Business Plus September 2016 by EMA

ISSUE 140 - SEPTEMBER 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

Adventure business blends conservation and commerce READ MORE: PAGE 29

MORE STORIES PAGE 14: Recruitment - more than a tech process PAGE 15: Employer guide to handling medical incapacity PAGE 28: Growth for chocolate business with ethical focus â&#x20AC;¦and much more!

THE ‘VOICE’ OF BUSINESS MEET YOUR ADVOCACY TEAM

MARK CHAMPION GENERAL MANAGER ADVOCACY & INDUSTRY RELATIONS

ALAN MCDONALD POLICY DIRECTOR

MIKE BURGESS SENIOR POLICY ANALYST

GARTH WYLLIE EXECUTIVE OFFICER – MANUFACTURING & INDUSTRY GROUPS

KYLEE GOODWIN, PROGRAMME CO-ORDINATOR

VAL HAYES EXTERNAL RELATIONS MANAGER

LISA ARCULUS, EXECUTIVE ASSISTANT – INDUSTRY GROUPS

TANIA HEALEY PROGRAMME CO-ORDINATOR – EXPORTNZ

PAUL JARVIE CATHERINE LYE, EMPLOYMENT EXECUTIVE OFFICER RELATIONS & SAFETY – EXPORTNZ MANAGER

MARY MACKINVEN, MEMBER COMMUNICATIONS EXECUTIVE

SHARON ROBERTSON EXECUTIVE OFFICER – EXPORTNZ, WAIKATO

WE HAVE Continued to raise the importance of better transport infrastructure and funding for this

Introduced the concept of Employment Readiness Certificates for school leavers

Been instrumental in the passing of antimigrant labour exploitation legislation

Promoted the need for a more efficient planning and consent process

Worked tirelessly on behalf of members to shape the Health and Safety at Work Act to deliver practical changes

Fought to mitigate members having to bear unnecessary costs of earthquake strengthening for buildings in low risk areas

Actively been the voice of employers in the Pay Equity Working Group which has been tasked by Government to find workable solutions to this issue

Delivered a reduction in ACC levies

BUSINESSPLUS is published by The Employers and Manufacturers Association (Northern) Inc (EMA) EMA is the major shareholder of national lobby group, BusinessNZ.

“To champion New Zealand business and help our members succeed”

In Tauranga: ExportNZ Bay of Plenty Smart Business Centre, 65 Chapel Street, Bay Central, Tauranga, 3110. PO Box 13202, Tauranga Central, Tauranga 3141. Ph: +64-7-571 0600 AdviceLine: 0800 300 362 (in NZ) or 1800 300 362 (from AUS) or 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: Roger Carson External Relations manager: Val Hayes Advocacy and Industry Relations manager: Mark Champion Learning manager: David Foley Enterprises and Strategy manager: Mauro Barsi Head of Legal: Charlotte Hatlauf Industrial Relations and Safety manager: Paul Jarvie Finance and Technology manager: Paul Yeo Corporate and Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye

Conservation and commerce blend well in Waiheke Island tourism business EcoZip Adventures, says founder and managing director Gavin Oliver. Full story, p29.

READ MORE: PAGE 29

MORE STORIES PAGE 14: Recruitment - more than a tech process PAGE 15: Employer guide to handling medical incapacity PAGE 28: Growth for chocolate business with ethical focus …and much more!

Commentary 5 6

8 9 10 11 12

EMA’s CEO Kim Campbell on: What does business need from local government? 6000 pages but plenty missing in city blueprint Obituaries to EMA Life Members: Colin Martin and Dick Wilks EMA Election Manifesto 2016 - A business view of the local body elections BusinessNZ CEO Kirk Hope on: Better planning for business Explained: Employment Court. The word on employment disputes Government support for summer internships hits all-time high MP Jami-Lee Ross on: Front row seat for the drama of US presidential election

Employment 13 14 15 16 18 19

Editor: Mary MacKinven, +64-9-367 0939, mob +21 636 089, email mary.mackinven@ema.co.nz Designer: Ripeka Mikaere | Printer: MHP | Distributor: Rocket Mail Advertising sales: Colin Gestro, Affinity Ads, mob + 27 256 8014, email colin@affinityads.com ISSN No. 1176-4953

Case law: Medical incapacity - a sticky issue for employers Balancing the human factor with technology in planning talent strategy For your eyes only: recruitment info is private Employment Chat – Q and A: How best to manage personalities, stress and fatigue EMA launches drug testing service Personal grievances costing more; EMA members fare better Seen @ EMA’s 2016 Employment Relations Conference in Auckland The Pokemonisation of workforce training

21 In business 23 24

Enterprises of all types and sizes belong to EMA for a variety of benefits: • The latest information and advice on everything to do with employing staff or managing contractors, and legal representation if employers require - at member rates; • A choice of 100-plus courses and tailored training options, plus specialist seminars and events on topics such as Lean practice and developing markets offshore through EMA’s Export New Zealand division – all providing opportunities to network; • Ensuring your voice is heard by local and central government, since our aim is to improve the environment in which your business operates.

Adventure business blends conservation and commerce

CONTENTS

BusinessPlus is free and available to EMA members only

EMA is yours

NEWS AND COMMENTARY FOR EMA MEMBERS

On the cover...

EMA head office: 145 Khyber Pass Rd, Grafton, Auckland, New Zealand Private Bag 92066, Victoria Street West, Auckland 1142, NZ Ph: +64-9-367 0900 Email: ema@ema.co.nz In Hamilton: EMA/ExportNZ Waikato 103 Tristram Street, Hamilton. PO Box 490 Waikato Mail Centre, Hamilton 3240. Ph: +64-7-839 2713

ISSUE 140 - SEPTEMBER 2016

BUSINESSPLUS

Economics: Balancing numbers with words in our membership surveys: PMI and PSI Marketing: Practical tips for becoming a thought leader Selling up: Vendor finance can help business buyers and sellers

25 International trade 26 27

What Asia wants for dinner Taiwan’s bridge to China could keep the golden goose alive Ethical chocolate business in a league of its own

28 Member profile 29 31

Zipping along on top of the world: EcoZip Adventures Green light for more NZ ‘planes in Thailand: Pacific Aerospace

+ Inside: EMA Policy Manifesto 2016, Training Plus insert detailing September training courses, and more BusinessPlus September 2016

CHRISTMAS AND NEW YEARS PUBLIC HOLIDAYS 2016/2017 IMPORTANT DATES • Christmas Day Sunday 25 December Or Tuesday 27 December 2016 • Boxing Day Monday 26 December 2016 • New Year’s Day Sunday 1 January 2017 Or Tuesday 3 January 2017 • 2 January Holiday Monday 2 January TRANSFER OF PUBLIC HOLIDAYS OVER CHRISTMAS 2016 & NEW YEAR 2017 Christmas Day 25 December 2016 and New Year’s Day 1 January 2017 fall on a Sunday and are therefore subject to specific Christmas and New Year public holiday transfer rules. • If the public holiday falls on a Sunday and the day would otherwise be a working day for the employee, the public holiday must be treated as falling on that day. • If the public holiday falls on a Sunday and the day would not otherwise be a working day for the employee, the public holiday must be treated as falling on the following Tuesday. EMA recommends employers consider the impact of the transfer rules and discuss your business requirements with employees well in advance. Where the public holiday is observed on Sunday the following Tuesday will just be an ordinary day for the employee. If they usually work on Tuesday and you do not require them to work then annual leave or roster changes may be suitable options, subject to the Holidays Act and any relevant terms of employment.

PUBLIC HOLIDAY SUNDAY OR TUESDAY? If Sunday IS normally a working day for the employee Public holidays: Christmas Day = Sunday 25 December 2016 New Year’s Day = Sunday 1 January 2017 If Sunday IS NOT normally a working day for the employee Public holiday transfer:

Christmas day = Tuesday 27 December 2016 New Year’s Day = Tuesday 3 January 2017

NOTE: Employees are entitled to a maximum of 4 public holidays over the

• the reasonable expectations of the employer and the employee that the employee would work on the day concerned • Whether, but for the day being a public holiday, the employee would have worked on the day concerned

CHRISTMAS CLOSEDOWNS AND PUBLIC HOLIDAYS If a public holiday falls during a closedown period the factors listed above in relation to what would otherwise be a working day must be considered as if the closedown were not in effect. This means employees may be entitled to paid public holidays during closedown periods.

ANNUAL HOLIDAYS AND PUBLIC HOLIDAYS A public holiday that occurs during an employee’s annual holidays is treated as a public holiday and not an annual holiday. An employee who has an entitlement to annual holidays at the time that their employment ends will be entitled to be paid for a public holiday if the holiday would have: • otherwise been a working day for the employee; and • occurred during the employee’s annual holidays had they taken their remaining holiday entitlement immediately after the date on which their employment came to an end The requirement only applies to the annual holiday entitlement an employee has at termination, not accrued leave from an incomplete year of employment. Employees become entitled to 4 weeks annual holidays at the end of each completed 12 months of continuous employment.

PUBLIC HOLIDAY TRANSFER

Christmas and New Year period. An employee will only be entitled to a paid day off on the public holiday if the day would otherwise be a working day for them.

The Holidays Act allows an employer and employee to agree in writing to transfer a public holiday to any 24 hour period.

OTHERWISE WORKING DAY

This means with agreement a public holiday may be transferred:

In most situations it will be very clear that the day on which the public holiday falls would otherwise be a working day for an employee.

• By a few hours to match shift arrangements • To a completely different day In the absence of a written agreement, a public holiday is observed midnight to midnight.

If it is not clear whether a day would otherwise be a working day for your employee, you should consider these factors with a view to reaching agreement with your employee: • • • •

The employee’s employment agreement The employee’s work patterns Any other relevant factors, including whether the employee works for the employer only when work is available • the employer’s rosters or other similar systems

FURTHER ASSISTANCE The Advice section of the EMA website www.ema.co.nz contains detailed guides on leave entitlements. This is only a brief guide. It should not be used as a substitute for professional advice. Please contact AdviceLine on 0800 300 362 in New Zealand or 1800 300 362 if calling from Australia if you wish to discuss further.

NZ 0800 300 362 | AU 1800 300 362 NZ 0800 300 362 | AU 1800 300 362 www.ema.co.nz www.ema.co.nz

“We know that many members’ business productivity is stifled or suffering due to poor government decisions, and we continually play catch up.”

CEO COMMENTARY By Kim Campbell

What does business need from local government? As we enter the final countdown to this year’s local body elections – with postal voting closing on October 8 - it’s timely for you as a business ratepayer to say what’s important for you. Your business is part of the lifeblood of the community you operate in, and every three years you get to vote for who you think will deliver the best outcome. Remember too that you have an extra vote for property you own that is not in the district or city where you live, as long as you are enrolled as a ratepayer elector for that other property. See the detail at elections.govt.nz Local government plays a key role in New Zealand. Nationally, it makes up 4 per cent of GDP, collects around $5 billion per year in rates and manages around $120 billion of public assets. Under the Local Government Act, the purpose of local councils is to: • • • •

Provide local infrastructure and services, Plan and regulate the local government, Levy rates to pay for the local government’s work, and Enable local democracy.

