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Published b y t h e E m p l o y er s & M a n u f a c t u r e r s A s s o c i a t i o n Inc
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Issue 95 - August 2012
Marketing a new kiwifruit juice
The costs of personal grievances
More smart government interventions wanted
In this issue: • Having an affair at work? • Suspending employees risky • CHINA THOUGHTS... • More changes coming to RMA
Commercialising IP:
What the experts advise
Contents 1
Business Plus is published by : The Employers and Manufacturers Association (Northern) Inc
On the cover...
159 Khyber Pass Rd, Grafton, Private Bag 92066, Victoria Street West, Auckland 1142 Ph: 09 367 0909 or 0800 800 362 Email: ema@ema.co.nz Website: www.ema.co.nz
Here we have the marketing department at Elliotts King of Kiwi. Marley is the son of a friend of the founder Glenn Elliott and a big fan of the kiwifruit drink. He really wanted to help… and let his sister Iris in on the action too. For more go to page 23
Chief Executive: Kim Campbell Advocacy Manager: Bruce Goldsworthy Manager, Employment: David Lowe Manager EMA Learning: David Foley Manager EMA Membership & Marketing: Mauro Barsi Whangarei Louise Morrison 09 459 1501 mob 027 6870604 Waikato Denis Quigan 07 823 9311 Russell Drake 07 838 0018 Max McGowan 09 570 1289
mob 027 203 0694 mob 021 686 621 mob 027 241 4608
Bay of Plenty Terry Arnold 07 575 8401 Patrick Brus 07 542 2295
mob 021 662 656 mob 021 758 714
Rotorua / Taupo / South Waikato / Whakatane Clive Thomson 07 348 0334 mob 0274 372 808
23
Advocacy 02
EMA: advocacy at work
03 More smart interventions vital By EMA CEO Kim Campbell
12
02
Good governance is for everyone from Phil O’Reilly CEO BusinessNZ
14 Changes signaled for resource management law, again
News 04
EMA AdviceLine ‘fantastic service’ survey
05 Navigating through the social media revolution
18
06 Personal grievance cases fall 22%: employers and workers ‘batten down the hatches’ 11
Assurances given on TPP
15
New era for minerals exploration
18
Who revived the electric car? Kiwis!
Editor Gilbert Peterson Ph: 09 367 0916 gilbert.peterson@ema.co.nz
21
China thoughts...
Writer Mary MacKinven mary.mackinven@ema.co.nz
23
- A juicy story about kiwifruit
- Nightside re-energises aircraft engine turbines
Business Plus
Published by Mediaweb Project Manager Anthony Stead 021 215 9632
22 Exporters accentuate the positive: 2012 Survey
Advice 08 Having an affair at work, and what can I do about all these absences? Employment Chat
Advertising Sales Colin Gestro (09) 444 9158 colin@affinityads.com
10
ISSN No. 1176-4953
16
Suspending an employee very risky
10 Should an employer help with financial literacy at work?
23
24 25
Navigating the Value Gap
Our Vision. Your Success
2 Advocacy
EMA: advocacy at work New Zealand faring better than most r Oliver Hartwich, the new executive director of the New Zealand Initiative, addressed EMA’s Policy Forum on amongst other things, housing affordability, the positioning of New Zealand in the world economy, the EU, Australia’s outlook and growth worldwide. He suggested “New Zealand is doing as well as, if not better than, many countries.” He said the Euro was never going to work and Australia is not the most appropriate benchmark for New Zealand.
D
(l-r) Garth Wyllie [EMA], Warwick Hawker [Ministry of Foreign Affairs and Trade (MFAT)], Graham Kearns [NZ China Trade Association], Rodney Harris [Ambassador of NZ to Riyadh, Saudi Arabia], Kim Campbell [EMA] and Pita Cammock (Middle East and Africa Division of MFAT]
Jury still out on mayoral powers MA strongly recommends current draft changes to the local government legislation not include executive powers for other New Zealand mayors until the Auckland experiment has had more time to prove its worth. This was one comment in EMA’s submission on the Local Government Act 2002 Amendment Bill seeking to clarify the purpose of local government, governance issues, financial prudence and streamlining council re-organisation procedures. While EMA advocated for an Executive Mayor for Auckland, we also wanted counterbalancing mechanisms. The jury is still out on whether the Auckland model of an Executive Mayor is a success. For instance, mayoral control in Auckland seems responsible for the rationing of information to Auckland’s councillors which should often be available to them as it allows for the proper testing of decisions and part of accountability. EMA supports the Bill’s aim to improve local government’s delivery of public services through effective planning and consenting processes, minimising the rates burden on business (as prescribed in the Shand Report), limiting excessive debt consistent with providing intergenerational equity, and providing good quality infrastructure.
E
CEO talks to Waikato University on business links MA CEO Kim Campbell shared views last month on closing the gap between the education and business sectors. The occasion in Hamilton celebrated Waikato University’s unique internship programme for placing students from the Management School into businesses for work experience. Forty students across a range of business disciplines have been placed locally.
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Ambassador to Riyadh and MFAT officials visit. rade opportunities for NZ business with Saudi Arabia, including investment and
T
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export, were on the agenda when New Zealand’s new Ambassador to Saudi Arabia visited. Viet Nam Food Forum ietnam’s Vice Minister for Agriculture and Rural Development, Diep Kinh Tan, was key speaker at a business matching workshop for Kiwis and Vietnamese in Auckland. Vietnam is keen to promote the large range of foodrelated products they have available. The New Zealand response was Diep Kinh Tan from AssureQuality Oritain and Plant and Food Research promoting Kiwi food science expertise.
V
EMA contributes to international workplace health and safety standards MA’s manager of Occupational Health and Safety (OH&S), Paul Jarvie, has just returned from the International Network of Safety and Health Practitioners Organisations (INSHPO) in Moscow. The international organisation Paul Jarvie met to discuss draft standards to apply to the qualifications and professional development of OH&S practitioners around the world.
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Heatley on minerals exploration t a lunch meeting on August 7th Energy Minister Phil Heatley covered off three new Bills coming up that will change minerals exploration law, and more on the plans for future oil and gas drilling. Details are on page 15.
A Phil Heatley
By Kim Campbell, Chief Executive, EMA
Advocacy 3
More smart interventions vital (First published in NBR, July 27th, 2012)
Our economy has not made the sort of progress most of us hoped it could. Our real GDP per capita in 2010 ranked us 24th of 34 countries; in 1990 we were on a par with Ireland and Singapore but a decade later both had vastly surpassed us; in 1960 we were amongst the top five wealthiest countries.
