Business Plus February 2017 by EMA

ISSUE 144 FEBRUARY 2017

Pilot Brewery Sideline business of making beer takes off P31

MILLENNIALS WANT TO BUY SUSTAINABLY BUT CAN THEY AFFORD IT?

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SKILLS SHORTAGE AN ONGOING CONCERN: EMPLOYERS’ SURVEY

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NO PRISONERS TAKEN ON MINIMUM EMPLOYMENT STANDARDS

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SUMMER BRIEFINGS 2017 SCHEDULE – REGISTER NOW!

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…AND MUCH MORE!

10 Ways We Have Helped Your Business 1. Been deeply involved in making pactical changes to the Health & Safety at Work Act 2. Provided economic and employment updates to more than 6000 people visa our regular Member Brieďż˝ngs 3. Introduced the concept of Employment Readiness Certiďż˝cates for school leavers 4. Continued to raise the importance of better transport infrastructure and funding for this 5. Promoted the need for a more eďż˝cient planning and consent process 6. Been instrumental in the passing of legislation protecting migrant labour from exploitation 7. Fought to mitigate members having to bear unnecessary costs of earthquake strengthening for buildings in low risk areas

8. Answered more than 30,000 queries from members via our AdviceLine service in the past year 9. Provided more than 750 training, networking and conference events for our members, which were attended by more than 10,000 people 10. Delivered a reduction in ACC levies

On the cover: BusinessPlus is published by The Employers and Manufacturers Association (Northern) Inc (EMA) EMA is the major shareholder of national lobby group, BusinessNZ. BusinessPlus will be attached to EMA’s fortnightly email newsletter, e-report, this year – starting with the February 8 newsletter. Editor: Mary MacKinven T +64-9-367 0939, M +21 636 089 E mary.mackinven@ema.co.nz Designer: Ripeka Mikaere

Drinking beer was a way to wind down after flying excursions, for a group of Waikato aviators. But being businesspeople, they have turned the pastime into the growing business, Pilot Brewery.

ISSUE 144 FEBRUARY 2017

Pilot Brewery Sideline business of making beer takes off P31

Pictured: Pilot Brewery boss Jim Ellis and wife Jenni at the company’s iconic helicopter keg. MILLENNIALS WANT TO BUY SUSTAINABLY BUT CAN THEY AFFORD IT?

Full story page 31

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SKILLS SHORTAGE AN ONGOING CONCERN: EMPLOYERS’ SURVEY

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NO PRISONERS TAKEN ON MINIMUM EMPLOYMENT STANDARDS

P15

SUMMER BRIEFINGS 2017 SCHEDULE – REGISTER NOW!

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…AND MUCH MORE!

Contents

Printer: MHP

Commentary

Distributor: Rocket Mail

EMA’s CEO Kim Campbell on: 2017 – what will it bring?

The 2017 landscape for EMA to navigate

Sustainability - the young demand it, but won’t always pay

BusinessNZ CEO Kirk Hope on: Optimism for 2017

Advertising sales: Colin Gestro, Affinity Ads, M + 27 256 8014 E colin@affinityads.com ISSN No. 1176-4953 EMA Head office – Auckland: 145 Khyber Pass Rd, Grafton, Auckland, NZ Private Bag 92066, Victoria St West, Auckland 1142. P +64 9 367 0900 E ema@ema.co.nz

Electric vehicles are all go

Home and away for manufacturers and services

Hamilton: EMA/ExportNZ Waikato 103 Tristram Street, Hamilton. PO Box 490 Waikato Mail Centre, Hamilton 3240. P +64 7 839 2713

Business confidence strong, skills shortage a concern: Employers’ Survey Seen @ Employers Forum on Privacy, Auckland

Tauranga: ExportNZ Bay of Plenty Smart Business Centre, 65 Chapel Street, Bay Central, Tauranga, 3110. PO Box 13202, Tauranga Central, Tauranga 3141. P +64 7 571 0600 AdviceLine: NZ 0800 300 362 AUS 1800 300 362 E advice@ema.co.nz Phone 8am-8pm weekdays for information about employment and more, plus referrals to EMA Legal lawyers and your local EMA consultant in employment relations and/or occupational health and safety. Visit www.ema.co.nz for owner and staff training programmes, conferences and other events, employer guides and templates, manufacturer services, media statements and submissions, export development and more EMA contacts Chief executive: Kim Campbell Membership manager: Kayne Franich External Relations manager: Val Hayes Advocacy & Industry Relations manager: Mark Champion Learning manager: David Foley Enterprises & Strategy manager: Mauro Barsi Industrial Relations & Safety manager: Paul Jarvie Finance & Technology manager: Paul Yeo Corporate & Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye

Employment 14

Case law: The cost of non-compliance in record-keeping Employment Chat – Q and A: Keeping social functions safe and renewing a redundant position Workers’ input key to improved health and safety

OH&S legislation, one year on

16 18

In BusIness ICT: Application Evangelists: the final stage of system upgrade

ICT: The changing face of ICT security

Marketing: Tips for top email marketing

Buying: An acquisition is not an event but a process

Energy: Tips to conserve electricity and gas

Compliance: Getting to grips with new food safety law

InternatIonal Trade Entering your market bit by bit

High stakes in Hong Kong

Latin America’s annus horribilus

New Zealand’s banks and financiers - could do better?

Member ProfIles Pilot Brewery: Flyers formalise their relationship with beer

Summer Briefings 2017 schedule – Register now!

+ Inside BusinessPlus is free to EMA members

Training Plus insert detailing February training courses, and more BusinessPlus February 2017

Advocacy helping business succeed As an EMA member you are part of a 4000-plus business collective which employs more than 250,000 staff. This collective voice is extremely powerful. It allows the EMA Advocacy team to exert influence on your behalf and be your voice at the table to deliver a landscape which allows business to be more effective and successful. The team has honed its approach to advocacy and the key issues it will focus on. This ensures the teamâ&#x20AC;&#x2122;s efforts are used to shape the key decisions influencing your business environment. Advocacyâ&#x20AC;&#x2122;s key areas of focus Coping with the challenge of growth and development, in particular how this relates to infrastructure development, transport and the resource management system Addressing skills development, education and training Health and safety and all employment law related matters Export and trade opportunities for growth

CEO Commentary By Kim Campbell

2017 – what will it bring? With 2017 well underway, it is timely to contemplate what this year will bring. At home, we are heading into a general election. While I can’t predict the outcome, what I can say is we at EMA will continue to engage across political parties to ensure the needs of business are placed squarely on the agenda of those seeking office. We will make the point that, while social issues often drive the commentary around election time, the need for economic stability and sustainable financial management are also essential to driving New Zealand’s success. However, it may well be the international factors that will keep us awake at night this year. With Trump newly sworn in as President of the US, we are all waiting to see how this will impact our trade deals and our domestic economy. Will he deliver on his pre-election rhetoric?

Exporting nation We are a small economy, and a trading nation. It looked like the Trans-Pacific Partnership (TPP) trade agreement had a fighting chance of making it over the line when it was signed in New Zealand in February 2016. The TPP gave New Zealand access to the first and third largest economies in the world (US and Japan respectively) along with other economies such as Canada, Mexico and Peru that we have not had a trade agreement with previously. Interestingly, the combination of this and Brexit has fast-tracked dialogue in other parts of the globe for our trade negotiators, such as the EU, the UK and China. For our exporters we will be running at least two trade missions this year, one to Thailand and Vietnam and

the other to South America. These missions are invaluable and there is nothing like being immersed in your market to grow your understanding of how to improve your business. Plus, I encourage our exporters to showcase their achievements at our annual awards, which are now open for entries. More details will come from our ExportNZ team. We will be working on our election manifesto this year and welcome your input into what you think the big issues are for business. Please feel free to raise these at any of our fora for members, or contact us directly.

Resource management reform We continue our work on reforming the resource management system. This is no simple task and neither is it headline-grabbing election fodder. However, it has been a constant source of frustration for the business community for many years, and we have been working diligently on progressing this. In the past year we commissioned ground-breaking research which found that the current system was not working effectively for the environment – which was a key component of the sustainable management principle the Resource Management Act was founded on. This research has built a powerful case – as it’s not just business saying the current system needs an overhaul, it is also vital for New Zealand in managing its unique island ecosystem. These findings have met with political cross-party support – we all agree there is a problem. Our next step is how we identify a solution and how we work towards this. No easy task, but one we wholeheartedly back and will resource.

Congestion charging The ongoing issue of Auckland and its productivity will be a focus for us. About 65 per cent of our membership is impacted by the city’s transport woes. We want to understand what the cost of the current congestion is to the economy and what an acceptable solution might be. We know it’s trying for businesses that rely on staff being able to get around the city, whether that’s getting to and from work, being able to move freight or people or to service clients. How do we get the best out of our transport network and what else needs to be considered to lift productivity?

Electricity pricing Our work to have the Electricity Authority pause and review its suggested changes to the electricity pricing model will continue. While we have had moderate success in slowing down the proposed Transmission Pricing Methodology, we cannot claim any victory just yet. A revised proposal is currently open for submissions, and we expect the Authority to report back in April. In our view the proposed changes unfairly disadvantage businesses and consumers in our region, and potentially stifle investment rather than encourage it. In conjunction with the above, our continued focus is helping deliver the best possible environment for employers under the current legislative and compliance framework along with working on key issues our members have raised. And now is the time to take advantage of our training offering to ensure your staff are primed and ready for the year ahead – see the TrainingPlus insert in this issue of BusinessPlus.

Kim Campbell is the CEO of EMA. Email kim.campbell@ema.co.nz BusinessPlus February 2017

Commentary By MARK CHAMPION

The 2017 landscape for EMA to navigate The year has begun with a new Prime Minister in Bill English and with it a challenge for the National-led Government to prove its worth for a fourth term. National is up against some subtle shifts in the mood of the electorate, which it will need to understand and harness if it’s going to keep the Treasury benches later this year. Recent polling from leading market research company UMR tells the story for us in bite-sized insights as follows: •

People think New Zealand is going in pretty much the right direction.

•

Since March of 2016, the New Zealand First Party would have held the balance of power after an election – and it still does.

•

Grey clouds were gathering over the popularity of the former Prime Minister John Key’s leadership.

•

The electorate saw housing as the most important problem facing the country.