These matter a great deal to business and provide an excellent framework for deciding what is important to local body authorities, particularly the difference between public goods and private goods.

government decisions, and we continually play catch up.

outline what they will do for the business community in their areas.

Likewise, we have targeted planning and regulation as another core area of advocacy. Members have constantly told us of their frustration in this area, and we have been campaigning for several years to move this debate forward. We need to detangle the three core laws that impact this.

On September 8, we will host our second Auckland mayoral debate. Given this is one of the most hotly contested seats in this year’s election, we wanted to ensure the voice of Auckland business was heard loud and clear by candidates.

Raising the voice of business On the financial side, moderation and strategic spend are our mantra. Hence, our reference to focusing on core operations and delivery of public goods, so that rates can be kept at reasonable levels. Local government does find itself in a bind in regards to revenue, however, that is no reason to bash business. I’m confident business is willing to pay its fair share for services it requires. However, it’s not acceptable for local government to look to levy business as a simple revenue-raising tool. Furthermore, we oppose and have had some success in having the business rate differential removed by some local authorities.

A similar event was held for Waikato members on September 1. In this edition you will also find our manifesto for Auckland local body issues, where we outline what business needs from the city to cope with its current growth. See page 8, and the insert. Every council has a role in facilitating a business-friendly environment, and now is your opportunity to make sure your voice is heard. • Kim Campbell is the CEO of EMA. Email kim.campbell@ema.co.nz

Hopefully, you have enjoyed reading recent editions of BusinessPlus where we have offered mayoral candidates from around the EMA region the opportunity to

We have been extremely vocal, both publicly and behind the scenes, on the need for local authorities to positively serve the local business community. We are all in favour of local government prioritising local infrastructure, and realising non-core assets as one way to fund this. We know that many members’ business productivity is stifled or suffering due to poor

BusinessPlus September 2016

COMMENTARY By Alan McDonald

“The plan is also silent on how Auckland is going to build and fund the water and waste water infrastructure to cope with new growth and intensification. It is silent on how to double the size and capacity of the electricity network to cope with growth.”

6000 pages but plenty missing There are many positives in the justfinalised Auckland Unitary Plan, but what stands out are the omissions in planning to build a much larger city during the next 25 years and more. The Plan’s provision for more than 420,000 homes to be built in the next 30 years will be welcomed by employers in the region, who tell us they struggle to recruit and retain staff who find the red hot Auckland housing market too daunting or too hard to enter. But the EMA has concerns that provisions for new commercial and industrial land lie mainly to the far south of the city and the far north, namely in Warkworth, Papakura and Drury. In contrast, the heaviest areas of population growth are predicted to be in the southern suburbs closer to the city, the North Shore – again closer to the city – and in the west. In other words, there’s a disconnect in the Plan. The other industrial/commercial land zoning changes in the plan are basically just a shuffling of the deck chairs to change existing commercial zones to allow different industrial/commercial activities. Nearly 740,000 new Aucklanders are expected to settle in the region by around 2040, and there will be 270,000 new jobs. Of those 270,000 new jobs, the predictions are that 100,000 of those will be provided within 5km of the Auckland city centre. When you overlay the planned increases in housing density with the areas where people in Auckland generally work, the problem becomes very obvious: how are they actually going to get to their jobs? How will critical infrastructure such as electricity, water, wastewater, schools and parks be provided for?

BusinessPlus September 2016

For all its positives the Unitary Plan actually highlights that land planning and transport planning must be better co-ordinated so that critical infrastructure is in place ahead of, or on time to meet, the rapidly growing demands of business and residents in Auckland. The plan is also silent on how Auckland is going to build and fund the water and waste water infrastructure to cope with new growth and intensification. It is silent on how to double the size and capacity of the electricity network to cope with growth. Elsewhere around the world provision of infrastructure leads growth. Auckland is still playing catch up to the tune of $12 to $14 billion just to cope with current population.

Move it, move it The EMA believes transport development remains the single biggest issue facing Auckland business and more needs to be done to rapidly complete Auckland’s critical transport spine.

“Transport planning and construction, and land planning and construction, don’t align with each other. How can this be done better? Vancouver … actually shows the way.” The Auckland Transport Alignment Project (ATAP) was supposed to provide the transport component to meet Auckland’s growth, but at first reading is underwhelming in its goals. It appears to accept further congestion as inevitable, at least until 2040 (that’s 24 years away), and gets side-tracked into discussions on congestion charging and the as-yet unrealised potential of new technology.

Overlay the 1950s vision for Auckland’s transport network spine and it looks remarkably like the 2016 vision. The problem is, it’s 66 years later and still incomplete. We say, complete the spine first, including critical public transport infrastructure, and then fixate on the clever, new toys to manage projected congestion. The long delayed east-west corridor project, out of the Penrose industrial heartland, needs to start construction immediately. But typical of the shortsighted planning of Auckland’s past, the current plan does not feature motorway links to the north and currently only provides for a link to the eastern suburbs, AMETI and the East Tamaki, with no sign of a construction timeline. There is also no intention to replace the two-lane bridge bottleneck at Mt Wellington. Six suburbs from Glen Innes to East Tamaki, all on the eastern side of that new link and including Howick, Pakuranga and Botany, are earmarked for the most intense densification under the new Unitary Plan. Huge growth projections for passenger traffic and the industrial area surrounding the airport will continue pressure in that area of the city, despite current works, while improved access out of Whangaparaoa remains stalled as funding for the long-planned Weiti bypass remains low in priority. On the North Shore, Albany, Takapuna and Hauraki areas are marked for high density while in the west it’s Massey, Hobsonville and to a lesser degree Te Atatu are earmarked for that development. All these suburbs are on motorway links or major arterials that are already under pressure with congestion. A bus lane would appear to have been a logical addition to the current extension

Obituaries to EMA Life Members

in city blueprint of the North Western Motorway. Park and ride access continues to hamstring capacity on the Northern Busway and, while building the City Rail Link is finally underway, business in the central city faces years of disruption before the multiplying swarms of traffic cones disappear.

We regret to inform members that EMA’s esteemed Life Members Colin Martin and Dick Wilks have recently passed away.

It’s little better closer to the city centre where major arterial routes will also face double the housing density and population trying to get to work on the same constrained roads.

Colin (83), was a Life Member since 2009.

Double-decker buses are appearing as one method of increasing capacity on the existing bus network and Auckland Transport (an Auckland Council Controlled Organisation) is proposing a light rail solution on major routes into the city. But, these are on existing, clogged major arterials and focus on accessing the central city, not accessing the wider region or the areas of more widespread heavy commerce and industry.

Colin Martin

He was a former EMA board member (and President 2005-08), and previously a President of the Auckland Manufacturers Association and New Zealand Manufacturers Federation. He attended and actively took part in EMA’s Manufacturers’ Forum and Policy Forum till very recently.

Transport planning and construction, and land planning and construction, don’t align with each other.

EMA’s chief executive Kim Campbell says, “Colin always had a view on things, which we appreciated. New Zealand industry has lost a good friend.”

How can this be done better? Vancouver, a Canadian city Auckland’s politicians and planners often reference as a model for Auckland, actually shows the way.

Colin will be remembered for his business acumen, his love of sport and for being a gracious gentleman who loved a drop of good red wine.

There, transport and land planners must approve each other’s plans – they actually talk to each other – and areas are set aside for development. For example, in the north-east outer regions of Vancouver the land is deemed too valuable as a farming resource to be developed – much like Pukekohe in the Auckland region.

Richard (Dick) Wilks (92) was a respected and admired Life Member, a former Board member and president of the Auckland Employers Association (1989) and New Zealand Employers Federation.

But in the southeast, new commuter train lines, six-lane highways and toll bridges are under construction to cope with that city’s projected growth. Currently there is only enough demand to fill a two-line highway and bridge network and the road literally ends in the middle of nowhere.

Kim says, “He contributed enormously to the success of New Zealand business over many years. He was quite a wheel in the automotive industry. “A was a true gentleman who will be remembered for his wise counsel, which was always dispensed with dignity and understanding.”

But closer in, as the 11km train line extends outwards, 20- and 30-storey apartment blocks rise around the train stations and owners are virtually handed their apartment keys as the train stations open for business.

EMA sends sincere condolences to the families of both men.

It’s all funded by developers and through public private partnerships, giving certainty to the planning process and to business. • Alan McDonald is the policy director at EMA. Email alan.mcdonald@ema.co.nz

BusinessPlus September 2016

Dick Wilks

COMMENTARY By Alan McDonald

EMA Election Manifesto 2016 - A business view of the local body elections At election time every three years, EMA summarises for members the critical issues the EMA advocacy team is lobbying on for you. Hopefully this information below, which is further explained in the BusinessPlus insert, will also guide you when casting your vote. Votes in the nation-wide local body elections are due by October 8 and the results will be known about a week later. This year the EMA’s Policy Manifesto for the 2016 Local Body Elections is taking an Auckland-centric view as the issues facing Auckland continue to have a halo effect throughout the remainder of the EMA region (from Taupo northwards). Consistent issues throughout the EMA membership region are: •

burgeoning demands and rising costs for housing,

•

lack of new infrastructure and pressure on ratepayers to maintain existing, and fund new, infrastructure,

•

transport issues, and

•

increasing demands on business to pay more than its share to fund local government coffers.

The six issues needing action are:

The Auckland Unitary Plan

to medium-term options and longterm future of the Port.

The EMA urges the incoming Mayor and Council in Auckland to give greater priority to infrastructure planning, funding and construction to cope with both the residential and commercial growth enabled by the Unitary Plan.

The EMA also has a long-standing policy of divesting the port operation while retaining ownership of the land beneath the port, charged out at a suitable lease.

Transport

The EMA recommends a steady increase on the UAGC over a period of years to reach an agreed target contribution to rates of perhaps 20 per cent, or more.

The incoming Mayor and Council, in conjunction with Auckland Transport, the New Zealand Transport Agency and central Government ministries must define what both the Auckland roading and public transport networks will look like, how they will address both short-term bottlenecks and long term congestion issues raised by population growth, and how the funding mix will be applied to complete that network. Auckland business and residential ratepayers cannot be expected to pay more for transport networks unless they know what the network looks like and are confident it will reduce or manage congestion.

Ports of Auckland Ltd Auckland Council should accept the recommendations of the Port Future Study Group to secure both the short-

Uniform Annual General Charge

Business Differential EMA recommends that councils continue to lower the Business Differentials, where they exist, at a faster rate than the current reduction programme.

Public Private Partnerships The EMA supports the introduction of EY’s measures to better utilise the balance sheet and existing asset base of Auckland Council. These measures would more quickly help provide the critical infrastructure required to support and enable current rapid business and residential growth, and maintain Auckland’s consistent ranking as one of the world’s most liveable cities.

SHIPS

PUBLIC PRIVATE PARTNER

to identify and utilise The EMA encourages Councils Partnerships (PPPs) as opportunities for Public Private large-scale infrastructure a procurement method for a financing opportunity to

provide s to projects. PPPssure fund mea e they are struggling to when a time Councils t bas of EY’s atasse tion tool can quickly and TION ting This introduc major exisprojects. e procurement morprovide infrastructure to rts the sheet and would requ ired the necessary costseffectively balance se measure e business and residential growth. both structur support s and uncil. The critical infra busines consistent Council should make ovide thecurrent rapid klan d’s s. Aucklandthat exist within its own Auc EMA believes citie enable maintain The able opportunities of use live better t to help fund and build wth, andworld’s mos balance sheet and asset basefor Auckland’s ongoing e of the critical infrastructure required should be sold. success. Also, non-core assets a large shareholding in The City does not need such at the table and a longthe airport to maintain a voice port operations, while for term management contract port land, would provide a retaining ownership of the steady and stable revenue.

