It’s disconcerting how many business owners neglect to spend time thinking about their vision, how they plan to achieve it and the risks they are likely to face along the way. Worse still, many also fail to invest time in thinking about the people who will take them to their ultimate destination.
The fact is that cosmetic appointments can result in catastrophic consequences, especially when a business fills key positions without any clear purpose or intention. This has often been the case in some B-BBEE appointments, commonly known as fronting or window dressing; or when an employer hires an employee as an independent contractor simply to dodge the relevant employment laws.
These practices may be extreme, but their impact can be highly damaging. That’s because one of the core principles of South African law is that the intention of the parties involved dictates the legal ramifications. Without getting too technical about this, our courts apply a number of tests to measure true intentions. It’s unlikely that the fronting approach to team selection would pass any of these tests.
Another mistake that employers make when it comes to selecting the right people boils down to reaction rather than prevention. In other words, a business will only fill a position when its need is so urgent that there is no time to give proper consideration to the appointment.
Desperate moves like this can be as damaging as our other two approaches mentioned above. What’s more, reactive decisions can also apply to selecting shareholders and other stakeholders, not just team members.
Long-term, poorly considered appointments can even result in litigation and business failure. With prevention in mind, this article focuses on some of the questions to weigh up when selecting a winning team.
Independent contractor or joint venture?
It’s not unusual for two parties that are independent from each other to join forces on a specific project. When this happens, the parties can opt to enter a joint venture agreement that clearly sets out their respective obligations. In many cases, however, a joint venture agreement constitutes a partnership which, in turn, raises the inherent risk of unlimited liability.
The alternative would be a contract/subcontractor arrangement. Here, the party that is awarded the main contract would appoint the other party as a subcontractor. In many cases, this option would address the risk of unlimited liability.
Another case where the independent contractor agreement may be the most feasible option is when suppliers are engaged. Such an agreement could be defined as a supplier agreement, a service level agreement or an independent contractor agreement. This option applies when an organisation has a specific project or specific requirement and needs periodic assistance from a suitable service provider to deliver.
It’s crucial to understand the risks associated with all these options, weigh the risks against the potential gains and purpose of the engagement – then formulate the most appropriate contractual arrangement.
Employment contracts: fixed-term or indefinite?
With the recent amendments to our labour legislation, it is even more important than ever to give proper consideration to engaging employees. That said, South African employment practices have never been defined by a golden thread of proper consideration. Unfortunately, the new amendments will not address this weakness.
One might think that employers would be motivated to select the right people for the right positions by the threat of a possible penalty from the Commission for Conciliation, Mediation and Arbitration (CCMA) totalling up to 12 months’ salary. Not so, in many cases.
Often, businesses going through growth spurts only focus on reacting to their current needs rather than planning and implementing their recruitment activities strategically. This often results in appointing the wrong person, who is simply incapable of doing the job.
Square pegs in round holes are not the only cause of disputes at work, but they are certainly a significant contributor.
So, it’s imperative that employers consider their human resource needs carefully and scrutinise the applications they receive with equal rigour. Beside the risk of incurring a CCMA penalty, failure to exercise care and attention could result in retrenchments that expose you to a whole new set of regulations and challenges. Put bluntly: getting rid of a few employees will no longer be the quick financial fix that it used to be.
In future, employers will be compelled to consider the exact causes of any financial problems they are facing. They will only be permitted to retrench people if they can show that their financial problems are directly linked to employing those people in the first place.
As far as the fixed-term versus indefinite contract argument is concerned: rather than invoking provisions related to an employee’s probation period, when their performance is closely monitored after first starting work with a new employer, there is a trend towards appointing people as independent contractors or as fixed-term employees. In many cases, employers do this solely to circumvent the process and procedure laid down for dismissal in our employment laws.
For this reason, the CCMA now follows guidelines to determine the true intention of the contracting parties. If the authorities find that an employer is evading an employment law provision by circumventing it, it may be deemed that they engaged an employee on a permanent contract of employment with an indefinite term.
This is yet another compelling reason to have a clear understanding of purpose and strategy when appointing a new employee. It is equally important to put the relevant human resources paperwork in place.
This should cover policies relating to the use of facilities such as email, internet and phone; remuneration and leave; sexual harassment; grievance procedures; and disciplinary procedures. In addition, job descriptions must be properly defined and employment contracts should be drawn up in line with the latest provisions.
These documents are fundamentally important when it comes to setting boundaries and guidelines for how your employees should behave in the workplace. And the way your employees behave is vital to achieving your long-term strategic vision.
What about shareholders and other stakeholders?
