BusinessPlus December 2015

Issue 132 – December 2015

News and commentary for EMA members

Ours is a people business – p28

• Loopy rules overhaul – p13 • Business growing: Employers Survey – p15 • Holiday visa conundrum – p17 • Collaborating to tackle big markets – p26 ...and more!

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

Cover photo: Dave Larsen started out as apprentice and now he’s chief executive at Rayglass boats, doubling and tripling profits each year. See full story, p28.

Photo credit: Garry Brandon of Garry Brandon Photography

EMA head office: 159 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

Merry Christmas from EMA staff to all our members, and best wishes for a prosperous and happy 2016.

In Hamilton: EMA/ExportNZ Waikato 103 Tristram Street, Hamilton.

PO Box 490 Waikato Mail Centre, Hamilton 3240.

Ph: +64-7-839 2713 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 Editor: Mary MacKinven, +64-9-367 0939, mob +21 636 089, email mary.mackinven@ema.co.nz Writer: Gilbert Peterson Designer: Ripeka Mikaere | Printer: MHP | Distributor: Rocket Mail Advertising sales: Colin Gestro, Affinity Ads, mob + 27 256 8014, colin@affinityads.com ISSN No. 1176-4953

You can keep phoning and emailing AdviceLine during the holiday season, at slightly changed hours, as outlined on p19.

But our offices will be closed from 5pm on Wednesday, December 23 and will reopen on Monday, January 11, 2016.

CONTENTS Commentary 5 6 8 9 10

EMA’s CEO Kim Campbell on: Building inclusive economies House price sting, RMA reform and pay equity scrutiny EMA in very good shape: Report from president BusinessNZ CEO Phil O’Reilly on: Outlook for 2016 Evaluating waste services

News 12 13

ISO 9001:2015 refreshed, property taxes, EMA’s new board Government addresses EMA views of loopy rules

Employment 14 15 16 18 19

Prepare your team to sell well Employers Survey results: Employers remain confident about business prospects Employment Chat - Q and A: Misleading role description and holiday visa conundrum Mars NZ crowned as country’s Best Workplace 2015 Pre-employment test confuses worker, leads to PG claim AdviceLine hours over Christmas-New Year

In business 21 22

EMA is yours

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.

23

Tax: Reining in the season of goodwill Governance: Good governance covers all bases, wards off failure Marketing: Beating off the competition

International trade 24 25 26 27

New anti-bribery legislation raises bar for integrity systems Little things matter in exporting to Asia Why collaboration is good for Kiwi companies Book review: Reinventing the Silk Road

Member profiles 28 29 31

Rayglass boats built on reputation Skyline, the super playground at Rotorua Who’s Who at EMA’s AGM - in pictures

Here are just a few reasons our members stay members, and just a small part of the commitment we make to them:

Member Briefings

Online Resources

Keeping you one step ahead of the competition.

A library of knowledge, tested in the courts and all in one place.

Attended by over 2,000 other committed business people, our targeted 90 minute briefings and webinar are held every 4 months, in over 30 different locations.

Download from our member only templates covering a wide range of Business related documents including Workplace Health & Safety, Employment Relations and other value added savings.

Information that you need, as you need it.

Keeping you well informed & well ahead of important legislative updates & changes.

Training & Development

AdviceLine A free member only, confidential telephone service designed to provide Employers with up to date, clear, direct and practical advice on Human Resources, Workplace Health & Safety, Mentor Guidance and business related issues.

Available Monday to Friday, 8am - 8pm.

Free call 0800 300 362.

We’re backing your business to succeed & investing in your people to make it happen.

Our business school offers over 100 courses, all targeted at making your business more successful. We work with you either at our training centre or onsite at your business to make sure your people get the best learning, and the best results.

Advocacy & Industry

Legal Services & Consulting Well trained, well supported, and only for employers – it’s your ‘go-to’ team.

Our team provide excellent service and real results – without substantial fees.

64% of our employers win their personal grievances, when nationally only 36% of employers win.*

Our Advocacy team is the ‘voice of business’ on tax, trade, interest rates, compliance costs, infrastructure, energy, education, policy and planning.

Dedicated to creating a better environment for you and your business.

*2012 analysis of personal grievances determinations from the Employment Relations Authority.

Find out how we can help, visit our website www.ema.co.nz or simply give us a call 0800 300 362

CEO COMMENTARY

By Kim Campbell

Building inclusive economies My recent attendance at the leaders meeting of APEC (Asia-Pacific Economic Cooperation) in Manila has reinforced my view of the key initiatives EMA has driven over the past year, such as the importance of export growth for New Zealand.

“Another key insight from APEC was that economic growth must be inclusive and sustainable. There is no point otherwise.”

We have been vocal about the benefits of free trade agreements, and at APEC the importance of the Trans-Pacific Partnership (TPP) was a central point of discussion.

As New Zealand is on the eve of signing TPP, it was interesting to hear that Indonesia, the Philippines and even China are making noises that they may want to be part of this agreement too.

This is a clear signal of the benefits of these types of agreements. Furthermore, since the global financial crisis, domestic growth (measured by gross domestic product) has bounced back in many APEC member nations. However, without trade agreements such as TPP, there are no mechanisms to enable further growth. To a trading nation such as New Zealand, these are vital.

Naturally, growth in China was also a focus of APEC. While there were some concerns around the recalibration of the Chinese economy, there was confidence that it will continue to grow at a rate of 6 per cent. The rest of Asia looks relatively stable in this regard too.

Another key insight from APEC was that economic growth must be inclusive and sustainable. There is no point otherwise.

This led to a key point around the digital era. As GE’s head, Jeff Immelt, said, industrial companies have to also be digital companies now, if they want to survive.

Without a digital plan they face oblivion.

Productivity growth in the service sector will be difficult without a digital platform, and as the global value chain moves away from hard assets to services and ideas, this will become more pronounced.

Above: Kim being interviewed in Manila for US television channel CNN International by Andrew Stevens award-winning editor and correspondent based at CNN’s Asia Pacific headquarters in Hong Kong - about current events being a threat to business investment.

initiatives in this space including the Youth Employability Project, the Learning Auckland Accord and the Vocational Pathways initiative. What was made clear at APEC, was the need for the education system to be aligned with the long-term sustainability agenda of businesses in a digital world.

It was also interesting to note that smallmedium-sized businesses’ priorities were a major concern for the APEC nations too, as 97 per cent of Asian businesses fall into this category. As we’ve often said at EMA, small business is big business – and it was reassuring to see that this is not unique to New Zealand.

Alignment and inclusivity

I also have to say as a New Zealander at APEC, it was heartening to see our Prime Minister, Rt Hon John Key, make an excellent case for our leadership in the region, and to see the way this resonated with other business leaders at this event.

Needless to say, it’s important to ensure we have the pipeline in place to help our youth become work-ready for the businesses of the future. At EMA we work on several

To sum up APEC 2015, I would say the Paris tragedy was a concern but it did not hijack the summit. The best way to dignify those

lost lives is for our business community to be firm in our resolve to grow and prosper so we can provide better lives for all.

Indeed all the APEC leaders reconfirmed their commitment to multilateralism, and sustainable inclusive growth.

US President Obama most eloquently summed it up by saying that the climate change agenda offers the greatest business opportunity in a generation in this regard.

In New Zealand we are well placed to prove him right.

Season’s Greetings As we head into the traditional summer holiday season, I would like to thank you for your membership and support over the past year. Our team will be here for you should anything arise over the break: please refer to the AdviceLine opening hours on p19.

Have a safe and happy holiday and we will see you in the New Year.

• Kim Campbell is chief executive of EMA. Email kim.campbell@ema.co.nz BusinessPlus December 2015

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COMMENTARY

By Alan McDonald

House price sting, RMA reform The advocacy team was out on the road meeting with members as part of our EMA Spring Briefing programme last month.

an Auckland issue in the EMA region, and employers are feeling some of the consequences.

One of our areas of focus had become the impact of spiralling Auckland housing prices on employers, in relation to sourcing staff and retaining them. While that might seem an Auckland-centric problem, the impact on our members in the regions was telling.

RMA reform

In Hamilton, Auckland investors have become the dominant force in the property market as they buy up perceived bargains – compared to Auckland prices – and house prices are rising as a result.

A few months ago our conversations with government about reforming or changing the Act were met with a strong negative reaction. Now we have the Productivity Commission being told to investigate the interaction among New Zealand’s three major planning laws - the RMA, Local Government Act and Land Transport Management Act - and where those processes might be streamlined.

For example, Coromandel MP Scott Simpson will tell you its hard work sourcing a tradie in Thames, as cashed up Aucklanders move to the Thames/ Coromandel area and immediately go about renovating kitchens and bathrooms.

Paeroa has just released 18 low-cost sections onto the market, with another 22 planned, to try and catch some of that Auckland diaspora, bringing new families and new businesses into the town. The development is council-backed and it helps that Hauraki District Council recently dropped its development contributions to help attract new development in the region.

Aucklanders are also making their presence felt in Tauranga, turning up in large numbers at open homes and auctions and again pushing the prices up. One of our Tauranga members had a staff member return from a failed attempt at buying a home at auction, asking for a wage increase. She’d been well outbid by an Auckland buyer - by more than $100,000 - and the staff member wanted a pay increase to be competitive at the next auction.

A Taupo member seeking to transfer the family to Tauranga also gave up at auction when outbid for a section, and is staying in Taupo.

Housing affordability is no longer just

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BusinessPlus December 2015

Our joint campaign with the NZ Committee for Infrastructure Development and Property Council to reform the Resource Management Act (RMA) is starting to gain traction.

And Environment Minister Dr Nick Smith is still bullish about making significant announcements around RMA reform before Christmas.