RECOMMENDATION of EY’s measures to The EMA supports the introduction and existing asset base better utilise the balance sheet measures would more of Auckland Council. These infrastructure required quickly help provide the criticalrapid business and to support and enable current Auckland’s consistent residential growth, and maintain most liveable cities. ranking as one of the world’s

FOCU2S 016 AND AIN ESTO AUCKLAND IN FOCUS L IF K N C U M A POLICY 2016 EMA POLICY MANIFESTO EMA

rs 66 yea It’s just rt networks vision. current . Public transpo tment. l to the identica still incomplete e underinves later and to suffer the sam by the e enabled cram more continu cation trying to congested intensifi ng the we’ll be vilyowi hea Plan Foll , already s, without d Unitary existing urb Aucklan ctive for the 2016 local BUSINESS DIFFERENTIAL Manifesto Manifes Auckland-ce have a the sub onto the EMA’s and effe ughout The hen sivePolicy ’s Policy an to people with that the continuation of largeThe EMA an Auckland-centric view, pre elections ATION d continue taking is etaking links thro r a combody cop RECOMMEND The EMA does not support EMA tions isrecommends continue arterial across the region. Our Councils sport to continue to have a Aucklan that er of the The EMA business differentials on rates “justifications” for body elec ing to offe privateastran the issues facing Auckland facing where remaind main appear issues the Business and remainder of the EMA out the Differentials, arguments against the two as the to lower public halo effect throughout the than the through ards). differentials are as follows. faster high ctexist, mix of at a nor thwrate they maintaining very storm tinue po cation. Taupo halo effe er andnorthwards). ty region (from programme. N ncils conre reduction intensifi current (from Tau n of wat the electrici NDATIO s that Cou whe ion benefit for business EMA of level visio ME reg higher A the 1: N pro end JUSTIFICATIO and COM out rentials, rates ment’s recomm s Diffe the EMA catch-upissues through bled in pays a higher proportion of the e EMA means s al govern is playing Consistent for business sistent issues are: rly dou throughout Busines rate than business ts Loc ines between nea the benefits of cos bus er ices g allocation be er EMAme. says: The to low Con region region tial andare: sweeping assumptions ram t, at a fast s and risin water serv also havemembership h residen demands and rising costs for n progand residential sectors requires rating calculation membership ey exis will demand • burgeoning In our reductio re on network to cope with bot geoning that are difficult to quantify. urrent pressu , y capital value, there should • bur sing, housing, capacit cture and , and fund new the and pressure on system, currently based on hou report on Funding infrastru . ses on ting infrastructure new • lack ofncil focu not be a differential. The Shand growth of new maintain exis t: the existing, and fund new, same point. • lack d Cou maintain to men Local Government makes the ers to rt, Aucklan ratepayers govern spo l that ratepay tran loca cal us cture, ents ofinfrastructure, pay It is criti differential on the basis e (such lighting, infrastru issues, and t Councils attempt to justify the storm water costs ” compon infra iness to structur issues, rt street and and ernmen on bus “boring tal • transport of higher road maintenance te water) demands on business to pay • transpo ing demands fund local gov horizon businesses • increasing core of water and was to from business properties. However, • increas , to fund local government benefits as residents its share sewage reserves. more than its share n its arguably do not gain the same libraries, swimming more than coffers.d Council ope s to from community services, parks, in parks and d social programmes coffers. hod klan t acutely ed to pools and other Council-funde that Auc e funding met be bold on a user pays basis, dict g felt mos critical t felt most acutely in rnat and activities. You could possibly, rate, balanced by a are bein ulation is pre being are also is mus alte issues es is re These to of It ncil residential issu d make a case for a higher the pop benefit is predicted to ve min structure. Cou These 2036. Theestimated the thepopulation Auckland where collecti d where 730,000 by ices for lower business rate. vision that infra those cho Aucklan by 2036. There is pro 730,000 than e nce than e fina ctur e rise by more mor to mak can deduct GST infrastru $14 billion. provision estimated rise by JUSTIFICATION 2: Business businesses have greater enough already a lag in infrastructure a lag in and s, ers. already n $12 billion $14 billion. a EMA says: The argument that able to deduct GST ratepay at between $12 billion and ya Overlay are at betwee kland. ost ability to pay because they case then the differential Auc alm it’s ues the was Overlay a has no validity. If this nt plag ork and rates plus GST. vestme d netw Underinvestment plagues Auckland. it’s almost should be 100 per cent of residential and Underin n for our roa 1950s vision for our road network ater 1950s visio on the deductibility of The ability to pay is not based income. nz .co. or w.ema expenses, but on net profit ntial 362 | ww ST. 0800 300 ema.co.nz worth investigating Other new funding proposals spreading the costs of or include infrastructure bonds of the asset, rather than infrastructure over the lifetime paying for it all upfront.

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BusinessPlus September 2016

It’s just 66 years identical to the current vision. transport networks later and still incomplete. Public underinvestment. continue to suffer the same enabled by the Following the intensification be trying to cram more Auckland Unitary Plan we’ll heavily-congested people onto the existing, already suburbs, without arterial links throughout the e and effective appearing to offer a comprehensiv to cope with that mix of public and private transport intensification. of water and storm Local government’s provision and the electricity water services is playing catch-up nearly doubled in network will also have to be residential and business capacity to cope with both growth.

focuses on the It is critical that Auckland Council government: the “boring” components of local (such us transport, core of horizontal infrastructure street lighting, sewage, water and waste water) parks and reserves. Council open its It is also critical that Auckland funding methods to collective mind to alternate must be bold finance that infrastructure. Council for the benefit of enough to make those choices ratepayers.

.nz 0800 300 362 | www.ema.co myvoice@ema.co.nz

See the insert in this issue of BusinessPlus for more information.

BusinessNZ COMMENTARY By Kirk Hope

Better planning for business City planning has caused problems for businesses and homeowners for a long time, especially in Auckland. Travelling congested roads, getting a resource consent, or finding affordable business premises can be made harder by council regulations and planning decisions.

“The Productivity Commission says some Councils are over-regulating their cities, and overly detailed planning rules are holding back business development.”

Currently, change to the RMA is not possible because of the voting makeup in Parliament, with a single vote preventing needed change.

Now the Productivity Commission is recommending sweeping changes in city planning, in its report Better Urban Planning

A new approach to the issues involved, where the natural environment and the built environment are regulated separately could be a way past that political impasse.

EMA and BusinessNZ will make submissions to the Commission with the aim of getting better planning as it relates to business needs.

If this report by the Productivity Commission helps to address the many urgent problems caused by the RMA, it will be very worthwhile.

The Productivity Commission’s initial recommendations appear sound. A key theme is “too much regulation”. The Productivity Commission says some Councils are over-regulating their cities, and overly detailed planning rules are holding back business development. In many areas better planning - and less planning - would be better. Another theme is “development is ok”. The Productivity Commission says development should be welcomed and facilitated instead of being unnecessarily restricted - councils should facilitate development and changes in land use, ensure enough development capacity is provided to meet demand, and promote the mobility of people and goods to and through cities. For too long there has been a presumption in planning law that business development

Business may be interested in supporting moves to separate the regulation of the natural environment from regulation of urban and economic development. The approach might hold promise for getting past the deadlock over the RMA.

is ‘bad’ – a presumption that has held back a lot of good business. The Productivity Commission says future planning law should have a presumption in favour of development, subject to clear limits. This is a message that will resonate with business. Another key theme in the Productivity Commission’s report is the dividing line between the natural environment and the built environment. These two areas are currently lumped together quite uneasily in the Resource Management Act (RMA), and the Productivity Commission’s report considers different ways that planning for those two areas could be improved.

The report overall holds potential for resolving many issues relating to urban planning in Auckland and other centres. It would be helpful if the outcome of this Productivity Commission review was a wide, multi-party agreement on the way forward for urban planning in New Zealand. EMA and BusinessNZ and will consider the draft review in detail and make a submission on its recommendations, and we’d urge other interested parties to do the same. More information on the report and how to make submissions are on www. productivity.govt.nz.

• Kirk Hope is chief executive of BusinessNZ. Visit www.businessnz.org.nz

BusinessPlus September 2016

COMMENTARY By Kent Duffy

EXPLAINED: How the Employment Court works.

The word on employment disputes The Employment Court has exclusive jurisdiction pursuant to the Employment Relations Act 2000 to hear all matters relating to employment disputes. Generally speaking, it represents the next step available to the parties of an employment dispute after they have been to the Employment Relations Authority, so the most common cases are challenges or appeals to Authority determinations. However, the Court can also hear matters directly, such as questions of law or proceedings referred by the Authority and matters around industrial action (ie, strikes and lock outs). The Court also has new powers pursuant to the Employment Standards Legislation (which came into effect on 1 April 2016) that permit it to hear matters concerning the most serious alleged breaches of minimum employment standards, for example, worker exploitation. The Court is able to award significant penalties against both individuals and companies, and can even ban individuals from working as a manager and being involved in hiring employees.

“One unusual point of difference is that the Court has the power to decide matters based on an “equity and good conscience” basis, as long as its decision is consistent with the law.” is that the Court has the power to decide matters based on an “equity and good conscience” basis, as long as its decision is consistent with the law. It may also accept, admit and call for evidence and information, whether strictly legal evidence or not. If either party considers that the decision of the Court is wrong, they are able to make an application to the Court of Appeal to appeal the decision. Generally the Court of Appeal will only grant a party leave to appeal if in its opinion, the question of law involved in the appeal is one of general or public importance.

Appeals to the Employment Court As noted above, a party to an employment relationship problem can challenge a determination of the Authority by applying, within 28 days of the determination having been issued, to have the case heard by the Employment Court.

“The Court is able to award significant penalties against both individuals and companies, and can even ban individuals from working as a manager and being involved in hiring employees.” There are currently five permanent judges headed by the Chief Judge. Usually, a judge will hear the case alone; however, for more complicated matters that raise important questions of law, the full bench (consisting of at least three judges) will hear the case. The Court operates much like other courts, for example, the District Court and High Court, with witnesses giving evidence before a judge who hears and considers all the evidence and makes a final decision on the matter. One unusual point of difference

BusinessPlus September 2016

There are two main types of challenges to Authority decisions, being: • An appeal of the Authority’s determination or part thereof This is where the Employment Court will consider the reasoning of the Authority’s determination (or parts thereof) and decide whether it was legally correct. This requires the challenger to identify any error of law or fact and any error of law or fact to be resolved. In this regard, the challenger

bears the onus of persuading the Court of the existence of an error of fact or law by the Authority in the determination being appealed. • A “de novo” challenge It is possible to have a full hearing of the entire matter where the Employment Court considers all the facts and evidence related to a dispute afresh, and makes a new decision. This is called a de novo hearing.

