While employees are the most valuable assets business owners have at their disposal, severe Governmental legislation and red tape can often do more harm than good – for employers and employees alike.
According to Advocate Saleem
Seedat, convenor of the Certificate in Practical Labour Relations at Wits Plus, many entrepreneurs and business owners view labour relations as a diabolical instrument that should be shoved into the footnotes of a business plan. “Employers harbour a pathological fear of any issues that even suggest some kind of disciplinary measure,” he explains. “In South Africa, labour relations should be part of the arsenal of any entrepreneur. It is not something to fear, and should be an area entrepreneurs make a point of understanding. Your labour force can be one of your greatest assets. Understand their rights – and educate them on yours. Together you can create a sustainable business.”
Seedat points out that just as employers shy away from labour relations, employees have an attitude of entitlement. “Employees forget that fairness applies equally to employers. For a business owner to create a successful labour relations policy it is vital that the lines of communication are opened between employer and employee and that everyone understands the others’ rights and expectations.”
Proposed labour laws
Unfortunately, many of Government’s proposed plans are more likely to make business owners skittish than open channels of communication with their staff. For example, local business has recently criticised Government for its proposed labour law adjustments. Is this fear talking or are there real reasons for business to be worried?
It appears the fear is in fact justified. Business owners face the prospect of being weighed down by more red tape than ever before when they hire staff, if the proposals to overhaul the labour laws are enacted. These proposals include the effective banning of labour brokers, the outlawing of temporary work and the fining of employers who don’t report firm vacancies to the Department of Labour (DoL). The period for submitting public comments came to an end in February.
A regulatory impact assessment (Ria) by local policy analysts concluded that if the proposals were made law in their present form, employers would steer away from taking on new employees or retaining existing temporary staff, putting thousands of jobs at risk.
If the proposals are made law, employers that rely on contract workers to fulfil projects will have to argue their case to the DoL for hiring temporary employees, as, by default, all employees will have to be made permanent. In addition, business owners running more sizeable operations will risk fines if they fail to carry out employment equity quotas.
The proposals also include the setting up of a state employment services portal (under the Employment Services Bill) which will act as a massive job placement database.
The bill proposes to make it compulsory for employers to report any vacancies in their firms to the department within 14 days. Employers that fail to do so can be fined up to R10 000.
The department believes that employers will use the portal to fill vacancies in their firms and justifies this by singling out a similar portal in Sweden where employers are fined when they fail to report vacancies.
The bill aims to “improve labour market inefficiencies” with the aim of combating unemployment. The problem is that it comes off as ‘big brother’ recruiting employees on behalf of employers. Will businesses be forced to hire employees they do not necessarily need simply because the post was filled before? One of the few benefits of the recession has been business tightening its belt, becoming leaner and more efficient and doing away with redundant and inefficient employees and positions.
Another worrying point about this particular proposal is that it hasn’t actually worked in Sweden. The DoL’s head of employment services, Zodwa Mabaso, has publically conceded that a Swedish official has advised her department against levying fines, pointing out that in Sweden fines had only succeeded in clogging up the Nordic country’s courts as resolute employers sought to challenge the fines.
Out of touch
The proposals reveal how out of touch Government appears to be when it comes to creating and enabling business environments. During the economic development portfolio committee’s public hearings on SME Finance late last year, some MPs asked business owners whether they had considered turning their businesses into cooperatives. These are entrepreneurs who have taken it upon themselves to start a business and put their families and homes at risk to finance their start-ups. Now they are being asked whether workers shouldn’t be given an equal share in their business.