T
he decline explains why our education, health and welfare are under siege. It means that while our standard of living and lifestyle is still attractive, in terms of our income per head we have been going backwards.What can be done to stop the slide? We have been listening to Professor Goran Roos, an internationally renowned Swedish expert in manufacturing. He said we should set about creating more jobs in manufacturing. He pointed out that manufacturing jobs are the highest value, and we should set our sights on achieving many more of them. For every job created in manufacturing from two to five further jobs are created elsewhere in the economy, requiring logistics, accounting, design, advertising, and so on. We also know from work by Sir Paul Callaghan and others that a job in New Zealand manufacturing generates revenue averaging over $400,000 whereas a job in tourism generates just over $80,000. High value and capital intensive manufacturing jobs such as those in Fisher & Paykel Healthcare and Fonterra respectively deliver revenues over $800,000 per employee. We asked the professor: How can a small economy like ours add more value, for instance, to the ship loads of logs and other commodities leaving our shores every day? I found the answer telling and insightful. The goods we export as undifferentiated commodities represent the legacy of our colonial past.The business model set up for
our economy was to provide the UK with raw materials so their workers would have resources to add value to, and either consume there or sell back to us, and others, in the form of textiles, clothing, and other branded, high value manufactured goods. It’s little different today. We have failed to shake off our colonial past. Except now we sell the bulk of our commodities to China, Korea, Japan and other countries where they add the most value then sell it into prized markets such as the US and Europe where a small part of our product output must compete with them. This backward business model seems to have gotten into our DNA.We need to overhaul it, and to do that we need the government to introduce more smart interventions. Classical neo liberal economics would have us believe any intervention is heresy. For two decades we were told the market would sort it out, given time. That hasn’t worked out so well.The finance sector is a recent painful example. Another is our slow-to-arrive ultra fast broadband. Our rail network clearly needed government intervention. Which interventions, and how much should New Zealand invest to attract more high value manufacturing activity to rebuild our economic growth? As Professor Roos remarked, constructive intervention is likely to be more desirable and important the smaller an economy is. So if it’s good for an economy the size of the US, how much more so for ours? In the US President Obama outlined the sort of interventions being planned in his State of the Nation speech on January 24th this year.The premise he set was that manufacturing is the main means by which innovation and productivity keep America on the cutting edge, hence his blueprint for manufacturing would deliver higher paying
jobs and many spillover benefits to the rest of the economy. Its interventions will, amongst other things, cut the company tax rate for manufacturers to 25 per cent, and less for high tech firms, extend and simplify their Kim Campbell R&D tax credits system, invest heavily in skills training, and build a string of manufacturing institutes across the nation. Professor Roos added that in New Zealand an intervention to address the processing of our commodities, which doesn’t fall foul of WTO trade rules, could be a form of export tax.That is, placing a duty on a commodity that is reduced in proportion to the value added, and which is notified in advance and introduced over time. The axe wielding forester and tractor brigade, and other interests will no doubt send up a huge cry of outrage, even though such an intervention would make them and the country better off. It would cut in half the number of trees harvested, employ more people, impact the roads far less, and generate higher margins. Similar objections could be addressed for other agricultural products where the highest value is earned from them, not in New Zealand, but offshore by those distributing and retailing them. Herein lies the dilemma: How to manage the transition to appease those who benefit from the current, sub optimal situation? However the purpose of this article is not to come up with quick answers but raise the debate. Under what circumstances and by how much could we reduce the company tax rate as in the US to stimulate investment in manufacturing and/or exporting? Would an export tax be a useful way to stimulate investment in New Zealand? If neither, how will we stop the rot? What genuine and serious action is acceptable for New Zealand to become a vibrant economy once again?
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4 News
EMA AdviceLine ‘fantastic service’: survey The employment advice offered freely to members through EMA’s AdviceLine has been rated highly in every respect by callers.
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he phone service, open from 8am to 8pm weekdays except for public holidays, is also accessed by email. Each year EMA surveys more than 1000 members who have used the service in recent months. We know in business that time is money, and no one wants to wait when they have urgent or stressful employment issues to discuss. So EMA is pleased that when it comes to the promptness of advisers answering the calls, 99% of callers rated them ‘excellent’, ‘very good’ or ‘good’. Once connected with an AdviceLine adviser, callers continued to be impressed. They found the attention given professional, friendly and empathetic. 98% rated the advisers handling their call as ‘excellent’, ‘very good’ or ‘good’ in these respects. The quality of the advice given was also found to be ‘excellent’, ‘very good’ or ‘good’ for 95% of callers. Overall, the EMA AdviceLine service was rated ‘excellent’, ‘very good’ or ‘good’ by 98% of callers. On each measure, the service rated ‘excellent’ or ‘very good’ for more than 80% of callers. For the online employment advice
available at www.ema.co.nz just 65% rated it ‘excellent’ or ‘very good’. We are planning to look at that, as there may be room to improve. Online resources include templates and guidelines on specific employment issues covering topics from absenteeism to work-life balance and which members can download for free. Following is a selection of comments from survey participants: • The team do a fantastic job, the advice is much appreciated. Keep up the great work! • Fantastic service and worth being a member of EMA for. Have recommended to other companies as it is superb. • We are Australia-based and it is excellent.
• T he AdviceLine is a great place to call to review issues and ideas/approaches to tackle these. All staff are always happy to ‘chew the fat’ on the tricky issues, while providing informed advice. • Your service has always been excellent, people very knowledgeable and helpful. • It’s a fabulous resource. The email survey this year was from 284 respondents (a 21.5% response rate) from the 1300 invited to take part. To join the Employers and Manufacturers Association (EMA) and take advantage of our highly rated, immediate help line, plus many other services, contact sales@ema.co.nz
Adviceline rated top class 60 50 40
Q1 Q2
30
Q3 Q4
20
Q5
10 0
Excellent
Very Good
Good
Fair
Poor
Planning to stay open should a disaster strike
A
new website (www.resilientbusiness. co.nz) has been developed to support New Zealand businesses to stay open after the unexpected happens. Auckland Council has supported the duser-friendly website presenting case studies, tips, articles and basic templates for business continuity planning. Businesses are also asked to complete a short survey tool to gauge their own
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ability to ‘stay open’. The information is organised for varying sizes of business to add to its relevance, from sole traders and entrepreneurs to large businesses and organisations. “It is very important for the New Zealand business community to be resilient,and have continuity plans in place in the event of an unexpected
disruption,” says Clive Manley of Auckland Council. “Businesses provide goods and services and employment, so building resilience into them is critical to making our New Zealand overall more sustainable.” It’s important from the beginning to ensure the website is supported by business and worked for them, he said.
News 5
Navigating through the social media revolution While corporations watched and wondered at the sudden empowerment of their customers, Christopher Barger was leading General Motors social media to build and enhance brand loyalty. Because, like it or not we are in the midst of a digital revolution changing the game for businesses worldwide.
C
hristopher will be sharing his experience and insights at The Project [R]evolution Conference at AUT University on August 30 and 31. He was director of global social media for GM on a range of initiatives including online training, governance and crisis communication to offline advocacy work through events like SxSW, BlogHer and CES.
Before GM, Christopher Secretary of State Hillary Clinton managed social media and the man behind President initiatives and corporate Obama’s highly successful communications for social media strategy during his IBM where some of the victorious election campaign; company’s earliest efforts • Emily Banks, associate editor around influencer marketing, of digital news site Mashable; Christopher Barger podcasting and blogging took • Google chief technology place. advocate Michael T Jones, He is author of The Social former chief technology officer Media Strategist: Build a Successful Program of Keyhold Technologies which from the Inside Out, where he describes became Google earth; and his experiences and provides insights for • ReadWriteWeb founder Richard others in similar situations. MacManus. At The Project [R]evolution Christopher Local experience includes BBR’s Julian will join a powerful line up of speakers Smith talking about brand storytelling, covering all aspects of the social and and commercial lawyer Corin Maberly digital media revolution – from legal advising on outsourcing social media issues through to brand management, to management. government and education. Keynotes include: For more information or to register visit www.the-project.co.nz • Alec Ross, innovation advisor to US
AUT UNIVERSITY, CONFERENCE CENTRE, AUCKLAND, 30 - 31 AUG 2012
JOIN: Alec Ross (US State Dept.) Emily Banks (Mashable) Mike T. Jones (Google) And many more... EARLY BIRD TICKET PRICE EXTENDED and GROUP DEALS AVAILABLE
Partners:
"Join the [R]evolution now - as it will not be televised but will be tweeted!" The Project Revolution Digital and Social Media Conference offers a unique opportunity for business, government and media managers to glean insights, ask questions and mix with some of the leading players in the field.