Legal representation in Court While there is no requirement to obtain legal representation when appearing in the Employment Court, it is always advisable to do so. Representation is advisable because the legal process is complicated and, unlike the Authority (which is inquisitorial in nature and can assist the parties in identifying and resolving the legal issues in dispute), the Employment Court relies solely on the evidence of the parties (or representatives of the parties) to guide its decision making, which is where effective advocacy becomes important. Moreover, the Employment Court has a number of formalities such as giving evidence, preparing and writing submissions and cross-examination, and an experienced employment lawyer can guide you through these processes to help ensure you secure the best outcome in the circumstances. • Kent Duffy is an employer adviser at EMA’s AdviceLine. Email kent.duffy@ema.co.nz

Student interns at work at Douglas Pharmaceuticals

Government support for summer internships hits all-time high Each year the government provides funding for New Zealand tertiary students in their final or penultimate year studying science, technology, business, engineering or design, to gain valuable work experience. The Student Experience R&D (research and development) grant provides funding for summer internships. Callaghan Innovation has been running the programme for the past three years, and in 2016 has received its largest number of applications: 364. In mid-August, Science and Innovation Minister Steven Joyce announced 245 Student Experience grants have been approved for 116 businesses to employ students over the forthcoming 2016-17 summer break. Mr Joyce said the central aim of the grant is developing the technical skills of students in a professional, commercial R&D environment, while also providing businesses with expertise to further their work. Overall, the Government will invest up to $1.76 million in 2016-17 through the R&D Experience grants scheme, to get New

Zealand students working with hi-tech companies. “The results of this programme have steadily shown the worth of bringing fresh minds to commercial workplaces. Businesses that were surveyed about their 2015-16 experience, tell us that 36 per cent of 2015-16 summer interns went on to be employed for longer by their sponsoring company, and what we’re hearing back is that this programme is positive for businesses and students in equal measure,” says Mr Joyce. Auckland-based Douglas Pharmaceuticals has recruited students through the grant for the past five years. Research and development director, Peter Surman, says two of the company’s three recent Callaghan Innovation funded interns have become fulltime, permanent members of staff. “Without a doubt, support from Callaghan Innovation has encouraged us to take on a larger number of student interns,” says Mr Surman. “There isn’t a ready pool of talent in pharmaceutical product development

available in the domestic market. We therefore tend to hire new graduates and professionally develop them in the formulation, analytical, clinical and regulatory aspects of pharma new product development. “We find that recent graduates are generally very motivated and receptive to learning, which is critically important as our new product development roles are very specialised and require considerable inhouse training to master.” The programme is available to businesses of all sizes that have a focus on research and development, and to all undergraduate students studying science, technology, engineering, design or business at NZQA levels 7 to 8 or equivalent, at a New Zealand tertiary institute. The R&D Experience grant provides funding of $18 an hour for up to 400 hours of work upon proof of the company’s payment to the student (to a maximum of $7,200 excluding GST). To find out more, call Callaghan Innovation on 0800 422 552 or visit callaghaninnovation.govt.nz

BusinessPlus September 2016

COMMENTARY By Jami-Lee Ross

“What we saw were very passionate people that truly believe in their candidates and what they can do for the world.”

Front row seat for the drama of US presidential election I’ve recently returned from the US where I observed the Republican and Democratic national conventions, as part of a New Zealand National Party delegation, which included EMA Board member Andrew Hunt and MP for Bay of Plenty Todd Muller. Attending these nominating conventions is eye-opening. New Zealanders don’t do politics anywhere near on the scale Americans do. The sheer mammoth size of the US Presidential Election process would blow the mind of even the most seasoned New Zealand political observer. New Zealanders and our media can be mistaken in believing that political activists in the US, particularly Republicans, all have three heads and a desire to tout guns and bibles wherever they go. What we saw were very passionate people that truly believe in their candidates and what they can do for the world.

Republican convention

We were fortunate to hear many of the pro-Republican yet anti-Trump sides speak their mind. They know they have a huge job ahead of them to bring their party back together once this current circus is over. US House Speaker Paul Ryan himself is walking one of the most challenging political tightropes ever contemplated. His job is to ensure the wider party is sufficiently backing the nominee forced upon them, but also keeping enough distance to contain the inevitable collateral damage. His challenge is punctuated by the fact American politics is just so divisive. It really is black and white, without any shades of grey or nuance. This was exemplified by delegates and speakers at the Republican convention. It got vicious and it got nasty. Speaker after speaker all week long whipped up discontent and fear, while chants of “lock her up; lock her up” were heard regularly. They really do have a deep and primal hatred of Hillary Clinton.

controversies surfacing and Clinton failing to outshine her husband or President Obama, it was far from perfect. We like to think in New Zealand that everything will be fine and the Clinton brand will easily prevail. We lull ourselves into this false sense of security because we find Mrs Clinton much more palatable. Our politics is more in line with hers and she reached out to New Zealand warmly when she was Secretary of State. But this election is much closer than the world thinks. Trump could conceivably be taking office as President in January 2017. Experts in presidential politics that presented to us admitted they got it all wrong in the primaries and are no longer willing to believe what conventional wisdom tells them. Trump has thrown everything they know to be true into question. Andrew, Todd and I all jumped at the chance to see this phenomena in person. It was an opportunity to connect with US politicians, build relationships where we can, and fly the flag for New Zealand interests that get discussed or voted upon in the Congress.

Both Republican and Democrat parties are very divided right now, particularly the Republican Party. There is the “Party of Trump” and the “Party of everyone else”. Political party events are usually stage-managed celebrations, whichever country you’re in, but the contrast in feeling amongst many of the party’s establishment, as expressed away from the convention arena, was astonishing.

Democrat convention

Presidential candidate Donald Trump is far from the most popular guy in the Republican Party. The party leadership had all its stars aligned, with good fundraising, strong party organisation state by state, and an unpopular incumbent president. Yet somehow the party members managed to do the impossible: pick the candidate with the highest unfavourables to run against the Democrat’s Presidential Candidate Hillary Clinton.

Overall the Democrats had much more pulling power when it came to Hollywood star appeal, and the gathering in Philadelphia had a positive atmosphere to it. But it was not without controversy.

But we also gained a front row seat to watch one of the world’s biggest television dramas. It’s tough, it’s brutal, and the leadership of the powerful nation on earth is at stake. We hope they can pull it all together, but if not, I rest easy knowing that our own small, resilient, stable democracy in New Zealand will keep at least our corner of the world paddling in the right direction.

After numerous problems for the Republicans, the Demorcrats would have expected their show would all be smooth sailing. But after Sanders successfully called for the scalp of the DNC chair, further email

• Jami-Lee Ross is Member of Parliament for Botany and Junior Government Whip. Email jami-lee.ross@parliament.govt.nz

BusinessPlus September 2016

The Democratic National Convention (DNC) had a much more positive feel to it, but it equally was divisive. The Bernie Sanders supporters were not easily kept quiet and this was highlighted by the sight of members actively heckling popular and impressive First Lady, Michelle Obama. We could never imagine National Party members ever doing that to Bronagh Key.

EMPLOYMENT By John Edwards

Privacy in recruitment So you are hiring. What do you need to do to meet your privacy obligations? Here’s an easy checklist of do’s and don’ts. They all relate back to the 12 privacy principles in the Privacy Act that guide the collection, use, storage and disposal of personal information.

Applications When calling for applications, the key thing to remember is to only ask for information that is relevant to the applicant’s suitability for the particular role. For example, an airline might need to know certain medical information about a candidate because a flight attendant might not be able to work safely if they had certain health conditions. But if it’s not relevant to the role, don’t ask for it. There are other considerations to weigh up including: •

•

it’s important to keep the identities of applicants and their personal information confidential

“it’s important to keep the identities of applicants and their personal information confidential”

You can use publicly available information to help inform your assessment of an applicant’s suitability. Some employers might carry out a Google search to find out what is out there about an applicant. But it is not okay to:

reveal they have applied for the role.

Reference and other checks You can only contact the referees that an applicant nominates. This includes for internal applicants. If the applicant has not agreed to the employer approaching a person, the employer should not approach that person for information. If there is someone other than an applicant’s nominated referees whom you would like to get a reference from, you must first get the applicant’s express consent. If the applicant doesn’t consent:

•

ask applicants for their social media login details

•

ask them to befriend you online so you can check them out; or

•

ask an existing online friend to check them out for you.

After the recruitment Check with your successful applicant what they are happy for you to disclose about them when you announce their appointment, and when. The personal information they provided you in their application is not necessarily information they are happy to share more widely.

disclose the information only to those who are directly involved in the recruitment because it is not okay to share the applications around your workplace or talk about them with anyone else; and

•

you can’t go ahead and speak to that other person anyway;

Take care with the way information you have gathered is handled. Remember:

•

you can draw your own conclusions on what this might say, or might not say, about an applicant’s suitability.

•

not to use the information you obtained in a recruitment process for any other purpose, except with the applicant’s express consent.

make sure you store the information safely and securely from unauthorised access.

Remember to always check with the referee if their comments are provided in confidence to you. Otherwise, you may be obliged to disclose their comments if the applicant asks for them.

•

to securely destroy the applications of unsuccessful candidates, unless you have received their prior consent to keep their personal information on file in case another suitable opportunity should arise; and

•

ensure the recruitment agency (if you are using one) does the same because, if they were working for you, you are responsible for checking they meet your privacy obligations to applicants.

Interviews It is also important at the interview stage to take reasonable steps to protect the identity of your applicants including, and perhaps especially, for internal candidates. You might want to consider holding the interviews away from the office if you think it might be more appropriate, especially if candidates will be easily recognised. You have a duty not to breach an applicant’s privacy by doing anything that might

Get the applicant’s prior consent to any vetting you are going to do. This includes checking for qualifications, criminal convictions, police vetting (which is necessary for particular types of jobs), and credit checks. But only undertake credit checks if the role carries a significant financial risk. Even asking for consent to do a credit check requires justification.

John Edwards is the Privacy Commissioner. Visit www.privacy.org.nz

BusinessPlus September 2016

“Technology alone cannot fully assess the attributes and presence of your candidates, relevant to your business.”

EMPLOYMENT By Robyn Webb

Balancing the human factor with technology in planning talent strategy Technology continues to contribute to the streamlining of recruitment processes, with talent teams increasing the use of digital platforms within existing methodologies. In recognising and embracing the advantages of a digital strategy, is there any downside? How could the balance between technology and the human factor impact the ‘customer experience’ and why is this important? And critically, will the use of technology influence the available talent pool for final selection? Consider your own experiences of employment search. Which elements engaged and influenced you? How were you motivated to progress? Was it a website which captured your attention? An advertisement which resonated? Effective advocacy by someone who inspired a vision of your future career. Or was the early part of the process conducted online? How did that work for you? At what stage did you communicate directly with an actual person? It is true that the digital platform can deliver efficiencies for employers in attracting and evaluating talent. Such digital products include website application, candidate tracking systems, recorded video interviews, psychometric assessments, CV screening software and culture or values questionnaires to pre-determine appropriate “fit” with organisational culture. As with all communication, consideration of message, audience and objectives influence the recruitment approach. For anticipated high volume response, technology enables rapid prioritisation of preferred candidates, by matching skill capabilities and/or assessing alignment through pre-interview screening.

BusinessPlus September 2016

The right fit

Attracting talent

At a recent seminar discussing contemporary recruitment practices, participants identified “the right fit” as being the critical factor towards successful appointments.