•

Social issues and the economy continued to grab the other top spots in that list of important issues.

What can we learn from those insights, which will enable us to read the politics of 2017? Clearly the issues the electorate has identified as being most important play right into the hands of the challenger parties – Labour, Green and New Zealand First. The issues of housing, poverty, inequality, immigration, and to a 6

BusinessPlus February 2017

lesser extent the economy, are heartland Labour territory. Labour leader Andrew Little and his team, in 2016, demonstrated themselves capable of marshalling damaging attacks on the Government on the housing issue. Prepare yourself for that battle front to be broadened out across the social equity landscape, albeit with less chance of scoring the kind of direct hits taken by the current Government that was essentially in denial about what was driving the housing issue. That broadening out across the social spectrum, focussed on the ‘haves and the have nots’, will be driven by necessity as we see the Auckland property market cooling after the Government’s introduction of a range of tactical measures – led by the increase in the Loan to Value Ratio (LVR). We can expect an escalation in pressure around the ‘living wage’, employment conditions, tax settings, the development of policy to ’close those gaps’, and certainly targeted scrutiny of the Government’s performance in these areas.

Andrew Little

Political filters For those of you with an appetite for tea leaf reading, here are a few relationships and dynamics we will be using to filter our interpretation of the political landscape this year: 1. The Labour/Greens relationship

Don’t expect too much more cosiness than we’re seeing right now. Labour knows that the Greens are essential to them forming a government, but also know the Greens should not be regarded as natural allies – given their proximity on the political spectrum.

The Government’s own work in tying together the strands of government information in order to paint the picture, identify where the need is greatest, followed by a programme of ‘social investment’ is a powerful tool in that battle. It’s good work and a giant leap forward in our social planning. But the Government has done a poor job so far of explaining why it’s important and what it can achieve. That needs to change to counter the anticipated Labour/Green/New Zealand First parties’ push on these issues.

Bill English

Labour will gain as much traction as it can around the concept of unity and stability – the presentation of an alliance already carefully nurtured - but remember the current detente arrangement between Labour and the Greens runs out by election day.

2. The Labour/New Zealand First relationship

Both parties are chasing light blue votes, so it will be a litmus test for the state of that relationship if those shared electoral ambitions delivers conflict or agreement on issues.

3. The Auckland dynamic

The sheer size of Auckland’s population makes it a problem and an opportunity under our MMP system. How do you appeal to Aucklanders without alienating the rest of the country? How do you deliver national leadership around the real and escalating problems of the most popular and populous city in the country? How do you do all this and still win the ‘other half’ of the country?

4. Regional development

This is a battleground counterbalancing the Auckland dynamic, and one clearly in the sights of New Zealand First.

5. The Goff factor

Can the new Mayor of Auckland, Phil Goff, at this time in the national electoral cycle, build the bridge with central government that’s needed so badly?

The EMA has some strongly held views, gleaned from what our members tell us, about how to build that more prosperous New Zealand and deliver that positive environment for your businesses. It’s a wish list of sorts as we look ahead to the general election and what we need from our political leaders.

Election wish list 1. A cross-party commitment to do a ground-up review of the resource management system and the many interlocking pieces of legislation that govern the balance between the environment and economic development; 2. The development of a harddriving governance mechanism to get the job done faster on infrastructure development in Auckland, which means an iron-clad commitment to the delivery of the Auckland Transport Alignment Project (ATAP) and the funding formula that’s needed. We have waited long enough.

5. A continued focus on delivering high quality free trade agreements and an on-going determination to strip away nontariff barriers to trade; and 6. A coherent national strategy on how to deal with the large ageing workforce, skills shortages and immigration. As always, let us know what you think.

Phil Goff

3. Certainty around the pay equity issue by being defined in legislation. 4. A review and overhaul of the Holidays Act. Right now all we are seeing is confusion and delay.

6. Maori politics

Potentially a key to this election and certainly an opportunity for National is consolidating and potentially growing its alliance with the Maori Party.

Mark Champion is EMA’s general manager of advocacy and industry relations. Email mark.champion@ema.co.nz BusinessPlus February 2017

Commentary By Abbie Reynolds

Sustainability - the young demand it, but won’t always pay There’s a dilemma facing New Zealand businesses that invest in sustainability. While these businesses generate returns through increased employee engagement and improved reputation as well as operational efficiencies and cost savings, improved sales don’t always follow. The consumer research shows these businesses should be expecting to get a return through improved sales as well, either by their charging more for their sustainable product or through strengthened customer preference. However, consumer action tells a different story. Colmar Brunton market research company recently released its 2016 Better Futures survey, which tracks New Zealanders’ attitudes and behaviours towards brands that are responsible socially, environmentally and economically. This is the eighth year they’ve done this research, and it shows growth in the number of New Zealanders committed to living a sustainable lifestyle. Colmar Brunton identified that one of the drivers of that growth is Generations X and Y. Gen Y is otherwise known as Millenials – that group of young people born between 1982 and 2000 (and currently aged 17-35 years). They will be 75 per cent of the global workforce in eight years, by 2025. Described as ‘selfie-obsessed’, ‘entitled’ and ‘self-indulgent’,

Millenials have been consistently identified as more engaged with sustainability and social justice than previous generations. And perhaps this isn’t surprising given they’re generally highly educated, they’ve had strong awareness of social and environmental issues from an early age and have the shadow of climate change bearing down on their futures.

Many consumers expect that businesses are already doing the ‘right thing’: that they are recycling, celebrating diversity, reducing their carbon footprint, giving back to communities. So when a business falls short of these expectations, it risks public condemnation of its actions. This can have a very real negative impact on sales, customer preference and reputation.

Millenials express a strong preference for sustainable products and services. But the reality is that, like other consumers, they won’t necessarily sacrifice functionality to make a sustainable choice. And many can’t afford to pay more for the sustainable option if it’s more expensive.

Hyper-connected, savvy Millennials living in a challenging world are demanding better. Any business that doesn’t engage is vulnerable.

Short-lived relief This might bring sighs of relief from businesses that aren’t yet thinking about sustainability. But that reaction would be premature. The carrot of increased sales might not be as strong as consumer preference suggests, but there is a stick to notice, which is the potential for public discussion of any issue that a business fails to handle in an ethical way. Social media has changed the way businesses interact with their consumers. And Millenials take this to the next level. They’ve grown up with social media, which gives them a voice, and that voice strongly connects to being part of the solution not the problem.

Meeting demand And there is opportunity. Consumer demand for genuinely sustainable brands is soaring. In the US, for example, growth in organic beef retailing from 2011-2014 exceeded 300 per cent, with suppliers unable to meet soaring demand, according to IRI (an American market research company). Consumers need brands to help them make more sustainable choices. There is so much information for consumers to understand and process to make the ‘best’ decision; it is genuinely complicated. And although ‘conscious consumption’ on the rise, it isn’t yet part of our social fibre in New Zealand.

Continued pg10

Abbie Reynolds is executive director of the Sustainable Business Council, a division of BusinessNZ. Visit www.sbc.org.nz 8

BusinessPlus February 2017

Commentary By Kirk Hope

Optimism for 2017 Growth in sectors such as construction, tourism and retail, and recovering dairy prices, are all part of the picture. Business is looking optimistic in 2017. The latest EMA survey shows most firms in the Upper North Island are expecting general business conditions to improve this year. The survey also shows most of them are expecting their own performance to improve in 2017. This positive sentiment is mostly apparent in other parts of New Zealand too. There are several reasons for optimism, but probably the basic one is our solid economic growth rate – around 3.5 per cent, better than many other developed countries. Growth in sectors such as construction, tourism and retail, and recovering dairy prices, are all part of the picture. Another reason for optimism is the likelihood that the Government will increase spending on infrastructure this year, including on Auckland’s central rail link, state highways, district health boards, schools and the broadband rollout. Government spending on a wide range of projects will offer many opportunities for involvement by large and small businesses.

Unemployment is very low at around 5 per cent, and labour force participation is extremely high - over 70 per cent - so there’s a lot of competition for workers. Business continues to hope for greater numbers of high-skilled potential employees graduating from education and training. Low productivity is another issue affecting business and, just like the skills shortage, it’s not easy to address. We have particular issues in New Zealand - including the dominance of small businesses, and the fact that small businesses may be less able to make investment in productivityboosting technology – which make it harder to improve our productivity. Businesses will need to be alert to ways to attract good staff, and ways to achieve more spending on technology in 2017. Another difficult consequence of steady economic growth has been the growth in house prices in Auckland and other centres. Attracted by the robust economy, immigrants and returning New Zealanders have been drawn to Auckland in particular, placing stress on the ability to provide sufficient housing, leading to house price inflation.

The problems of growth Steady economic growth has contributed a lot to business optimism, but it has also made it harder to find staff.

Now there are some signs that prices may be starting to slow in Auckland and other regions. Immigration is starting to slow down, with tougher tests for new migrants, fewer international students arriving, and more New Zealanders leaving for jobs in the recovering Australian economy. Meanwhile, restrictions on investor lending may be starting to slow the increase in housing credit growth, and improved council planning may help grow the stock of houses more rapidly. Auckland business would certainly benefit from a better balance between migration, growth and housing development.

External factors While continued economic growth in New Zealand is a big factor in creating positive business sentiment, other factors outside New Zealand could bring some business uncertainty in 2017. International risks affecting New Zealand business include slower economic growth in China, delays in achieving trade agreements with the EU and UK, and uncertainties arising from the new Trump administration in the US - particularly in terms of its opposition to greater international trade. A lot of our prosperity comes from international trade with China, Europe and the US, and New Zealand exporters would not welcome negative trading trends with these big markets. More free trade internationally and continued business growth and development in New Zealand would be the hope of business in 2017.

While continued economic growth in New Zealand is a big factor in creating positive business sentiment, other factors outside New Zealand could bring some business uncertainty in 2017.

Kirk Hope is Chief Executive at BusinessNZ. Visit www.businessnz.org.nz BusinessPlus February 2017

Commentary

Electric vehicles are all go Businesses wanting a slice of the electric vehicle pie can read new recommendations from Government on setting up public battery charging facilities for electric vehicles (EVs). The recommendations are for both those who are new to EV charging infrastructure and those already involved in developing infrastructure. The information may also be useful for organisations setting up restricted infrastructure. Public charging infrastructure is by definition publicly available, intended for use by the public and intended for charging an electric vehicle. Public charging infrastructure includes: •

roadside charging stations,

•

charging stations in public places or commercial facilities open to the public, eg, service stations and tourist attractions, and

•

charging stations in open car parks, eg, commercial buildings or Park & Ride.