Electing the right stakeholders and shareholders is just as vital to minimising business risks as appointing the right team members. Here, it is important to observe the Companies Act 71 of 2008, among other laws, as well as the current B-BBEE legislation, which is especially relevant if you are bidding for large contracts, corporate or government. In both cases, you need to build your B-BBEE scores.
Defining a B-BBEE strategy that makes business and moral sense is a unique process that your business should only undertake with utmost care and attention. There is no such thing as an off-the-shelf B-BBEE strategy and you should never seek to implement one.
Shareholder agreements have always been very important tools in negotiating stakeholder involvement or attracting additional investment. Usually, these agreements also included provisions regulating governance, which is of particular significance when investing in any company.
With the emphasis on maximum transparency and proper governance structures, the law has not changed, which means your shareholder agreements must align with the new Act.
Further, in terms of the provisions relating to shareholder agreements under section 15(7) of the Companies Act, shareholders may still enter into any agreement with one another provided it is consistent with the provisions of the Act and the Memorandum of Incorporation (MOI). Your MOI is defined as a document that:
“sets out rights, duties and responsibilities of shareholders, directors and others within and in relation to a company, and other matters as contemplated in section 15; and by which:
i) the company was incorporated in terms of this Act, as contemplated in section 13; or
ii) a pre-existing company was structured and governed before the later of:
aa) the effective date; or
bb) the date it was converted to a company in terms of Schedule 2.”
Therefore, in the case of a conflict between the agreement and the MOI, the MOI will now prevail. If a clause in the agreement conflicts with the stipulations of the MOI, then only that clause will be voidable and it can only be voided by a court application.
Each document introduced by the new Act has its own specific purpose that must be acknowledged and applied in the best interests of the company. Ideally, these documents should be living documents rather than dead paperwork that ends up in someone’s desk drawer, never understood nor implemented.
Accordingly, shareholder agreements that incorporate your B-BBEE strategy on ownership and your MOI’s content on governance and voting must reflect what management is actually doing to implement your long-term vision.
Your team members are not only those people on the frontline or shop-floor of your business. They also include your managers as well as your stakeholders and shareholders. The support service providers you engage are equally import to your team’s success.
To achieve your long-term vision, you need to regulate the relationships between all these parties judiciously using the most practical, feasible and business-friendly legal solutions. We strongly advise you to work with us to develop and implement the most appropriate approach for your business.
When To Hire A Consultant
Good consultants are expensive but their worth the money if you do your part.
Hiring a business consultant is costly enough without hiring the wrong one.
There will be a time when you and your business will face the need for outside consulting and help. It might be market information you need, or advice, skills, strategies and techniques that don’t exist in your organisation.
Consultants can provide solutions for a huge range of business issues. Different types of consultants bring different ideas to the table but you need to know when and why to use them.
In general, a business consultant works with you on strategy, planning and problem-solving. They might help you develop a business skill and grow knowledge. You might need to learn how to design a business model, create a marketing plan or determine which marketing techniques you need to use and how to use them.
Consultants come in many forms. A lot of people are familiar with the big players like PWC, (PricewaterhouseCoopers), Deloitte, Ernst & Young or KPMG but there are many, many other firms as well as individuals.
Firms, especially the big ones, do not share their fee structure. Fees are considered a trade secret that is kept under tight control. In addition, fees vary per region, client, service, etc. With that said, fees for the big firms have been reported to start around $3,200 to over $6,600 per hour. And in a survey of individual consultants completed in 2017 by Consulting Success, 14 percent of consultants made more than $50,000 per project fee.
Consultants fall into five categories:
1. Strategy and Management Consultants
These firms or individuals will have a deep understanding of your specific market and know best practices of your industry.
They can offer help in enlarging your market footprint, expand your product offerings, help you reorganise for efficiency and cost savings, increase your company’s capabilities or help you make a large equipment purchase or even buyout another company.
2. Operations Consultants
These companies focus on increasing your process quality and efficiencies. You might use them when you are looking to map out existing processes, analyse them and get suggestions/advice to improve quality, reduce steps or mistakes and increase margins and decrease costs.
3. IT Consultants
Probably the biggest growth area in consulting right now. With the rapid pace of technology and tech support needed, most companies have hired a consultant at some point to help integrate and improve their computer or phone systems or storage space, upgrade servers, etc.
4. Human Resources Consultants
These businesses are used to work specifically on employee needs. You might use them to recruit top talent, improve employee retention and determine compensation to align with your company goals. You might use them for leadership and communication development.