Places are limited, so register now.
Key support from: Business Plus – Exclusive news, advice, learning and networking
6 News
By David Lowe, EMA’s Manager of Employment Services
Personal grievance cases fall 22%: employers The number of personal grievance cases fell by 22% in 2011 compared to 2010, a sign of the times for both businesses and their employees that the labour market is proving quite difficult for both businesses and people looking for jobs.
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ob opportunities seem to be limited but employers are reporting they are finding it hard to find a good calibre of skilled candidates. So employees are finding it tough to find a job or change jobs, and employers recognise it will be hard to locate good calibre replacements should someone leave. The upshot is both employers and employees are battening down the hatches,
not rocking the boat.The scenario is reflected in the personal grievance statistics. There was a 53% reduction in cases involving employees with less than 90 days service compared to 2010, which reflected the extension of the trial employment period law on 1 April 2011 from small businesses to all businesses. But the introduction of the 90 day grievance-free trial period is not the sole reason for the reduction in personal grievance cases. Cases involving employees with three to six years’ service went down by 43% and those involving people with six or more years’ service reduced by 22%. The national average award for hurt feelings was $4,976, lower than the 2010 average of $5,140.The Wellington region was the most consistent changing only
Personal Grievance Awards Analysis 2011 By Successful Claims
Number of claims compared to 2010
-1% to $5,115.The average hurt feelings payment in Auckland was $4,424 and in Christchurch $6091. Winning and losing finely balanced David Lowe The chances of winning a personal grievance are now finely balanced with 45% of employers winning their cases. Being an EMA member boosts an employer’s chances since 61% of EMA employers successfully defend their actions. Getting advice and getting it from the EMA pays off! Reinstatement has never been a popular remedy. In 2010 when it was the primary remedy, 20 claims were made and reinstatement ordered 12 times. But on 1 April 2011 reinstatement became just one of the remedies available.
NOTE: There has been a change in the methodology used to analyse the cases. To enable a comparison with previous years, the results using the previous methodology are noted in smaller font italics.
2011
2010
2009
2008
Auckland
-34%
-20%
111 in favour of employees out of 201 claims (55% 59%)
166 in favour of employees out of 309 claims (54%)
189 in favour of employees out of 309 claims (61%)
206 in favour of employees out of 301 claims (68%)
Wellington
-28%
-16%
38 in favour of employees out of 75 claims (51% 56%)
65 in favour of employees out of 104 claims (62%)
66 in favour of employees out of 115 claims (57%)
48 in favour of employees out of 81 claims (59%)
Christchurch
-47%
-27%
52 in favour of employees out of 95 claims (55% 65%)
115 in favour of employees out of 178 claims (65%)
85 in favour of employees out of 155 claims (55%)
93 in favour of employees out of 139 claims (67%)
National
-37%
-22%
201 in favour of employees out of 371 claims (54% 60%)
346 in favour of employees out of 591 claims (59%)
340 in favour of employees out of 579 claims (59%)
347 in favour of employees out of 521 claims (67%)
By Hurt & Humiliation
2011
2010
2009
2008
2007
Auckland
$4,424 (-27%)
$6,028 (+27%)
$4,888 (+1%)
$4,851 (-12%)
$5,526 (-4.4%)
Wellington
$5,115 (-1%)
$5,161 (-22%)
$6,593 (+2%)
$6,474 (-24%)
$8,536 (+22%)
Christchurch
$6,091 (+24%)
$4,918 (-5%)
$5,100 (+4%)
$4,896 (-26%)
$6,630 (+16%)
National
$4,976 (-10%)
$5,543 (+8%)
$5,204 (+3%)
$5,067 (-26%)
$6,804 (+10%)
$4,579 (-24%) $5,077 (-2%)
$6,381 (+30%) $5,140 (-7%)
Redundancy
In favour of Employee
Lost Wages
Hurt & Humiliation
Lost Benefits
Penalties
Reinstatement
Auckland
29 out of 40 (72%)
$5,594
$4,403
n/a
$3,167
0 out of 1 (0%)
Wellington
6 out of 11 (55%)
-
$4,750
n/a
n/a
0 out of 0 (0%)
Christchurch
20 out of 26 (77%)
$4,555
$5,447
$15,786*
n/a
0 out of 0 (0%)
National
55 out of 77 (71%)
$5,166
$4,812
$15,786*
$3,167
0 out of 1 (0%)
31 out of 42 (74%) 6 out of 11 (55%)
20 out of 27 (74%) 57 out of 80 (71%)
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News 7
and workers ‘batten down the hatches’ It lost its status as the primary remedy and only 11 claims were made in 2011 with three successful. Cost of winning The total cost of winning and losing continues to climb largely due to increasing legal fees. For both employers and employees, a lot of money is now at stake. But employers who use EMA Legal’s reduced member-fee services have a lesser amount at risk. For example, the Employment Relations Authority commented: “It is commendable that the Employers’ and Manufacturers Association is able to provide a professional legal service at this level of cost. A level that should embarrass if not shame some practitioners…”
The Christchurch factor An interesting area is the big increase in wage arrears cases taken in Christchurch.Whereas about 25 of the national personal grievance claims are heard in Christchurch, the hearings there accounted for 40% of wage arrears claims. Employers may have had some difficulty meeting their obligations after the tragedy of the earthquakes. Law changes With the personal grievance law changing on 1 April 2011 the vast majority of cases for the period that these statistics cover (the 2011 calendar year) were residual matters dealt with under the old law.
The costs Employer To Win
To Lose
Hurt feelings
$0
Hurt feelings
($4,976)
Lost wages
$0
Lost wages
($12,749*)
Legal fees
($16,050)
Legal fees
($16,050)
Costs award
$4,695
Costs award
($2,850)
TOTAL
($11,355)
TOTAL
($36,625)
Employee To Win
To Lose
Hurt feelings
$4,976
Hurt feelings
$0
Lost wages
$12,749*
Lost wages
$0
Legal fees
($9,200)
Legal fees
($9,200)
Costs award
$2,850
Costs award
($4,695)
TOTAL
$11,375
TOTAL
($13,895)
*Average hourly rate from Quarterly Employment Survey (Dec 2011). Average lost wages is three months.
