| Small businesses are usually characterised by good relations between the owner ("boss") and his staff. This is one of the advantages of smaller firms. However, as the business grows staff levels naturally increase and with them staff problems: high turnover, arguments on the job, absenteeism and low morale are just some examples of difficulties which can arise. When they do they can cost you money.
 Caption: Seasonal Businesses like most in the OPE INdustry have high labour turnovers - but turnover should be minismised as it costs the equivalent of up to 2-years remuneration to replace an employee!
This series of articles in PEA aim to help readers: Find, train and retain the right kind of employees;
Diagnose staff problems before they become to large by finding workable solutions;
Understand employers' legal obligations in areas such as Income Tax, Industrial Relations etc;
Establish a simple records system.
In October, we looked the areas of staff training and employee benefits. This issue we cover controlling absence, labour turnover and what to do when staff leave a business. These are common problems in seasonal businesses like those in the OPE Industry.
Absence & Labour Turnover
Two widespread personnel problems are: Absence & Turnover. A manager should analyse rates within his firm to understand possible causes. Experience shows that absence rates can be affected by:
Your management style and the supervisory styles of others within your firm. Your management presence can have a tremendous impact on how comfortable your employees feel on the job. Are you too abrupt? Are your decisions about personnel matters consistent, or are you erratic and unpredictable? Are you too lenient? What is the atmosphere like inside your organisation?
The Physical working conditions. Are temperatures comfortable to work in? If people have to work in extreme temperatures, do you provide appropriate protection and clothing? Is the working place as clean and well-organised as the operations permit? Is there enough space for each worker? (Information on suitable work place environments is available from Departments of Labour in your state.)
Your expectations of a reasonable output. Is the pressure of production unreasonably high? Are there enough rest periods to allow highly-pressured workers to relax? Conversely, is the pace too slow?
The Working Hours of your operation. You may need to be more flexible in your arrangements. For example: would the married women appreciate a 4-day week, or a similar number of hours spread over five days with later starts and earlier finishes?
The Employees’ Attitude: for example, an employee may lack interest in the job, or may not need to earn a full salary to meet personal commitments.
Home Problems
All the above factors need to be considered carefully and sensitively if you are to uncover the reasons for your absence rates. Only when you have discovered the cause of the problem (wether within your organisation, or the individual concerned) can you take steps to resolve it.
Labour Turnover
Labour turnover represents a drain on the pool of skills held in your workforce. When looking for the reasons for high voluntary labour turnover, consider the same things which can affect absence and in addition:
 Caption: If you have a high labour turnover, it is in your interest to look carefully for possible causes. You may find that the problems have their origins in the job. Exit interviews with departing employees may help minimise employee losses.
The job expectations of your workers (particularly new recruits)
The distance people travel to work
The pay you offer
If you have a high resignation rate, you may need to consider these factors carefully. If you have a high dismissal rate you may need to question your own expectations of your employees. To obtain indicative levels of labour turnover inside your industry you could informally speak to competitors at industry functions otherwise the ABS may be able to help with statistics.
[Pic 1 Labour turnover]
Cap:
Seasonal Businesses like most in the OPE Industry have high labour turnovers – but turnover should be minimised as it costs the equivalent of up to 2-years remuneration to replace any employee!
Controlling Absence & Labour Turnover
What can be done to solve any problem uncovered?
There are a number of measures which should be selected according to how appropriate they are for your particular circumstances.
Draw up a set of rules on leave entitlements ensuring all employees are fully informed.
Encourage employees to make prior application for leave to attend to private business, with a requirement that they notify the firm within a set time if they are unexpectedly absent for any reason.
Consider the use of formal leave applications if appropriate
If an employee appears continuously sick and is not receiving proper medical attention you may need to recommend welfare action
Implement an attendance bonus program where punctuality and attendance are rewarded with a cash payments
Improve employee benefits
Financial incentives such as employee share-holdings or profit sharing schemes, long service awards and wage incentives
Improve recruitment and selection practices
Planned induction programs for new employees
Better Supervisory practices
Improved Physical working conditions
Job satisfaction is believed to be related to both absence and labour turnover. An employee who is bored or unhappy with his job is much more likely to be repeatedly absent, or to leave the job. Some organisations have found that they were able to reduce their absence and turnover rates by reorganising jobs to provide more employee satisfaction. This sort of job redesign usually involves giving employees more responsibility, a greater say in how they do their work, more variety and increased opportunities for advancement.
Organisations such as TMA & OPEA survey members to create a picture of standard Industry pay/benefits to assist companies appropriately remunerate staff. However, Money is only one factor in employee satisfaction/retention. Surveys show that 35% of employee retention revolves around work/lifestyle balance (up from 10%). Recognition and Career progression account for a further 30%. 25% of staff performance and 12% of productivity is directly attributable to employees’ happiness with their work environment.
Retaining staff is critical because it can cost up to 24-months’ salary to replace existing employees. That means Labour turnover costs your business real cold hard cash. Between 100%-200% of any employee’s salary to replace them should they leave.