Government does have a point: Employees who have a stake in the business’s success are more likely to perform and will benefit economically. Everyone wins. But the suggestion does raise the spectre of government seizing ownership of private assets a la Zimbabwe. Are these fears justified? And even if they aren’t, is it fair to ask entrepreneurs to simply give away shares in their hard-earned companies? Is this in any way supportive of an entrepreneurial spirit in South Africa? The issue of finance is no better. In the last five years Khula has been running a 42% default rate on its guarantee scheme, while a similar scheme in India had a default rate of just 2,5% over the same period. An ANC MP excuses the record with the oft-repeated mantra: “But we live in a developmental state.” It seems to suggest that business owners shouldn’t worry about paying back state loans because it’s Government’s job to bail you out. A DA MP’s point is just as worrying. He seems more concerned that increasing Khula lending through the banks might place the local banking system at risk, than that Khula has never lent out more than 800 guarantees a year in its over 14-year existence.
As Barrie Terblanche, author of Starting Your Own Business in South Africa, puts it, Government seems to think that all businesses, even small, are solid entities. You can tax them, make them sell a cut in a BEE transaction or turn them into cooperatives and they won’t close shop. The reality is of course quite different – and often the cause of business owners resenting Government, its laws and fearing the murky waters of labour relations.
Business owners need to take action. First, take a close look at your business and see where you can improve labour relations. The proposed laws might come into effect or they might change, but use this as an opportunity to scrutinise the way you do business. Labour relations are nothing to fear, as long as you know your rights as an employer, and what you should be offering your employees. Alternatively, if, as a business owner, you want to take action, the best thing you can do is write to the DoL outlining how many jobs you would have to cut should the labour law amendments be enacted, or for that matter, if any other anti-business proposal threatens to make it more expensive or difficult to run your own business. Entrepreneurs are the life blood of the gross domestic product and their businesses should be encouraged to thrive. This should not be achieved at the detriment of the local labour force, but threatening the livelihood of business is no solution either.
Amidst the doom and gloom there are some things business owners can do to improve their labour relations. Saleem Seedat outlines a few steps you can implement today:
- Understand that Government’s proposed bills are just that – proposals. There is a swell of opposition and they are unlikely to be implemented in their present form. Do not have a knee-jerk reaction to something that hasn’t happened yet.
- Try instead to view your relationship with your employees as a partnership. If you are antagonistic towards them they will be antagonistic back. Remember that without your labour force you have no business and try to be accommodating instead. Once your employees buy in to the fact that a sustainable business means job security and growth for them, you can build a trusting relationship.
- Be open and honest with your employees. Explain how your business works and your objectives. Allow them to believe you also have their best interests at heart.
- Unfortunately unions can be militant. They need to be seen as vocal and aggressive by their members. This stems back to the 80s when they were at the forefront of the struggle, and certain tendencies have not yet changed. This militant behaviour means that they push for extremes but do not always educate their members. Many employees do not know their rights. They also do not understand the rights of their employers, and carry a sense of entitlement that is not always accurate.
- If your employees feel they can trust you, talk to you and that you have their best interests at heart, you will immediately have a better relationship with them. Build this relationship now and the new proposals need not have an adverse effect on your business.
- One way to improve productivity is also to offer performance bonuses. These can be based on quality, outputs, whatever suits your business model. Even if you pay minimum wage this is a way to give your employees a reason to work hard and feel connected to the business’s success. Help them understand that better productivity equals a better business and more money for everyone.
In a nutshell
What the future might hold
The DoL’s labour law proposals, which were released late last year and closed for public comment in February, include:
- Regulating contract work by putting a stop to the practice of repeated contracting for short-term periods. The onus will be on employers to justify the use of short-term or fixed-term contracts (Labour Relations Amendment Bill).
- Temporary employees or those on fixed-term contracts will be expected to qualify for the same benefits as permanent employees (Labour Relations Amendment Bill).
- Labour brokers will only be able to perform recruitment services on behalf of clients and will be prohibited from paying benefits and wages on behalf of the client.
- Designated employers (defined by annual turnover with for example Community, Social and Personal Services being R5 million) that don’t prepare and implement an employment equity plan can be taken to the Labour Court and fined between 2% and 10% of their turnover.