Total Average Costs
Costs award against employer
Employee’s Actual Costs
Percentage
Costs award against employee
Employer’s Actual Costs
Percentage
Auckland
$3,065
$10,286
30%
$5,530
$17,595
31%
Wellington
$2,912
$6,250
47%
$3,026
$12,957
23%
Christchurch
$2,309
$7,278
32%
$3,856
$12,653
30%
National
$2,850
$9,200
31%
$4,695
$16,050
29%
Misconduct/Poor Performance
In favour of Employee
Lost Wages
Hurt & Humiliation
Lost Benefits
Penalties
Reinstatement
Auckland
49 out of 93 (53%)
$5,804
$4,652
$ 540*
$2,250
1 out of 1 (100%)
Wellington
22 out of 33 (67%)
$8,866
$5,390
-
$3,000*
0 out of 2 (0%)
Christchurch
23 out of 45 (51%)
$7,354
$6,400
$16,800**
$1,667
1 out of 2 (50%)
National
94 out of 171 (55%)
$6,970
$5,237
$11,380
$2,150
2 out of 5 (40%)
Lost Benefits
Penalties
Reinstatement 0 out of 0 (0%)
$3,197
$9,871
$2,471
$8,890
$4,390
$10,101
$3,368
$9,988
54 out of 100 (54%)
$7,937
22 out of 33 (67%)
$8,866
26 out of 48 (54%)
$11,017
102 out of 181 (56%)
$8,763
32% 28%
43% 34%
$5,269 $5,390
$7,133
$5,764
$6,165 $3,026
$3,527 $5.043
$ 540*
$14,212
$10,795
$18,130 $12,957
$12,653
$216,522
$2,250
$3,000*
$1,667
$2,150
34% 23%
28% 31%
2 out of 2 (100%) 0 out of 2 (0%)
1 out of 2 (50%)
3 out of 6 (50%)
* Only one decision ** Only two decisions including one of $31K Constructive Dismissal
In favour of Employee
Lost Wages
Hurt & Humiliation
Auckland
10 out of 27 (37%)
$10,817
$5,550
-
-
$5,773
$ 546*
Wellington
2 out of 11 (18%)
$7,280*
$12,500**
$18,860*
$2,000*
0 out of 0 (0%)
Christchurch
4 out of 13 (31%)
$4,541
$7,000
-
-
0 out of 0 (0%)
National
16 out of 51 (31%)
$8,784
$6,781
$18,860*
$2,000*
0 out of 0 (0%)
11 out of 29 (38%)
2 out of 11 (18%)
4 out of 13 (31%)
17 out of 53 (32%)
$10,817
$7,280*
$4,541
$8,784
$12,500**
$7,000
$6,853
$18,860*
$9,703**
0 out of 0 (0%)
$2,000*
$2,000*
0 out of 0 (0%)
0 out of 0 (0%)
0 out of 0 (0%)
* Only one decision ** Only two decisions Business Plus – Exclusive news, advice, learning and networking
8 EMPLOYMENT CHAT
Having an affair at work...? Q. Two of my managers are having a relationship outside work, I’m sure of it – they behave differently now, especially around each other of course. I believe the effect on staff is bad. Is it reasonable to ask them outright…. and what can I do if they are? – Paul Dear Paul Of course relationships are private matters and it is no one’s business if they are having it off at home, even at lunchtimes. (Lunchtime is unpaid private time.) If it matters to you why not try a casual approach saying you have noticed a relationship seems to exist, and you have no problem with that as long as it doesn’t impact on their work. Impacts include job performance, attitude, demeanour and the managers’ management styles. If you have some figures or complaints that indicate reduced job performance, you could try talking informally with them in private and individually, or with the one you know best. Politely ask the question outright. Justify it by saying you have noticed a change in their interaction which may have the effect of embarrassing others or disfavouring them, or makes each of them less available to their immediate reports… or whatever the actual problem is.
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Ask that they be more discreet at work, for example, by not talking openly about their social life together. Say you will also talk to the other party the same way. This alone will probably be enough to sort things out. If not, or if matters get serious, you need to get into the usual performance management process as for any underperformance requirements as laid out in the Employment Agreement and the company policies referred to in it.
“...why not try a casual approach saying you have noticed a relationship seems to exist, and you have no problem with that as long as it doesn’t impact on their work.”
Q. This one employee of mine is always sick, especially on Mondays and Fridays it seems. She is a lovely person – when she is here. But it is really inconvenient not being able to rely on her. What can I do? – Sally
Dear Sally I could almost trot out a prepared script for this oh-so-common scenario. Except of course, every situation has its own nuances. We have an A-Z Guide called Absenteeism which covers the issues involved in identifying and managing regular absences. You can find it at www.ema.co.nz using your EMA member password. Your case seems to be more about frequent absences rather than a long period of time off. Both cause problems in getting the job done. After all, you employ her to do a job and if her role wasn’t needed, you’d have a temp, or no one! However, intermittent absences can sometimes be harder to address than one, single, ongoing period. Her absences might be intermittent because of a single medical condition or injury that keeps re-emerging (eg, asthma or a back injury) or any number of unrelated medical issues or injuries. Where a medical condition results in absence from work you may still review her ongoing employment where the absences are affecting the operational requirements of your business. You should consider, and ideally have, up-to-date medical information about her condition, and how it will affect
WHAT EMPLOYERS ARE ASKING ADVICELINE THIS MONTH
9
And what can I do about all these absences? her ongoing ability to attend work full time. Can you accommodate those absences? Can others cover for her? Does she really want to work part time and would that suit your business? If her intermittent absences are not due to a medical condition, and very often they aren’t, they could be for all sorts of reasons. It is important you give the employee the opportunity to put forward an explanation. You need to consider any relevant reasons for the absences and manage them appropriately. But you do need to actively manage the situation and ensure the employee is aware of your concerns and expectations. You must remember in handling this type of absence you need to be fair and act in good faith. Be open in your communication and consult with the person. Get current and specialist opinion where relevant, and give notice of any intentions you may have to hold a meeting and investi gate the absences. At the end of the process weigh up all the considerations so that any decisions are made after a full and fair inquiry given what a fair and reasonable employer could have done in the circumstances. Q. I believe my firm is sacking me by making me redundant. I believe they don’t
want me as CEO because they want an executive chairman and general manager for personal/ego reasons that will be disastrous for the company. I can’t bear to go home and tell my wife. I don’t believe the firm is struggling or they have grounds.Will you help me take a personal grievance? – Steve Dear Steve We are able to offer you as CEO all the advice you need to manage staff. But I’m sorry to say we act for employers only. So in this case, we cannot take on your case against your employer. I suggest you find a specialist employment lawyer to help you sort out whether you are being constructively dismissed or genuinely made redundant. Alternatively if you decide to walk away, I suggest you take some time out to deal with this nasty side of life… and ensure you have support systems that may or may not include counselling (perhaps through your GP). By the EMA Advocacy team in consultation with EMA Advice, and based on real calls to EMA’s AdviceLine. The information in this article is a guide only and not to be used as business advice without further consultation. EMA members can start with our AdviceLine team at phone 09-367 0909 or 0800 800 362 (within New Zealand),
0800 223 729 Ace Payroll for New Zealand employers.
and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email adviceline@ema.co.nz or read or print information such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, at www. ema.co.nz To inquire about becoming a member to gain access to this free AdviceLine service, please contact EMA Membership at the numbers above or through EMA.co.nz.