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It’s well worth finding way of helping them stay!
Leaving the Firm
People leave their employment for four main reasons: they quit, they retire, are fired or made redundant.
For whatever reasons, and in whatever circumstances, employees leave their employment, it is important for both the firm and employees that terminations of employment are carefully managed.
[pic2 Exit Interview]
Cap:
If you have a high labour turnover, it is in your interest to look carefully for possible causes. You may find that the problems have their origins in the job. Exit interviews with departing employees may help minimise employee losses.
Resignations
Resignations can occur for any number of reasons that may, or may not, be related to the job. If you have a high labour turnover, it is in your interest to look carefully for possible causes. You may find that the problems have their origins in the job.
One way of finding out why people are leaving is to ask them. This can be a sensitive subject and how frankly your questions are answered may depend on the openness of the relationships that have been established in your firm.
If you decided to ask people why they leave, you should do your homework well and prepare for the exit interview just as you would prepare yourself for any other kind of interview.
Familiarise yourself with the individual's:
Work History and performance
Progress inside your organisation
Training
Absence Record
During the interview, employees could be asked about:
Whether the though they had fair pay for the job
How satisfied they had been with the physical and other working conditions
What they thought of the job: Was there too much too do? Was it boring?
How well they had gotten on with their work mates?
How satisfied they were with their future prospects inside the company?
If you decide to have exit interviews with employees who quit you should be prepared to listen and accept critical comment. Where possible act on complaints. If you are not prepared to accept and act on criticism, exit interviews are a waste of time.
Retirement
 Caption: Retirement can be a difficult time for employees and businesses - plan ahead to minimise disruption.
Retirement can be a difficult time for employees. Some large organisations run special retirement advice and counselling services to make the change easier. While such services may be beyond many small businesses retiring employees should nevertheless be encourages to make proper legal, financial, social and leisure arrangements before they retire. they should also be encouraged to contact the growing number of community bodies which are concerned to help workers plan for their retirement. The firm should plan ahead for retirements so as to have on hand the necessary funds for pensions and any other rights which employees may have accumulated over their years of service.
In small businesses the most common way of handling retirement are:
Make retirement Automatic and/or mandatory at a specific age (usually 60 or 65)
Permit flexible retirement after a minimum age (the decision to permit employees to continue working after this age should be made by management)
Some employers have made a program for fit worker for retirement age to phase themselves into retirement over a number of years. Sixty-five year olds, say, working a four-day week, 66 year olds a 3-day week, 67 year olds a 2 day week etc. This type of scheme has the advantage of retaining special skills and knowledge within the organisation while replacements are found or trained. The retiring worker continues to make an active contribution to the business as well as having more time for pursuing other interests.
[Pic 3 Retirement]
Cap:
Retirement can be a difficult time for employees and businesses - plan ahead to minimise disruption
Federal Industrial Relations Proposals
The Federal Government’s Workplace Relations proposals (as far as they are known) aim to create a “Fair Pay Commission” that would set minimum terms and conditions. The existing “no-disadvantage” test for enterprise bargaining will be abolished to be replaced by four legislative minimums: Annual leave, Personal leave, Parental leave & Maximum Normal Working Hours.
Entities with less than 100 employees (as most within the OPE Industgry are) will be exempt from “unfair dismissal” claims. Larger Firms will be able to structure their operations to create sub-entities with employee numbers below this threshold. There will be a statutory probation period of 6-months for new employees regardless.
However, the proposed legislation is unlikley to mean the end of “unfair dismissal” claims, but the movement of these actions into different jurisdictions (eg Anti-Discrimination & Common Law; where there is an implied requirement of fairness & trust).
In short: the new laws appear to be good for lawyers (and at the moment Advertising Agencies & Media Barons) – but not necessarily for business.
Unsatisfactory performance
There can be a number of reasons for unsatisfactory performance, so in the first instance a supervisor should try to find out the causes. It could be the result of sickness, preoccupation with a domestic problem, deficiencies in equipment, conflict inside the workplace, poor training rather than a bad attitude on the part of an otherwise good employee.
If after investigation all possible reasons for poor performance and attempting other solutions (relocation, retraining) you may be forced to dismiss the employee.
Retrenchment
It is hoped that you will never have to retrench your employees. However, if this becomes necessary you have a responsibility to give employees as much notice as possible. Certain awards specify minimum periods of notice and severance conditions. In order to reduce friction when forced to retrench employees consider the following guidelines:
Liaise with employment agencies as far as possible to assist retrenchees find new employment.
Provide references or referrals to other employers
Make redundancy payments promptly
Consult with union and employer representatives who might be able to help with job placement.
Retrenching employees can be a regular way of life in a seasonal business like power equipment. Therefore it is even more important that it be handled correctly as those skilled employees will likely be top of your recruitment list for the following season.
Next Issue: Income Tax & Personnel Management
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