We’d like to see a fresh start with a crossparty agreement to revisit and replace the RMA. That may be a step too far while United’s Peter Dunne and NZ First hold the balance on any vote for major reform, but we are not easing up on this campaign and will keep the pressure on Government and opposition parties to revisit a piece of legislation that is an obvious handbrake on development and may not be producing the environmental outcomes expected from the Act.

Pay equity The very difficult area of pay equity - how we measure the value of one particular industry sector against another and remunerate staff accordingly - is firmly back on the agenda with Government announcing a working group to address this contentious problem.

Evaluating an aged care worker’s pay against pay rates in occupations such as the police or nursing is a complex exercise, made more complex by the fact many of the lower-paid occupations under scrutiny

also happen to be female-dominated industries. That mix of pay equity and equal pay was first visited nearly 30 years ago and then cast aside.

EMA’s Head of Legal, Charlotte Hatlauf, is a member of the working group, as are two of our BusinessNZ colleagues, giving EMA members a strong voice on how this issued is resolved. We also have representation on the steering group overseeing the working group.

Auckland issues The EMA is one of the members of the Consensus Working Group (CWG) driving the Ports Future Study looking at the long term future of Ports of Auckland Ltd. We were represented on the sub group of the CWG that selected the consortium led by EY (the former Ernst and Young) to carry out the study.

It’s a significant piece of work being carried out in a tight timeframe to a tight budget, and the EY team will work closely with the CWG as they refine the options and their feasibility before the CWG comes to a final recommendation on the port’s future in mid-2016.

EMA is also one of the stakeholders invited to participate in a meeting on the Auckland Transport Alignment Project (ATAP). The Project will set the timelines and priorities for major transport projects in Auckland for the foreseeable future, so meeting the needs of Auckland businesses is a critical consideration for ATAP. We are also hugely concerned at slippage in delivery for the critical East/West Corridor link out of the Penrose/Onehunga industrial area to the Southern Motorway.

Since May, this project has slipped from a 2020-21 delivery timeframe to a 2024 finish date.

That’s unacceptable for such a critical project and we continue to push for a faster delivery.

Finally, to all our members who are fortunate enough to be taking a break from

COMMENTARY

and pay equity scrutiny their businesses over the Christmas and New Year period, have a great holiday and enjoy the time with family and friends.

The Advocacy and Industry Relations team is the voice of members. It studies their concerns then writes and speaks on their behalf to government at all levels, about minimising the cost of doing business and simplifying employment relations in New Zealand. We also keep members informed of the changing business operating environment. • Alan McDonald is policy director at EMA, email alan.mcdonald@ema.co.nz

BusinessPlus December 2015

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COMMENTARY

EMA in very good shape · Report from President Laurie Margrain The past financial year (to July 2015) has been outstanding for the EMA on a number of fronts, and is the result of a concerted effort to reflect what members want from their organisation.

We have recalibrated the organisation to allow better alignment of functions and services, and believe this is now starting to pay dividends in key areas.

Like any organisation of our type, membership is our lifeblood. Therefore, it is particularly heartening to confirm that our total membership has grown in recent times and we look forward to seeing this as an ongoing outcome of our efforts.

This has fed into the outstanding financial results delivered by the organisation this year, which is a record for EMA. The final operating surplus was driven by strong revenues in our membership and learning

services, and balanced by the vigilant management of costs. We are happy to report an operating surplus of $1.1 million.

While our express aim is not to focus on significant profit outcomes specifically, we nevertheless need to preserve our financial stability and ensure our reserves are maintained.

Strong financial results means we will continue to grow the opportunities for our members through our services such as training, networking and advocacy, which was a deliberate focus of our business restructure in the past financial year.

I would like to pay tribute to our current board members, and those who retired during the immediate past term. Without their dedication to overseeing the governance of the EMA, we would not be in the position we are today of being primed and ready for our future.

Laurie Margrain

In addition, I would like to pass on EMA’s gratitude to Bruce Goldsworthy who has recently retired, after being with our organisation in its various forms for the past 46 years. Bruce has had a long involvement with the manufacturing industry, through both the good and the hard times, and will always be remembered for his dedication to the EMA and our members.

EMA will continue to be a busy, productive and successful organisation which will focus on its members and their needs.

Thank you for your ongoing support, and we look forward to continuing to work with you, and for you, to build a more prosperous New Zealand.

Please find the list of members of the board for 2015-16 on p10 and see photos of the AGM on p31.

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BusinessPlus December 2015

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BusinessNZ COMMENTARY

By Phil O’Reilly

Outlook for 2016 Business faces change and opportunity in 2016.

range of food and beverage products – have been performing strongly.

That’s partly because 2015 has been an eventful year with much uncertainty arising from events occurring overseas.

Moreover the fundamentals of our economy are sound.

New Zealand’s prospects are closely tied to international business cycles. Being connected to the wider world is how we succeed as a trading nation.

New Zealand’s growth story has differed from other countries over recent years.

Bolstered by demand for food products following the global financial crisis, and benefiting from high immigration, New Zealand began this year with around 3 per cent growth - higher than most countries.

This fell back to around 2 per cent in 2015, largely because of reduced global dairy prices and the subsequent contraction in dairy output – but 2 per cent growth is still good by current international standards.

This moderate level of growth is expected to continue in 2016.

The outlook for dairy may be complicated by the possibility of an El Nino summer and rather large stockpiles of milk powder in international markets.

But the New Zealand economy is more than dairy. Other export leaders – tourism, ICT, advanced manufacturing and a wide

“But the New Zealand economy is more than dairy. Other export leaders – tourism, ICT, advanced manufacturing and a wide range of food and beverage products – have been performing strongly.”

The NZ dollar has weakened from the high levels of 2014 and may weaken further for a while in response to international pressures. If the US achieved an interest rate hike in or around December 2015, that could boost the US dollar and weaken the NZ dollar as we go into 2016.

The good news is that a lower NZ dollar along with lower interest rates - would likely bring an increase in economic growth.

A lower dollar would ensure our exports become more competitively priced, while lower interest rates would boost business confidence to invest.

Another boost to growth can be expected from the Trans Pacific Partnership Agreement (TPP).

If ratified, the effects of this trade deal will begin to be felt in 2016, increasing greatly over the next decade.

Strong foundations The impact of tariff reduction on our key exports will be massive under the terms of the TPP. On an annual basis, New Zealand companies will be paying millions less in tariff charges – the dairy industry is projected to be better off by $100million, meat by $70m, wine by $10m, manufactured goods by $10m, forestry by $9m, fish by $8m, wool by $4m, and so on.

It has been estimated that in 10 years’ time New Zealand will have had the equivalent of another 1 per cent GDP added to the economy as a result of the TPP, ie, our economy will be worth an extra $2 billion.

The TPP is likely to be positive for the ICT industry. New Zealand has retained its policy of excluding software from being patentable, helpful for New Zealand ICT

“The TPP is likely to be positive for the ICT industry. New Zealand has retained its policy of excluding software from being patentable, helpful for New Zealand ICT companies that would have otherwise have faced a prohibitive penalty regime favouring US software patent-holders.” companies that would have otherwise have faced a prohibitive penalty regime favouring US software patent-holders. Our digital industry has experienced rapid growth recently and is well positioned for more.

Tourism is another industry that is positioned well for the future. It has been a star performer in 2015, helped along by a lower NZ dollar, and this is likely to continue in 2016. High numbers of tourists through 2015 were good for the retail and hospitality sectors.

Migrants coming to New Zealand are bringing another kind of economic boost.

Strong migration growth has supported many aspects of the economy including retail and construction growth, and this is likely to continue.

Energetic, innovative businesses and an enabling environment for enterprise delivered a good result for the New Zealand economy in 2015, and have set a good foundation for growth in 2016.

• Phil O’Reilly is chief executive of BusinessNZ. Visit www.businessnz.org.nz This is Phil’s final column, as he is leaving BusinessNZ this month. Best wishes and thanks for your helpful insights Phil!

BusinessPlus December 2015

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COMMENTARY

By Jonathan Gardiner

review process. The terms and conditions of certain supply agreements prohibit your engaging competing waste service suppliers for such reviews. This serves the interests of your incumbent supplier, whilst limiting the breadth of ideas and potential technologies available.

Evaluating waste services Businesses need to get the best possible pricing and contract terms for utilities such as water, power and rubbish collection.

commercial contracts on their behalf, we have observed the following potential pitfalls:

But once costs are minimised, improved utilisation becomes critical to extracting greater value. And a formal, independent audit process is the best way of identifying quick wins.

• Staff training: New waste-handling process may require either specialised staff training or socialising of new ideas. This entails additional cost, and the purported benefits may be predicated on unrealistic assumptions.

• Staff buy-in: Change needs to be adopted from the top down, however, if staff aren’t on board with a new process, you could be charged for specialist one-off disposal of spoiled recyclables should waste not be accurately sorted. It is thus important to ascertain the time pressures on your staff before a new initiative is accepted.

Hospitality customers are a happy hunting ground for waste diversion suggestions given that their raw materials often come in recyclable packaging, and food waste streams result. However, this industry is fundamentally deadline-focussed, and staff are less likely to worry about what goes in a particular bin when there are orders backing up. A suggestion to save money on waste may thus end up costing you more in staff time.

• Spread the message and keep it current: Ensure you spread the waste diversion message beyond a small number of staff.

This has cropped up in the education sector where a particular year/age group might push hard for an improved process, but the next year is more apathetic. A few years later a similar set of failed initiatives will be suggested by an enthusiastic set of newcomers, unaware of what was previously attempted.

In the past two years the waste services marketplace has experienced aggressive price-cutting by major suppliers. Now they are differentiating themselves with service offerings, and their customers need to understand how.