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10 Advice
By Erin Burke, Senior Solicitor, EMA Legal
Suspending an employee very risky
(First published in Waikato Times)
When allegations are put to an employee and disciplinary proceedings commenced, it is almost a given you will have one unhappy worker on your hands for a number of weeks, if not months.
justification is very high. is discussed. This can all take some In a nutshell, suspension time. may be justified only in But failure to follow this cases where the risk of procedure may render the industrial sabotage is high suspension unjustified, even (not merely a possibility), if allowing sufficient time to the risk of intimidation and follow the procedure weakens Erin Burke safety of other employees/ the employer’s argument that the witnesses is likely, or where employee needs to be suspended allegations relate to an due to some imminent danger with employee’s negligence or inability to them remaining in the work place. perform safety-sensitive work and there are Suspension really is a time when no other duties available for the employee legal advice is needed, as the facts and to perform. peculiarities of each case are almost A further conundrum is that an limitless, and the risks of ‘getting it wrong’ employee still needs to be consulted about are high. suspension prior to any final decision to suspend, and this requires that the Erin Burke is a senior solicitor with EMA person be given full information on the based in Hamilton. She has lectured in proposal, time to consider it and respond, employment law at the Department of and should ideally allow them to have a Law, University of Waikato and can be support person there when the proposal contacted at: erin.burke@ema.co.nz
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o employers can often wonder whether suspension would be the easiest way to temporarily remove this potential hotbed of disgruntlement and dissatisfaction from the workplace. However, suspension can be a bit of a bear trap even where the employment agreement expressly allows for it and the suspension is on full pay. The problem is that a suspension must be justified, both substantively and procedurally, and the threshold for that
Should an employer help with financial literacy at work?
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any employers may find it hard to see the relevance of personal financial education in their workplace yet its relevance includes helping stressed employees trying to manage their personal debt, and helping with preparing for retirement. Some employers have found it improves productivity and profitability. A consequence is we encourage employers to offer personal financial education to their staff though, understandably, they often resist given the other pressures on their time. However, those that have offered financial education report their staff are less stressed and more productive as a result. As one employer put it, “I thought it was a waste of time initially. But then I realised people don’t know how to do budgeting and they don’t know how to save.The biggest impact is on how people work and how much they produce. If they’re worrying about money it envelops them, they can’t see a way out and they can’t focus on their work.”
Staff in financial strife may have their ability to contribute as a productive team member affected; at worse it could lead to dishonesty and theft. These people need help – they may benefit from one-to-one support from an organisation like Family Budgeting Services (free, confidential budgeting help on 0508 283 438). There will be staff who need to think about KiwiSaver and whether they should join. Many life events occur when people need to reconsider their finances: having a baby, buying a house, separation or the death of a partner – all moments when people need to think carefully about how they will manage financially. The chances are members of your staff will at some point be reaching out for this information. Money Week is being held from 2-8 September. It’s a week of financial education activities.We have free Sorted
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By Diana Crossan, Retirement Commissioner
Diana Crossan
seminars that you could run during Money Week, and free Sorted booklets you can order – all on a range of money topics from budgeting and managing debt to KiwiSaver and investing: sorted.org.nz/partners/ seminars-booklets-ordering. Why not use Money Week as the time to encourage your staff to learn more about everyday money, how to manage their money better and where to find information on how they can do this. The Commission for Financial Literacy & Retirement Income, an autonomous Crown entity, provides free, independent and impartial information about money matters. Our vision is for all New Zealanders to be financially sorted.
News 11
Chief negotiator gives assurance over TPP Chief negotiator on the Trans Pacific Partnership (TPP), David Walker, gave an EMA meeting an assurance this month that the TPP agreement would not be signed unless there was at the least a balance of advantage for New Zealand, and the right of sovereign countries to introduce regulations which are in the public interest will be protected.
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r Walker said the 14th round of the TPP negotiations coming up early September in Virginia would include the two countries that have agreed to join the talks; Canada and Mexico.
He outlined the history of the TPP beginning with the rationale for its establishment in the original P4 agreement between Singapore, Chile, Brunei and New Zealand and for which he was responsible. Mr Walker said the Honolulu round last November laid out the ambition for the negotiations that all parties signed up to. The documents covering all of it are at www.mfat.govt.nz. This ambition covered several points including that the agreement is to be comprehensive, regional, for the 21st century, and for it to be a living document, which means more countries can join and that it can be added to and evolved. There’s no room for new countries joining to stop or back up the processes already underway – ‘they merge from an onramp to a moving stream of traffic
David Walker
onto the TPP highway.’ The big sticking issues in getting the agreement signed off are as previously reported, notably in trade access for products that are politically sensitive, for example in New Zealand’s case access offshore for dairy products, and around the highly complex areas of intellectual property.
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12
Good governance is for everyone We tend to think of governance mostly in terms of public companies listed on stock exchange - where directors have legislated duties, and there’s a formal separation of powers of between shareholders, directors and managers.
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ut all types of enterprise need good governance Most of New Zealand’s enterprises are small or medium sized companies that are both privately held and closely held, where the shareholders are also the directors. Governance is just as important to small firms as to large, listed companies. In fact, many small companies fail to grow because of a lack of governance – the governance gap keeps them small. Community organisations – school boards, for example - also need good governance. Here, the practice of governance helps build successful communities. So good governance is for everyone. But the conduct of public companies in particular is very much in the public eye at the moment, given the losses incurred by shareholders over recent months following the collapse of a number of finance companies. Good governance of public companies is important for the economy, allowing for trust by investors. Here in New Zealand we have a unique situation with a very small number of listed companies – the smallest exchange in the OECD. Instead of listed companies we’ve tended to choose cooperatives and SOEs. NZ has perhaps the highest level of cooperatives in the world - Fonterra and other dairy cooperatives like Westland and Tatua), Silver Fern Farms,
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Foodstuffs, Alliance Group, Ballance, Ravensdown, Paper Plus, Mitre 10, Southern Cross, Plumbing World and others. Our economy also has a large preponderance of state owned enterprises. In the past this has suited our circumstances, but these models do have their limitations. The debate about Fonterra’s Trading Among Farmers has highlighted the limitations of cooperatives – shares aren’t very liquid, and it’s hard to obtain
“...we hear criticism of people being silly to put their money into a finance company, but in fact there weren’t a lot of other options..”