5. Sales & Marketing Consultants
Firms in this area are used to create marketing plans, work on positioning statements, develop a brand, launch advertising campaigns, establish social media strategies, initiate sales process and improvement, or design sales training and coaching.
So why would you ever hire someone from one of these categories?
Expertise: You might not have the internal resources or skill set within your company to tackle your project, goal or what you want to accomplish. Using a consultant or power player within your industry might pay big rewards.
Seasoned change agent: Navigating office politics and taking the blame for reducing headcount or other cost-cutting measures, consultants are change agent experts and can act as that outside voice to break up the roadblocks and make things happen.
Process improvement: Your consultant will be an expert or even a leading expert in their field and have years of experience in what you are attempting to solve for the first time. Why try to invent a best practice when a consultant has probably already implemented it multiple times?
Idea generator: A consultant can bring a fresh perspective to your business that you might not have. They can see the bigger picture of the market and where your company fits into it by being an outsider. The insights they have can boost your internal team to new ways of thinking and approaching problems.
Trainer: By the nature of the job a consultant does, they are natural trainers. Their job is to share their knowledge, insight, and experience. They would be a good choice to do a training course, presentation or do one-on-one or team coaching.
Consultants are a good resource but one of the biggest drawbacks can be making sure the use of one results in actionable, observable outcomes that you can clearly see impact your profits and bottom line.
Too many times a consultant might give you a strategy and blueprint on how to make it happen but there is no follow through on making sure it’s implemented, followed and that results are tracked.
This isn’t necessarily the consultant’s fault. They may have been hired to only do the setup and certain tasks. Consulting can also be very expensive and take a long time. Large companies can spend hundreds of thousands of dollars and have nothing to show for it after nearly a year.
This article was originally posted here on Entrepreneur.com.
4 Benefits Of Business Process Outsourcing For Small Businesses
Using data outsourcing has many benefits for your small business and is something you need to consider should you want to improve and make your company more efficient.
When starting a business, you don’t always estimate the amount of work and skills needed to operate and manage your business efficiently. But that’s where business process outsourcing (BPO) comes in handy, and can save many startups from going under before they’ve barely begun making waves in the market.
Take a look at your small business. Are you constantly searching for qualified and experienced people to undertake tasks but never having the funds to employ and fill all the necessary roles? Do you find that most of your time, as manager, is spent on administrative tasks that don’t directly contribute to any of your company’s goals?
The way you’re going to save your business and grow it at the rate you initially projected, will be by outsourcing these activities to computer and data processing services who can overlook those details while you attend to your business. Using data outsourcing has many benefits for your small business and is something you need to consider should you want to improve and make your company more efficient.
1. Rely on the professionals
One benefit of using data and form processing services is that you can rely on the professionals to get the job done. Their business is to monitor, process and report on the processes of your business that you entrust to them. And you won’t have to worry about hiring and training a whole new team or spending countless hours on those mundane tasks. Data processing, marketing or accounting is their speciality and they know exactly what they’re doing.
And the best part is that there are a variety of business processes that can be outsourced.
2. Save time on most business processes
A great benefit of BPO is that you will no longer be responsible for the tasks you didn’t necessarily sign up for when you started the business. This means you can take every minute saved by outsourcing to develop the areas of the business that made you start up in the first place.
Different department functions that can be outsourced include:
- Human resources: The hiring process can be a long and draining one. Outsourcing your human resources means there are other people responsible for filtering through hundreds of CVs and applicants based on what you’re looking for through a series of high-quality-candidate databases. All you’ll need to worry about is the final interview and meeting.
- Marketing: Understanding your target audience is important in business. And marketing is the tool that allows you to engage, manage your brand reputation, acquire new customers and maintain your current client relationships. But if you aren’t a marketing firm, there’s a chance you’ll miss these ROI opportunities, which is where outsourcing would be the best option.
- Customer service: Not many small businesses can afford to operate and set up a 24/7 call centre within their offices. Outsourcing call centres to manage your customer support is more common than you may think and will save you the effort and resources of creating a new department in your company.
- Finances: You business’ finances are arguably the most important asset that needs to be tracked and managed. We can’t all be financiers and since finance is so important in business, outsourcing your business finances is advisable. You won’t find yourself spending more than you can afford, you won’t have to worry about payroll, tax preparation or any accounting activities. Your financial BPO will take care of it all and you can stick with what you know best about business.
By making use of business process outsourcing, you’re allowing yourself and your employees the opportunity to hone in on the skills you already have instead of trying to find time to learn new ones that aren’t related to your everyday job description. This will also allow your company to become more efficient in its industry as the focus will be solely on the business’ product or service offering.