In recent months two vertically integrated suppliers have signalled their intention to emphasise value-added recycling and waste minimisation processes over pricecutting going forward. Other suppliers of waste services that don’t possess their own landfills are using waste audit services as a point of difference, to avoid getting dragged into a price-cutting battle they will struggle to win.

Business customers will save more money by sending less waste to the rubbish dump (landfill) than they will from a reduction in the price of waste services.

From a supplier’s standpoint, waste audits are costly, requiring staff time and data analysis, with capital outlays often the consequence of the resulting recommendations. Waste audits are also self-defeating for those in the business of collecting and burying rubbish.

As we have been working with businesses to reduce their waste quantities and bin movements, as well as negotiate new

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BusinessPlus December 2015

Audit waste expenditure Challenge current processes and the underpinning assumptions with an audit

The Commerce Commission moved in 2015 to limit unfair contract terms, which cause an imbalance in parties’ rights in consumer contracts. Although the intention is to focus on the non-commercial sector, energy retailers have begun rolling out more enduser friendly terms to business customers.

It is our hope that the relevant waste industry participants will adopt a similar position to allow for a greater spread of waste minimisation ideas.

Waste diversion reduces cost Other than the obvious desire to limit landfill refuse, to extend the life of these expensive assets and minimise resource wastage, there are currently obvious financial pay offs in diverting waste. These are likely to grow in future, either with a change of Government, or with a change in Government focus.

A waste levy of $10 per tonne is already in place to help reduce the amount of waste New Zealanders generate, but the levy is set at a level 10 times below that of some of New Zealand’s regular trading partners.

In addition, the Emissions Trading Scheme covers methane emitted from landfills, but only for every second tonne at present.

Energy-savings initiatives by business are hampered by relatively low energypricing, and the same sort of thinking will undoubtedly apply with regard to waste services. However, given the current level of these charges vis-à-vis our international trading partners, we recommend business remediates as much as possible now rather than face higher costs in the future.

With the components of your waste services charges unlikely to fall any lower, diverting waste from landfill such as with increased recycling, is the best way to unlock additional savings and insulate your business from potential cost blowouts in future.

• Jonathan Gardiner is a director of Total Utilities. Visit www.tumg.co.nz

We could tell you why it’s good to offer your employees Southern Cross health insurance, but kids like Brya put it best.

Read about how Brya’s dad’s employer, Foster Construction, helped them by offering Southern Cross health insurance at healthybusiness.co.nz Call us on 0800 GET COVER or talk to your Adviser.

Let’s get a healthier team

NEWS COMMENTARY

New board to steer the ship EMA welcomes its newly elected voluntary board for 2015-16, which comprises: Laurie Margrain (chair) Open Country Dairy Andrew Hunt Kinetics Group Andrew Phipps University of Auckland Charles Black Goodwood Industries Chris Davis Rinnai NZ Colleen Stairmand Diabetes Auckland David Jack Permark Industries David Thomas Winstone Wallboards Derek Rankin Rankin Treasury Advisory Graham Mountfort Douglas Pharmaceuticals James Watson ASB Bank Margaret Brown COGITA Holdings Margret Gracie New Zealand Steel Richard Pearson EnviroWaste Stephen Hughes Masport Laurie has announced this will be his final term as chair.

Please find photos of a number of board members, taken at the AGM, on p31.

L-r: Kim Campbell [EMA chief executive], Laurie Margrain [EMA board chair] and Chris Davis [EMA board member]

ISO quality management system refreshed The internationally recognised certification system for measuring and proving a company’s product quality, “ISO 9001 Quality Management Systems – Requirements”, has been brought into the 21st century after being revised this year, says Standards New Zealand that develops and publishes standards.

This flagship international standard has been revised to reflect new technology,

greater access to information, higher customer expectations, globalisation, and the increasing importance of service industries.

If you want increased customer satisfaction, reduced risk, improved processes, increased efficiency, a competitive edge, and easier expansion into new markets, ISO 9001:2015 will help you achieve this. The 2015 version can also be easily integrated with other

management systems.

All the requirements of ISO 9001:2015 are generic and are intended to be applicable to any organization, regardless of its type or size, or the products and services it provides.

Developed by the International Standards Organisation, ISO 9001:2015 can be purchased on the Standards New Zealand website, www.standards.co.nz

Capital gains tax of sorts comes into force Bright-line legislation has been passed in Parliament to ensure property speculators pay their fair share of tax.

The new bright-line measures will require income tax to be paid on any gains from residential property purchased on or after 1 October 2015 and sold within two years.

The exceptions are an owner’s main home, inherited property, and the transfer of relationship property.

Proposals in the Taxation (Bright-line Test for Residential Land) Bill are part of a threepronged approach to tighten the property investment rules.

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BusinessPlus December 2015

The other two tax-related prongs are: • recently enacted rules requiring buyers and sellers of property to provide an IRD number, and non-residents to also provide the foreign equivalent of an IRD number and a New Zealand bank account number; and • a new bill, proposing a new withholding tax on sales of residential property by people who live overseas and go on to sell the property within two years of purchase.

The withholding tax would come into force on 1 July 2016, following enactment of the Taxation (Residential Land

Withholding Tax, GST on Online Services, and Student Loans) Bill.

Revenue Minister Todd McClay says, “IRD will be watching transactions as part of this requirement to provide IRD numbers at the time of sale.”

IRD has received $62 million in funding over five years for as many as 100 compliance officers, which is expected to generate an additional $420m of tax revenue.

• See BusinessPlus (November 2015) for a description of the bright line tax rules and how they affect business owners.

NEWS COMMENTARY

By Mark Thomas

Government addresses loopy rules The Loopy Rules Report we released recently recommends changes that should deal with the frustrations of EMA members and many others, I’m pleased to say.

The Government launched the Rules Reduction Taskforce in late 2014 to identify loopy rules impacting on property owners, and ways to fix them.

Top of the EMA’s concerns was consenting issues, for example, that the 20-day timeframe for consent applications to be processed by councils was regularly not met.

In our report we refer to the “20-day illusion” and recommend councils develop an endto-end management approach to improve this process, and that they be required to publicly report on their performance times.

Consistency of decision-making was another problem the EMA raised. Our report has a section to “Make it clear what the rules are”, which will define standards more

clearly and require government agencies to improve their rule-making.

EMA commented that customer service was an ongoing issue. The Taskforce determined it was such a problem we wrote a chapter saying a new customer focus was needed for the public sector.

We also agreed with the EMA that the Special Housing Project Office in Auckland Council had proved valuable, and recommend this approach be extended into other parts of consenting at the Council.

The EMA asked why consenting should even sit within a political system, and this led to one of the Taskforce’s most controversial recommendations: that Government work to remove councils from building consenting, by extending selfcertification, as exists with industries such as electricians and gas fitters, to builders.

The Resource Management Act (RMA) was the biggest area of comment. We endorse the Government’s intention to introduce faster and more flexible processes, and to eliminate the need for resource consents for minor or technical breaches.

We make a range of other recommendations concerning fire regulations and occupational health and safety, which we think will also address EMA’s concerns.

You can follow the progress on our recommendations at www.rulesreduction.govt.nz • Mark Thomas was appointed to the Rules Reduction Taskforce by Hon Paula Bennett. He is managing director of Serviceworks, an Auckland based consulting business, and is also a Deputy Chair of the Orakei Local Board on Auckland Council.

Email mark.thomas@service-works.co.nz

Provisional tax doesn’t have to be scary.

With Tax FINANCE you can delay payments to a time that suits you.

Avoid more expensive funding options and keep cash in your business.

For a better tax outcome visit tmnz.co.nz, talk to your tax adviser or call 0800 829 888.

EMA_HP_TF_OT2

BusinessPlus December 2015

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Employment

By Caryn Leitgeb

Prepare your team to sell well Let’s face facts: #1: The single element that differentiates an organisation from its competitors is its sales team. #2: A sales representative position is the hardest vacancy to fill, and it’s a costly process. #3: It takes on average seven months to fully onboard and train a new sales representative, and more than 12 months to see the full benefits.

There are many ways to try and stay ahead of your competitors: cut prices; develop new products; find new sales methodologies; …or invest in your sales team. Looking at the facts above, what do you think is your best option?

Investing in your sales team means keeping them motivated, giving them a great leader and training them continuously.

One of the most common complaints heard from sales managers is “my salespeople aren’t motivated”. That’s possibly because you’re clinging to success models that stopped working years ago.

Sales are no longer about you, the producer.

In the past, sales was all about selling yourself, your products, your features. Now, it’s all about them, the customers.

The new set of rules for selling include: • Label your customers: Clients who are labeled as ‘superior’ tend to buy more.

People like to feel they belong to an elite group of people, and are more likely to take action to feel they belong.

• Play devil’s advocate: Be upfront and admit to your products’ shortcomings before your customer does. Predict their objections and give them solutions. When you do something unexpected (it’s called the power of the contrary), you get immediate attention.

• Surprise reciprocity: In a famous study it was noted that subjects rated others as more likable when the others had simply bought them a can of soda. Even the smallest favour can increase customer loyalty and retention, because it’s not the value of what you get, it’s the fact that something good happened to you. So, surprise your customers with something – anything will do!

• Immediate gratification: We are more prone to buy when we know that our problems can be solved immediately. If you know your customers well, you should be able to predict their next orders, and have some products available right away.

• Have empathy: to get people to buy from you, you need to be able to solve their problems. You do so by listening intently and deeply understanding what your client really wants.

How to attain selling skills Research shows that the top organisations invest first in their sales leadership. Great sales leaders boost morale. Engaged and happy people are high performers, and high

performers reach their targets. Moreover, happy employees don’t leave.

Investing in your sales manager is only part of the solution. Having an exceptional sales team and getting new salespeople up to speed as quickly as possible are the ONLY things that will keep you ahead of the game.

To do so, you need a vigorous orientation and training programme, which includes pre-training, on-the-job training and posttraining. The skills of your team are directly related to your sales results.