capital investment to grow them. SOEs likewise find it hard to get enough capital to invest to grow. Also, the dominance of SOEs in the economy has effect of squeezing out private sector businesses, holding back our prospects for growth. Our challenge is to get more listed companies. We need a deeper pool in which investments can be made,
so companies can grow and employ more people. Our ‘shallow pool’ of listed companies was a part of the problem in the failure of finance companies both after the 1987 crash & more Phil O’Reilly recently following the global financial crisis. In both instances would-be investors didn’t have a great deal of choice apart from finance companies - there weren’t many other companies to invest in. The situation was even worse in 1987 when inflation was around 18% - there was a positive incentive for people to actively seek higher returns than they could get from banks, and finance companies were a logical choice. After the fact, we hear criticism of people being silly to put their money into a finance company, but in fact there weren’t a lot of other options. We need more listed companies. At the same time, we also need to regain our confidence and trust in sharemarkets. So the new Financial Markets Conduct legislation will help. One way it will help is in better distinguishing between a director A who has wilfully or recklessly or fraudulently destroyed shareholder value, and director B who may have been caught out because the risk profile around the company changed. Under current securities law, director A and director B are both liable for criminal charges and imprisonment. We have seen in recent court appearances some directors who undoubtedly undertook criminal acts and who deserve imprisonment. The amount of damage and loss caused by criminal actions by certain directors has been appalling. But we also have a number of directors who committed no fraud or wilful or reckless acts, but who got caught because the global financial crisis left their companies and their
By Business NZ’s CEO Phil O’Reilly
risk profiles exposed. While their governance was compromised and they clearly performed poorly, with savage results for investors, I wonder if this is on a par with those who committed deliberate fraudulent acts. A law that doesn’t distinguish between deliberate evil wrong doing and poor performance will make it hard to get good directors. You would tend to think twice about becoming a director if you think that you will be deemed criminal for actions where there was no criminal intent. The new legislation will address this by making a clearer demarcation between criminal and civil liability. Also it will be easier to enforce, with a more graduated range of civil offences, with a wider range of sanctions than
“A law that doesn’t distinguish between deliberate evil wrong doing and poor performance will make it hard to get good directors. You would tend to think twice about becoming a director if you think that you will be deemed criminal for actions where there was no criminal intent. ”
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we have now, both more and less severe, and with significantly higher penalties at the upper range. There has been much criticism that our existing legislation in the past hasn’t been enforced. Often our response to a crisis is to make penalties tougher, but not enforce them. Enforcement is essential. We need more listed companies, not less. We need more directors and more diversity among our directors - not less. For everyone to get the best out of it, including shareholders and our communities, we need good governance. Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz
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14 Advocacy
By Gill Chappell
Changes signaled for resource management law, again The current round of recommended changes to the Resource Management Act (RMA) puts the focus on how current and emerging resource management issues should be addressed while reflecting contemporary values and priorities, as it is 20 years after the original Act was passed.
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he proposals are from the independent Technical Advisory Group (TAG) appointed by the Government to review the RMA’s sections 6 and 7. These deal with the “Purpose and Principles” sections of the Act. The TAG’s recommendations form part of the second tranche of the overhaul of the Act promised by the National Government when it came to power in 2008. The first overhaul enacted a new Environmental Protection Authority and allowed consent applicants to approach it and the Environment Court directly, among its effects in 2009. Section 6 deals with “matters of national importance” and section 7 with “other matters” that have a substantial role in shaping and directing how the RMA’s purpose is given effect through local authorities’ planning and decisionmaking. The TAG was also charged with addressing perceived gaps in managing natural hazards identified as a result of the Canterbury earthquakes. The latest proposals, in the TAG’s Report of the Minister for the Environment’s Resource Management Act 1991 Principles, are only a series of “recommendations”, not Government policy. However the group’s first report in 2008 resulted in significant amendments to the Act in 2009 and these recently released recommendations are likely to follow the same route. The Minister for the Environment does
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not intend to formally consult on the report though there is a window of opportunity for feedback. Key proposed changes include the amalgamation of sections 6 and 7, with the addition of several new clauses focusing on natural hazards, the built environment, and infrastructure. Other existing clauses have been redrafted to improve the functioning of the section. Of note is the proposal to focus on the “actual attributes” of landscapes to ensure specific outstanding landscapes or natural features are identified in an operative Regional Policy Statement within five years before they can be said to apply to a particular piece of land. The change, coupled with the removal of reference to “amenity values” as an issue to which decision makers must have regard, will assist rural landowners, many of whom for years have been uncertain about the status of their land and how they might develop it. The changes to section 6 also seek to address the perceived disconnect between developing case law (which has adopted an overall broad judgment approach to matters), and the “environmental bottom lines” language of the Act. Focus on clarity Section 7 is completely rewritten to focus on process issues, an attempt to direct best practice as a principle. It requires decision makers to: • Achieve timely, efficient and costeffective resource management processes; • Limit policy statements and plans to RMA matters; • Use concise and plain language while avoiding repetition; • Have regard to any voluntary form of environmental compensation, offsetting or similar measures; • Promote collaboration between local authorities; and
• A chieve an appropriate balance between public and private interests in the use of land. EMA members will no doubt support the clear articulation of all of these process principles, Gill Chappell particularly TAG’s intention to require council decision makers to better recognise private property rights. The TAG is at pains to note the balance between private and public benefit is not new; the same clause was originally part of the Resource Management Bill when drafted in the early 1990s. New definitions are also proposed for sections 6 and 7 including for the terms “outstanding natural landscapes and features”, “mitigation”, “natural character”, “areas of significant indigenous biodiversity”, “terrestrial habitats” and “aquatic habitats”. There are also a myriad of recommendations associated with the management of natural hazards such as earthquakes and floods, including aligning definitions across multiple pieces of legislation, mandating better information sharing and developing a single natural hazards plan for all regions and districts. A National Environmental Standard or National Policy Statement is also contemplated, as is a comprehensive review of all flood related legislation at some point in the future. A copy of the TAG Report can be found at mfe.govt.nz under “Publications – resource management” and businesses can provide their responses directly to the TAG. Gill Chappell is an Auckland barrister. gkchappell@xtra.co.nz Note: EMA plans to provide feedback on the TAG recommendations on behalf of our members. Anyone wanting to contribute should contact Peter Atkinson at: peter.atkinson@ema. co.nz
News 15
New era for minerals anticipated Mining for oil, gas and minerals in New Zealand is to be facilitated with the Government’s re-write of three laws in particular, says the Minister of Energy and Resources, Phil Heatley.
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r Heatley covered the value that oil and gas mining in New Zealand was delivering – oil is our fourth largest export earner - and how we can make better use of our minerals estate in future. The occasion was an EMA lunch early August on “Responsible Development of New Zealand’s Energy Resources.” Under review currently are the Crown Minerals Act 1991, and the Health and Safety in Employment (Petroleum Exploration and Extraction) Regulations. A new law before Parliament now is the Exclusive Economic Zone Continental Shelf (Environmental
Effects) Bill designed to manage environmental impacts beyond our present 12 mile offshore limit, which is the first time environmental rules have been developed to apply within the New Zealand EEZ. Key changes to be made are: • Amend the purpose of the Bill to incorporate the concept of sustainable management to reflect the Resource Management Act. • Increase the maximum penalty for companies that breach marine consents from $600,000 to $10 million. • Clarify that a transitional period for planned petroleum activities will cover the 2013/14 drilling season; and • Provide a maximum statutory timeframe of six months for a marine consent process. Mr Heatley says the law will provide better protection for the marine
environment and certainty for industry on the regulatory processes affecting investment. The minister also reported on the annual oil and gas exploration regime to apply. Two months ago 23 onshore Phil Heatley and offshore blocks of territory available for competitive tender were made available for oil and gas exploration covering over 40,000 km sq of seabed and 3,300 km sq of land in Waikato, Taranaki, Tasman, the West Coast and Southland regions. Exploration permits will be awarded by the end of the year. Mr Heatley said the Government would release blocks for exploration every year at the same time so international investors knew when to present their proposals, rather than on a first in, first served basis. EMA congratulated the minister on his approach.
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16 Advice
By Justin Ensor and Simon Wilkins
Navigating the Value Gap KPMG research shows that 45% of NZX listed companies are trading below the book value in their accounts, in some cases significantly so.