Recommendations for an integrated process, balancing technological and human elements, therefore include: • Ensure your messaging excites, inspires and engages. • Simplify your application process. • Provide an early opportunity for candidates to question, explore and confirm their interest • Utilise inclusive processes which ensure opportunity to consider ‘leftfield’ candidates, who offer diversity of expertise and creative new thinking to your business • Maximise the opportunity for human interaction, to advocate for your business, highlight your vacancy and promote your brand • Integrate tools as a component of your process, within a broader framework • Provide relevant and constructive feedback, including to unsuccessful candidates and candidates following completion of psychometric assessments

Therefore, tools utilised within the candidate sourcing and evaluation process must be ‘fit for purpose’, mitigating possible risk of potentially suitable candidates either withdrawing or being declined. The application of tools would also need to reflect the likelihood that ‘the right fit’, as determined by certain values, attitudes and behaviours, may vary between departments, teams and roles. Considering your candidates as customers and based on specific candidate feedback from our market, let’s consider elements of a positive customer experience and the factors which influence their ‘buying’ decision, in this case • Whether to participate in your company’s recruitment process, • Whether to remain engaged through to the final hiring selection and appointment, and • Whether to say “yes” to your offer of employment. From a candidate’s perspective, considerations include: • Is it easy to apply? (consider website ease or complexity) • Is the online information requested relevant to the role and its level? • Is there support through the process, especially where I have invested time in psychometric assessment? • Has there been wording or triggers to capture my attention and motivate my engagement in this process? • At what stage have I or might I experience a human interface? • Is there opportunity to compare this potential opportunity with my personal career drivers, to confirm alignment?

In summary, in evaluating tools suitable to the continuous improvement of your digital talent strategy, dual considerations are the value added to your processes and your achievement in attracting the talent your business needs to thrive. Human-to-human interaction remains relevant, including effective partnering to promote the employer’s brand and to showcase opportunities. Technology alone cannot fully assess the attributes and presence of your candidates, relevant to your business. Nor can it effectively promote the vision, tell your story and establish strong connections to build future talent success. • Robyn Webb is a senior consultant at Pohlen Partners human resource and recruitment specialists. Visit www.pohlenpartners.co.nz

“No employer is bound to hold a job open forever, where an employee suffers an illness or injury. However, termination of employment in such circumstances must be justified at the time.”

EMPLOYMENT By Persia Templeton

Medical incapacity - a sticky issue for employers Health and medical related issues are a fact of life for employers. While most employers have a reasonable awareness of their obligations when it comes to sick leave, how many employers know what to do when a serious medical issue arises with one of their employees? In a recent decision in the Employment Relations Authority the employer, Advance International Cleaning Systems NZ (AICS), was caught out when employee Mr Brown suffered a heart attack, and the question of his ongoing employment had to be addressed. Mr Brown was employed as an account manager responsible for looking after existing customers and cold-calling new customers. On July 13 last year Mr Brown suffered a heart attack, and subsequently underwent open heart surgery. On August 4 last year, a discussion took place between Mr Brown and his senior regional sales manager Mr Day. During this discussion Mr Day proposed that when Mr Brown returned to work, a new account manager would take responsibility for another territory which was covered by another employee, and that employee would take over Mr Brown’s territory. Mr Brown assumed that this arrangement was only a temporary solution, to cover his rehabilitation time back at work. On that basis, he did not have an issue with the placement, and did not question the proposal. On August 5, there was telephone conversation between Mr Brown, Mr Nadan (the company’s managing director) and Mr Day. Mr Brown claimed that Mr Nadan’s view was pushed that someone in Mr Brown’s situation was unlikely to return to full duties for six to 12 months. Mr Brown claimed to have challenged this view, but Mr Nadan appeared solely focused on why

such would not be possible. Mr Nadan disagreed with this view in the Authority, and claimed that he was trying to ascertain Mr Brown’s situation and his rehabilitation prognosis. On August 10, Mr Brown advised the company that his doctor had recommended he remain off work until September 1, and then be subject to a further review. He also advised he would be incapable of driving until the end of September. The next day, Mr Nadan wrote to Mr Brown, advising that the company considered it could not sustain the work demands without an additional account manager, and, on that basis the company was consulting with him as per clause 14.6 of his employment agreement. Clause 14.6 provided that AICS could “…terminate this agreement by giving such notice to the Employee as the Employer deems appropriate in the circumstances if, as a result of mental or physical illness or accident, the Employee is rendered incapable of the full ongoing performance of their duties under this agreement.” Mr Nadan went on to say that the sales role was essential to the success of the branch, and Mr Brown would not be capable of resuming full ongoing performance of the duties for several weeks. He further set out that the following had been considered: •

“The employment agreement, the nature of …role, and what is required of it.

•

“The nature of surgery and… prognosis. The likely health and safety issues are likely to impact on ongoing recovery inherent in the role.

•

“The likely duration for recovery to normal health to be able to carry out duties AND alternate options that

may be available for partial return to work after the initial prognosis end of September 2015?” Mr Nadan then proposed that Mr Brown’s role could not be fulfilled in the short term due to medical incapacity, and the company felt “…it may be best that you stand down from the role”. Mr Brown was asked to consider the “proposal” and to seek independent advice. Mr Nadan further advised that AICS would consider “what other options may be available” for Mr Brown in the future “and to the extent a rehabilitation back-to-work scheme if this was practical”. On or about August 17, after receiving no response from Mr Brown, Mr Nadan emailed Mr Brown advising that AICS was exercising clause 14.6 of the employment agreement. On August 18, Mr Brown’s representative Mr Tayler emailed Mr Nadan formal notification of a personal grievance. Mr Brown claimed he was unjustifiably dismissed.

Determination Section 103A of the Employment Relations Act provides the “test of justification”; namely, whether a dismissal is justifiable is determined on an objective basis, by considering whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time. The Authority upheld Mr Brown’s claim. The Authority found that AICS commenced a process with respect to medical incapacity, but failed to complete it. AICS

Continued on pg18

BusinessPlus September 2016

Employment CHAT

How best to manage personalities, Q. We had warned Dolly about her mistakes increasingly over her 20 years on the job, then she resigned to avoid being dismissed. Now she is claiming constructive dismissal. What is that? – Simone

Dear Simone This means she feels she was forced to resign, and that pressure was put on her to resign without the correct performance review process leading to her being (fairly) dismissed. Correcting an employee’s mistakes is appropriate and expected of a fair and reasonable employer. However in discussions with the employee about their performance and their mistakes it is important that you did not ask or suggest that she resigns. It would have been ideal to mention that you value her as a long standing employee of the company and wanted her to remain being an employee, however there are a few performance issues you would like to address. This way it becomes harder for her to prove a constructive dismissal claim when you specifically state that you value her as an employee. She needs to provide evidence that you proposed a resignation by asking or suggesting that she resigns so remember the language you use is key.

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

If you have meeting notes to show that Dolly initiated the resignation on her own accord her claim for a constructive dismissal would be in jeopardy. The Authority could conclude she resigned of her own accord and was not constructively dismissed. Q. Two of our workmates have never really got on, but both are good workers so I’ve tried to accommodate their different values. Now one, Joy, has resigned and said the way we handled her latest complaint left her no choice. We were very sympathetic and were discussing the matter when she decided to leave. Have we done something wrong? Lee

Dear Lee The issue that made Joy complain might have been the final straw. She could possibly, but unfairly, have jumped to the conclusion that you had control over the dynamics between the two of them. People like to blame others; and leaving is a last resort in a job where you feel valued and can’t afford to be unemployed. Let’s go over what was required on your part when she made her latest complaint, so you can be sure she can’t claim unjustifiable constructive dismissal.

First, you are duty-bound to make sure everyone feels safe at work. Was she safe from harassment and from physical harm, for example? If she raised any complaints around bullying or a fear for her health and safety you need to ensure this complaint was thoroughly investigated before deciding that there was not enough evidence to turn this matter into a disciplinary process. You would then have to ensure you gave Joy some feedback about the outcome of the investigation so she is satisfied the matter was taken seriously. The evidence (such as notes of meetings and witnessed or written conversations) needs to make it plain there was no suggestion that she was given the choice of resigning or being dismissed. There should also be evidence there was no conduct with the dominant purpose of effecting a resignation. Indeed, if all of the evidence is to the effect that you sought to protect Joy and did everything you reasonably could to retain her, your response would be considered to be what a good and fair employer could do, even if it could be said that other employers might have done something different.

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BusinessPlus September 2016

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Employment CHAT

stress and fatigue Any intervening authority or mediator would need to be convinced that your behaviour meant the resignation was reasonably forseeable. Q. One of our workers says she is stressed. Under new health and safety law this makes me panicky. What are my obligations? - Carene

•

Dear Carene Some stress is normal and desirable, however, if an individual is not coping, action needs to be taken. The key trigger is if the person is not coping.

workload, to make sure individual workers aren’t over-stressed. Complete risk assessments to evaluate stress issues for each position. Some positions are more inherently stressful than others. Watch for signs that a worker is stressed, and follow up with the individual worker. Organise work so it is not unreasonably demanding on individual workers.

Stress, in the long or short term, can lead to mental and physical fatigue, and physical and mental fatigue can lead to immediate safety concerns (like loss of concentration on the job) and long-term health problems. Your job as an employer is to identify hazards in the workplace that could cause injury or illness to a person whether it be physical or mental under the new Health and Safety at Work legislation.

Workers also have responsibilities. They need to: • Tell their supervisor if they are feeling stressed at work, so the manager has the opportunity to resolve the problem. • Advise their supervisor of any factors in the workplace that may be causing work-related stress. • Request reasonable adjustments to working practices if these will assist in meeting changed circumstances. • See a doctor, counsellor or attend stress-related training.

Employers need to: • Identify situations where there is the potential for work-related stress. • Monitor job content including

It’s common sense really, to discuss the performance of staff and what can be done to improve it – whether the lowered performance or sense of ill-health is caused

by stress or something more tangible like an uncomfortable chair. Call AdviceLine to discuss a specific plan for your situation. Also note that EMA offers a one-day course for you and your staff, called “Mental Resilience - Reducing Stress and Building Mental Strength”. It’s next on in Auckland on November 9. And all our courses can be tailored to individual workplaces by our Tailored Training team. • 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), 8am8pm 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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BusinessPlus September 2016

EMPLOYMENT

EMA launches drug testing service In line with new health and safety legislation, EMA is offering a one-stop-shop service to help employers conduct drug testing with confidence and security.

can tailor a policy to suit.”

then to a larger catchment later this year.

EMA and WorkCare are rolling out the service on a trial basis in Auckland this month, and

For all the detail, please visit www.emashop.co.nz

Mr Brown was awarded $10,384.66 for lost wages and $6,000 as compensation for humiliation, loss of dignity and injury to feelings.

must show that the procedure it followed in carrying out the dismissal was fair. As part of this process, the employee must be first given the opportunity to provide information (eg, medical reports), before the employer dismisses them.