An effective sales training programme must address the basic sales elements that include the sales process, planning and research, and listening and questioning.

However, modern selling requires additional skills and understanding such as selfawareness, attitudes and beliefs.

EMA Learning has taken this into account in developing our now-proven, Ultimate Sales Professional training programme.

The programme works with sales people over six months, developing and enhancing their capabilities in strategic thinking, sales planning, persuasive communication and co-creation of value. We demystify sales to help sales rookies operate effectively and to extend seasoned sales professionals so they enjoy phenomenal success.

• Caryn Leitgeb is the EMA Learning portfolio manager for Waikato and the Bay of Plenty. Email caryn.leitgeb@ema.co.nz EMA Learning – Business training at its best.

BOOST SALES

Book Ultimate Sales Professional training for your team.

Visit www.ema.co.nz or email learning@ema.co.nz

14

BusinessPlus December 2015

EMPLOYMENT

Employers remain confident about their business prospects Employers are confident about the business environment, according to EMA’s 2015 End-of-Year Employers Survey, which show most (57 per cent) expect their own businesses to grow in the next six months.

And 53 per cent expect overall business conditions to stay the same in the next six months, rather than to worsen (as expected by 8 per cent). A further 40 per cent expect improvement.

These are early findings in the recentlycompleted, half-yearly Employers Survey.

Overall, responses did not vary significantly from the 2015 Mid-Year Employers Survey.

EMA thanks the 211 members who completed the survey. Conducted twiceyearly, the Employers Survey will next be emailed to you in June 2016 and we hope you can find 15 minutes to fill it in, to help build up a picture for our advocacy efforts and for your comparison with other firms; and for the public and Government to know what’s happening in the business world.

Skills shortage In other results of the End-of-Year Employers Survey, remaining problematic for 67 per cent of employers is finding and recruiting skilled staff, with only 2 per cent saying it is easy.

Employers are finding the greatest difficulty in filling positions for professionals, technicians and managers, as depicted in the table below: Job position

Employers finding position hard to fill

%

Professionals

32

Technicians

24

Managers

22

Sales workers

15

Machinery operators

13

Service workers

11

Labourers

8

Clerical/Administrative

6

Other positions

28

Most employers plan to meet their skills needs during the next 12 months by employing staff with required experience (52 per cent), and/or upskilling those who don’t have the experience (50 per cent). A large number of employers prefer to retain existing staff on the job (48 per cent).

Other avenues for recruiting include: Recruitment sources

Employers planning to recruit this way

%

• • • • • •

solving abilities Relevant work experience Qualifications obtained Subjects undertaken Student results obtained University attended International capabilities

As a way to improve work-readiness, more than 28 per cent of employers have developed business links with secondary schools, and 37 per cent with universities.

Taking on an apprentice

24

Immigration

Employing contractors

16

Seeking skilled migrants

15

The survey also collected information on the 30 per cent of respondents who are recruiting using immigration to obtain skilled employees. The majority (51 per cent) of these rate the process as being difficult.

Ageing workforce In most cases (51 per cent), employers employ staff older than 65 years of age.

And 63 per cent say they are prepared for an ageing workforce.

House price rises House prices were a new measure in the survey. Rising house prices have affected 21 per cent of employers surveyed. The effects of this are: Effects of rising Concerned, among house prices on affected employers employment

%

Staff are travelling longer distances to work

79

Applicants expect higher remuneration

78

Decrease in applicants for jobs

55

Higher turnover of staff

42

Work-readiness In a continuing trend, 35 per cent of employers are not satisfied with the workreadiness of school leavers; and only 12 per cent are satisfied.

Employers rank the most important factor when recruiting tertiary graduates, in order of priority: • Fit with our business culture • Personal skills/team work/problem

Health and safety Most employers are ready for changes in the Health and Safety at Work Act, which comes into force on April 4th, 2016. Our survey shows how familiar employers are with aspects of the law: Familiarity with the health and safety law

Employers

%

Directors are active in understanding due diligence with their business

75

Prepared for the Act

65

Familiar with the new Act

64

Familiar with ‘general risk and workplace regulations’

64

Familiar with employee engagement and participation and 64 representation Have a clear understanding of the law affecting multi-PCBU workplaces

50

More results can be found at www.ema.co.nz BusinessPlus December 2015

15

Employment CHAT

Misleading role description and Q. My new manager says the job is not what she expected it to be, and she is not happy. How can I keep her? – Nev

Dear Nev If you and she signed an employment agreement with the job description incorporated, there should be no argument that the job differs from what was offered, and she might be driven to resign due to her false expectations.

Unless of course she can convince you that you haven’t honoured that job description or you know she is correct.

Has she in fact being doing the job you offered her, or just part of it? Has it been

“Perhaps there is an issue with communication and the clarity of the job description – have you abused its vagueness? Is it fair that her understanding and expectations could differ from what you intended for the role?”

made clear that her full responsibility will develop in time, if that is the case? Or that the opportunities that are the most exciting aspects of the job are in fact rare and haven’t cropped up yet? Did you misrepresent the role to her?

Perhaps there is an issue with communication and the clarity of the job description – have you abused its vagueness? Is it fair that her understanding and expectations could differ from what you intended for the role?

If so, you could expect her to resign and potentially look for a reason (such as constructive dismissal) to lodge a personal grievance claim.

Let’s try and salvage the situation and avoid that expensive outcome!

If you are unhappy with her performance, you could instigate a performance review.

But that doesn’t sound like it’s the case.

A better outcome could be to discuss with her what she expected, where the role falls short, and agree to adjust her day-to-day activities to suit her expectations and the role you offered in the first place.

Where there is clear disconnect between

ADVICE AND SUPPORT WHEN YOU NEED IT. Free call NZ 0800 300 362 AU 1800 300 362 Visit www.ema.co.nz

16

BusinessPlus December 2015

“If so, you could expect her to resign and potentially look for a reason (such as constructive dismissal) to lodge a personal grievance claim. Let’s try and salvage the situation and avoid that expensive outcome!” the job description and the actual work requirements re-write the description so it is clear and truly reflects the role while still ensuring there is some flexibility around work requirements.

And of course if you have no written or even verbal agreement to a job description (other than a job title and some vague verbal instructions), this is the time to get it formalised and make everyone happy.

Q. A young German tourist has come in looking for work and from what I can gather he’d be perfect here over summer.

What checks do I need to do on him, and is he covered by New Zealand or German employment law? – Scott

We’ve got a team of advisors, lawyers and consultants who’ll do more than take the case - they’ll help you build a workplace for the future.

AdviceLine

Member-Only Resources

Don’t just get information – get advice you can rely on from industry specialists.

A library of knowledge, tested in the courts and all in one place.

A free, confidential telephone service providing employers with up to date, direct and practical advice.

Our member only resources allow you to download templates for all the difficult jobs that face employers - like Employment Agreements and OH&S.

Employment CHAT

holiday visa conundrum Dear Scott First of all he needs a valid work visa of some kind – which may be either in his passport or on a letter from Immigration New Zealand.

Immigration NZ has unlimited places available annually under the Working Holiday Scheme (WHS) to young citizens (aged 18-30) of the Federal Republic of Germany, for a stay of 12 months. The rules vary for each country the migrants are from.

If he already holds a work visa, you should check its conditions. Some work visas will specify the company name, location and job title for which the visa is granted. So, they can’t start working for you until those details have been changed.

In most cases, the candidate will need a job offer before applying for a work visa, though some migrants already hold an ‘open’ work visa to work for any employer.

It’s really important that they present you with the correct documents. As an employer, you could be prosecuted and fined up to $10,000 if you employ someone who is breaching their visa conditions. If you employ them while knowing they’re not allowed to work, the fine increases

“As an employer, you could be prosecuted and fined up to $10,000 if you employ someone who is breaching their visa conditions.” to $50,000. If you exploit a worker who you know is not allowed to work in New Zealand, then the maximum fine is $100,000 and/or seven years in prison.

But you don’t have to do all the work – in fact it’s against the law for employers to offer immigration advice to job applicants.

Your German applicant has to get that advice from a licensed advisor (and some exempt people, such as a lawyer). EMA refers members to Malcolm Pacific advisers or anyone of your own choosing.

And finally, your German traveller works here under NZ employment law.

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 NZ), and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email advice@ ema.co.nz

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• By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s AdviceLine. All names are fictional.

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17

EMPLOYMENT

Mars New Zealand crowned as country’s Best Workplace 2015 The global provider of business technology solutions for human resources, IBM Kenexa that is listed on the New York Stock Exchange, has awarded Mars New Zealand the title of New Zealand’s “Overall Best Workplace of 2015”.

Mars also won the category for Best Medium-Large Workplace (with 150-399 employees), which it has won seven times since 2007.

It beat almost 200 organisations to receive this year’s top award in New Zealand’s longest-running and largest measure of employee engagement. The awards, now in their 16th year, are based on employees’ ratings of their workplace in a confidential online survey across 12 key metrics including leadership, culture, recognition and engagement.

Mars New Zealand is one of the country’s leading consumer brands companies providing New Zealanders with an extensive range of products in the categories of pet care (eg, Whiskas, Pedigree, Dine and My Dog), chocolate (eg, M&Ms, Mars, Snickers and Milky Way) and other food (eg, Uncle Ben’s, Dolmio and Masterfoods). Mars Inc is a globally-run, privately-owned company with more than 75,000 employees worldwide.

IBM Smarter Workforce for New Zealand senior consultant, Leighton Abbot, congratulated Mars on their achievement, which demonstrates on-going commitment to provide a great working environment for their staff.

He said, “Mars New Zealand has been a leading light for organisations looking to improve performance through engaged people for many years now. With support ranging from a flexible, pet-friendly environment to world-class learning and development through ‘Mars University,’ Mars employees have what they need, to do a great job.