Transport Minister Simon Bridges says Government expects most

Continued from pg8 One trend we’re seeing both locally and internationally is the rise of ‘purpose’ organisations that are trying to find ways to make it easy for consumers to make sustainable choices. Rather than being a company with a mission, a ‘purpose’ business is a mission with a company.

charging will continue to take place at home or the workplace, but reliable public charging infrastructure is crucial to provide drivers with the confidence to make longer trips. It can also influence the decision to buy one. The New Zealand Transport Agency is working closely with local and central government agencies, power companies, technology providers and the motor industry, to produce public charging infrastructure guidance and information. You can read more at www.nzta.govt. nz under ‘Planning and Investment’. This guidance is part of the government-industry programme to help reach 64,000 EVs in New Zealand by the end of 2021. This news is in addition to the 15 projects that have been conditionally approved to receive around $3.5 million from the Low Emission Vehicles Contestable Fund. The projects include Foodstuffs (NZ) using electric grocery delivery vans, PowerNet encouraging EV uptake in Southland business fleets and The Warehouse installing charging

Harvard Business Review’s “2015 Business Case Purpose Survey” of 474 executives worldwide shows that during the GFC, purpose businesses continued to grow. The 2015 Imperative and NYU Workforce Index shows that purpose also increases employee productivity, engagement and loyalty.

Purpose businesses are coming to life in the US. One pioneer is the globally successful outdoor clothing company Patagonia, started by outdoor enthusiasts wanting to ‘’build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis’’.

Purpose also connects with customers – particularly Millennials. For example, Dutch fashion brand MUD Jeans targets its conscious consumers through not only producing organic certified cotton jeans but empowering them to participate in recycling this precious resource, offering its “Lease a Jeans” concept.

The data backs the model. The

This is the “circular economy”

BusinessPlus February 2017

stations at 20 of its stores. For more information about the fund – next round coming up soon visit www.eeca.govt.nz/ev For general information visit www. electricvehicles.govt.nz

Types of electric vehicles in NZ Battery electric vehicles (BEVs): These are a purely electric vehicle, fuelled only by the battery which is charged by plugging into an electric power point, eg, the Nissan Leaf, Renault Zoe and Tesla S are types of electric car. The Renault Kangoo and Nissan eNV200 vans are also available in New Zealand. Plug-in hybrid electric vehicles (PHEVs): These have two engines – one fuelled by a battery, which is charged by plugging into an electric power point, and the other engine running on a fuel tank and generally using petrol or diesel. Examples include the Mitsubishi Outlander PHEV, BMW i3 (range extender model) and Audi e-tron. (Source: eeca.govt.nz)

forecast to be worth $4.5 trillion in the next 15 years, which many Millennials embrace. It decouples growth from natural resources, generating revenue from waste and innovative customer-focused products and services. As customer expectations change, business needs to evolve to maintain relevance. Millenial consumers are sending business strong signals about what they expect. And although they might not reward you for it right now, you risk being punished if you don’t meet their expectations. Embedding sustainability and embedding ‘purpose’ are both ways that business can navigate these changing expectations.

Commentary By Stephen Summers

Home and away for manufacturers and services Echoing many other indicators of the New Zealand economy, the BNZ-BusinessNZ Performance of Manufacturing Index (PMI) and the Performance of Services Index (PSI) show 2016 was a good year. These indexes are based on surveys of members of EMA and the national BusinessNZ family so, combined, they measure around 80 per cent of the private sector’s GDP. Having these two surveys consistently showing expansion in business activity is a pretty big deal for the growth of the country. So exactly how well have the PMI and PSI gone? During 2016, the PMI’s average index value was 56.0, and above 50 shows expansion. To put that into perspective, this was up from the average of 54.2 in 2015, and bang on the average for both 2012 and 2013. This shows that New Zealand’s manufacturing sector has been consistent at a healthy level of growth over the past few years. For the PSI the average value over 2016 was 56.6. This was slightly

down from the average result of 57.8 for 2015, but the third-highest average yearly figure since the PSI started in 2007. Again, like the PMI, it shows that overall the past few years have been in a consistent mode of expansion for the New Zealand services sector. International success story Yearly comparisons are one thing, but at the same time international comparisons tell us whether New Zealand is on the right track compared with other countries. Therefore, a good first port of call is comparisons with our trans-Tasman neighbours. The two graphs show that New Zealand has typically had the better of Australia in the manufacturing sector since around 2010, while it’s been the case since 2009 for the services sector. However, Australia’s indexes have been on a slow but steady increase towards expansion since 2012-13 and in the long run, an improving and stronger Australian economy will generally have positive outcomes for New Zealand, as our products and services will experience increased demand from across the ditch.

Going one step further, the J.P.Morgan Global PMI and PSI which New Zealand contributes towards, and measures the majority of global activity - have averaged 51.0 and 52.0 respectively over 2016. Interestingly, both global PMI and PSI surveys produced their best results at the end of last year. The recent pick up in expansion levels over the past few months has been welcomed by the international community after the past three years have typically shown moderate expansion slowly easing. New Zealand’s share of global output is only 0.3% of both manufacturing and services, however, it’s still heartening to see that, unlike other countries that have either struggled to climb out of weak growth or have regularly swapped between expansion and decline, the manufacturing and services sectors in the furthest corner of the globe have remained a pillar of expansion.

Stephen Summers is an economist at BusinessNZ, of which EMA is the major shareholder. Email ssummers@businessnz.org.nz BusinessPlus February 2017

Business confidence strong, skills shortage is a concern Business was moving into 2017 with a confident outlook, according to the most recent EMA Employers’ Survey. However, the skills shortage was a concern. The online, half-yearly survey was conducted among EMA members last November. Almost half of respondents (49 per cent) expected business conditions to improve over the next six months, while only slightly fewer (47 per cent) conditions to stay the same. That left 4 per cent in the unfortunate position of being negative. Significantly, 68 per cent of respondents expected their own business to grow in the next six months. This was a major increase on the same time a year ago: in November 2015, 57 per cent were expecting growth. “These results are most encouraging, especially with the uncertainty overseas,” says Kim Campbell, chief executive at EMA. The majority of respondents had increased their number of employees in 2016, which would correlate with the positive outlook respondents had of their own businesses. However, on the downside, employers were still struggling to recruit, with 53 per cent finding it difficult or very difficult to attract suitable candidates for positions in general. “These results reinforce the need for employers to take good care of the staff they have,” says Mr Campbell. Respondents were from a crosssection of businesses across the EMA region, from Taupo northwards to Kaitaia.

BusinessPlus February 2017

Snippets from the report · Demand for skills Among respondents, 58.5 per cent had increased their number of employees over the year, while 41.5 per cent had not. For positions generally, employers were finding it difficult to recruit (52.8 per cent), up 8.8 per cent on November 2015. Employers were finding it difficult to recruit for skilled positions (72.8 per cent), up 5.8 per cent on the same time a year earlier. The majority of employers (65 per cent) said there was, or there soon would be, a skills shortage in their industry sector. Most businesses said they were meeting their skill needs over the next 12 months by employing staff with required experience (45.5 per cent) and up-skilling current employees (54 per cent). A large number of respondents preferred to retrain existing staff on the job (51.1 per cent). This was up 3.1 per cent on a year ago. Other areas to meet the skill need are seeking skilled migrants (for 21 per cent, taking on apprentices (30 per cent) and employing casual and contract workers (26.7 per cent). · Use of 90 Day Trial Periods A significant number of employers (83 per cent) had used the 90-day trial period, which was up 5 per cent from the same time a year ealier. A majority of employers (75 per cent) said the trial period would be easier to use if it was automatically included in the contract, unless there was agreement prior to taking up employment that one would not be included. Only 31.6 per cent would like to see an extension of the 90-day trial period – and for most, to six months.

· Holidays Act Approximately a third of respondents (35.2 per cent) whose role was to administer holiday pay said they found the calculations difficult to administer, but 30.1 per cent had no difficulties. Those employers who had difficulty with administering the Holidays Act responded that their preferred options for changes were: one formula for all leave payments (for 85.2 per cent); and/or accrual of all leave in hours rather than weeks (66 per cent). · Flexibility in the workplace One of the ways employers were responding to the tight labour market was to use flexible work practices. Telecommuting has increased markedly over the past year (to 63.6 per cent), while part-time work was still the most preferred flexible work practice (for 89.7 per cent of employers). · Drugs and Alcohol The majority (61.1 per cent) of employers surveyed had concerns with drugs and alcohol in the workplace. A significant number (72.2 per cent) had included drug testing in their employment contracts and 36.9 per cent of businesses required employees to undergo drug and alcohol testing. More than half of respondents (58 per cent) had taken disciplinary action and 27.3 per cent had dismissed someone because of drugs. · Health and Safety Most employers felt WorkSafe New Zealand was about right with the way it is policing, inspecting, being helpful and offering assistance. Read the full report at www.ema.co.nz

Seen @ Employers Forum, Auckland

Glenn Mills, Georgina Gymer and Alexander Topp [Green Cross Health]

Nichola McLellan and Bronwyn Raine [Kiwi Steel NZ]

Risha Dunn and Clare Monaghan [Gillies Hospital]

Jose Machado [Industrial Site Services company], Gigi Hui [Spectrum Care Trust Board] and Denise Coldham [Fujifilm NZ]

Barry Davis and Deven Lodhia [Auckland Council]

Sarah Forde [Kelly Services NZ], Alicia Tutbury and Beverley Pollard [Framework Services] 14

BusinessPlus February 2017

Paul Jarvie [EMA] and Parvez Akbar [NZER Consulting]

Sunita Patel [Mitre 10 Mega Henderson and Westgate Mitre 10], Emily McEwen [Recreational Services] and Chris Pearce [Hick Bros Civil Construction]

employment By MICHAEL WITT

The cost of non-compliance in record-keeping A tougher enforcement regime was enacted 10 months ago in regard to employment minimum standards, such as recording employees’ wages, holidays and terms and conditions of employment. And the legal cases below show how the Employment Relations Amendment Act 2016 is being applied. In the Act, Labour Inspectors were given enhanced tools to investigate and address breaches, including the ability to: •

•

issue infringement notices for clear-cut breaches (eg, failure to maintain copies of employment agreements) with penalties of $1,000 per breach or up to $20,000 for multiple breaches in a three-month period; and apply to the Employment Court for penalties against employers, with penalties set at the greater of $100,000 or three times the financial gain for a company.