3. Reduce operation costs
The reason why small and large businesses choose to outsource business processes is the opportunity to reduce operating costs. Also, it’s incredibly convenient and stress-relieving to not have to try and do a job you don’t quite understand and aren’t qualified to do.
BPO reduces operating costs as you won’t have to spend money on new employees, employee training or the equipment and software to carry out those tasks. You will also be saving yourself time on tasks that don’t need to be done in the office. That time can then be put into business-focused activities that can make your company more efficient in the product or service it offers customers.
4. A competitive edge
Having the extra time to focus on the real work your business does, will give you a competitive edge. And not only in the industry of small businesses. Having the resources to make your business products efficient and the best on the market has the potential to make you a competitor amongst larger businesses.
By choosing the right BPO companies, your business will also be operating with the latest technology and software – without you having to pay extra for it. This is an edge above most small business who attempt to do everything on their own before they’ve established the necessary profit margins to make those upgrades and remain consistent in their development.
These are just four of the many benefits of BPO. Make the smart business decision and use BPO to your advantage. It’s a quick, easy and affordable way to build your company and witness exponential growth.
How Your Company Can Easily Attract Fresh Talent
Well, there are many ways to go about attracting fresh talent, the easiest of which are…
The minds that are walking out of university these days have so much potential and power which many companies are longing for. Fresh new minds that are eager to start working and applying themselves in the “real” world. The best interests of your company lie in attracting this fresh batch of millennial talent. So how exactly could you do that?
Provide opportunities to learn
Millennials are after experience and career growth. They want to know that the company they will be working for is prioritising that journey. And what better way to encourage them on their career path than providing learning opportunities within the business?
A few of the main ways companies provide their employees with opportunities to learn are through internships, learnerships and mentorships.
- Internships: An internship is like a pre-entry level position where interns have an opportunity to learn the ropes and figure out if this is, in fact, the industry or career they want to be building a career in. This is an extremely valuable and appreciated opportunity for most graduates and a way for companies to easily spot talent. If both parties are happy with how the internship has been carried out, all the employer needs to do is offer up a permanent post.
- Learnerships: What is a learnership? And what are the benefits of a learnership in a company? A learnership is an educational training programme that companies offer to employees which allows them to gain work experience while learning industry-relevant theory. It’s more than a basic internship as learnership jobs can lead to a registered NQF qualification. This is beneficial to the company as they can be certain that all their employees are equally knowledgeable about their work and millennial applications will be flooding in for the opportunity to add further education and experience to their CVs through this opportunity.
- Mentorships: Fresh minds are still newbies in the business and want to know that they’ll be taught (not spoon fed). This is where companies can offer mentorships that new employees can work with seasoned employees to gain business tips and insights that will help them become better. This is what graduates are looking for, an opportunity to learn from the best in order to be the best.
Be an innovative environment
You can’t expect to attract fresh minds and creative talents when your company lacks an innovative environment. People want to know that they will be challenged and inspired every day by their work environment. And it’s not about working overtime to keep your new employees stimulated, but about making sure they have the resources, creative team members and freedom to think outside of the box.
They need to know that their innovation will be encouraged and supported. When advertising for vacancies, don’t be afraid to mention some of the innovative projects you’ve done. It will definitely excite any innovative minds on the job-hunt and those are the types of people you need to elevate your company.
Provide flexible work schedules
Flexibility is the work-trend at the moment and young people are looking for flexibility from their jobs. Being flexible with your work schedules is in your company’s best interest for more reasons than just the talent you’ll be attracting:
- Discourage the turnover rate of employees as they will have an increase in employee satisfaction.
- Increase in productivity from punctual and purposeful employees.
- And there will be an opportunity for extended business hours to increase customer satisfaction.
If you offer and implement it in the right way, flexible working hours are probably the easiest way to retain current and attract new talent to your company.
Be digitally relevant
Having the latest technology and digitally-advanced business processes shows new talent that you’re all about adapting to the constantly changing environment. They will want to work for you because this strive for relevance means they will constantly have opportunities to improve and find new ways of taking the company and industry forward.
Start by improving your office processes and being more digitally savvy. The more “ancient” your ways of doing things, the less fresh talent you’ll attract. People don’t want to sit and struggle through admin when their time could be spent on something more useful and relevant to the current era.
By making the most of technology, it also shows that your company chooses to be “green” with how they conduct business. And being part of a “save the planet” movement while doing your day job is what most young people strive to do these days.
Every company can easily attract fresh talent by implementing the above practices. And the resources that are spent is nothing compared to the revenue these new minds can potentially bring in by being part of your company.
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