“It is inspiring to see an organisation

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BusinessPlus December 2015

L-r: Rob Lee (managing director of IBM NZ), Gerry Lynch (general manager of Mars NZ) and Leighton Abbot (senior consultant, IBM Smarter Workforce).

commit long-term to building and maintaining such a positive culture – they show us all what is possible.”

Ten-year league members • Flight Centre (NZ) • Overland Footwear

This year more than 30,000 employees from 193 New Zealand organisations representing private and public sectors participated in the survey. Forty workplaces reached ‘finalist’ status and 19 were winners, including across the five employee size categories: Small Workplace, Small-Medium Workplace, Medium-Large Workplace, Large Workplace and Enterprise Workplace.

Five-year league members • AA Insurance • ADInstruments • Brother International NZ • FMG • Hyundai Motors New Zealand • Mars New Zealand • Office of the Electricity and Gas Complaints Commissioner • Soltius New Zealand • South Taranaki District Council • Trade Me • Warehouse Stationery

The winners are: Best Workplaces in each size category • Office of the Electricity and Gas Complaints Commissioner - Best Small Workplace, • Hilti - Best Small-Medium Workplace, • Mars New Zealand - Best Medium-Large Workplace, • FMG - Best Large Workplace, and • VTNZ - Best Enterprise Workplace.

Most Improved organisations in each size category • Motor Trade Association - Most Improved Small Workplace, • Careers New Zealand - Most Improved Small-Medium Workplace, • New Zealand King Salmon - Most Improved Medium Workplace, • AA Insurance - Most Improved Large Workplace, and • 2degrees - Most Improved Enterprise Workplace.

About the IBM Kenexa Best Workplaces Survey and Awards This is New Zealand’s largest and longest running study of workplace climate and employee engagement. The annual programme identifies the best places to work in New Zealand as rated by their employees, across 12 key categories including leadership, development, recognition and employee engagement.

The programme is proudly supported

by Kiwibank, the Employers and Manufacturers Association (EMA) and AUT Faculty of Business and Law. For more information on the IBM Kenexa Best Workplaces Survey and Awards and a full list of the finalists and winners, go to: www.bestworkplaces.co.nz Follow the conversation at #BestWorkNZ

EMPLOYMENT

Pre-employment test confuses worker, leads to PG claim Dismissal for inadequate performance within her 90-day trial led a hair salon worker to claim she was unjustifiably dismissed, alleging the trial period was invalid.

agreement, which she signed. She started work on December 10, but by January 19 performance concerns were discussed with her and on January 28 she was dismissed.

In her personal grievance claim Ms Hansen said the trial was not valid because she performed a “voluntary pre-employment test”, and was therefore already an employee three days later when she agreed to the 90-day trial.

The Authority concluded Ms Hansen had been justifiably dismissed under a valid 90-day trial period, and was not owed wages for the period of the voluntary preemployment test.

The Employment Relations Authority found in favour of the employer, Fusion Salon, for taking careful steps to ensure that the preemployment work test did not constitute employment under the Employment Relations Act 2000.

The events begin with Fusion Salon interviewing Ms Hansen about covering a fixed term maternity leave position, and she agreeing to volunteer at the salon for a day on December 6, so Fusion could ascertain her suitability as a colourist/intermediate.

On December 8, Fusion Salon sent Ms Hansen a letter of offer “subject to a 90day trial period”, and an employment

Employers can mitigate the risk of worktesting before offering employment, by: • ensuring the applicant’s understanding of the arrangement, and setting the parameters as the employer did in this case; • not providing any kind of reward for the test; • ensuring any test or work done does not benefit the business other than for the purposes of recruitment; and • limiting any test to that necessary for assessing the person’s skills.

• From EMA’s AdviceLine team.

AdviceLine hours during Christmas and New Year season The AdviceLine team helps members to be proactive and informed in ensuring statutory compliance and best practice in dealing with employment relationships. The team operates a freephone line for members, from 8am to 8pm weekdays. But the hours over the holiday season are: Thursday, December 24 8am - 5pm Friday, December 25 Christmas Day closed Monday, December 28 Boxing Day holiday - closed Tuesday, December 29 9am – 5pm Wednesday, December 30 9am – 5pm Thursday, December 31 9am – 5pm Friday, January 1 New Year’s Day - closed Monday, January 4 New Year holiday - closed Tuesday, January 5 – Friday, January 8 8am – 5.30pm Monday, January 11 onwards 8am – 8pm Contact AdviceLine on 0800 300 362 in New Zealand or 1800 300 362 from Australia. Email advice@ema.co.nz

BusinessPlus December 2015

19

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IN BUSINESS

By Joanna Doolan

Reining in the season of goodwill The season of goodwill is upon us and Christmas celebrations are in full swing.

Whether you are planning a Christmas party, a lunch, a gift or similar for your staff, there are tax implications to add into your cash flow budgets.

I appreciate all this will be very taxing and put a dampener on the Christmas spirit, however, the message is: do not let your generosity in the season of goodwill overshadow your correct tax status.

If you cannot be bothered sorting through the tax implications of a celebration, the answer is to have a “bring your own” Christmas morning tea and donate your savings to a worthy cause. Providing your donation is to an approved charity and you are making profits, you will get a deduction from your company profits for the amount donated, so you may want to up the amount to cover the tax benefit you get.

For anything else, let’s recap the rules.

Entertainment tax applies to parties, dinners out, work functions, hosting at shows and similar. For these events, you get an income tax deduction for 50 per cent of what you spend, and you will need to pay GST on the non-deductible amount (in the GST return covering the period in which you file your income tax return).

The good news is, if entertainment expenditure limitations apply, fringe benefit tax (FBT) doesn’t, and vice versa.

Determining whether to apply an entertainment deduction restriction or the FBT rules is easy. Entertainment takes precedence unless the employee: • can choose when to receive or use the benefit; or • does not receive or use the benefit in the course of employment duties.

For example, you are hosting clients at the horse races, so hand out invites to your executive team as their Christmas gift.

expenditure limitations will apply to the latter - because the employees can choose when to enjoy this benefit.

If the races are in the course of employment duties, the employer can claim a 50 per cent entertainment deduction; if not, the employer will be liable for FBT.

Not happy with that idea either, you might decide it is best to give Christmas hampers or bottles of wine. These are likely to be subject to FBT since the employee can choose when to enjoy the gift. However, since the gift attracts a liability for FBT, its cost should be fully deductible.

For the rest of the staff let’s assume you honour them with a Christmas morning tea on your business premises: this should be fully deductible because the 50 per cent limitation rule does not apply to light refreshments such as morning teas. FBT should also not apply to this benefit, as it is being provided on the employer’s premises and, therefore, falls under the “on-premises” exemption.

More scenarios Let’s say you decide to cancel the morning tea and hold a full-on Christmas party, and even hire some blow-up sheep for entertainment. Expenditure on the food and drink is 50 per cent deductible under the entertainment expenditure regime. Incidental expenditure such as hiring crockery, wait staff or a band/DJ and the blow-up sheep will also be 50 per cent deductible.

If, instead of hosting a Christmas party, you decide to take all your staff to the Cook Islands and provide training on the entertainment rules and an update on the strategic direction of the business for 2016, for example, there’s good news! The entertainment expenditure limitation rule doesn’t apply outside New Zealand. And FBT will not apply, as the benefit is received in the course of employment.

If you decide that trip looks a bit expensive and you narrow the group down to your top executives, and give the rest of the staff a voucher to take their families to a local restaurant, FBT and not entertainment

When FBT applies, there is what is known as “unclassified benefits” and if gifts are under a minimum value threshold, they are exempt from FBT. That is, you are not liable for FBT if you pay FBT on a quarterly basis and give non-specific benefits (or “unclassified benefits” using the legislation terminology) that cost, in total, $300 or less per employee per FBT quarter, and in the current and previous three FBT quarters you provided benefits of $22,500 or less for all your employees.

If you account for FBT on an annual or incomeyear basis, you will also be exempt if the total taxable value of unclassified benefits does not exceed $1,200 per employee or $22,500 for all employees, per annum.

Common examples of unclassified benefits are Christmas gifts, childcare, travel or vouchers.

Don’t forget the $300 is an aggregate threshold.

If, on the other hand, your gift is food or drink, the expenditure may only be 50 per cent deductible, since there is deemed to be a private benefit. The cost of taking a client out for a pre-Christmas lunch or dinner should also generally be 50 per cent deductible due to a deemed private element.

Aside from these sobering messages, have a fantastic Christmas.

• Joanna Doolan is a Tax Partner with EY. Email joanna.doolan@nz.ey.com BusinessPlus December 2015

21

IN BUSINESS

By Dave Jaques

Good governance covers all bases, wards off failure As we come to a close in 2015, I invite you to “get smart” and potentially work less, but achieve greater results in 2016.

It is a fact that an enterprise with good governance principles in place will always do much better than one without. This is because there is less ‘noise’ around – and much more ‘seeing the woods for the trees’.

This in turn directly leads to less risk and more opportunities.

However, I realise many of us are so busy actually running our business we feel we have no time to stop and investigate whether governance would be appropriate for us. Sometimes we think this process might cost too much.

Good governance means holding regular meetings with a balanced group of participants that is mindful of the growth cycle stage of your enterprise – as discussed in previous articles in BusinessPlus this year.

I cannot think of any better way to emphasis this need than by giving an insight into the following true case study.

Case Study: How to kill a successful business My client company was owned by a fairly clever individual. You could probably say he was a high achiever in many aspects of his life from a young age. He obtained a university degree and did well in the ‘School of Hard Knocks.’

In 1998 he discovered an opportunity to modernise an old machine-based product – essentially making it go ‘digital’.