Non-compliant employers could also face the possibility of being publicly named, and directors, senior managers and others could be held personally accountable and banned. When Labour Inspectors receive a complaint, or as part of a random audit, they can enter employers’ premises, interview any person and demand employee-related records. Labour Inspectors can also pursue claims on behalf of affected employees and take legal action against non-compliant employers. Non-compliance with minimum standards and entitlements can result in significant penalties being imposed against employers. The penalty regime was further strengthened by the legislative

changes in April 2016, in that penalties have been significantly increased.

and terms and conditions of employment in accordance with the legislative requirements.

Inspectors in action

The facts of the restaurant case are straightforward. In a nutshell, a former employee complained to the Labour Inspector for not having received an employment agreement and adequate payments.

Recent cases show an increased involvement of Labour Inspectors when it comes to investigating and enforcing compliance with minimum employment standards. The cases also show that noncompliance will be treated more seriously and hefty penalties be imposed. The Employment Court has recently introduced a four-step framework, which provides guidance to the Court, the Employment Relations Authority and parties alike, with regard to setting penalties for noncompliance with minimum standards. In essence, the Court or Authority will: 1. Identify the nature and number of breaches and applicable maximum penalty for each breach; 2. Assess the severity of each breach (eg, whether breaches were known, intentional, wide-spread, ongoing; and any mitigating factors); 3. Consider the employer’s means and ability to pay the applicable penalties; and 4. Determine the proportionality of the penalties in the circumstances. In the recent case of Labour Inspector of MBIE v Bahn Thai Restaurant, the Authority, for the first time, applied this framework when it imposed a penalty of $25,000 on a Christchurch restaurant for not recording wages, leave entitlements

Michael Witt is a senior solicitor at EMA. Email Michael.witt@ema.co.nz

The inspector carried out an investigation and ascertained that the employer had failed to maintain adequate records (amongst other things). The inspector initially issued an improvement notice, demanding the employer to take certain action within a set timeframe, but subsequently applied for penalties in the Authority.

Balance of punishment and affordability The Authority ascertained a number of breaches of various statutory record-keeping requirements. The Authority clarified that it would not consider the failure to provide employment agreements (and/or) records to be just minor breaches, as the failure would prevent employees from understanding their rights and entitlements, which would facilitate unlawful practices by employers. The Authority dismissed the employer’s claim in mitigation that he was not proficient in English and was unfamiliar with New Zealand law, despite having been in business for approximately 10 years. However, the Authority accepted that the employer had subsequently employed the services of a bookkeeper to ensure future compliance. The Authority also accepted that the employer was a small business and that consideration had to be given to its ability to pay. Continued pg28 BusinessPlus February 2017

EMPLOYMENT

Keeping social functions safe and Q The Christmas Party went horribly wrong last year, so how can we ensure we get it right this year? - Amy Dear Amy So, without intending to put a dampener on a function before it starts, it is worth reminding employees about your expectations around behaviour, about social drinking and the importance of ensuring everyone gets home safely after having an enjoyable time. This is important even if the event is held off-site at another venue. We recommend you inform employees of drink-driving laws and put steps in place to ensure the health and safety of employees during and after functions. This could include you doing the following: •

Providing information about safe drinking,

•

Identifying excessive drinking and stopping the supply of alcohol if necessary,

•

Providing food and non-alcoholic drink alternatives,

•

Encouraging people to arrange transport home or provide transport/taxi chits, and/or

BEST E H T EST YOU WE T R O F ...

“We recommend you inform employees of drink-driving laws and put steps in place to ensure the health and safety of employees during and after functions.” •

Taking particular care of young people.

You should also be aware that it is unlawful to supply alcohol to persons under 18 years old without express consent from their parents, and any alcohol must be supplied in a responsible manner. We recommend you also review existing policies around the use of company vehicles. You can state what the legal limits are and/or reiterate the company’s rules around alcohol consumption and company vehicles. Also remember that you must pay people their usual pay if the party is held at a time when they would otherwise be working. If the party is after hours, eg, at night, and the

business only operates in the day time, you do not have to pay them to attend the event. But the safety and responsibility rules still apply! It is well established in employment law that some conduct that occurs outside the workplace may lead to disciplinary action. The appropriate response to an issue of misconduct will obviously depend on the particular circumstances. Consider how you would response to the following complaints about behaviour at a staff function held at an offsite venue: •

An employee verbally abuses staff at the function venue;

•

An employee assaults a colleague after a heated discussion between them;

•

An employee who has been drinking tells a joke which visibly shocks a few staff but is laughed off by others.

Your response could range from a quiet word with the employee about their particular behaviour, to formal disciplinary action including dismissal in the most serious case.

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BusinessPlus February 2017

• Discipline & Termination • Diversity • Health & Safety • Employees & Technology • Payroll Essentials • Leave Entitlements

• Drug Testing • Harassment & Bullying • ACC • Unions • Recruitment • Privacy

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EMPLOYMENT

renewing a redundant position However, in order to justify taking formal action there would need to be a link to the workplace, eg, an impact on your business and your obligations to other employees. It is important to consider why any alleged behaviour is an issue, taking into account the relevant circumstances. As usual the onus is on you as the employer to justify any action you take. This is a brief guide and should not be used as a substitute for professional advice. Please contact AdviceLine for specific assistance. Q I’m making someone redundant. But I do need most of that role continued. Can I replace the person immediately? – Vince Dear Vince I’ll start by correcting your language and thinking: you can’t make someone redundant; only a position. However, you might want to reconsider disestablishing that position if most of the role is still needed. It might be easier to performance manage the employee if you are not satisfied with the employee’s level of performance

as opposed to making the position redundant, and this could include more training to get them up to speed. If you are disestablishing the position you would have to recreate a new role with additional components to the current role. If that role is similar to the previous role the employee whose position was disestablished should be given the role because they have the skills and experiences for it. There is a risk in recreating a new role that is substantially similar to the role that was disestablished, as it can appear as though the employer did not have a genuine business reason to make someone’s position redundant. Read our booklet, A-Z of Employing on Restructuring and Redundancy. Or phone AdviceLine for the specifics on your situation. The difference in a new role might be as much as a different level of responsibility, reporting to a different manager, adding and/or removing any task, requiring a different qualification or skill set to fit a new focus in the new role. When recruiting for a new role also take note of the Human Rights Act

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and Fair Trading Act, the Privacy Act and if relevant, the Immigration Act.

By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s AdviceLine. All names are fictional. The information in this article is a guide only and not to be used as business advice without further consultation. EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within New Zealand), and 1800 300 362 (from Australia), 8am-8pm weekdays NZ time; or email advice@ ema.co.nz You can also find information at www.ema.co.nz such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, or the detailed Employer Guides on 12 popular topics.

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EMPLOYMENT By LEON FOX

Workers’ input key to improved health and safety “For an HSR to be truly effective there needs to be useful training given to them. This will enable them to fully understand their role and to acquire practical ways in which they can assist with health and safety. ” At its heart, our new health and safety legislation requires employers to “involve” people. It recognises that, not only do staff have the right to have a say in how their health and safety is managed, but they also add value to that management.

other people at any risk through their actions or activities. The new legislation also includes a requirement to follow any reasonable health and safety instruction given to them, or any procedure they are informed of.

The legislation - the Health and Safety at Work Act 2015 - even goes to the trouble of detailing a list of the times in a business’ life when involving staff is mandatory: see the Act’s Section 60.

Involving workers

These mandatory occasions include events or activities such as: •

When identifying hazards,

•

When figuring out the risks associated with the hazards, and

•

When deciding the best controls for risks.

The Act also extends the definition of “staff”. The word used in the new law is “worker” and a worker is anyone who does “work” for your organisation.It includes those who are contractors and sub-contractors, temps, people on work experience, apprentices and volunteers. Organisations must involve and consider the needs and views of all these groups. Every worker also has their own duties and responsibilities to uphold. The clearest and most obvious is looking out for their own safety. They must also ensure that they don’t place other workers or any

Amongst the many ways in which an organisation can involve its workers is through HSRs (health and safety representatives) and through health and safety committees. An HSR volunteers, or accepts nomination, and is elected to represent a certain group of workers in the workplace (their work group). There are, once again, specific roles that they are expected, by legislation, to perform. The first and most obvious is that the representative act as the mouthpiece for concerns of their group. The equally obvious requirement is that the HSRs be given the opportunity to regularly interact and discuss health and safety with their team. It is expected that HSRs will also be able to represent their members by investigating concerns brought to them, by looking into anything risky, by making a recommendation, by confirming that the organisation is carrying out health and safety functions correctly and by suggesting ways

in which any injured workers might be assisted in returning to work.

Train them For an HSR to be truly effective there needs to be useful training given to them, to enable them to fully understand their role and to acquire practical ways in which they can assist with health and safety. A representative who goes a step further and passes a specific NZQA Unit Standard is also then able to undertake extra legally-authorised functions. Meetings of Health and Safety Committees are also a way to engage with staff and encourage participation. It is essential the committees are given good direction, good training and an understanding that they perform an integral role in shaping the health and safety culture of the business. The new legislation and regulation point out the committees’ roles in formulating recommendations and being able to ask for and analyse information. There is some clear direction around how a committee must be put together: workers must comprise at least 50 per cent of the membership of the committee and one person on the committee must have the authority to carry forward decisions made by the committee. The new legislation is pulling employers towards greater involvement with the people who work with them. Reps and committees are two of the most effective ways to do this, and training for each structure will make them more effective.

Leno Fox is an EMA trainer in health and safety, and principal of Safety Associates. Visit www.safetyassociates.co.nz 18

BusinessPlus February 2017

EMPLOYMENT By Craig Garner

OH&S legislation, one year on Doom merchants and opportunists are capitalising on the fear and uncertainty of the recent health and safety requirements for business, but the EMA has placed significant emphasis on education as a way to help businesses cope. Just over a year since the Health and Safety at Work Act came into effect in April, EMA will hold its next annual, two-day conference devoted to workplace health and safety, on May 10th and 11th. This conference will provide practical information, insights and thought leadership on what ‘good’ looks like for our business leaders, managers and practitioners specialising in occupational health and safety (OH&S).

having adequate health and safety systems in place. Already, six enforceable undertakings are being negotiated under the new Act. In the meantime we continue to emphasise the increasing importance of effectively managing health and safety for the sustainability of businesses.

