learning how to run a business and the value add the support services provide.
- Previous bad experiences – it was suggested here that some small business owners have had previous bad experiences with providers of support services so once burned then never to return.
- Ain’t broke don’t do anything with it – the suggestion that if it isn’t broken or creating problems then nothing needs to be done.
The problem with this situation is that when issues do arise in the business it winds up costing many many times more in time, dollars and productivity to deal with the issue and/or fix it than if some investment had been made along the way.
- rule of thumb it costs businesses 2 ½ times the salary of a position to replace the staff member;
- industry research suggests a business should be investing 2-3% of its net profit on its IT; and
- costs associated with needing to engage an accountant or solicitor to address specialist issues can be ten times plus the cost than had advice and assistance been obtained from the beginning and along the way.
If you want to discuss how to get started in building support for your business without breaking the bank, call me today (3264 4783) – I can help!
The cost to your business to replace staff is around 2½ times their salary. By example, if you need to replace an administration officer on $40k per year salary, the cost to you could be around $100K.
That’s ridiculous I hear you say … well consider the following which contribute to the costs:
- direct costs to recruit (eg, recruitment agency fees, advertising fees etc)
- salary costs to undertake the recruitment process (ie, salary of the person/people who will take calls from potential applicants, read applications and shortlist, undertake interviews and referee checks etc).
- productivity cost having staff focused on the recruitment activities rather than regular duties.
- productivity cost of other staff who have to pick up the work of the vacant position whilst recruitment process is being undertaken (this could include overtime costs as well).
- costs associated with inducting/training the new staff member in their job and associated processes.
- IT costs of setting the new staff member up in the system etc.
- productivity cost whilst the new staff member is coming up to speed on their job until they are at peak productivity (research suggests this could be anywhere between 4-12 months).
When you look at the costs in this light, I suggest it highlights the need to look at ways to foster an environment where employees want to stay.
Employee retention refers to the ability of an organization to retain its employees. Employee retention is a business management term referring to efforts by employers to retain current employees in their workforce.
Retention does not mean keeping an employee by obliging them to stay so it should not be costly for the company. Retention means encouraging the employee’s free choice to maintain his/her relationship with the company. Conversely, retention is not about keeping everyone all the time at any cost. This would require too much money and energy. Certain criteria must be introduced, such as measuring competency, performance and engagement in order to know which employees to keep. Your methods must depend on the level of the commitment of the employee.
The most commonly used method of retaining employees is without doubt remuneration, with different systems of financial or non-financial bonuses that become part of a “global remuneration package”. The list is long but it includes bonuses, super and non-super benefits, and stock options. Policies that are solely based on the accumulation of financial bonuses don’t differentiate between employees.
Businesses can also utilise reward and recognition systems to re-enforce value of employees. For these systems to be effective, they must be transparent, equitable and fair otherwise you can experience the opposite effect resulting in disgruntled employees and a toxic culture.
The following Retention Questionnaire published humanresourcesmagazine.com.au (2006) is a great start to understanding where you, as a business owner, are at in your approach to staff retention. Take some time to answer the following questionnaire in order to get an indicative feel for the capacity of your business to keep its employees engaged. The following questions are simply an indicator of commitment to retention.
- My company is well regarded by people looking for work and employees say flattering things about their job.
- I have an employee-centric culture that values internal customers as much as external ones.
- My employees have ample opportunity to understand how their work contributes to the bottom line of the company.
- I provide my employees with opportunities for growth and development.
- I provide a comfortable, safe work environment and I have a good reputation in the community.
- My leadership is accessible and provides vision and direction.
- I care for the wellbeing of my people by making employees’ lives easier and less stressed.
- I know how much it costs me to replace every employee who resigns/needs to be replaced.
- I know the reasons for these departures and the difference between an avoidable and an unavoidable departure.
- I know why employees stay or leave my company and what keeps them engaged.
- The rate of turnover in my company is lower than the average in the industry.
- I spend more time and money on my retention program than on recruitment.
- Salaries and bonuses are linked to performance or the development of competences.
- Our managers are trained to select, identify, guide, coach, reward and retain their people.
- I know my job forecast and professional development plan for the next two years.
- My employees are aware that they are an ‘asset’ in which one needs to invest and not a ‘cost’ to reduce.
- I use a job satisfaction or engagement survey in order to understand the requirements of my employees.
- I know who the talented employees in my company are.
- I think that my company does what is needed in order to retain its valuable employees.
- I regularly measure the effect of my retention strategy.
How many did you tick?
Under 5: You are regularly in the job market and finding it increasingly difficult to attract staff. Either you are challenging established thinking that a salary and a job are enough to motivate your employees or perhaps you have turnover rate of zero, so retention is not a priority for your company?
But let’s take a moment to think about the following: For your birthday, which present from your partner or spouse would give you the most pleasure? A cheque or a gift appropriate to your hobbies? The cheque would be easy and practical, but is not what one would expect to receive from a close family member. In this case, why do you as a company systematically use this method? It is time to research the individual satisfaction and personalised retention?
Between 5 and 10: The retention practices of your company are largely inspired by the concept of ‘the carrot and the stick’ and are centered on financial reward and Friday drinks. But you recognise that this mass motivation, used to obtain better productivity has reached its limits. Retention is not about “one size fits all”.
Between 10 and 15: You are conscious that your employees are as important as your clients and that you need to concentrate on the former to assure satisfaction of the latter. You know what is at stake with retention and you are committed to answer your employees’ demands in a culture of engagement. Excellence is on its way!
Between 15 and 20: You are an employer of choice and everybody should know it.
If you are finding your staff turnover is too high and would like some help to improve the situation, call me today (3264 4783) … I can help!
I have suggested in a previous Blog ways to reward and recognise staff’s awesome contributions that require no Budget. On the journey to being an Employer of Choice you may be in a position to utilise some other initiatives which are low cost.
To help you further, here are some low cost suggestions to show your world beater staff they are noticed and valued:
- Movie Tickets.
- Gift Certificates or vouchers.
- Book of Stamps.
- A framed memento/letter/certificate.
- Inscribe a favourite book as a gift.
- Balloons decorated with appropriate messages.
- Purchase a plant or flower arrangement with appropriate message.
- Buy the person something to use in his/her hobby.
- Lunch-on-me coupons.
- Take the person to lunch as a form of thanks or to mark a special event.
- Doughnuts, bagels, or rolls as an early morning starter.
- A “funny” trophy that is passed among team members based on “inside” criteria. .
- Submit the person’s name for a Wall of Fame award. This will result in a one-time increase on their pay.
- Something engraved with the person’s name, such as a pen set, business card holder, plaque, or portfolio.
- Paid subscription to a professional magazine or newsletter.
- A small contribution to their favourite charity in the person’s name.
- Time-off; full day or half-day.
- If your business is real estate (with sales people running around) or a hot factory, how about iceblocks in the freezer to cool your people down.
- During winter to warm staff up, add some chocolate milk mix in the kitchen for hot chocolates.
- A small box of lollies or chocolates with a thank you card.
Talk to Sally (Balanix Solutions) today for more assistance towards best practice Human Resource Management in your business – (07) 3264 4783.