He invested in completing that process but then found no-one wanted to buy it, as they were unsure the new technology would be reliable. Since the client was also the inventor of the technology it was easy for him to guarantee the reliability, so he overcame the lack of sales interest by renting the product out instead of attempting to sell it.

22

BusinessPlus December 2015

“On the day the phone call came through everyone was in shock. The finance company itself had gone into receivership from unrelated deals going bad.”

As time went by people became more comfortable with the future of digital products and sales began to increase alongside the rental ledger.

As a natural progression, the company started exporting finished product to Australia and the UK and entered into licence agreements for turn-key manufacturing in South America and South Africa (to hedge against the effect of the exchange rate).

As revenue grew the company moved from having facilities with several finance companies to having a single unlimited facility with a finance wholesaler. The company was authorised to administer its own loans as it saw fit.

One basket At this stage sales were $5million a year.

Income from the rental ledger alone was approximately $650,000 a year and the equipment was 18 months away from being completely freehold. Since the company was making a margin on finance it was using, the sales team talked most customers into doing a ‘rent to buy’ instead of paying cash for the product.

This enterprise was led by our dynamic entrepreneur – going from strength to strength. It did not hold any board meetings and as a result did not have a clearly defined forward plan, nor any closeoff or auditing of past performance. But, why would you need this when everything was going so well?!

I’m not sure if you have noticed in reading this case study, but in not practising the principles of good governance this highgrowth company failed to notice all its eggs were in one basked in using a single

finance facility to underwrite virtually all its business.

On the day the phone call came through everyone was in shock: the finance company itself had gone into receivership from unrelated deals going bad. Even though our client had a zero default on a ledger worth several million dollars the company was on ‘stop credit’. Of the $220,000 worth of orders under production that month, none of the company’s clients could pay, which presented an immediate cash flow issue.

Going, going, gone To cut a long story short, this single event caused the company to go into a vertical stall and other parties held back looking for a bargain from the pieces. The company defaulted in multiple areas and 12 months later sold for 90 per cent less than it was otherwise worth.

The moral of the story? Whether you’re a high-growth company going gangbusters or one that is experiencing trouble on a daily basis, doing “governance” well means a combination of checking for risk, managing opportunities, and essentially getting a long term plan that ensures a stable and sustainable operation. It does not have to be time-consuming or expensive, but it needs to be done.

Make sure you have your best year yet and in 2016 make some enquiries about getting good governance practices in place in your enterprise.

• Dave Jaques LLB NZIM is managing director of Good Governance NZ Ltd focusing on educating SMEs on good governance, and providing independent company directors to SMEs. Visit www. goodgovernance.co.nz

IN BUSINESS

include an incentive to answer a short questionnaire, eg, entry in the draw to win their purchase price back or to win a bottle of champagne.

“The most effective way to find out why your customers are purchasing your product is simply to ask!”

Beating off the competition Differentiation is one of the most strategic activities that you can engage in, as a business-to-business (B2B) company.

When clients are faced with a plethora of potential businesses to choose from – what makes them want to choose you over another?

Too many businesses make the mistake of trying to copy-cat what their competitors are doing. A lot of marketing money is wasted trying to match up. It’s not about matching competitors; it’s about defining what makes you different from them – your uniqueness.

It may take some soul-searching, but if you can take the time to understand your Unique Selling Point (USP), you will stand out from the crowd, your marketing efforts will be more targeted and you will therefore have a higher sales strike rate.

Defining your USP Your USP needs to clearly articulate the benefits of your product/service to your consumers. It needs to offer them something that a competitor’s product can’t or doesn’t already offer them. And it needs to be compelling enough to the customer, to switch them over to you. To do this you’ll need to get a clear idea of who your competitors are, and what they are offering.

A good starting point therefore, is to list the benefits or features of your product or service and then undertake a comparison with your competitors’ offerings. Highlight

those benefits that your product or service offers, but your competitors do not, or cannot offer. It will begin to become obvious where your products are similar, and where they differentiate.

Next, take some time to look at your competitors’ advertising and marketing material – be it websites, brochures, television advertisements, magazine advertisements, etc. Understand where they are positioning themselves in the market: what benefits are they pushing, what angle are they taking with their marketing campaigns? What do they believe they are best at? Obviously there’s no point wasting time and money going head to head with them on the same sort of proposition. You need to ensure your proposition is unique to you.

Remember price is important, but it is never the only reason that people purchase your product or service. Many other factors come into play, depending on the needs of the customer. Take the time to understand why they would want to purchase your product – is it because it is practical?

Reliable? Glamorous? Convenient?

The most effective way to find out why your customers are purchasing your product is simply to ask! At point of purchase or at a follow-up opportunity, ask them key questions such as: Can you rate our service? Can you rate our product quality and reliability? Would you recommend us? Why/why not? If appropriate, you may even want to

The information you glean from this sort of feedback will be invaluable in understanding the real reason that your customers are buying from you rather than your competitors and also importantly, if they are likely to return again and again as opposed to switching to a competitor’s offering.

These insights assist with obtaining clarity around your brand and clarity of the marketing direction required to achieve successful advertising campaigns and encourage customers to switch to your brand. The purchase process is often a daunting one for a customer. You need to take the hard work out of that process by clearly communicating to them the benefits of your product/service over another.

Promoting your USP Now craft your USP into a short, concise statement: one that can be easily understood by your customers; one that you could easily communicate to them; and most importantly, one that you and your customers will believe.

Once you’ve narrowed this down, take time to investigate current market trends, both nationally and internationally, to screen your USP. Is it a USP that is in line with where the market is heading? Will it have longevity?

Once you have formalised your USP - own it. Believe it. Communicate it to your customers via your website, advertising campaigns and marketing material. Ensure that all aspects of your business reflect your USP, including service, the sales process, even the atmosphere or look of your store (if appropriate).

Stand out from the crowd. Advertise what makes you special, and encourage customers to switch to you.

• Rosina Webb is founder and managing director of Energise & Associates that consults with businesses wanting growth through effective marketing and sales performance. www.energise.net.nz BusinessPlus December 2015

23

International TRADE

New anti-bribery legislation s m e st sy ty ri g te in r fo r a b s e is ra A new law brings New Zealand more into line with international legislation on the matter of corruption in business, making an integrity compliance system more urgent for traders.

The recently passed Organised Crime and Anti-Corruption Omnibus Bill, divided into 15 amendment acts, should now enable New Zealand to ratify the UN Convention Against Corruption, which we signed in 2003.

The Bill’s key changes in foreign bribery that business should think hard about are: • Facilitation payments and their documentation, • Companies are liable for actions of employees (including agents, directors and officers), unless they can show documented steps to prevent bribery, and • Penalties are not trivial, with fines up to $5 million and imprisonment up to seven years!

Risks and enforcement There has been a geographical shift in the countries we do business with. As New Zealand’s trading partners have changed, so have risks in foreign bribery and corruption. Although New Zealand is considered one of the least corrupt countries in the world in Transparency International’s Corruption Perceptions Index, the same cannot be said of all our trading partners.

Sadly it is very likely that many New Zealand businesses operating overseas are not taking foreign bribery risks seriously.

Deloitte’s 2015 survey of New Zealand and Australian companies showed that 40 per cent of organisations with offshore operations do not have, or are not known to have, a formal compliance programme in place to manage corruption risks.

What’s at stake? The international perception of New Zealand business and our brand are critical to our future growth.

Corrupt behaviour will have negative

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BusinessPlus December 2015

effects on a company’s reputation, and on the wider perception of New Zealand that is seen as people and businesses with a high degree of honesty and integrity. Once our reputation is gone, it’s gone. What value can anyone place on that? Billions of dollars is a likelihood.

Major risks go beyond reputation to direct financial penalties and imprisonment, not only under New Zealand legislation, but also under other countries’ jurisdictions.

For example: • Non-compliance with the US Foreign Corrupt Practices Act has resulted in heavy penalties for both US and non-US based companies and organisations.

• The UK Bribery Act affects any New Zealand companies with offices or operations in the UK. • Both these acts cover any foreign bribery acts committed in third countries.

International enforcement is tightening as well. For example, China is now taking a much harder stance on corruption as part of showing the world its market credibility.

The New Zealand Serious Fraud Office (SFO) is showing a willingness to pursue foreign corruption cases - at present it has a number of investigations ongoing.

Compliance programme An effective compliance system is likely to prevent you falling into a bribery/ corruption trap. Another good argument for developing an integrity compliance system is that it is a defense under New Zealand law and international legislation if an incident does occur.

No compliance programme can eliminate all risks, but showing a robust system in place, rather than pleading ignorance of the risks, will serve you far better in a court of law.

Building a compliance system doesn’t need to be complicated, but it should: • be in proportion to your risk profile,

• have top-level commitment, and • identify the main risks to your organisation .

Transparency International has worked with business and other players over the years developing tools and best practice to prevent bribery and corruption. In addition to Transparency’s Corruption Assessment toolbox, is the free e-learning tool developed with Business New Zealand and the SFO.

‘Facilitation payments’ Probably the most contentious part of the new legislation is ‘facilitation payments’ that are commonly defined as “small value payments to minor foreign government officials to expedite the performance of a ‘routine government action’” such as to ensure a consignment of goods is released on time rather than purposely delayed.

Although they are allowed, the amendment to the Companies Act requires all facilitation payments to be wellrecorded. However, it is usually difficult to distinguish a facilitation payment from a bribe. It is also difficult to record any documentation to support a facilitation payment, as in most cases they are illegal in the countries where they occur, so no valid receipts are likely.

Unsurprisingly, making these payments is strongly discouraged by the SFO, the Ministry of Justice and Transparency International New Zealand. Would business be able to properly show their validity, and prevent a slide into totally illegal bribes?