Learn what’s required Business’ participation in EMA’s education and training programmes has enabled those firms to manage OH&S.

We suggest you consider booking your seat or table now. The full conference programme will be available on www.ema.co.nz and open for registrations from midFebruary.

Most notably we have seen an increase in OH&S professionals undertaking tertiary programmes at Certificate Level 4 and Diploma Level 6. These help duty holders meet their obligations for increased knowledge, from the Due Diligence Duty of Officers through to engagement with workers and worker participation practices.

We will likely see an increase in prosecutions initiated by the regulator, WorkSafe NZ, as it holds organisations to account for unsafe practices, unacceptable working environments and not

The EMA offers an extensive range of training for business owners, managers and other staff. Whether you want to know how to run an effective health and safety committee, identify

and report hazards or gain a better understanding of your legislative requirements, we have a programme to suit you. Some are conducted online, others in the classroom. An EMA trainer of OH&S who is also a director of Safety Associates, Brent Sutton, says, as businesses move from implementation to operational mode under the new Act, issues of audit and assurance under the duties of compliance and verification for Officers will become a major issue. This will result in increasing demands on staff to provide evidence to their governance group (the Board and chief executive) that the business is doing enough to keep workers safe and to avoid potential prosecution. There is no one-size-fits-all health and safety management system. Every business must undertake its own reviews and assessments to ensure workplace hazards are identified and to effectively manage risk. Our courses can help with all compliance requirements. And the conference will draw all themes together.

Craig Garner is an EMA Learning portfolio manager. Email craig.garner@ema.co.nz

“Updating your OHS practices isn’t enough, you’ve got to walk the walk, everyday!” WHAT DOES GOOD REALLY LOOK LIKE?

Join as at our 2017 Health and Safety Conference COMING, THIS MAY - AUCKLAND

BusinessPlus February 2017

Keep your nger on the pulse Your people are one of your biggest assets. To make sure your business is performing at its best you need to get their pay and benefits ‘just right’. That’s where we can help. Using our market intelligence you can keep your finger on the pulse of market trends and act with confidence. The National Employers Wage and Salary Survey covers 216 positions. Our comprehensive reports include splits by industry, location and revenue bands: Salary reports: Reflect Salary ranges by position, location, revenue bandings and industry. Beneets and Conditions reports: Position specific analysis of benefits and conditions. You’ll find sample reports as well as a full list of positions and descriptions on our website.

www.nzsalarysurvey.co.nz The

National Employers Wage and Salary Survey is a joint venture between

IN BUSINESS By DAVID SPRATT

Application Evangelists: the final stage of system upgrade This article is Part 3 of a series on getting the best value out of the selection and delivery of new IT services. Part 1 (in BusinessPlus, October 2016) discussed analysing stakeholders’ needs and translating them into measurable selection criteria. Part 2 (November 2016) outlined assuring quality and delivery through the functional separation of project management, commercial controls and technical design. Imagine your business is at the stage where expectations of everyone involved in the coming IT upgrade are crystal clear and people are excited and engaged, and looking forward to the promised results. The product has been delivered – hopefully on time and on budget. Now, how do you extract the value that you hoped for? Let’s take a practical, real world example. I had been part of the team selecting new contact management software for First Assistance, an amazing New Zealand company that rescues sick and stranded citizens who are overseas. I asked the company how the selection process had made their lives better. The executives replied: “Dave, we like your process and we got what we wanted from it, but in truth that was the easy part. Gaining ongoing value from the system – now THAT is the difficult bit!” This is not an uncommon cry. If you measure the life of any IT solution, only 20 per cent of the time and money invested is for selection and project delivery. Put another way, $4 out of every $5 invested is spent AFTER you have got the system up

and running. People might haggle over every dollar when buying products but 80 per cent of their actual costs go uncontested, unchallenged and failing to deliver on the predicted benefits.

The three key elements or ways to engage Product Champions, which align directly to the core components identified in Part 2 as making up successful product delivery, are:

Selecting a system of any kind usually commits an organisation for years, even a decade in the case of complex systems like contact centres, enterprise recourse planning (ERP) or supply chain services.

• Commercial considerations: Use quarterly reviews of the business outcomes that the system has delivered against the original projections. The review team should involve an Executive Sponsor, your Product Champion(s), a delivery person (project manager) and a design specialist from IT.

The big issue becomes how companies avoid ending up with a system that sucks up cash, remains largely as it was when originally set up and eventually holds back the business.

Product champions assist uptake First Assistance has addressed this problem with a concept that is clever, simple and yet elegant and effective: They engage “product champions”. Product Champions are usually not technical gurus or business analysts, neither of whom tend to use the system day-to-day. Product Champions are staff whose day-to-day lives are affected by the system. These people have often taken the time to learn the system’s features and impacts on their own and their colleagues’ job functions. These are the people often heard saying, “If only we could do A or B this would really make things work so much more effectively.” Engaging Product Champions in the solution’s ongoing evolution brings measurable business value.

How product champions operate Product Champions’ membership of a group whose influence rises above its day-to-day reporting lines will rapidly become a badge of honour for them.

David Spratt is a director of Total Utilities. Visit www.tumg.co.nz

• Design features: Regular product updates and briefings are a mandatory requirement for Product Champions and should be arranged by IT and the supplier as a matter of course. These updates should happen at least six-monthly and should feed into the quarterly update process. However, it is impossible to ask Product Champions for suggestions on improving things at a business level when they have no understanding of current and planned product features, or the capability of the system to adapt and change using workflows or software plug ins. • Resources, budgets and delivery considerations: The budget and resource process for ongoing investment in existing solutions has traditionally been the job of Finance and IT. While this level of governance is important, enabling the role of the Product Champion and their Executive Sponsor through access to money and people cannot be understated. Give the Product Champions some financial teeth, access to a project manager and support from a system designer to see business-led change and ongoing value from your new IT investment.

BusinessPlus February 2017

IN BUSINESS By paul johnson

The changing face of ICT security Cyber-security is generally recognised to be as important, if not more important, than the physical security of premises. If left unnoticed and unattended, cyber-crime can potentially result in financial losses that could cripple a business. In years gone by, a firewall and antivirus/anti-spam software were considered adequate to secure an organisation’s information and communications technology (ICT) environment. Unfortunately this approach to perimeter security and using identification of known virus/spam signatures is not able to protect against the cyber threats that are now prevalent. The truth is, organisations do not appear to be preparing themselves well enough to counter evolving cyber threats. Ensuring your organisation is not exposed now requires a far more comprehensive approach. A recent survey of 700 organisations conducted by Tenable, a leading provider of security-related tools and applications, found respondents’ confidence in the ability to secure and protect their organisations from cyber threats over the next 12 months had declined 12 per cent. The survey also cited lack of visibility into networks, the rapid pace of change in the cyber threat environment, and low security awareness among staff as the top three challenges for ICT security practitioners. Complexity within an organisation’s ICT infrastructure is a key reason why securing the environment is tending to be more difficult than it used to be. Today, organisations use an ever-expanding range of connected devices and applications,

BusinessPlus February 2017

The security services now available include:

and physical and virtualised server infrastructure including connectivity to geographically dispersed cloud platforms. With so many devices and systems supported by internal and external resources, it is imperative that organisations have the visibility necessary to identify and mitigate cyber security threats.

• Enhanced Tiered Perimeter Security: These systems are the first line of defence and ensure the only data allowed through are of a specific type and received in specific formats. These systems also leverage global databases of known attack methods to screen out a large proportion of potential attacks.

In recent years there has been strong competition among IT service providers, resulting in rapid capacity increases in computing and storage, while network connectivity costs have plummeted.

• Vulnerability Assessments (VA): This is the real-time scanning of internal and external infrastructure. This process identifies devices and/ or systems which can be exploited through known vulnerabilities and makes recommendations for remedial action, such as updating code or patching servers. VA is often provided as a service and identifies the resources required to address issues.

It could be argued that prudent organisations should have invested some of the savings from this into enhancing their ICT security posture. Regrettably, most organisations have not invested in this way and as a result cyber-criminals now regularly exploit legacy security infrastructure to undertake sophisticated attacks in the search for vulnerabilities.

All business types are targets It is also notable that in 2016 cybercrime activity shifted away from only targeting large and high profile organisations. Today, and looking to 2017 and beyond, regardless of company size and profile, all organisations are attractive targets of cybercrime. Attacks can be launched with simple scripting and no special tools, which, if successful, can net significant financial rewards from credit card fraud, krypto-locker ransoms, intellectual property theft and other exposures. There is no silver bullet, no single solution from a vendor that can provide absolute assurance your organisation is fully protected. However, with careful consideration

Paul Johnson is manager of Network Edge. Visit www.networkedge.co.nz 22

of security products and services that are available, an effective and robust security posture can be achieved.

• Behavioural Monitoring: This is intelligent identification of suspicious activity within an organisation, which may indicate an active threat or even criminal activity. • Security Information and Event Management (SIEM): This is an integrated suite of tools used to capture security-related data, correlate the data into meaningful information, and present as a dashboard. The dashboard provides security experts with sufficient data to identify threats and respond to them appropriately. Larger organisations may warrant a dedicated in-house team of security professionals to maintain the desired security posture. However, due to the skillsets required to interpret the ever expanding output from security related tools, it can be more cost effective to work with a company that has expertise in this area.

IN BUSINESS By Rosina Webb like to voice their opinion, and time permitting, will often respond to an opportunity to comment.

Following up

Tips for top email marketing “Email campaigns are not just a one-way communication street. They are also a useful and effective way to drive traffic back to your website, to your blogs (where recipients can comment) or even to links about relevant events that you may be holding that may be of interest to them.” Growing your email marketing database takes a lot of hard work and networking. And once you have managed to get a client or prospect to opt in to your email database it’s important to ensure their experience is positive, so they stay with you. With that in mind, following is a summary of some simple ways to keep your audience engaged

Welcome email As with any new introduction, a warm welcome is always appreciated. Email your new database member with a friendly email thanking them for signing up. If you have used a promise of a free download, offer or gift in order to get them to sign up, make sure that you follow through by not only acknowledging it, but also delivering on it.