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he implication is that the market considers just under half the companies trading on the NZX are valued less than their balance sheets would suggest. Historically the market has largely disregarded balance sheets as relevant to value as they represent an historical ‘point in time’ view of a company’s financial position. However with fair value now firmly entrenched in financial reporting standards, more insight is available on the true value of certain assets. Moreover, accounting standards require company management to test book values of assets for impairment on a regular basis. Boards of directors have become increasingly familiar with impairment analysis over the last few years and many companies have recorded impairments to asset values. So what are the causes of this ‘Value Gap’ and what does it mean for directors and company executives and how they retain and attract investors? In our view, while most apparent where P/BV is less than 1, all companies need to develop their own internal view of value and should be alert to differences between internal and external viewpoints. Steps should be taken to understand the drivers for such differences and focus given to closing the gap where possible. So what are the opportunities and challenges a Value Gap represents? The lack of liquidity in the NZ market is often identified as a key reason for stock prices trailing internal value assessments. The consensus view is that many NZ stocks simply do not trade frequently enough to provide meaningful insight into value though comparison with a more liquid ASX indicates this may be overplayed.
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There are some other factors in play that can contribute to a Value Gap. The price of some stocks can be influenced by shareholder configuration such as the presence of a cornerstone shareholder with its own strategic agenda. This may cause uncertainty and speculation on the future direction of a company and the impact on smaller minority shareholders. This translates to how the stock is priced in the market. The impact of the Global Financial Crisis can’t be ignored as the equivalent data in 2007 showed only 21% of NZX companies with a P/BV of less than 1. The Global Financial Crisis (GFC) has demonstrated the global inter-connectivity of different markets and different industry sectors. What happens in Greece, impacts values in New Zealand. In response, the analyst community regularly evaluates companies by reference not only to an understanding of industry fundamentals but also to perceptions of how well company management is addressing and responding to uncertainty. Some companies are choosing to be proactive and upping their game in their market communications beyond standard investor relations management. They are achieving this by improving analytical tools (including internal valuation models) to understand how shocks to the economic environment will impact both their financial performance and business strategy while developing a robust framework for assessing future investment. Taking this approach allows companies to react quickly to market dynamics and get on the ‘front foot’ in engaging with investors about fast changing external and internal developments. Indeed such an approach will dovetail with forthcoming financial reporting requirements (IFRS 13) where additional disclosure will put
key fair value assumptions under the spotlight. Alternatively, companies may review portfolios and look to dispose of non-core or under-performing operations. By communicating this approach to the market they Justin Ensor demonstrate active balance sheet management and the drive to increase shareholder returns. Communicating key drivers of value to the market will provide critical information and insight to the analyst community, and so create a more open dialogue with Simon Wilkins investors. If Boards and executives are really committed to enhancing shareholder value in a relative sense this is a ‘quick win’ when compared to other challenges. Done well appropriate communications can make substantial inroads in bridging the Value Gap between internal and external value perceptions. While understanding liquidity and enhancing investor communications may help bridge the Value Gap, Boards should also consider the other side of the coin. Perhaps company management is too bullish on internal valuations and without sufficient regard to market indicators. The result may mean more robust impairment analysis is required. While 2011 saw an increase in the total value of impairment to $896m, it will be interesting to see how 2012 plays out. A greater regard to external indicators could see a rise in impairments as more companies reflect the realities of an extended period of uncertainty and little or no growth. This could play a significant role in diminishing the Value Gap. Justin Ensor, Partner, Corporate Finance T: +64 (09) 367 5934 E: jmensor@kpmg.co.nz Simon Wilkins, Partner, Corporate Finance T: +64 (09) 363 3480 E: swilkins1@kpmg.co.nz
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18 News - IP Update
Who revived the electric car? Kiwis! For a decade the Business Intelligence series of content-rich workshops has been designed for busy executives, owners, directors, managers, and their advisers by Lowndes Associate lawyers and now partner EMA. The topic in July was “Effective International Commercialisation of Intellectual Property”.
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very technology or technical improvement began as an idea, and as someone’s intellectual property (IP), said EverEdgeIP® chief executive and founder Paul Adams at the latest Business Intelligence breakfast workshop. Adams gave examples of new thinking: alternating current devised by Nikola Tesla 126 years ago; Google created by Larry Page and Sergey Brin 14 years ago. “But many don’t realise the IP or its value,” he said. “Or they think IP only refers to patents.” IP classes reflect areas of innovation, and in order of popularity and value these are: • trade secrets/confidential information, • copyright, • unregistered and registered trademarks, • patents, • domain names, • approval rights, • design rights, • plant variety rights, and • integrated circuit layouts. A patent is no silver bullet but it’s possible to patent just about anything: “It’s just about paying enough and instructing your patent attorney properly so he can draft an application. But it must be commercially useful, ie, broad and therefore more defendable.” When applying for a patent weigh up the risk of appropriation (theft), and the impact of telling everyone about it, alternatives, the degree of protection the company can afford, and the likelihood of the product
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innovation being detected and the patent infringed. “Patents can waste time and money and even damage the business.They are just a business tool.” Adams recommends matching each function of a business with the relevant IP class, eg, patent some aspects, trademark others and copyright another – even of the same product. Logically if a business has weak IP protection and a good product, it will be copied “but there is no point in having ‘strong IP’ and a poor product because no one will copy you anyway”.
or service then manufacture, market and sell the product yourself; license a third party to deploy IP in return for a royalty; or sell your IP to a third party who then licenses or deploys it. Licensing and selling options often suit New Zealanders who are distant from markets and lack investment capital. Protecting world-first innovation A commercialisation strategy was illustrated by a local design of a wireless battery charging system for electric cars presented by Dr Peter Lee, chief executive of Auckland UniServices Limited.
Paul Adams, Dr Peter Lee and Trent Smith
Turning IP into cash As MC and director of Lowndes, Mark Lowndes said, New Zealand companies tend to be strong innovators, but turning innovation into hard cash and international growth can be challenging. “Why aren’t we rich?”The solution, he suggested, was to commercialise intellectual property (IP) and being niche and different, as a small country like New Zealand can be. To leverage innovation, there are four drivers, said Adams.These are to create new revenue, followed by objective assessment of the technology and IP, building a sustainable competitive advantage, then reducing risk and liability. Three models to commercialise any IP are: deploy the IP, ie, design it into a product
UniServices is wholly owned by the University of Auckland to manage its commercial research, consultancy partnerships and new business ventures based on research, and developing the university’s IP. Dr Lee said in 2008 the prototype wireless battery charging system was launched, whereby cars are charged on the move. It aims to reinvigorate the electric car industry that had stalled due to plugging and unplugging problems, including worries about overload on the grid. In 2009 the first public demonstration met incredulity… and two years later the first copycat products emerged.This led to positioning the system, based on induction power technology, as best in class.
News 19
The battery designers, ArcActive of Christchurch which develops highperformance, carbon-based batteries for hybrid electric vehicles, won the award for Excellence in the Field of Environmental Technology Research at the world’s leading emerging clean tech conference, Clean Equity 2011. This led to a joint venture, and financial investment. Large multinational purchasers emerged. Qualcomm which provides wireless technology and services now protects the IP and imposes standards.The battery designer licenses it to manufacturers. Dr Lee said, “You need big friends… rather than spend your wealth on lawyers and getting on to standards committees and fighting.” In summary he said: • Know the areas where you are worldclass, and focus. • Build partnerships: co-creation is important for international markets. • Basic science results in breakthroughs when the market is savvy. • Inventions based upon the voice of market become innovations. • Business development is a creative process. • IP development synchronises with business development. As Mark Lowndes noted, if you have unlimited wealth and the best lawyers you will still lose a patent case half the time so you still need a wider business and IP strategy to protect your IP.