So the best advice when developing an ethics programme is to prohibit them: a bribe is a bribe no matter what the amount.

• By Daniel King and Brendon Wilson on behalf of Transparency International New Zealand. Visit www.transparency.org.nz

International TRADE

By Nada Young

Little things matter in

exporting to Asia Exporting food and beverage (F&B) to high growth Asian markets is all about the details.

International trade is a complex beast and even for the most seasoned exporter there comes a time when a small detail overlooked has expensive and time-consuming repercussions. This is particularly true for F&B exporters who must operate within a heavily regulated environment.

Governments in Asia take food safety very seriously and any breach of regulations or threat to public health can have significant repercussions.

Take for example the botulism scare that rocked Fonterra (and the New Zealand food industry at large) in 2013. A “false positive” test result in New Zealand sent our dairy exports to Asia into turmoil. The Asian media reacted savagely and dairy exports plummeted. Fonterra was fined for the error, but the toll on the dairy export sector was heavy and long lasting.

For most exporters, one of the most detail-oriented times is when it comes to delivering an order. The process usually goes something like this: 1. Settle payment terms; 2. Schedule production; 3. Book space on a ship or flight; 4. Organise export documentation; 5. Deliver the goods.

The process seems simple enough, but ask any exporter and they will tell you that these five little tasks can take countless hours and cause inordinate amounts of stress.

I recall a particularly high pressure incident that woke me at 4am in Hong Kong, frantically on the phone to New Zealand (where it was 8am), trying to track down a missing piece of export documentation vital to clearing a shipment of chilled, short shelf life, high-value goods that would be landing in Kuala Lumpur in less than six hours. If the correct set of documents was not presented, Malaysia Customs would

hold the shipment, racking up expensive storage fees, losing precious days of shelf life and taking up a good deal of everyone’s time. Worse still, Customs could have destroyed the whole shipment and fined the importer.

Mercifully, the oversight was quickly resolved and thanks to a great display of cross-discipline teamwork, the cargo cleared without any delays.

It takes absolute focus and dedication to compete in international markets.

Methodically working through every step and drawing on the strength of a skilled team of people contributes significantly towards long-term success.

• Nada Young is Asia Market Director at Incite assisting New Zealand’s exporters access export markets in Asia.

Visit www.exportincite.com

Product labelling for international markets is especially prone to error. I’ve seen the future of well-established companies put in jeopardy because of basic details, such as erroneous labelling on an order: because the labelling conflicted with local regulations, the buyer rejected the goods and the product was destroyed, in accordance with local law.

The exporter had to bare all costs. In the blink of an eye, a lucrative sale turned into a tremendously expensive disaster.

Another exporter I know sent goods to their customer with a competing distributor’s sticker on the product. A lot of effort was invested in smoothing ruffled feathers.

BusinessPlus December 2015

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International TRADE

By Catherine Beard

Why

collaboration is good for Kiwi companies At ExportNZ we’re big supporters of the mantra “collaborate onshore to compete offshore”.

Having such a small domestic market means we lack companies of scale and when they go offshore it makes it harder to compete with relatively smaller balance sheets.

Collaboration is one way to scale up quickly and share some costs along the way. It’s also a useful way to leverage “Brand New Zealand” and the values associated with it. For example, 20 years ago New Zealand was hardly known for its wine. Now it has a high quality reputation.

A good example is evident in the Hawke’s Bay Wine Growers Association - the winner of the DHL Collaboration in Export Award category at our ExportNZ awards in Hawke’s Bay this year. This group of wineries from the region is taking advantage of the growing Chinese wine market by banding together.

In the case of wine, it helps that it is intrinsically linked to the land, so when telling the story of a brand you can start with the country, then look at the region and then work down to the winery’s brand.

Collaboration doesn’t have to be formalised by legislation or a Government initiative.

Firms can take the initiative themselves.

Pacific Prime Wines, a joint venture of five New Zealand wineries, is also a good model of collaboration. It established its own US importing business and secured distribution into 14 states in just nine months.

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It has been able to leverage off the resources of five medium sized businesses to create an enterprise with sufficient scale to tackle a major market worth $40 billion.

We are always looking out for good examples of collaboration to inspire exporters to gain more heft by collectivising with others where it makes sense.

Evidence of success, support growing Indigenous NZ Cuisine (INZC) was initiated to help facilitate Maori food and beverage exporters to grow. INZC is a cluster of 31 Maori food and beverage businesses producing niche, branded food and beverage products, and succeeding through a shared sales and marketing collaboration platform.

With a market focus on Australia and Hong Kong, the cluster has a variety of producers from seasoned exporters such as Okains Bay Seafood, Taku Honey and Tiki Wines, to ‘new to export’ companies.

If you look at all of our exporters of scale, many of them have started out as collaborations – particularly in the primary sector. As well as the more wellknown examples of collaborative Kiwi successes such as Zespri and Fonterra, there are other fantastic examples in the food and beverage industry including for greenshell mussels, avocadoes and venison.

As well as the grower collaborations, there are also commercial marketing collaborations, including more recently, boutique brewers.

In February this year, a collaboration of five New Zealand craft beer breweries signed a deal with international drinks distributor, Instil Drinks Co. The comapny began working as a distribution agent in Britain for Yeastie Boys and Tuatara Breweries in Wellington, Renaissance Brewing from Blenheim, 8 Wired Brewing Co from Warkworth and Three Boys Brewery from Christchurch.

The breweries make up the New Zealand Craft Beer Collective, designed to get their beer out to the world.

Tuatara Brewery chief executive Richard Shirtcliffe confirmed that collaboration provided “huge advantages” in planning, freight, distribution, logistics and market representation.

We have encouraged New Zealand Trade and Enterprise (NZTE) to look at supporting collaborations, having seen how successful they are for Denmark, and there is a lot of academic literature to show they pay off. NZTE is now including the support of company-led collaborations in its export support services and we expect some good things to come out of that.

Successful collaboration usually comes down to good relationships and similar values and goals. Sometimes relationships take time to develop, and going on trade missions as a group is a good way to form bonds and explore synergies.

• Catherine Beard is the executive director of ExportNZ, email cbeard@exportnewzealand.org.nz

International TRADE Book Review

Reinventing the Silk Road Title: China’s New Economic Silk Road - The Great Eurasian Game and The String of Pearls

Westward routes in the north linked Kazakhstan, Central Asia and Persia to ports in Mediterranean Turkey; others went via Pakistan across the Arabian Sea; from Xi’an, the ancient Chinese capital, towards Tibet then south to Calcutta; another skirted Burma and connected by sea to Malaysia, Indonesia thence west to Colombo and Africa.

route will bring Chinese goods to Europe in 10 days.

Publisher/cost: Asia Briefing, available at www.AsiaBriefing.com in electronic format or print, $US29.99.

Jumping to today, the Ellis thesis states the Silk Road objectives are three, which are to:

Reviewer: Gilbert Peterson

• Secure energy supplies,

Tajikistan signed a US$800 million agricultural agreement last year to send crops to Henan in China and is negotiating the renovation of its aluminium and power plants.

• Create and secure the social environment in which trade can flourish, and

This year India and China signed agreements for $22bn of investment.

• Develop and install the necessary infrastructure for it.

Ellis lists all the countries involved across each different Silk Road route, with the latest investment tallies and developments itemised.

Author: Chris Devonshire Ellis, chairman of Dezan, Shiraz and Associates, a foreign direct investment practice he founded in 1992, with offices throughout Asia.

The new “Silk Road Economic Belt” is the Chinese grand plan that seeks to bring into the present day the same interconnected system of trade, culture and social intercourse that its predecessor did in ancient times.

In this way the author, Ellis, introduces his tightly researched account of China’s ambitions for the imminent future.

China’s New Economic Silk Road is an up-to-theminute exposition of the scale of China’s ever burgeoning global presence, with countless facts and figures to illustrate the case.

It’s an easy read and an important reference book.

The ancient Silk Road consisted of a number of routes carrying a huge variety of goods. It linked cities across China, Central Asia, India and the Caspian and Caucasian countries to reach Europe and North Africa.

To attain these objectives will require an immense diplomatic effort negotiating other nations’ participation, and this too will change the world’s geopolitical face as much as the trade it nurtures.

Strategy underway Oil- and mineral-rich Kazakhstan was where, in 2013, China’s President Xi Jinping first mentioned the Silk Road “One Belt, One Strategy”.

Trade between Kazakhstan and China is rising annually by 20 per cent; last December the two countries signed 30 agreements worth $US14 billion for power plants, nuclear fuel and uranium mines.

When completed in 2020, a new Kazakh rail

Likewise Turkmenistan, which accounts for 40 per cent of China’s natural gas imports. A rail link finished there last year is used mainly for transporting wheat from Kazakhstan’s agricultural north to Iran.

He also takes care to cover the political agreements, free trade agreements (FTAs) and other pacts involved, along with descriptions of the various economic instruments used to incentivise industry and trade. He explains the critical China ASEAN FTA. Ellis quotes a Muslim in Turkmenistan: “We need Mandarin to deal with the Chinese.

Everywhere else, Russian. Plus Arabic we know from studying the Koran. ...You can’t be here and refuse to do business with the Chinese. It would be stupid. The Chinese make peace come from this trade. And as a Muslim man I desire peace in this world.”

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Member PROFILE

Rayglass boats built

on reputation

“Ask anyone here at Rayglass what business we’re in and they will say, ‘We’re in the people business.’”

Rayglass’ chief executive Dave Larsen uses these very words to emphasize the boat-building company’s commitment to customers.

Dave started at Rayglass as an apprentice marine mechanic 17 years ago and now he’s running the company. Along the way he worked in the service department, the fit-out line, sales and marketing, took a year out to follow the America’s Cup circuit, went to university for a few years, and then became general manager.