Don’t make false promises Clearly define in your email subject line what the email is about, and then deliver on that subject. Don’t try to lure your audience with promises of offers or information that aren’t actually forthcoming in your email, as it will only lead them to get frustrated and possibly unsubscribe from your database.

Relationship building Email campaigns are not just a oneway communication street. They are also a useful and effective way to drive traffic back to your website, to your blogs (where recipients can comment) or even to links about relevant events that you may be holding that may be of interest to them. You could even send out a survey to ascertain their thoughts on your products or services, or gauge their opinions on what is of interest to them or what they’d like to see in the market. In general, people

Again, it’s important to follow up where appropriate. Perhaps this could mean splitting the information you want to convey into pieces and sending it out piece by piece to them. Perhaps it’s a follow-up to an offer or event you have put to them previously, to remind them that it’s time-bound.

Unsubscribe opportunity By law you need to offer your audience a chance to unsubscribe from your database. Sending emails to people who do not wish to receive them is called “spamming”. Although it’s not ideal to lose anyone, you will do more damage to your brand by continually contacting someone who does not wish to be contacted. Therefore it’s also important to take the time to understand your client/prospect. If you email them too often it may be off-putting, particularly if they are busy, and you will end up losing them. Find the balance of not too often, not too little.

Customer value Think about your emails from your audience’s perspective. What’s in it for them? Why should they read it? Why should they respond with their opinions? Why should they attend your event? Whatever your content, ensure it is targeted correctly to the people you are emailing. Every so often include a draw card of a product sample or an offer so recipients feel connected and appreciated. If you can get the balance right, your email database can provide a direct link to what your customers are thinking about your products or services and your brand. Nurture that relationship and people in your database can become your biggest advocates in the marketplace.

Rosina Webb is founder and managing director of Energise & Associates. Visit www.energise.net.nz BusinessPlus February 2017

IN BUSINESS By Mike Fokkens

An acquisition is not an event but a process In the last issue (December 2016), we discussed broadly the approach to growth by acquiring other businesses. The month, we drill down into the six phases involved, and provide a detailed checklist of action points. Start with a plan and a clear idea of your goals. This will give you a set of criteria to assess target companies and make your search for the perfect acquisition fast and simple. It will also help you get an honest appraisal of the chances of success. It is important to be proactive and to retain the initiative at all times because others in your industry are also hunting for a sound acquisition.

Six phases of buying another company Phase One – Research on industry • Gather market intelligence on industry growth opportunities and competitive position of the industry. • Draw on sector research from business brokers, for example. • Identify the most desirable segments of the industry for potential acquisition, taking into account identified growth sectors, competitive and capability gaps, competitive and capability overlaps, conflicts, duplications, synergies and potential leverage opportunities. • Scan the market thoroughly to ensure all viable target companies are included. • Build a database of typical or average industry revenues, earnings, skill profiles, customers and suppliers, geographic coverage, culture and readiness to be acquired – all important information for future reference. • Sign confidentiality agreements with sources of information. Phase Two – Self Analysis • Review your company strategy and objectives, your vision, mission, fiveyear plan, retirement plans and exit strategy.

• Evaluate alternative futures, sizes, alliances and positions in the value chain. • Perform a SWOT analysis. Integrate this with Phase 1 research and derive a set of scheduled actions to address all four quadrants (strengths, weaknesses, opportunities and threats). • Reconsider acquisition versus building the business organically (this is a sanity check). • Assess and compare your opportunities that emerged in Phase 1. • Appoint an acquisition team from employees and selected professional service providers (legal, financial and commercial). • Prepare and agree on desired profiles for target companies, including all key features and metrics, and agree with the acquisition team. Phase Three - Targeting • List all potential target companies to ensure completeness – first produce a long list. • Determine targets’ synergy with the acquisition strategy, and rank accordingly. • Broker should present you with a long list (no more than one month after approval to proceed). • Review the target company ranking and agree or amend. • Agree on the short list of targets – the best opportunities, at least five. Phase Four - Contact • Decide who should be blind approached and should not know about your plans. • Plan when to make information available and prepare nondisclosure agreements. • Prepare a format for your meetings and evaluation of target companies. • Schedule contact with target companies. • Interview directors of target companies about potential benefits of acquisition. • Assess directors’ interest in being acquired.

• Compile analyses of each target company (eg, financial, SWOT, current and future market analysis). • Evaluate their match against your original profiles and goals. • Review synergies and other growth opportunities. Phase Five -Negotiation • Value each company still under consideration. Consider sales of comparable companies, industry formulas and valuations. • Determine future roles of seller (e.g. director, manager, employee, shareholder) and key employees. • Agree restrictions on the seller, such as non-compete agreements. • Negotiate transaction terms and structure and agree how payment is to be made. • Raise and structure financing, if required. • Write letters of intent or a nonbinding offer. • Commission mutual due diligence: investigating the seller’s business documentation. • Draft contracts of sale specifying the sale price, deposit sum, any securities, payment process, liability and representation, transfer of leases and all future commitments. • Comply with all jurisdictional requirements for transfer of entity or assets. • Sign all papers. Phase Six – Integration of the two businesses • Co-ordinate the closing and transition periods, to help minimise business disruption for all parties in your original business and the one you have just acquired. • Plan the integration of workforces, operations and financial management. • Update the new company integrated business plan, now that many uncertainties have been removed. • Ensure that key managers remain and are motivated by the new company goals. • Instigate a progress review cycle, track goals and share feedback on performance. • Develop your acquisition strategy, effectively drafting a new company strategic plan based on acquisition.

Mike Fokkens is a business broker at LINK Business Broking (Licenced REAA08). Email michaelf@linkbusiness.co.nz 24

BusinessPlus February 2017

Tips to conserve electricity and gas With the festive season behind us, all businesses will remain engaged in the eternal quest to curb operating costs. When it comes to spending on utilities such as electricity and gas, the route to financial peace of mind is both commercial and technical via the following actions: • Professional energy procurement: Don’t just be a price taker, shop around effectively and preferably as part of a bulk tender process. • Energy optimisation: Undertake a detailed engineering focus on the kWh used, whether on heating, ventilation, air-conditioning, lighting, motors, pumps, compressors or chillers, etc – working where applicable with the Energy Efficiency and Conservation Authority’s (EECA’s) part-funding of approved energy reviews.

• Electricity check metering: The purpose of check metering is to drill down beyond the existing level of “summary usage” data information typically provided by energy retailers (both via their websites and monthly invoices) to “detailed usage per electricity circuit”. This is preferably non-intrusive (not hard-wired), ie, quicker, easier, more flexible and less expensive to undertake. Subject to receipt of EECA’s approval, customers may get up to 40 per cent of the cost off electricity monitoring and targeting project from EECA. The objective of the above processes is to identify specific opportunities that are both technically and financially viable prospects for businesses, to reduce kWh usage.

in business By richard gardiner

Examples of typical usage-reduction opportunities include: • Reducing peaks in invoiced maximum demand – whether by spreading the load better (‘operational’ changes); • Reducing peaks by installing variable speed drives (‘equipment’ changes); • Highlighting existing problems that have gone undetected (pinpointing the need for earlier preventative maintenance); • Identifying energy conservation measures; • Doing like-for-like comparisons which highlight usage anomalies; and • Identifying situations where equipment is operating when it’s not supposed to be!

Richard Gardiner is Managing Director at Total Utilities. Visit www.tumg.co.nz

BusinessPlus February 2017

IN BUSINESS

Medium- to lower-risk food businesses can follow a national programme. This involves following a set of food safety rules and keeping some records, but doesn’t require a written plan. Most businesses following a national programme need to register with their local council and if you operate in more than one council area you can register with MPI. All food businesses need to get checked by a ‘verifier’ who is a qualified auditor from a council or private agency. This is a vital part of the system, as it’s how MPI checks that businesses are making safe food.

Getting to grips with new food safety law “If you make higher-risk products, you need to use a food control plan to manage food safety. This means creating a customised plan for your business. … Medium- to lower-risk food businesses can follow a national programme.” Food manufacturers have probably heard about the Food Act 2014, which came into effect in March last year as an update on the 1981 act. With the deadline coming up for some businesses to register, it’s a good time to check you know what it’s all about. The new law intends to improve food safety, by adopting a risk-based approach. Those who make higherrisk food, like ready-to-eat meals, have to follow stricter rules than those who make lower-risk food such as confectionary. There is more emphasis on things that make the biggest difference to food safety. For example, the old law

set prescriptive rules for how your ‘floors, walls and ceilings’ should look. Under the new rules, these only matter if they affect food safety, and you have more flexibility to show how you manage possible risks.

Complying with the law What you have to do depends on what you make. If you make higherrisk products, you need to use a food control plan to manage food safety. This means creating a customised plan for your business. You’ll need to register your plan with the Ministry for Primary Industries (MPI) and have it evaluated. If you already have a food safety programme, you won’t need to make many changes.

You need to select a verifier before you register (see below for help with this), but you won’t be checked straight away. How often you get checked depends on the risk involved in your business and how well you manage food safety. This allows businesses to keep compliance costs down, and helps to improve food safety.

Upcoming deadlines New businesses have to comply with the law straight away, but existing businesses are moving to the new rules in stages. You need to register by 31 March 2017 if you manufacture food for vulnerable people, or sauces, spreads or dips that need to be kept cold, or ready-to-eat salads. A ‘transition timetable’, with deadlines for all food businesses, is on the MPI website.

Help to follow the rules Getting to grips with any new law can be difficult, and MPI has created resources to help. Check the MPI website for information, downloadable guides, case studies and more. Start by using the tool, ‘Where do I fit?’, on the MPI website to check how the law applies to you. Lists of evaluators and verifiers are also on the MPI website, along with guidance on how much they should cost. If you have any trouble finding one, contact MPI.