EMA’s new, full service drug testing solution is being provided in conjunction with WorkCare, for small and medium sized enterprise (SME) members. Costing $3000 + GST, the drug testing kit comprises: • A questionnaire to establish your needs; • Consultation with an EMA lawyer to draw up a drug-testing policy tailored to your business and to help you implement it with staff; • A toolbox to upskill managers on the drug testing process; and • A visit from WorkCare’s mobile team to conduct up to six tests (eg, urine tests), now or in the future. “The aim of the service is to help our SME members implement drug and alcohol testing in an easy and cost effective manner,” says EMA’s general manager of Enterprises and Strategy, Mauro Barsi. “Whether you need to conduct preemployment checks or random testing, we

Continued from pg15 never questioned the lack of response from Mr Brown, nor put him on notice that failure to provide information could be detrimental. These failures had even greater significance when in addition, there were indications given to AICS that Mr Brown was in fact within a fortnight of possibly returning, even if only part time. Further to this, the Authority found that while medical incapacity was the “prime” reason behind the decision to dismiss, it had also been influenced by other aspects – taking away, therefore, from the sole reliance on ACIS that dismissal was apparently due only to medical incapacity.

BusinessPlus September 2016

When can an employer terminate for medical incapacity? No employer is bound to hold a job open forever, where an employee suffers an illness or injury. However, termination of employment in such circumstances must be justified at the time. This requires that the employer has substantive reasons for the dismissal, and

Alongside its many other services, the EMA can provide your business with the right legal advice, education and training with respect to medical incapacity, as well as general advice and legal services in a broad range of employment matters. • Persia Templeton is a senior solicitor at EMA. Email Persia.templeton@emz.co.nz

EMPLOYMENT

Personal grievances costing more

EMA members fare better Every year EMA analyses the personal grievance decisions of the Employment Relations Authority to get a sense of emerging trends. The overall picture for 2015 shows a decrease in the number of claims taken by employees, along with a consistently high percentage finding success in their claims. Hurt and humiliation awards increased substantially compared to previous years, along with employers’ legal costs.

Hurt and humiliation In 2015 the average national award for hurt and humiliation increased 21 per cent to $6,344 compared to the previous year. Christchurch led this trend with an average award of $7,488 (up 31 per cent on 2014),

“EMA membership improved an employer’s chances of defending a claim, with 44 per cent of members having success compared with 33 per cent of non-members.”

with Wellington at $5,470 (up 19 per cent) and Auckland at $5,673 (up 10 per cent). Hurt and humiliation awards were highest on average where the case involved constructive dismissal, at $8,206 nationally. At the lower end of the scale were performance-related cases where the national average award was $5,358.

Employee success rate The number of grievances has continued to decrease (down a further 27 per cent in 2015), however, employees’ success rates have remained the same with 70 per cent winning their cases. In Christchurch employees had a 79 per cent success rate, compared to Wellington at 71 per cent and Auckland at 64 per cent. The most difficult grievance for employees to establish was constructive dismissal, which had a 53 per cent success rate, and the easiest to establish were redundancy grievances with 82 per cent of claimants being successful.

Continued on pg20

BusinessPlus September 2016

n e Se

EMA’s 2016 Employment Relations Conference in Auckland

Hannes Strydom [FairWay Resolution] and Bruce Lotter [Absolute HR Performance EMA consultant]

Kelly Morgan [HSBC]

Raganie Govender [Serco] and Hayley Gray [Bidvest Food Service]

Parvez Akbar [NZER Consulting] and Susan Miller [AM PROM]

Melissa Bennett [Red Stag Timber] and Je Lan Brash [Office of the Privacy Commissioner]

Lucia Francis [Cash Converters Birkenhead] and Teresa Seux [Arvida Group]

Richard Parker [TVNZ] and Nico Jansen [George Weston Foods]

Michele Hubbard [Invacare New Zealand] and Rebecca Isted [Kristin School Charitable Trust]

Shelley Kopu and Kiran Vallabh [ASB]

Continued from pg19 Most personal grievances relate to the first 12 months of employment, and an employee’s chances of success are highest within the first six months (at 81-82 per cent on average) compared with any other period of their employment. EMA membership improved an employer’s chances of defending a claim, with 44 per cent of members having success compared with 33 per cent of non-members.

BusinessPlus September 2016

Cost to win/lose Personal grievances continue to be a lose-lose situation for employers, with an average payout of $46,032 if they are unsuccessful (up from $39,134 in 2014) and an average payout of $16,042 if they “win” (up from $10,881 in 2014). For an employee, personal grievances are a gamble. They risk losing an average of $14,638 if they are unsuccessful, but stand to gain an average of $15,352 if they win.

Average legal costs have increased significantly for employers, at $21,954 (up from $15,894 in 2014), while employees’ costs have decreased slightly, at $8,726 (down from $10,216 in 2014). Employees stand to recover on average 42 per cent of their costs when they are successful in their grievances, compared with employers who recover on average 27 per cent of their costs when a grievance is defended.

EMPLOYMENT By Nirupam Sarkar

The Pokemonisation of workforce training Driving though Mission Bay in Auckland in recent evenings you couldn’t miss the multitudes of Pokemon hunters scouring the area for their next Pokemon, immersed in the augmented reality experience of the smartphone game app. Pokemon Go became more than just a successful mobile game app; it heralded the arrival of augmented reality (AR) as a mainstream technology. AR and for that matter virtual reality (VR) have been around for a long time, but it is the easy access to smart devices and the second wave of wearable devices such as the Occulus Rift and Microsoft’s Hololens that will send the adoption of these technologies into overdrive.

Augmented Reality and Virtual Reality

Both VR and AR are immersive technologies, but while AR allows the user to be present in the real world, VR takes the user into a fabricated reality. The possibilities for both technologies are limitless.

the use of VR/AR could reap significant benefits. For example VR/AR can be used in the precision training of workers in high risk environments, without exposing them to hazards or needing any material resources and having the option to repeat the training until the required level of proficiency is reached.

VR and AR as training tools

WorkplaceSIM is here now

a game or application can enhance the user experience even further.

One area that seems set to benefit immensely from the rise of VR and AR is training and education - especially workforce training. The key advantages over traditional training include a realistic 3D learning experience, increased engagement, fewer distractions, simplification of complex concepts, safety and control and therefore suitability for all learning types.

Augmented Reality is the blending of digitally generated elements against a real world background to enhance user experience and perception. A video/television sports broadcast is a simple example of AR, with graphics and animation overlayed on a live feed to improve understanding of the game. However, when a user has personalised access to AR content on the go on their smartphone or wearable device, and is able to interact with those virtual elements, a whole new world of possibilities opens up.

Specialised industries such as medicine, military and aviation have been early adopters of VR and AR technologies and used them to precision train their people in critical skills and procedures. The major impediments to wider adoption of these technologies across other industries until recently were cost and lack of specialist providers. But that is changing.

Virtual Reality is another immersive experience where a user is sensorially surrounded by a completely digitallygenerated environment. Flight simulators used by the aviation industry to train pilots is a classic example of a VR experience. Once again it has become much easier to access VR content today through smartphones and wearable devices. A user could wear a VR headset and watch a documentary on marine life while virtually swimming with exotic sea creatures, or experience a live sporting event from inside a stadium without being there. Adding interaction into the mix, like in

For example, Coal Services in Australia have taken VR training technology to the next level by creating an entire 360 degree theatre to train mineworkers in safety procedures. In Germany, railway company Deutsche Bahn AG uses VR to give prospective employees a chance to experience working in the company before they apply. There are many areas for New Zealand businesses too, where

EMA provides this experiential and immersive learning, in its brand new, simulated health and safety learning game, WorkplaceSIM. This game covers the key concepts of workplace health and safety in New Zealand. • Nirupam Sarkar is EMA’s Portfolio Manager – Digital Learning. Email Nirupam.sarkar@ema.co.nz

A Health and Safety Training Game

WorkplaceSIM is a unique health and safety 3D game simulation designed to help teach the latest workplace safety practices and procedures in New Zealand workplaces. Set in a general office environment , this module provides an introduction to Health and Safety processes and procedures applicable to most workplaces. The five topics covered in the game are: • Understanding Health and Safety • Roles and Responsibilities • Hazard Management • Ergonomics • Wellbeing

To find out more about WorkplaceSIM or to deploy the game for your organisation, please contact EMA Learning (09) 3670962 or email learnit@ema.co.nz.

BusinessPlus September 2016

Find the middle ground. Keep your precious staff.

North or South, East or West. Health Professionals to Construction Workers. We’ve got the true picture from Kiwi employers just like you to help you make informed decisions that deal with questions such as, ‘In order to retain my precious staff, what should I pay and what benefits should I include’?

national employers

wage salary survey

nzsalarysurvey.co.nz

“If there is one comment that has been a consistent performer over time, it would be skill shortages and/or lack of experienced staff.”

IN BUSINESS By Steve Summers

Balancing numbers with words in our membership surveys: PMI and PSI “Lies, damn lies and statistics!” It’s a line often bandied about by those who show concern for the validity of certain numbered results. It can also be symptomatic of people’s views of what they find easiest to understand. Some enjoy diving deep into statistics but fail to get the big picture, while others don’t even attempt to dip their toe into the pool, and miss out on nuggets of information. Those who question numbers do have a point, though. Taking just a “quantifiable” (ie, numbers) approach to surveys often means only part of the story is told. Looking just at the numbers without taking other factors into account might mean missing out on a wealth of information that would help inform business or other decision makers. That’s why the Performance of Manufacturing Index (PMI) and the Performance of Services Index (PSI) surveys ask more than quantifiable questions. They also ask participants their impressions about the main influences on their business activity over the past three months – which is the “qualitative” approach.

numbers for the previous month, asking about main activities over the past three months provides a trend and is more useful than one-off occurrences that might affect a business during a very short timeframe. The next question is: “Was the major influence positive or negative?” to be clear about which side of the ledger it falls on.

“That’s why the Performance of Manufacturing Index (PMI) and the Performance of Services Index (PSI) surveys ask more than quantifiable questions. They also ask participants their impressions about the main influences on their business activity over the past three months – which is the “qualitative” approach.” For example, for one business an increase in the value of the New Zealand dollar might be negative if the business is heavily reliant on export sales. For a business that imports materials and sells almost exclusively into the domestic market the increase might be positive.

Since the surveys began, both have asked businesses, “What has been the major influence on business activity in your firm over the last three months?” This is followed by the question: “Overall, has the major influence on business activity you’ve described been positive or negative?”

Asking about positive and negative effects eliminates uncertainty. It also enables a simple snapshot of the proportion of every month’s positive versus negative comments to be provided and used in most of our commentary on the results.

These two questions are asked for very specific reasons.

So what comments have been received over time?

