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Team Tribulations: Choosing Wisely

The importance of selecting the right members for your team (and business).

Nicolene Schoeman-Louw

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Fighting-Team

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.

Conclusion

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.

Nicolene Schoeman – Louw is an admitted attorney of the High Court of South Africa, as well as being a Conveyancer, Notary Public and Mediator. She is the Managing Director of Schoemanlaw Inc Attorneys, Conveyancers and Notaries Public (Schoemanlaw Inc Attorneys) in Cape Town. Visit www.schoemanlaw.co.za for more information or email enquiries@schoemanlaw.co.za

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Hiring Employees

Unemployment Is Way Down: 3 Tips To Attract Employees In A Tight Market

Now that ping-pong tables have become table stakes, it will take benefits with substance to attract the best employees.

Peter Daisyme

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Get creative. From remote work options to diverse compensation plans, employers like you can tailor your employment package to match the employee.

In this way, you’ll follow the path of the most successful businesses, which see competitive talent markets not as an obstacle but rather an opportunity to demonstrate their companies’ merits, and entice would-be employees.

Flashy perks are out of fashion

Startup culture glorifies fun fringe benefits like ping-pong tables, beer on tap and free pizza. After all, what employees wouldn’t choose to spend Friday afternoons goofing off with co-workers and snacks?

Turns out, most of them. Gallup’s State of the American Workplace report found that most employees would leave their current job if a competitor offered substantially more flexibility and money – not perks.

Real adult workers might enjoy Galaga arcade games in the break room, but they would rather be able to leave early to pick up their kids, schedule longer vacations and pay for better lifestyles with fatter pay cheques.

When the job market puts the power in the hands of the worker, businesses can’t skate by on superficial perks. To attract high-quality employees who will stay, companies must offer practical, competitive benefits with long-term appeal.

Related: Why Innovative Employee Benefits Are Your Competitive Advantage

Here is what the top talent really wants:

1. Assistance with student debt and housing costs

The student loan debt crisis is bad and getting worse. College graduates are finding jobs, but their wages aren’t going up. Those in the workforce are making payments late and falling into delinquency.

The problem isn’t limited to recent grads, either. Debt.org reports that the number of people older than 60 with student loan debt has quadrupled over the last 10 years.

Companies can help workers break this cycle by offering student loan support in addition to regular salary. Some providers of programmes now help employers offer student loan assistance programs, to attract new employees.

Employees saddled with debt often struggle to save up for big purchases like houses. In addition to student loan assistance, consider offering a mortgage assistance programme to help employees pay for housing. Not only will employees appreciate the fast track to home ownership, but they might stay with the company longer if they buy a house with a five-minute commute.

2. Forward-thinking travel policies

The Global Business Travel Association found that 59 percent of candidates surveyed consider travel policies when they choose an employer. And there’s a lot more to take into account here than just help booking a flight.

In fact, a movement is growing to make employee comfort a priority in business travel plans, since 79 percent of business travellers report that travel experiences affect their job satisfaction.

“The direct benefit of revamped travel policies is increased loyalty from employees and potential hires alike,” Scott Hyden wrote on Recruiter.com; he’s chief experience officer for RoomIt, a hotel-booking solution for corporate travellers.

What’s important is that smart employers not cram employees into the cheapest non-chain hotel closest to the airport. They take care of the little things (like storing and shipping business clothing) to make every travel experience go smoothly. They allow traveling workers to earn loyalty perks and points from hotels and airlines for personal redemptions. These small courtesies don’t cost much, but they make a big difference to workers.

Related: 5 Benefits Of Turning Your Employee Into An Intrapreneur

3. Preparation help for retirement

According to PwC’s 2018 Employee Financial Wellness survey, most employees are not confident that their retirement savings will even make it to retirement; 42 percent surveyed believed they would need to use money from retirement plans for other expenses.

Leaders should work with retirement plan providers and financial services companies to provide employees with resources and tools to plan for the future no matter what their salary grade.

By providing retirement literacy and investment-education options, enterprises help workers make the most of their pay cheque and live healthy, fulfilling lives. Don’t just put the resources out there and let employees figure it out themselves, though. Invite financial advisors to come talk to employees every few months about their options.

Invest in workers’ futures, and they will be more likely to spend that future with the company that helped them. Even if it’s not currently possible to offer a pension equivalent, employees will appreciate the educational assistance in getting their savings plans up to snuff.