For more information visit www.mpi.govt.nz/foodact or speak to your local council. 26

BusinessPlus February 2017

international trade By catherine beard

Entering your market bit by bit Australia is a sensible first choice for many Kiwi companies looking to start exporting overseas. New Zealand and Australia have one of the closest and broadest economic and trading relationships of any two countries in the world. There are many similarities between the Australian and New Zealand markets, though there are small subtle cultural differences that exporters need to pay attention to. The Beachheads Advisor in Australia for New Zealand Trade and Enterprise, Mark Kennedy, says that in the Australian market, mainstream is disappearing – the market is going for the best or the best priced. There is also a shift in what is perceived as a premium product. It’s all about the crafting that has taken place to create the product: who was involved, where does it come from and what passion drives the organisation? You need a really clear sense of purpose and a point of relevant difference. I spoke to Mike Sproule of Original Foods Baking Co wholesale bakery about its export journey. Original Foods Baking Co was established in Christchurch in 1991 and produces more than 90 products including cakes, donuts, muffins, brownies and slices, sold under the brands Original Foods Baking Co™, Goofy™, Bite Me™ and generic supermarket brands. The products have broad appeal in the New Zealand and Australian markets. In fact, it was the high demand from Kiwi consumers in Australia wanting Original Foods’ sweet treats, that started their export growth into the Australian market. Mike says, “We have a very loyal

customer base and we still get people emailing us on our website asking for their favourite products.” The proudly family-owned business has been perfecting its baking recipes for more than 25 years. Original Foods prides itself on the freshness of its baked goods. The company uses the highest quality raw ingredients with everything freshly baked and then frozen to retain freshness, before being shipped. Natural flavours are used wherever possible with minimal use of additives or preservatives. The company now supplies quality cafes, restaurants, supermarkets, catering companies and tourism businesses in New Zealand, Australia, the Cook Islands, Samoa and Hong Kong as well as Air New Zealand, Singapore Airlines, Virgin and Jetstar’s inflight menus. Mike says, “We’re currently looking at the Chinese market and continuing to expand our Australian market. “We’re primarily working with wellestablished contacts we’ve made in each market.” It seems they are in a growth market too, with the global demand for baked products projected to exceed US$485 billion by 2020, and AsiaPacific ranking as the fastest growing market. Original Foods has just built and opened a $10 million, 2,800m2 production facility in Christchurch, which has allowed it to significantly increase production volume.

• A strong point of difference is essential. “There are cheaper products out there that try to undercut us, for example, but we have superior quality products and are leaders in our field.” • Don’t expect to make money straight away in a new market; it takes time to foster relationships, understand market nuances and learn from your mistakes. • Keep building your contacts and knowledge, it can take time and some luck to find a good distributor – you may need to try a few before you find the right one. • It’s good fun but it’s not easy! You need patience and perseverance. Hire someone with experience and with good contacts to help open doors for you.

Mike’s top seven tips for Kiwi companies looking to export are:

• Don’t jump on a plane and run around everywhere. Stop, look and really understand the market, and make sure you have a clear plan for each market.

• Great relationships are critical within your distribution networks in each market.

• Conquer one market at a time. Once you have that one right then move to your next one.

Starting out

Catherine Beard is executive director of ExportNZ, a division of BusinessNZ. Email cbeard@businessnz.org.nz BusinessPlus February 2017

international trade By Nada Young

High stakes in Hong Kong Entering the food and beverage (F&B) game in Hong Kong can be a bit like getting tossed about in a tin boat during a storm. Hong Kong is intense. Just navigating its teeming sidewalks and constant noise can put you on edge. It’s a city of alpha men and women moving from one opportunity to the next, deftly dodging setbacks as they advance towards the next ‘big thing’. For a New Zealander, this overt capitalism can take a bit of getting used to. However, with an economy driven by some 7.15 million locals and more than 54 million visitors per year, mostly from Mainland China, Hong Kong is definitely a market worth taking on.

Sophisticated supermarkets The supermarket channel is sophisticated and well suited to New Zealand’s products. Indeed, many of our hero brands are already well established in Hong Kong. New entrants face a high cost of entry and unbridled competition – with no duties or import barriers, Hong Kong is an obvious first step for international F&B exporters looking to Asia for growth. Consumers are exposed to a plethora of international products

and so too are the retail buyers, who drive a hard bargain when listing new brands on the shelves. It’s not uncommon to pay between HKD400,000-600,000 (NZ$70,000-100,000) to list a brand in the right stores.

Direct channel? The import-friendly environment also means Hong Kong is one of the few places in Asia where it is viable for retailers to do away with the traditional distributor model and import goods directly. The direct-to-retail model can be beneficial for some brand owners as it saves 25-30 per cent in the price build for a distributor margin. It can also significantly reduce expensive listing fees and compulsory advertising and promotion (A&P) costs. And yet, direct-to-retail is not without its pitfalls. The modus operandi for retail buyers is testing new products, keeping the top performers and culling the rest with ruthless zeal. There is simply no focus on brand building and this cutthroat attitude leads to high brand turnover. Generally, brands will invest heavily during the market entry phase, with regular sampling, price promotions and campaigns in print and social media.

Distributor model A more sustainable strategy for Hong Kong is to work with a capable distributor who can act as brand custodian. Brand owners can leverage off the distributor’s market expertise in order to formulate and execute a successful marketing strategy. A distribution model has the added advantage of enabling the brand owner to access multiple retail channels while dealing with only one customer (the distributor). The distribution model is also more suitable for high value, low volume products such as gourmet yogurt and premium lamb. Retail buyers are extremely reluctant to take on the risk of ordering a full airline container of high value, perishable goods, preferring instead to transfer the risk of spoilage and warehousing costs to distributors. Distributors are not only more adept at handling sensitive goods, their ability to service multiple retail chains allows them to rapidly sell full containers and increase their order frequency. If the intention is to stay in Hong Kong long term, brand owners should be prepared with a solid market entry strategy and deep pockets. Success in Hong Kong will have a positive ripple effect in surrounding markets, including Mainland China, Taiwan and Southeast Asia.

Nada Young is a director of Incite. Visit www.exportincite.com Continued from pg15 In applying the “new” framework for the assessment for penalties, the Authority set the penalty at $25,000 (payable to the Crown) and observed that this was an appropriate penalty, which combined “effective and realistic punishment and deterrence on the one hand, and affordability on the other hand”. The Authority further observed that higher penalties than previously will likely be 28

BusinessPlus February 2017

sought and imposed in the future. The Authority’s determination serves as a reminder that noncompliance with minimum employment standards will be taken seriously and awards for penalties will likely increase. This is a timely reminder in terms of compliance, in that the “grace period” provided for in the Employment Relations Amendment

Act 2016 will expire on 1 April 2017. By then, all employment agreements must comply with amended requirements for arrangements regarding hours of work, cancellation of shifts, secondary employment, and employees’ availability for work. In particular, the latter remains of great interest as we await the first decisions from the Employment Court this year.

INternational trade By Thomas Manning

Latin America’s annus horribilis A malign convergence of low commodity prices, endemic corruption and legal perversion curtailed Latin America’s economic development in 2016. That was then further threatened by the rising tide of jingoism and trade protection in the Western Hemisphere represented by Donald Trump’s election as US president, and Brexit.

Argentina “Zero poverty” was the mantra of Argentine President Macri’s successful election campaign, but it came to naught by the end of 2016 when official figures revealed 32 per cent of Argentines were living below the poverty line, a 1 per cent contraction in GDP and 47 per cent inflation. Macri’s new mantra is “No pain, no gain” and he promises an economic rebound this year, which for the future of his government is vital as the electorate’s tolerance for pain is notoriously scant.

Brazil Brazil’s corruption-riddled Congress and Senate impeached President Dilma Rousseff on spurious grounds and installed in her place the reviled vice-president, Michel Temer, who is himself now under indictment for illegal enrichment. Political instability and low oil prices have plunged Brazil into its worst economic depression in a century, the amelioration of which will take years, particularly as Trump’s protectionist shadow has fallen across Brazil’s most lucrative export markets in the US.

Bolivia Bolivia enjoyed modest growth during last year, by increasing natural gas production and infrastructure development. But President Evo Morales’ intention to stand for a constitutionally prohibited third term has storm clouds gathering, as

Morales’ unconstitutional candidacy is trenchantly opposed by Bolivia’s wealthy urban elites.

Chile Low copper prices sent the Chilean economy backwards in 2016 and President Michelle Bachelet saw her approval ratings sink to basement level when her son-in-law’s speculative and legally dubious land dealings were exposed, and after mass demonstrations against privatised pensions and education services.

Colombia Colombia’s oil income dropped and growth conversely sagged. But a peace accord with rebel army FARC, which has inhibited economic development for decades, means Colombia will be well positioned for growth once oil prices rebound.

Cuba US President Obama’s rapprochement with Cuba led to a surge in US tourism and gave hope to improved economic prosperity, which is now threatened by Trump’s election as he has vowed to undo the thaw unless democracy was introduced and political prisoners freed, otherwise the US economic blockade of Cuba would continue.

Mexico While Mexico’s economy grew 2.3 per cent in 2016 Trump’s protectionist policies are a major economic threat to its preponderant trade with the US under NAFTA, which Trump has vowed to renegotiate in the US’ favour or even abrogate. Mexican President Enrique Peña Nieto is mired in a scandal concerning his wife’s real estate dealings with government contractors and he has the lowest poll ratings of his entire presidency due also to insecurity brought about by barbarous drug

trade violence, systemic corruption and untrammelled impunity, the remediation of which is presently Mexico’s most urgent challenge apart from NAFTA’s future.

Panama Panama enjoyed the strongest economic growth in the region last year on the back of the upgraded Canal and a booming, unregulated financial services sector, which was revealed in the ‘Panama Papers’ to be profiting from money laundering, legal skulduggery and tax evasion that, now curbed by new regulations, will result in reduced economic output this year.

Peru Last year Peru elected a new president, the ex-World Bank official Pedro Pablo Kuczynski, who intends to lead Peru into new privatisations and lighter regulation. While the economy has been performing well there is growing social unrest as the benefits have not been reaching Peru’s impoverished majority.

Venezuela Venezuela, an economic basket case led the world with mindboggling 800+ per cent inflation and dire shortages of food and medicine, which has led to widespread looting and rampant crime. Ex-bus driver President Nicolas Maduro clings to power in the face of widespread odium, propped-up by a compliant supreme court stacked with cronies. Despite 2016’s travails, and apart from worrying distempers in Bolivia, Brazil and Venezuela, democracy is still alive and well in Latin America (notwithstanding Cuba), which bodes well for the ability to develop equitable solutions to present difficulties and especially to forge durable bilateral trade alliances to confront new world trade realities.