Impressions count

There are common themes from month to month, which include seasonal factors

Unlike the questions focusing on activity

such as weather and holidays. A number of survey respondents mention the flows of both domestic and international orders/ sales. Up until the Global Financial Crisis, quite a few comments tended to be around the value of the New Zealand dollar. Some comments are still received on that subject but to nowhere near their former extent. It’s fair to say New Zealand businesses in general are now more knowledgeable about the mechanisms for dealing with exchange rate changes. If there is one comment that has been a consistent performer over time, it would be skill shortages and/or lack of experienced staff. This shouldn’t be a surprise to most members, given that finding the right people is something many New Zealand businesses grapple with on a daily basis. So next time you fill in the PMI or PSI survey and write about the main influences on your business, rest assured your comments will be consistently sorted and analysed to provide an additional picture of the month’s activity in your sector. To take part in the monthly PMI or PSI, please email marketing@ema.co.nz You can read the survey results in EMA’s fortnightly e-report email newsletter or at businessnz.org.nz. The results are also widely reported in mainstream media as economic indicators and compared with the Indices from other countries. • Steve Summers is an economist at BusinessNZ, of which EMA is the main shareholder. Email ssummers@business.org.nz

BusinessPlus September 2016

IN BUSINESS By Rosina Webb

“Positioning yourself and/or your company as a Thought Leader in your industry ensures that potential clients and other industry players will associate your brand with insight and authority in your given field. “

Practical tips for a thoughtful leader The term “thought leader” has been a buzzword for some time, but what does it mean and what can it add to your business? Thought Leaders are positioned as “best in class” in their field. They have a combination of accomplishments and expertise in their chosen industry, as well as a body of published work that is cutting edge, innovative and well respected. They are popular and well connected, and see value in utilising social strategy to get their creative ideas moving. Positioning yourself and/or your company as a Thought Leader in your industry ensures that potential clients and other industry players will associate your brand with insight and authority in your given field. When those players are looking at who to hire, you will be top of mind. Not only that, the perception of your being the best in your industry will mean clients are more willing to pay higher prices for your services. So how do you become a Thought Leader? It’s not as simple as completing a course. Becoming a Thought Leader involves a passion and commitment to developing and refining your personal skill sets and industry connections. In addition to this, you will have the drive to develop new, innovate, cutting-edge ideas, and to publish those ideas in order to gain industry recognition.

Practical steps • Cultivate your personal brand Spend time building your list of credentials on LinkedIn, Twitter, Facebook and other social media platforms. Be sure to note your career accomplishments, academic achievements, industry credentials and/or awards. This will provide the base to grow from.

BusinessPlus September 2016

• Online presence Develop a robust online presence. Begin with a blog to showcase your knowledge and establish followers who like or share your articles. Generate and test content topic ideas by undertaking Google searches - to see what people in your industry are interested or excited about. Connect with industry leaders in your chosen field and review what they are reading and posting on social media to learn, learn, learn. Comment on or share their posts to establish a presence with their followers. Think outside the square – investigate what other industries are talking about online, and find synergies to your own industry that you can adapt and practically apply to create new and innovative thinking in your own industry. • Network – a lot Join as many social media platforms as possible and connect with existing clients, professional contacts and those you have networked with at an event or seminar. Work through online industry-related groups, client-related groups, etc, that provide articles or threads from which you can generate additional connection opportunities. Lastly, interest groups are where you can contribute, but also take time to read others’ queries, submissions and solutions, in order to learn from them. Flaunt your connections: the higher ranked industry players you are connected to, the higher your own profile. Similarly, the more people in your network the more industry weight you will hold. • Engage in public speaking Investigate guest-speaking opportunities at

industry associations and conferences. Record everything you present, and crossreference it via Twitter, LinkedIn, your blog, YouTube, Facebook, etc. Repurpose your content and presentations so that the research, effort and time you put into compiling it are fully maximised across many channels. Be bold and innovative with your ideas. Be memorable, inspirational and forward thinking. • Win awards Investigate award opportunities in your industry and make it a goal to achieve that award. • Build your communication platform Get published - a lot - whether in industry magazines, association material or even a book! Make bolder claims in your social media and drive new ideas and bigger predictions. Build an email list of loyal readers who can become your brand advocates and share your content with others. Start publishing on industry-related blogs. It goes without saying that the more often you publish, the bigger audience you will have. Video blogs on your website are also a useful way to add additional website traffic and raise your profile. Becoming a Thought Leader isn’t something that happens overnight. It needs hard work, commitment and innovative thinking in order to raise your profile and achieve industry guru status. But it can be done – so what are you waiting for? • Rosina Webb is Founder and Managing Director of Energise & Associates that develops effective marketing and sales performance. Visit www.energise.net.nz

“Obviously, there is a financial risk to the seller providing finance. Happily, there are a number of effective methods of minimising the risk.”

IN BUSINESS By Mike Fokkens

Vendor finance can help business buyers and sellers Vendor finance is typically used in buying a business when there is a shortfall in a purchaser’s equity and bank finance.

an approach that suits both the vendor and the purchaser and their agreeing the terms in writing.

Simply put, vendor finance is money left in a transaction on pre-agreed terms and conditions by the business owner (vendor) so he can achieve the asking price for his business. Vendor finance can take many forms, ranging from an uncomplicated secured term loan to a structured “earn out” arrangement that is based on the business achieving agreed levels of performance at a point in the future.

Typical vendor finance terms

Why use vendor finance? The biggest advantage to the seller is making the business more affordable to a wider section of buyers. By widening the potential number of buyers, the vendor vastly speeds up the sale and increases the chance of getting a better price. Their business will stand out from others on the market. From the purchaser’s point of view, it solves the difficulties of obtaining finance from the bank and the vendor’s confidence in offering finance makes the business-forsale appear less risky.

Example: Secured Term Loan As an example, assume the purchase price of a business is $1,250,000. The purchaser pays $1,000,000 on settlement and a further $250,000 over two years at 7 per cent interest payable monthly. The loan would be secured on the assets of the business, a second mortgage over the purchaser’s real estate and backed by a personal guarantee from the purchaser. After two years, the purchaser refinances and pays the vendor out. There are many variations of vendor financing. It’s a matter of coming up with

In a vendor finance loan, the following examples are typically put into the sale and purchase agreement or perhaps a separate loan agreement: • The amount being borrowed, • The interest rate to be charged, • The frequency of the payments, • The term (years) and form (interest only) of the loan, • Securities and how they will be provided, • Who pays the legal costs associated with the loan.

“There are many variations of vendor financing. It’s a matter of coming up with an approach that suits both the vendor and the purchaser and their agreeing the terms in writing.” In the event of an earn-out, agreement will also be needed on performance milestones and how and when financial reports will be provided to the vendor.

Making it safe Obviously, there is a financial risk to the seller providing finance. Happily, there are a number of effective methods of minimising the risk. This includes making sure that: • The loan agreement is properly drafted by an experienced solicitor, • The loan is secured by a charge over the assets of the business being sold, • The loan is secured via a charge over the assets of the purchaser’s business and/or mortgage over real estate

owned by the purchaser, • The purchaser provides personal guarantees. A vendor might also consider requiring the purchaser to do any of the following: • Enter a deed of priority, which would give the vendor’s loan priority against third party lenders; • Limit the purchaser’s ability to borrow more money until the vendor has received full payment; • Give a vendor the first right to buy the business back at a pre-agreed formula, should the purchaser default.

Conclusion Vendor finance can be a very creative method of financing to get the deal over the line. Any vendor finance arrangement will have risks. However, these risks should be weighed against the potentially substantial benefits of a faster sale at a better price for the vendor, and a lower risk and easier transaction for the purchaser. There are common sense mechanisms through which the vendor can protect their interests. Both parties must take sound legal and financial advice. Many business owners will either have received or about to receive their 2016 end of year financial accounts. This is often a time for reflection on the business. So, when it is time to sell your business or if your business has been on the market for a while without achieving the sale you want, make sure you consider vendor financing as an option! • Mike Fokkens is a business broker at LINK Business Broking (Licenced REAA08). Email michaelf@linkbusiness.co.nz

BusinessPlus September 2016

International trade By Catherine Beard

“Bulk ingredients are being replaced by premium luxury finished goods, predominantly processed foods and beverages.”

What Asia wants for dinner In an era of new beginnings and investing in our future, I am often asked where the opportunities lie for exporters, particularly in the food and beverage sector. This sector is important to pay attention to because New Zealand is in the middle of a fundamental transition from feeding Westerners to feeding the Asia-Pacific region. While I don’t have a crystal ball, I do have access to market intelligence – which you can access too – that helps identify trends and expected areas of growth and changes in products and industry structure. The Ministry of Business, Innovation and Employment (MBIE) produces useful reports from its research into New Zealand’s emerging markets. Emerging market reports can be found at www.mbie. govt.nz/info-services/sectors-industries/ food-beverage/information-project Our free trade agreements with Australia, ASEAN and China are helping to provide significant opportunities in these markets. The nature of our food and beverage exports have changed significantly since the 1950s, when we were the UK’s market garden targeting the British wholesaler and shopkeeper with traditional English foods and ingredients in bulk, with almost no beverages.

This picture is now changing and the future looks very different. As we look towards the 2050s, our target market for New Zealand’s food and beverage exports is the middle class Asian consumer and bar/ restaurant manager. Bulk ingredients are being replaced by premium luxury finished goods, predominantly processed foods and beverages. Exactly where the opportunities are to be found lies in the intersection of what East Asia and South-East Asia wants, and what New Zealand can produce.

Project MBIE’s Food & Beverage Information Project seeks to identify and highlight the high potential opportunities in this area. It is producing reports such as “What does Asia want for dinner?” to delve deeper into the market opportunities. It is analysing 586 sub-categories of food and beverages such as “frozen bovine livers”, not just “meat”. It also tells us what Asia does not want or need, in categories where the countries produce enough themselves or just do not consume it. After much analysis, the project has identified 20 emerging market opportunities in East/South-East Asia with high growth potential and a good fit for New Zealand.

“Identifying these key market opportunities correctly is imperative because there is limited potential to increase the farm area of New Zealand (with almost 50 per cent farmed already), so we will have to change existing land use.”

BusinessPlus September 2016

These include: · infant formula, · dairy nutritionals, · honey, · brandy/cognac, · champagne/sparkling wine, · chocolate, · whiskey/bourbon, · salmon, · cherries, · nuts, and · innovative food. East/South-East Asia has low or no production and therefore primarily imports the following: salmon, barley, blueberries, raspberries, pistachios, virgin olive oil, champagne, brandy and whiskey. Identifying these key market opportunities correctly is imperative because there is limited potential to increase the farm area of New Zealand (with almost 50 per cent farmed already), so we will have to change existing land use. Potential problems for these emerging opportunities include geographic and climatic barriers, provenance, origin or brand, and products needing to be defensible. But let’s keep in mind the bigger picture opportunity for New Zealand as a country. It is the same size as Italy, which feeds a population of 60 million, and exports twice as much food and beverage as New Zealand. New Zealand is also still a young country and is still on the journey of discovery about its comparative advantage. And in the past 20 years, wine, honey, aquaculture and avocados have gone from nearly zero to hero. There are still more markets and sectors to conquer, and I look forward to watching our exports seizing opportunities and flourishing in the Asia-Pacific region. • Catherine Beard is executive director of ExportNZ, a division of BusinessNZ. Email cbeard@businessnz.org.nz

“Of course, every export market in Asia has its challenges, and expansion into China is definitely a goal worthy of working towards. The question is, how do you keep the golden goose alive? “

International trade By Nada Young

Taiwan’s bridge to China could keep the golden goose alive New Zealand’s food and beverage (F&B) companies looking for new markets in Asia often view China as the nexus of international trade, but for some, it is a “golden goose”. Motivated by visions of gleaming golden eggs by the container load, some exporters force their way inside the golden goose only to find that the venture ends just as it did in Aesop’s fable – with no gold left to give. China is a complicated place to do business. The regulations for imported F&B goods are onerous, frequently changing and applied inconsistently by customs agents at each port of entry. It can also be commercially risky. Many customers such as distributors and Quick Service Restaurant (QSR) chains will not hesitate to switch suppliers in their quest to find cheaper alternatives. For example, one major desert manufacturer I know significantly scaled up their production to meet the volume demands of a major QSR chain only to have their orders come to an abrupt halt shortly after winning the business. The chain had found another supplier – a local manufacturer who had unabashedly copied the existing product and sold it to the QSR for a better price.