So, yes, ping-pong tables and puppy breaks are fine, but employees are more interested in stability and flexibility than entertainment. Use practical benefits to attract top talent, retain the best workers and ensure that people who work for the company have the resources they need to live successful lives.

This article was originally posted here on Entrepreneur.com.

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Hiring Employees

After Realising He’d Hired All The Wrong People, This Food Start-up Founder Hit Reset

JUST co-founder Josh Tetrick wanted to build a disruptive company, so he hired disruptive employees. Then he got disrupted himself.

Jason Feifer

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Josh Tetrick had never run a food company, and he considered that an asset. His goal was to disrupt the food industry, so he wasn’t interested in old ways of doing things. “If you had told me when I started the company that one of the keys to success would be hiring people who are experts at going out to the Midwest to visit different warehousing partners, I would have been like, ‘Shut the fuck up,’ ” he says. Instead, as he built his startup JUST (originally called Hampton Creek), he hired outsiders like himself. It seemed to work. His first product, an egg-free mayonnaise, debuted in 2014 at Northern California Whole Foods stores and shortly thereafter was carried by thousands of Safeways and Walmarts. Demand was high.

Then lids started popping off. Labels fell off, too. The packaging was defective, and the product went from a success to a money-loser. As Tetrick scrambled, he came to a hard realisation: An entrepreneur can be too disruptive for his own good.

At the beginning, Tetrick fit a certain Silicon Valley archetype – the brash founder who celebrates inexperience. There’s a logic to it. If you want to rock an industry with fresh ideas, you can’t be bound by industry standards. And Tetrick had big ambitions. In creating animal-free versions of staples like eggs, mayonnaise, cookie dough and more, he wanted people to rethink how food is made. So he set up shop in a Bay Area garage and began hiring people he thought could make a huge impact – experts in data science and high-tech platforms.

Then came the disastrous launch. As his products lost money, he began examining the causes. There were many. His company had a terrible manufacturing contract and had picked the wrong manufacturers and warehouse partners. Its shipping process was a mess, and so was its supply chain. “Pretty much everything we should have been doing in operations we weren’t doing,” he says.

Related: The Pros & Cons Of Owning A Restaurant Franchise

When CEOs reflect back, they often regret that they didn’t move faster to fire people who weren’t right for the company. Waiting even an extra month can drag down an organisation. Tetrick understood this. He’d hired smart people, but now he realised they were the wrong smart people. So he laid off a few and replaced them with industry vets.

“We hired a guy who gave me the most boring presentation I’ve had in the history of all interviews,” Tetrick says. “But that was great, because all he wanted to do was talk about warehousing.” Then Tetrick forced himself to step back from hiring. Rather than be in control of every decision, as he once was, he left his new industry experts to build their own team – filtering for what they thought was important, rather than what he did.

Operations team members either caught on or were replaced. Contracts were renegotiated. Supply chains were fixed. Losses shrank and disappeared.

As he watched this happen, Tetrick reconsidered his leadership. “I need to be intelligent enough to know that there’s a whole bunch of stuff I don’t know anything about,” he says. But more than that, he needed to appreciate the limits of change.

“Everything is not a revolution,” he says now. Some things can be reinvented, but others are better off embraced.

Today, Tetrick says, JUST is a growing 120-person company and is on its way to going public. That’ll be the next phase of its revolution – all thanks to some very non-revolutionary employees.

This article was originally posted here on Entrepreneur.com.

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Hiring Employees

That ‘Bad’ Interviewee You Just Talked To May Be The Perfect Match For Your Job Opening

The ‘pattern matching’ that companies have long used to find the right candidate isn’t always the best strategy.

Alex Gold

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Think you’ve just conducted a bad interview? You may be mistaken.

Walking back to our office in San Francisco’s SOMA neighbourhood one recent sunny Friday afternoon, I was excited about the job interviews I had scheduled for the afternoon. While some entrepreneurs hate this task, I’ve always relished it. To me, finding like-minded individuals with the requisite skills and a passionate desire to change the world – or something “like” that – is thrilling. Right?

At least it is for me: That afternoon, I would be conducting phone interviews for our open head of sales position, a notoriously difficult role to fill, not for a lack of candidates, but rather for the challenge of weeding out the perfect candidate truly skilled at closing sales and helping to build our health-intelligence platform.

That afternoon, however, reality set in, in the form of close to ten disappointing phone calls.