- Designated employers with less than 150 employees must submit an employment equity plan to the department once a year, instead of the present once every two years.
- Employers must register all vacancies in the workplace to the department within 14 days or face fines of up to R10 000 (Employment Services Bill).
– Stephen Timm
How To Build Organisational Wealth Through Increased Efficiency
Using the right business systems can allow your staff to become more efficient through best-practices and better process flows.
As your business grows, the demands of running and managing all its parts increase. Fortunately, technology can help you standardise, streamline and adapt your operations in order to meet these increased demands. Let’s have a look at some of the ways in which you can increase efficiency to build your organisational wealth.
Integrated business units
It can be difficult to get a holistic view of what is going on in your business if information is floating between different departments and/or locations. Manually pulling data together can be very time consuming, causing delays and leaving greater room for human error.
By implementing an integrated business management solution, you can significantly increase efficiency among all your business units, allowing departments to easily share and access information. This real-time, inter-departmental integration allows you to get a birds-eye view of the performance of your business at the click of a button.
Business process automation
You can significantly save time by automating key business processes with an Enterprise Resource Planning (ERP) system. Accounting, for example, is much easier when details of all transactions are quickly and automatically shared between departments (no need to manually upload or download information).
Automation will enable your teams to respond to customer enquiries with alacrity and maintain optimal stock levels. Through automatic alerts and responses, relevant managers will be notified when stock reaches predetermined minimum levels. When these levels are reached, purchase orders for replenishment stock are automatically generated.
Automation also enforces consistency in your business’s day to day operations by following local and industry best-practices built into the system.
Synchronised customer data
The success of any small to medium sized business depends on getting new customers and providing excellent products and services to existing customers. Collating and sharing customer data across all departments is essential for effective customer service. SAP Business One, for example, provides the tools to track and manage the entire sales process, from initial contact and invoicing through to project management and after sales support – playing a pivotal role in customer retention management.
This complete view of past, present and prospective customers, along with historic purchases will help you to better understand your customers’ needs, behaviours and preferences. This will enable you to respond to clients effectively in order to boost satisfaction levels, increase sales, maximise profits and ultimately promote client retention. In addition, your marketing team can better plan campaigns based on insights from accurate data about prospective and current customers.
Instant access to information
You have to be able to plan properly to stay ahead of your competitors. Having access to up to date, relevant and accurate business data removes the guesswork and empowers employees to make informed business decisions. With an integrated business management system, you will be able to better manage your cash flow and stock holding with a real-time overview of current stock levels, orders in process and outstanding payments. This, in turn, will save time and allow you to better manage your procurement process and help build organisational wealth.
Who doesn’t like it when a plan comes together and things are working well? Working smarter and better – not harder – is what increased efficiency is about. Your teams will share the benefits of increased efficiency as you grow your organisational wealth together.
Mi Casa Es Su Casa: Achieving Positive Corporate Culture
How to achieve positive corporate culture in a group company.
According to management consultant Peter Drucker: ‘Culture eats strategy for breakfast’. And there’s a good chance of this being true, especially since studies have shown a direct correlation between a strong, positive organisational culture and a business’s financial success.
The importance of culture
Prof JL Heskett writes in his 2011 book, The Culture Cycle, that a positive culture can make as much as a 20-30% difference in company performance, when compared with “culturally unremarkable” opponents.
Culture is also a form of protection – strong competitors may be able to copy a strategy, but can’t duplicate a culture. Indeed, when things go wrong in the economy, public opinion, or even the strategy itself, a company’s culture can serve as a safeguard against these, because employees are faithful to it.
But… while culture is a remarkable thing, it’s difficult to define and attain.
The definition of culture
Company culture is traditionally interpreted from a corporate perspective, to include the principles, opinions, basic assumptions, and mindsets that are shared by a group. But these don’t hold any value if they aren’t entrenched in a company’s processes. This is why culture is also about action.