A well-known premium supermarket in Taipei, which also has outlets in China. •

Taiwan ranks 11th out of 189 economies on the World Bank Group’s Ease of Doing Business scale. China ranks 84th, New Zealand ranks 2nd.

•

It’s a country of 23 million people, which is large enough to have scale, but not so large as to be overwhelming.

•

Crucially, it’s one of China’s closest neighbours and Taiwan’s extensive commercial interests in Mainland China are frequently underestimated. Many of the major distribution companies we work with in Taiwan actually have larger operations in Mainland China than they do in Taiwan.

• Of course, every export market in Asia has its challenges, and expansion into China is definitely a goal worthy of working towards. The question is, how do you keep the golden goose alive?

The business culture is professional and loyalty is deeply ingrained.

•

Customs regulations are transparent and compliance is easily met (for most F&B categories).

By partnering with a reputable distributor in Taiwan that has operations in China, exporters can gain access to this allimportant market while enjoying the many benefits of doing business with ease in Taiwan.

Taiwan as a bridge

•

Taiwan is regarded as a leader in border management and adopts advanced transparent practices for clearing goods effectively and efficiently.

• Nada Young is a director of Incite, an export development agency for F&B companies trading with Asia. Visit www.exportincite.com

Consider the following attributes of Taiwan as an aid to doing business with China.

BusinessPlus September 2016

International trade By Brendon Wilson

Gabe Davidson (l) and Rochelle Harrison with a PNG supplier.

Ethical chocolate business in a league of its own Small company The Wellington Chocolate Factory decided from its beginning three years ago to place ethical operation and integrity at the centre of its strategy and operation. The co-founders believed that ethical outcomes would be their major differentiator to generate success in a highly competitive business sector. Turning the traditional industry model on its head, the co-founders Gabe Davidson and Rochelle Harrison source from ethical farmers growing organically and treating staff well. True to expectation, they experienced a big growth curve. To support and manage this growth, Gabe and Rochelle have worked with Motif Agency’s James Bushell to ensure their management team was well-sorted. Motif specialises in advising ethical small and medium businesses. James now chairs the chocolate company’s board and has formalised many of the social and environmental goals it set. The business partners had extensive prior experience in Melbourne roasting coffee and owning cafes. Gabe decided an ethically-focused, craft chocolate business could be satisfying and successful based on new value benchmarks in a sector often marked by poor practices such as dubious sources and the use of child labour.

different target market for its values.

How it’s done Gabe and Rochelle personally involve themselves in every step of the supply chain, from growing, picking, roasting, transporting and then making chocolate products in New Zealand. This way they can personally vouch for the integrity of every stage of their business. More than that, they wanted to use their success to improve the lives and economies of people, communities and countries they worked with. They found it necessary to look for sources of cacao not common in the chocolate industry. Peru, The Dominican Republic and Papua New Guinea (Bougainville) offered the opportunity to personally build supply chains with assurances of organic product and ethical human practices. This has meant, for example, helping farmers to secure their land tenure, financing their specialist cacao bean fermenting and drying equipment, and then securing transport arrangements to bring the beans to New Zealand with certainty, at controllable cost and by the best means possible for all concerned.

Up until recently it has been an industry sector dominated by large multinationals, with operating styles that include attempting to compete with a craft newcomer by adding a “premium chocolate product” range.

It’s already legendary – as depicted on television and YouTube - that suppliers have re-created ancient trade routes across the Pacific on small traditional canoes, saying: “We sailed 10,000 miles on the Uto Ni Yalo, a traditional Pacific voyaging canoe, bringing cocoa beans from Bougainville back to New Zealand, a venture backed by 440 Kickstarters, so we can make our ‘Bougainville Bar’.”

But Gabe doesn’t compete in that way. He is creating a different culture and operation, appealing to an entirely

Gabe and Rochelle are not frightened to do things which seem off-the-page if it will influence for good.

BusinessPlus September 2016

In keeping with their ideals, formal certification audits show sources, practices and standards simply, without their having to re-engineer the business to meet the requirements. Moreover, their integrity and ethical business model embraces innovation and excitement in ways traditional business methods just can’t do.

The Wellington Chocolate Factory’s ground rules • Develop and treat staff as friends and collaborators, so openness, trust and commitment grow from communication, training and inclusion – staff are fully involved in the business and part of the integrity process. • Staff know their work has a widening impact for good at all stages of the chain, rather than just making or selling. • ‘Vision’ is less important than clearlystated ’principle’: ideas, solutions and success will follow. • Trust, confidence and assurance is created in the products and the company through decency and organisational justice. • One Board member is their Ethics Officer, to whom all staff are encouraged to take issues and concerns at any time, guaranteed to be without any negative reaction or repercussion. • A four-year plan targets the values they decided on, rather than targeting dollar results alone. • Consumer packaging is designed by artists aligned with the ethical process, creating original artwork to let the product tell their story to a growing client base. • Continual search for ways to audit and prove the integrity of practices and sources, as well as for improvement and opportunity for growth. • Brendon Wilson is director of Transparency International New Zealand. Visit www.tinz.org.nz

MEMBER PROFILE

Zipping along on top of the world

“Even as the business grows we’re careful to stick to the fundamental principles that inspired us to set-up EcoZip Adventures, and that is delivering small-scale, authentic and highly personal experiences.” EcoZip Adventures on Waiheke Island has been experiencing a growth curve redolent of a hockey stick in the past 12 months. Visitor numbers to the eco-tourism and adventure business grew by 63 per cent over high season, with similarly strong growth into autumn and winter, says cofounder and managing director Gavin Oliver. “From our small beginnings four years ago, we’ve seen our business really take off. “Travellers to and within New Zealand are no different than those elsewhere; they’re savvy and tend to avoid experiences that are obviously stage-managed, instead

seeking out experiences like ours that are truly authentic,” he says.

and commerce are not naturally exclusive and, actually, make quite easy bedfellows.”

EcoZip Adventures has three huge flyingfox ziplines, each more than 200m long, that zip people over a vineyard and then over a swathe of old-growth forest, followed by a guided walk back through the forest. On the walk they hear the history of the island, how EcoZip is trying to return the forest to its original state via its pest and weed eradication programmes, tales of Maori forest lore and plant use.

A good portion of visitors are corporate groups on team building, activity or simply fun days.

Gavin says, “We generally try to deliver a conservation message - fundamentally trying to demonstrate that conservation

Last year EcoZip “zipped” about 17,500 people earning about $2 million revenue. This year it’s expecting at least 20,000 and possibly as many as 23,000 zippers. “While on one hand this growth is fantastic, and tells us we weren’t nuts to do this (a thought that has occasionally crossed our minds), growth like this comes with its share of problems, most notably finding

BusinessPlus September 2016

“We generally try to deliver a conservation message - fundamentally trying to demonstrate that conservation and commerce are not naturally exclusive and, actually, make quite easy bedfellows.“ people would never have thought possible as recently as 10 years ago. Gavin Oliver

the right people. The business employs 12 full-time and that rises to 30-plus with additional seasonal staff joining in spring. “We’ve always given preference of employment to Waiheke Island locals, a process that has enabled us to have the very best advocates for the island promoting the island and representing our business; so it’s a win-win. We benefit, our clients benefit and the island economy benefits. Now we have to look further afield.” And EcoZip has a big South Island project in the offing. The growth has been possible because, says Gavin, “We’ve never lost sight of the fact we’re only as good as our latest customer’s experience. “In a globally connected world, with social media at its very core, customers are able to share their thoughts and feedback on their experiences in ways most business

Business roots Gavin formed the business with co-owner Chris Hollister (chief executive), two men thrown together by their shared loves of tramping and craft beer. They saw a gap in the adventure tourism market and an opportunity to get people off tour buses and out into the clean, green and 100 per cent pure New Zealand countryside. Gavin and his young family had emigrated from the UK in 2008. He had been a partner in a large corporate travel agency located in central London but after a fiveday visit to New Zealand, he fell in love with the place. Ten months later, having sold the business and the house, he and his wife arrived here with one child under two and another on the way. When asked what is good about doing business in New Zealand, Gavin says, “Approachability”. “Chris and I had never been in adventure tourism so we needed to get a lot of advice,

and often still do. “I once told a client I knew nothing about her sector of the tourism industry, which I wanted to develop ties with, so I asked her if I was going to pitch to her, what should I say. “After a momentary stunned silence, she told me. She’s now one of our best clients and has become a firm friend to boot. So while Kiwis take their businesses quite seriously I’ve rarely found any that take themselves too seriously. They’re just routinely honest, approachable and usually pretty humorous too.” And what is the worst thing about doing business in New Zealand? “It’s the tyranny of distance. We’re geographically a long way from most of our key markets, so we need to run up the air miles to build and keep those vital relationships. Technology is great, but sometimes there’s still no substitute for face-to-face.” Gavin advises someone in their first year of business to stay true to their fundamental, inspirational vision or dream, even when things are tough. He quotes Jack Ma, the founder of Alibaba: “Today is hard. Tomorrow will be worse. But the day after tomorrow will be sunshine.”

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Green light for more NZ ‘planes in Thailand Thailand has been confirmed as a market for an extra model of aeroplane made in Hamilton, now that Pacific Aerospace has received certification from the Civil Aviation Authority of Thailand. This brings the worldwide total to 18 certifications covering 59 countries for the particular plane being sold in Thailand – the P-750 XSTOL, Mark III turboprop single-engine aircraft. The Thai certification covers both Instrument Flight Rules and Visual Flight Rules. This adds to a bevy of other approvals in the Asia-Pacific region including in China and Indonesia. Pacific Aerospace chief executive, Damian Camp, says Thai certification will further strengthen the company’s position in Southeast Asia, with 25 P-750s already operating throughout Indonesia and PNG. Already 45 CT-4’s training aircraft operate in Thailand. He says, “We have already received our first order from Thailand and a brand new P-750 will be delivered to the new owner in November. Our experience tells us that once one aircraft is in a market, other orders will follow.”

Camp says the flexibility of the P-750 XTOL makes it uniquely suited to the often variable and challenging terrain found across the Asia-Pacific region. “The P-750 XSTOL is an incredibly versatile utility aircraft. Its ability to be used in 10 different mission configurations is a significant sellingpoint, and one that we know our Asia-Pacific customers are very interested in.” The different configurations include passenger/cargo use; freight; agriculture, solid and liquid; firefighting; survey, geophysical and photographic; medical evacuation; skydiving; and intelligence, surveillance and reconnaissance. Located at Hamilton International Airport, Pacific Aerospace has more than 60 years’ experience designing and manufacturing rugged and reliable aircraft. The company employs 130 staff and is vertically integrated from the aircraft design and certification, machining and forming of metal and composite components through to the assembly of the aircraft and its systems and test flights.

Damian Camp

BusinessPlus September 2016

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