Thomas Manning is governing director of Latin American business consultancy Manning Group Ltd and Transpacific Business Tours, and publisher of the Transpacific Business Digest. Visit www.manningrouplimited.com BusinessPlus February 2017

international trade By brendon wilson

New Zealand’s banks and financiers - could do better? New Zealand’s banking and finance sector needs to be resilient, efficient and transformational to enable business growth and export expansion, and for access to capital for investment in plant and developing innovative products. Debt finance plays a pivotal role for New Zealand companies in meeting their customer expectations and facing the world’s competitive entrepreneurs. So how can our banking and finance sector improve, and show its responsiveness to the needs of New Zealand business? Those needs are often demonstrated by the following scenarios.

Typical business issues 1. Your earnings just cover your costs, with seasonal patches when they don’t. 2. You work long hours. 3. Your business’ tax regime is overly complex and compliance costs are high. 4. Health and safety requirements have recently become more demanding. 5. You receive next-to-no interest on your deposits. 6. You have to meet banks’ timeframes for deposits, eg, your biggest sales may be on weekends when banks aren’t open, so your deposits often can’t be made in time to cover outgoings. 7. When you borrow for expansion or working capital, your interest rates are 3-5 per cent above libor, meaning your competitors may be paying considerably less for their debt; even if your business is

local, you are exposed to offshore competition and costs. 8. For you to borrow at all, banks require tangible, often personal assets, which might mean mortgaging your home to acquire business capital – a serious disincentive to opportunity, growth and innovation, adding personal risk. Transparency International New Zealand (TINZ) is undertaking a consultation process to design an assessment of the New Zealand financial sector’s current operations. Independent professional assessors will work with banks and financial institutions to establish their real responsiveness, and whether regulation is playing a suitable role. The International Monetary Fund reports that despite the GFC, only around 2 per cent of the world’s banks have changed the way they do business, including the strengthening of their governance and integrity systems to reduce risk, and preventive measures against bribery and corruption. Our ‘Financial Integrity System Assessment’ aims to discover whether New Zealand banks and financial service providers are different, and in what areas. This will result in developing initiatives and tools to reinforce a culture of integrity and realise greater benefits for business in New Zealand.

Change the risk profile Costs of the risk of corruption and poor practice will be lowered when the banking and financial services sector can highlight assessed and proven transparency, accountability, strong integrity systems and core ethical values.

Does our financial system help or hinder our reputation and bring those benefits to clients and the economy? As the New Zealand economy continues to grow and become engaged with new patterns of business and new global partners, it increasingly needs to build relationships with and within countries that have differing standards. The recently-announced sale by ANZ of UDC Finance to Chinese interests reminds us of the openness of New Zealand’s financial organisations to global economics. It is important that we are open to world competitive capital and services, but that all those providing finance services to New Zealand business are aware of what it takes to meet customer and integrity expectations here, and demonstrate how they design their processes to meet them – and so contribute to New Zealand’s reputation. For the international financial system to recognise that change is needed to maintain the trust of the public and business, disruption might yet be necessary from cyber currency trading, peer-to-peer lending, crowd funding platforms and other technologies. And it will be important to ensure any new, mould-breaking financial innovations are built on strong integrity systems, and meet our needs and expectations in transparent ways. The progress of our Assessment will feature in future issues.

Brendon Wilson is a director of Transparency International New Zealand. Visit www.tinz.co.nz 30

BusinessPlus February 2017

MEMBER PROFILE

Flyers formalise their relationship with beer The busy life of retirement was never going to last for Jim Ellis. He was only 55 after all, and had enjoyed being in business. He had jumped in to help start up Pilot Brewery about four years ago, as a shareholder and director. But two months ago when his fellow shareholders and company directors – also recreational pilots - starting talking about the next exciting growth phase, it seemed like the right time for Jim to step back in as boss. He kicked off his gumboots, walked off his lifestyle block and into the boardroom. The craft brewery business had certainly grown in size and shape during his absence, he says. Now it was time to implement the business plan and find new strategies for Pilot Brewery to grow beyond its established roots in the Waikato. After all, strategy is everything for growth, he says. And Jim knows, after selling a childcare business that he and his wife grew from scratch into multiple New Zealand regions. The concept of Pilot Brewery had been hatched in the hangar after a hard day’s sightseeing in the sky, when Jim and nine other recreational flyers might have had one too many. The idea developed further during an overseas trip. It only took a brief visit to a small local brewery for these close-knit founding aviators to decide they could make their own beer!

the region soar. The beer is brewed in Nelson and three full time staff run the operation from their local airfield north of Hamilton.

All branding themed on aviation “All branding is based round aviation but the beer is for everyone!” says Jim. “That’s because we all fly and are passionate about aviation AND beer… as long as we are not doing both together. It’s a perfect relationship.” Unique selling points include the strong aviation theme branding, from beer names such as Avgas (short for aviation gas) Pilsener and Low Vis Indian Pale Ale, to the Mr Biggles storybook-pilot logo and the real helicopter converted to a mobile keg dispenser. The formerly active R22 chopper has had the motor taken out and replaced with an ice-bank. It holds two kegs, dispensed from taps on the aircraft’s tail. The chopper is moved between venues on a trailer. Says Jim, “We have plans for 2017, ‘18 and ’19. Auckland will be a focus, starting with aviation clubs. “We always had a focus to grow. But I’m not a believer in the scattergun approach. You go into an area and work it, you brand in that area, market there, and once you have a good presence, you can move on to another one. You have to give the market the justice it deserves.”

Ten flyers soon became 60-plus shareholders of Pilot Brewery to quench more than just their own thirsts.

When asked for his views of doing business in New Zealand, Jim says business is about relationships.

Growth has been phenomenal from 60,000 litres in one year to 110,000 the next. This summer Pilot Brewery beer was sold on Coromandel Peninsula when visitor numbers to

“These are more important than contracts. Respect, honesty, service, looking after people, showing appreciation…these things make it all worthwhile. The money you make is the by-product; it should not be the

driver. “As with any aspect of life: people want to feel listened to. Find solutions [for customers and suppliers] without creating drama, and get things sorted. Don’t get defensive when things don’t go right: this is your chance to shine! Show how much you can be taken seriously.” Complying with liquor laws to promote safe drinking is not an issue for the company. It produced its latest beer, the low alcohol “Microlight” at 2.5 per cent, for this reason. Jim’s advice to someone starting out? If being in business itself is new, he recommends the owner get a mentor for learning business 101. “Some people don’t understand some basic principles such as time management and basic financial responsibilities. Stick to the guidelines. Solid foundations - wellstructured businesses - multiply. “A business fails not because of the market you are in but because you are not doing what you should do. The owners are always accountable. If you structure things right you will get through tough times. “For us, we are passionate and fun is involved, and we know the aviation market but that’s not exclusive. You have to take it seriously but it should be fun; if it’s a chore overall – some aspects of work are, of course – then why are you in it?” BusinessPlus February 2017

FREE for all EMA members | To register call AdviceLine on 0800 300 362 or email advice@ema.co.nz Visit www.ema.co.nz

Summer Member Briefings Schedule 2017 Waikato / BOP Day/Date

Time

Venue

Mon. 27 Feb.

9.30am - 11.00am

The Junction Hotel, 700 Pollen Street, THAMES

Mon. 27 Feb.

3.00pm - 4.30pm

ASB Baypark, 81 Truman Lane, MT MAUNGANUI

Tues. 28 Feb.

9.30am - 11.00am

Eastbay REAP, Reap House, 21 Pyne Street, WHAKATANE

Tues. 28 Feb.

3.00pm - 4.30pm

Suncourt Hotel & Conference Centre, 14 Northcroft Street, TAUPO

Weds. 1 March

9.30am -11.00am

Holiday Inn, 10 Tryon Street, Whakarewarewa, ROTORUA

Weds. 1 March

2.00pm - 3.30pm

Central Kids Kindergartens, 6 Glenshea Street, PUTARURU

Thurs. 2 March

9.30am - 11.00am

Claudelands Conference Centre, Corner Brooklyn Road & Heaphy Terrace, HAMILTON

Day/Date

Time

Venue

Fri. 3 March

9.30am - 11.00am

Quality Hotel Lincoln Green, 159 Lincoln Rd, HENDERSON

Mon. 6 March

9.30am - 11.00am

Butterfly Creek, Tom Pearce Drive, MANGERE

Mon. 6 March

3.00pm - 4.30pm

Waipuna Conference Centre, 58 Waipuna Road, MT WELLINGTON

Tues. 7 March

9.30am - 11.00am

QBE Stadium, Stadium Drive, ALBANY

Tues. 7 March

3.00pm - 4.30pm

Bruce Mason Centre, 1 The Promenade, TAKAPUNA

Weds. 8 March

9.30am - 11.00am

Rainbows End Conference Centre, Clist Crescent, MANUKAU

Weds. 8 March

3.00pm - 4.30pm

Ellerslie Event Centre, Ellerslie Racecourse, 80 Ascot Avenue, REMUERA

Thurs. 9 March

9.30am - 11.00am

Counties Inn, 17 Paerata Road, PUKEKOHE

Thurs. 9 March

2.30pm - 4.00pm

Bruce Pulman Park, Teamsports Centre, Walters Road, PAPAKURA

Fri. 10 March

7.30am - 9.00am

EMA, Room C, 145 Khyber Pass Road, GRAFTON

Fri. 10 March

2.30pm - 4.00pm

EMA, Room C, 145 Khyber Pass Road, GRAFTON

Mon. 13 March

9.30am - 11.00am

Titirangi Golf Club, Links Road, NEW LYNN

Tues. 14 March

2:00pm - 3:00pm

Webinar: www.ema.webex.com

Day/Date

Time

Venue

Thurs. 16 March

9.30am - 11.00am

Woodlands Conference Centre, 126 Kerikeri Road, KERIKERI

Thurs. 16 March

1:30pm - 3:00pm

Distinction Whangarei, 9 Riverside Drive, WHANGAREI

Day/Date

Time

Venue

Fri. 17 March

9.30am - 11.00am

Aotea Centre, Lower NZI Room, Level 3, Mayoral Drive, AUCKLAND

Auckland

Northland

Auckland