He’s been chief executive since 2013, the year Rayglass grew net profit 147 per cent.

And the results have been startling since, with about 40 per cent of the company’ earnings consistently coming from exports.

Net profit lifted by 300 per cent in 2014, and 156 per cent this financial year.

The company was established in 1985

by Tony Hembrow to become a leading quality manufacturer of power boats, and the winner of many awards.

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“We focus on what we can control. The exchange rate is an external factor we have no control over. We try and park it. We trade in Kiwi dollars.

Disaster triggers change

Customer commitment

At the start of 2007 the lamination plant burnt down. The business had to decide whether to rebuild or take the insurance money and fade away. It decided to get back to business, but the disaster triggered change.

“What we can control is our commitment to the customer and when our work gets to the customer there can be no failure.

“We ensure our work is recognised as the highest quality and people will pay a premium for that.”

A year ago Rayglass had 50 staff on the payroll in Auckland; now it has 60, plus another 12 in Hamilton.

“But it’s always a challenge finding good committed staff to bring on board with a team that is genuinely the industry’s best,” Dave says.

“We need new staff to be committed to our brand, to know what it means to work for Rayglass, and to understand how we engage with our customers.

“We’re big on our apprenticeship programme – that’s how I started my career.”

For example, Rayglass was judged winner of “Excellence in Exporting” at the Westpac Business South Awards this year.

He adds, any young person wanting to work and learn, and looking for a career in the marine industry, is welcome.

In addition, the Rayglass Legend 2800 boat was voted “Overall Winner – Boat of the Show 2015” at the Hutchwilco NZ Boat Show - for the fifth time.

Rayglass invests heavily in new product development and design; the spending on research and development (R&D) is 10 per cent of revenue.

Dave says the company has remained on its growth trajectory in both main markets, Europe and the US, by looking after its dealer networks and making sure it stays in tune with how end users use their boats.

For instance, he says, “We sell a lot of diesels here, whereas in the US they sell a lot of outboards.

A world first, its Selectable Engine Transom has reduced manufacturing lead time by 80 per cent and allows 95 per cent of a boat’s production to be completed before matching it to any possible choice of engine power options, whether single outboard, twin outboard, petrol stern drive, diesel stern drive or water jet.

BusinessPlus December 2015

However, around the time of the GFC in 2007-8, life wasn’t all plain sailing for Rayglass.

Says Dave: “That’s when we started the refit programme, and besides, a lot of suppliers depend on us - upholsterers, stainless steel fabricators, sign writers. We became more cross-functional and diversified to protect the leisure spend which will always be cyclical.”

Rayglass developed its Protector range of service work boats supplying sectors such as government, federal, whale-watching, oil and gas, emergency response and superyachts.

He says, “We go to all the boat shows in New Zealand and I go to the US at least twice a year - once to the Florida boat show. We nurture our existing customers, and get into their networks and we’re always on the lookout for repeat orders and ways to add to the Rayglass reputation.”

Dave is repeatedly quick and effusive in his praise for the entire Rayglass team.

And its US owner, the giant Brunswick: how is that working out? “They’re 100 per cent hands off,” Dave says. “They’re great people, and we have a fantastic relationship with them. We couldn’t ask for a better set-up.

“We’re still a big Yamaha dealer (Brunswick owns Mercury) and next March we’re expanding into a new part of the market with the launch of the Rayglass Legend 3500.”

Member PROFILE

Bruce Thomasen beside chairlifts that bring back customers and carts after the luge ride at Skyline.

Skyline, the super playground at Rotorua Skyline is hosting four million luge rides a year worldwide, since designing the adrenalin experience in Rotorua 30 years ago.

And these days in Rotorua, there are plenty of other incentives to visit the Skyline experience. Three high thrill reasons spring to mind: the SkySwing, the Zoom Zipline and gondola-assisted mountain biking (for all ages and abilities).

For those who are more physically challenged there are the walking trails, Stratosfare restaurant, Jelly Belly (100 flavours candy store), a food market kitchen, the Volcanic Hills winery, and the latest - stargazing.

Outer suburb Ngongotaha is rated a top spot in New Zealand for exploring the night sky, and Skyline has advanced telescopes there to help you do it.

Over the past three years Skyline has invested $6 million in developing its Rotorua suite of attractions and is actively looking for more.

The company’s general manager in Rotorua, Bruce Thomasen, says, “We’re in the business of giving people a great memory and a lot of fun.

“What we’re lucky to have is 100 acres and a lot of gravity.”

Bruce was previously in charge of developing the company’s luge operations and for five years travelled the world studying what adrenalin experiences worked and what didn’t.

He oversaw the company’s luge run developments in Singapore and Canada, and one about to open in Korea.

“We’re celebrating 30 years in business this year and crucial to our success has been the drive to innovate and improve the customer experience.”

BusinessPlus December 2015

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Member PROFILE

mountain biking location for the world’s biggest Skyline is New Zealand’s host .

2017 to 2015 Tour from festival, the Crankworx World

The luge was invented by former Queenstown resident Hylton Hensman but it was in Rotorua where he introduced the famous ride commercially.

Bruce outlined what drives the 200-person company now. He says the key moment four years ago was setting a big goal: to achieve 50 per cent growth in revenue within five years. They knocked that off in three years, when staff numbered just 180.

The next big goal set last year is to achieve 50 per cent profit growth before interest and tax (EBIT), again within five years.

Bruce says they’re on track.

But to reach ambitious targets like these he says they knew they had to come up with new revenue streams, and better processes and people skills to manage them.

Lean and keen In the quest for the lift in efficiency and productivity, they called in Lean specialist Clinton Yeats, who presents EMA’s Lean seminars for members.

The first year involved bringing the staff up to speed on why and how they could overhaul the company’s performance, and making sure the staff were on board with the grunty goals for growth. By the end

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BusinessPlus December 2015

of the second year the changes brought about were transformational, Bruce says.

“The aim of our Skyline Edge of Excellence (S.E.E) programme is to make the business easier, better, more efficient, and safer.

“As a result we are now hosting more visitors per staff; we use better systems and have boosted productivity.

“In the end it’s simply about continuous improvement.”

One of the biggest and lasting benefits of the S.E.E programme is increased staff involvement with safety and quality, and teamwork. There is a strong sense of ownership and willingness to take on new ideas and make the changes necessary.

Staff satisfaction in all categories has increased and overall satisfaction increased from 68 per cent to 90 per cent.

The results are also paying off financially.

According to their Annual Report last year the Rotorua operation achieved 30 per cent growth in revenue. The consolidated Skyline Group made $63m profit before tax on sales of $163m and has assets valued at $360m, with all areas of the business showing substantial growth.

But for the Rotorua staff, the immediate causes for celebration have been the highest accolades heaped on them, including the 2015 supreme winner of the Air New Zealand Supreme Tourism Industry Association Awards, where the company also won the category of Business Excellence – Annual Turnover over $6 million.

Bruce says, “We’re celebrating 30 years in business this year and crucial to our success has been the drive to innovate and improve the customer experience.”

And the outlook for future growth?

Bruce grins, “Mountain biking is the new golf, and dirt the new snow.”

Skyline is the host location for the world’s biggest mountain biking festival - the third stop of the Crankworx World Tour from 2015 to 2017, which includes France and Canada.

The first year of the New Zealand leg of the event last March attracted 724 of the world’s best riders, 150 media and 24,000 visits over five days.

It propelled New Zealand into the world’s top mountain biking destinations, and was worth $3.4 million to the Rotorua economy.

Out & About Out & About

EMA’s Annual Annual General General Meeting, Meeting, Auckland Auckland EMA’s

Melissa Chan [Bellingham Wallace] and Melissa Chan [Bellingham Paul Yeo [EMA]Wallace] and Paul Yeo [EMA]

Carl Bennett [Bellingham Wallace] and Carl Bennett and Chris Davis [Bellingham [EMA board,Wallace] Rinnai NZ] Chris Davis [EMA board, Rinnai NZ]

Kim Campbell [EMA] and Richard Kim Campbell [EMA]EnviroWaste] and Richard Pearson [EMA board, Pearson [EMA board, EnviroWaste]

Mauro Barsi Barsi and and Roger Roger Carson Carson [EMA] [EMA] Mauro

Helen Orr Orr [Aro [Aro Arataki Arataki Children’s Children’s Helen Centre] and and Val Val Hayes Hayes [EMA] [EMA] Centre]

Simon Holdsworth Holdsworth [Holdson] [Holdson] and and Colleen Colleen Simon Stairmand [EMA [EMA board, board, Diabetes Diabetes Auckland] Auckland] Stairmand

Andrew Andrew Hunt Hunt [EMA [EMA board, board, Kinetics Kinetics Group] Group] and and Laurie Laurie Margrain Margrain [EMA [EMA board board president, president, Open Open Country Country Dairy] Dairy]

Derek Derek Rankin Rankin [EMA [EMA board, board, Rankin Rankin Treasury Treasury Advisory], Advisory], Graham Graham Painter Painter [Trade [Trade Consultants] Consultants] and and David David Thomas Thomas [EMA [EMA board, board, Winstone Winstone Wallboards] Wallboards]

Nicola Pohlen [Pohlen Partners] and Lyn Nicola Pohlen [Pohlen Partners] and Lyn Kirkham [AHG Associated Practices] Kirkham [AHG Associated Practices]

Jeff Williamson [Mainprice King] and Jeff Williamson [Mainprice King] and Janet and John King [EMA] Janet and John King [EMA]

Graham Graham Kearns Kearns [ExportNZ [ExportNZ Auckland, Auckland, Kearns Kearns Services], Services], Margaret Margaret Brown Brown [EMA [EMA board, board, COGITA COGITA Holdings] Holdings]

Guest speaker Craig Foss, Minister for Guest speaker Craig Foss, Minister for Small Business Small Business

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