Picking up my phone once more, I made my final call – to the most unlikely candidate of the bunch. And, within two minutes, I was floored: This guy was quizzing me on my knowledge of our business space. Not only that, but he was also asking about my personal relationships with competitors. Huh?

Calling around to other founders after the interview, I quickly uncovered a strong consensus based on those founders’ individual experiences: This candidate’s comments weren’t weird or unwelcome, they said. In fact, they considered the best salespeople to be the ones who quizzed them.

For me, this was the first of many unexpected interview lessons that I learned “on the fly” as a start-up founder. One of those lessons was that, in conducting job interviews and evaluating candidates, most hiring managers rely on “pattern matching” – the idea that you can identify patterns in candidates, in terms of their personal attributes and skills which align with your organisation’s mission and values.

In the age of artificial intelligence and machine learning, this practice has intensified, as pattern matching has gone high-tech. Recruiters and organisations are turning to algorithms to more accurately identify talent “matches.”

Related: How To Interview Prospective Customers

However, even with this new data analysis capability, the concept of pattern matching can break down. Here are some further lessons I’ve learned that demonstrate the fallibility of “pattern matching” and why it may be challenging to rely on it during job interviews.

1. A “bad” interviewee could be the right colleague

We often want to hire people we get along with. When a candidate can quickly and seamlessly integrate into the team, we can almost immediately leverage that collaboration for better business results. What’s more, the likelihood of conflict diminishes significantly, removing obstacles that often impede organisations when team members have contrasting values.

Finding that seamless integration can be quickly determined through an interview, where we evaluate someone for his or her skills and ability to gel with team members. Yet, even a bad interview doesn’t mean the candidate won’t be a good match.

“Sometimes, a challenging interview does not equate to a poor hire,” Simon MacGibbon, my colleague and CEO of the health-monitoring company, Myia, told me.

“You need to be able to look at the scope of the entirety of the candidate, including background interviews, reference checks and work product. Basing hiring on interviewing alone puts many companies at risk of passing over candidates with valuable skill sets and different, but complementary, personalities.”

2. Hire for attitude. Train for skills

Herb Kelleher, the legendary co-founder of Southwest Airlines, said it best in the book Nuts!: Southwest Airlines’ Crazy Recipe for Business and Personal Success: “Hire for attitude and train for skills.” This, of course, is how Southwest grew from relatively humble beginnings into one of the largest airlines in the world.

However, interviewers may be biased toward skills over attitude. Naturally, it is easier to opt for a quantifiable metric than to dig into a candidate’s personality and disposition.

Consider Michael Lewis and his book Moneyball, which recounts how professional baseball started using Sabermetrics to determine a player’s skill level and performance potential. Other industries have likewise leveraged specific metrics and assessment tools to identify the right candidates for open positions.

However, stringent metrics aren’t everything and may not always deliver the right candidates for a constantly evolving business environment. Some of the nation’s top entrepreneurs are now hiring candidates who are demonstrably adaptable and who can forge their own paths.

“When hiring, we focus on grit and fit over pedigree and expertise,” Daniel Fine, founder of Neu Brands, told me. “All are relevant and important, but when you’re building a rapidly scaling company, culture and team alignment have to be the top priority. This isn’t something I’ve always been successful with, but having learned the hard way, it’s now a focal point.”

Related: The Exit Interview

3. Interviewees who interview you know they can get a job anywhere

Going back to the example of our search for our head of sales candidate: The best candidates for a position will often interview the interviewer to learn whether they can be successful in the role. These days, they know they can go anywhere; record low unemployment works in their favour.  Yet, remarkably, a lot of entrepreneurs and managers do not respond positively to this shift in power which gives talent the upper hand. Many positions go unfilled, as a result.

A 2018 research report confirmed this. Titled Talent Intelligence and Management Report, from Eightfold.ai and Harris Interactive, it compiled findings from 1,200 interviews with CEOs and found that 28 percent of positions went unfilled.  Also in the study, 87 percent of CEOs and CHROs stated that they were facing at least one talent-related challenge. Employers are even giving up college-degree requirements in an attempt to widen their candidate pool.

So, the next time a candidate interviews you, in his or her job interview, you may want to think again. This person is probably more sought after than you think.

It’s time to win the right talent

It may not be a good feeling for a founder or executive to come to grips with this new reality. However, it’s also a valuable opportunity to change your interview approach and start evaluating candidates on more than experience and skills. By accepting this new shift in power, you can improve your position in the race to hire the best talent.

This article was originally posted here on Entrepreneur.com.

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