A company can’t create an intelligible culture without people who a) agree with its core values or b) are prepared to commit the time needed to.
Further, those employees who succeed in a company are generally those who most closely associate with the culture. If the principles and ideals of an organisation are shared, a strong culture can even support recruitment through self-selection.
As a result, leaders should spend as much time determining, collaborating on, and communicating culture as they do on strategy.
Culture in a group company
With different and broad-ranging companies working together, the goal of building and sustaining culture in a holding company can be trickier than in other organisations.
In cases like this, it’s critical for every company in the group to hold onto its own distinct culture, in ways that fit the greater business.
Simultaneously, the parent company should create a culture for all of the holding companies to attach to. Because, without a uniting mechanism, real integration can be difficult to accomplish.
The problem is: which culture is the priority? The composition of a group company evolves as it acquires and sells different companies, so a root culture is necessary; one that current and new subsidiary cultures can buy into.
Where to start
- Develop a set of principles, behaviours, and motivators for culture, and define what these mean practically.
- Write a positioning statement to share what the organisation stands for, both externally and internally. For example, Google’s is “organising the world’s information and making it universally accessible and useful”.
- Generate a motto that summarises your culture. Google’s is: “Don’t be evil.” In other words: do positive things for the world, even if it means letting go of some short-term wins.
- Communicate these messages widely and repeat them continuously. (As obvious as this sounds, many group companies make the mistake of not communicating values to subsidiaries.)
- Invest time and resources into smoothing out the cultural differences every time a new company is acquired. This is important because an implosion of combined cultures can cost valuable talent, customers, or worse.
- Teach the culture. Not just through induction programmes for new employees, but through ongoing events, reminders, collaborations, and other ways that remind people what the culture looks and feels like.
- Share and ingrain the group’s root culture, as an element of unity.
The heart of the matter?
Peter Drucker highlights a potent triad in organisational transformation: Strategy, capabilities, and culture. He says that all three must be created together, aligned, and designed to be supportive of one another. This is more complex in group companies but, with strong communication and high levels of collaboration, a clear and productive culture is possible.
Why Deadlines Aren’t As Great As You’d Think For Creative Work
Be careful about how much time pressure you put on yourself.
Do you ever find yourself staring down at a deadline and just freeze? There is something to be said for setting a schedule for yourself and following through, especially when you are first starting a business, but recent research from Harvard finds that when you are dealing with creative pursuits, you need to give yourself enough time to breathe, otherwise you’ll just be doing busy work instead of actually building something that is truly innovative.
In an interview with Harvard Business Review’s Working Knowledge podcast, Professor Teresa Amabile said that during a hectic day, it’s possible to get a mistaken sense of creative energy powered by adrenaline simply because things were being crossed off a checklist.
“People who are under a lot of time pressure on a given day, actually feel very productive, they tend to feel very creative,” she said.
“But, here’s the interesting thing; they were actually significantly less likely to come up with creative ideas, or solve problems creatively on those days. They got a lot of stuff done, but they weren’t necessarily creative.”
She noted that in her research, people came up with the most creative solutions when they were working under low to moderate time pressure. So the next time you think about imposing an arbitrary deadline on developing new ideas, you might want to go easier on yourself.
Because feeling like you’re on a treadmill doesn’t only make your thinking more fractured, Amabile says that it also makes it tougher to find meaning in your work. So what can managers do to make sure that their employees always have time to innovate? Start with providing spaces where they can be quiet, focused and away from distractions.
“Let them understand the importance of what they’re doing, their own individual actions, and how that translates into something that will contribute to a customer need, to a societal need, to something that the company really needs to move forward,” Amabile said.
“Try to give people enough time for projects so that they can explore, so they can do that background research to get the information they need, and then so they can play with it somewhat. That doesn’t mean indefinite time frames, but it probably means longer time frames than people are usually given in most companies for most projects.”
This article was originally posted here on Entrepreneur.com.
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