“...You need big friends… rather than spend your wealth on lawyers and getting on to standards committees”
Patenting Patents are the main tool of Trent Smith, manager of IP at SMART Technologies, a NASDAQ-listed interactive display technology provider and the world leader in interactive whiteboards. The company holds some 850 patents and patent applications in markets around the globe. A business needs to ensure its protection efforts align with its business objectives and to know how it will use its IP protection – defensively or on the offensive. He said you need to understand the IP system, including the classes of protection, filing options and costs. Timelines for each IP protection type are important.The IPONZ website shows patents have to be renewed after four years and at three-yearly intervals, copyright every 16-50 years, and trademarks every 10 years. For example, the timing of the application processing and publishing of a product’s IP affects the owner’s ability to license and sell. The company needs to understand the
competition, identify threats early, and know how to counteract. A strategy could be to use the provisional patent filing system to defer a filing decision and costs. Publish a patent to block others from filing. Negotiate filing costs. “Focus on your core products. Budget costs for two to three years or even 20 years – it’s easy [because the filing costs are clear]. “Challenge your competitors’ patents and pending applications – we take a very aggressive approach because we are a technology leader.” But on the other hand, consider being first to market instead of filing. Be clear whether IP is even enforceable, eg, in Japan it takes seven years to register a patent and by then the technology has often moved on. Does the country have a mature legal system and how much do people pursue protection? – They do in the US! In emerging markets strong IP allows a brand to command a premium price which can be an intangible benefit, Smith said. The next workshops in the series are: Driving Human Performance – Does Money Matter? September 12 The Big Debate – That You’d Be Mad to Be a Company Director. October 31 To find out more and register to attend, please visit business-intelligence.co.nz
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News 21
By David Mahon, from his China Watch Summer newsletter
China thoughts... “Western commentators are concerned that economic problems and political indecisiveness in Europe will weaken the Chinese economy this year and even push it into recession.
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his assumption is based on an old but enduring fallacy that China is an export-dependent economy that has succeeded primarily by dumping goods in Western markets. But the value of exports retained in China is far less than the price of goods landed in the West would indicate. Apple takes 58.5% of the profit from its Chinese-assembled iPhones, while China retains a mere 1.8%.The Logitech mouse provides its Chinese manufacturers with a margin of only 7.5%.The recent European Commission ruling has rejected recent dumping claims. “China is not an export-dependent nation. Foreign-invested companies are responsible for almost 50% of all Chinese exports and therefore suffer considerably when exports decline. Procrastination and further softening of demand in Europe — combined with the economic distractions and distortions that characterise election years in the United States — will contribute to the Chinese economy slowing, but the impact will not be great, for the Chinese Government has the means to sustain steady growth. “If current trends prevail, China will achieve an annualised GDP growth rate of 8% while keeping inflation below 3%. “China’s current share of international investment is still slight. It contributed a mere 5.2% in 2010, dropping to 4.3% in 2011, and experienced a virtual slump in the first two quarters of 2012. Although contributing 33% to Asian GDP, China contributes no more than 10% to global GDP. China may be the world’s second largest economy, but the majority of its
population are still farmers or, more accurately, gardeners of small plots averaging 0.6 of a hectare. “Many in China’s coastal cities are wealthy and the middle class is growing quickly, but with nominal GDP per capita of USD 5,430, China ranks only 91st in the world. If purchasing-power parity (the buying power of local currency) is taken into account, China lies between Ecuador and Jamaica in 94th place. “In June, to support growth, the People’s Bank of China cut interest rates to 3.25%, and again in July to 3.0%. A further interest rate cut is likely this year. In both February and May bank reserve ratios were reduced by 0.5%, and are likely to be reduced again before the end of the year. Misperception There is a misperception that serious instability exists in the senior ranks of the Chinese Communist Party. As a result of their lack of transparency, the Chinese Government and Communist Party invite conspiracy theories and fuel public distrust.The Bo Xilai scandal has been a major challenge to the party’s ability to undertake damage control and manage public and international perceptions. “Faith in the party is waning. Since economic reform began, even through the toughest times, Chinese people had a degree of confidence in their leaders. Now officials are too busy getting rich at our expense and attempting to disguise the fact by manipulating the media. Today, thanks to a more open media and social networks, we can find the truth about most things.” - Beijing restaurant owner “My friends and I do not mind that some people get rich, but it’s how they become rich that matters.” - Shenyang office worker In recent generations their capacity for endurance has carried a beleaguered population through wars, revolutions,
famines, natural disasters and the shocks of economic and social reform. Poorer Chinese, who make up the majority, are nevertheless beginning to feel that this capacity for endurance is now being taken for granted and even abused by the government. As each year passes, it is clear that the party is getting further out of touch with its own grassroots. Party Secretaries who were once farmers’ and factory workers’ sons and daughters are now the sons and daughters of party officials, and have often lived such privileged lives that they find it hard to relate to the people for whom they are supposed to be responsible. “The recent deluge in Beijing was a shock. It showed us that, although new infrastructure has been built over the last ten years, crucial details such as drainage have been neglected. Last week I spent hours parked on a bridge as the streets below me became rivers. The hardest thing for us to accept is that the government seems to have lied to us about the number killed. First we were told that it was 37 and now, after public outcry over such an absurdly low number, the government has just raised the number to 77 dead! We doubt that number as well. Why lie to us about a disaster that in even the best of circumstances they could not have foreseen? We seldom trust what we are told anymore.” - Beijing secretary David Mahon is Managing Director of Mahon China Investment Management Ltd. www.mahonchina.com David Mahon will be addressing an Export New Zealand Go Global breakfast in Auckland on September 22nd. www. exportnz.co.nz
Business Plus – Exclusive news, advice, learning and networking
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Exporters accentuate the positive: 2012 Survey 60
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Export New Zealand’s 2012 Survey shows the majority of 20 exporters are still in a positive 0 frame of mind despite exchange rate challenges and the lack lustre growth affecting some parts of the world economy.
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ust over half the respondents (51.8%) expected their profitability to improve in the next 12 months with 20% expecting their orders to rise substantially, said Catherine Beard, Executive Director of ExportNZ. When asked about the main obstacles to Is the Government doing enough to encourage exporting? 80 70 60 50 40 30 20 10
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exporting or exporting more, the top four stant changes and complexity of paper 20 issues were: work for exports going to China. 1. Demand offshore When asked if the Government was 10 2. Exchange rate volatility doing enough to support exporting 61.3% 0 3. Funding for developing export markets said no (down from 65% last year. Where 4. Price competitiveness of their products. as 24% of respondents said capital was no 60 Obstacles to export growth in New constraint at all while for 32% said it is a 50 Zealand were captured in the following real constraint. comment: “There is a significant list non-tariff 40 “The regulations imposed by the NZ barriers that exporters are battling Food Safety Authority (NZFSA) are at and ExportNZ is keen to work with 30 times excessive and well beyond those government officials to tackle them,” said imposed on our competitors in overseas20 Catherine Beard. markets.” 10 The overseas barriers to trade The extent that a lack of capital is a constraint were identified mainly around to growing exports? 0 tariffs, product registration, (Where 1 = by far the biggest limiting factor, to 5 = no constraint at all.) bureaucracy and non-tariff 25 barriers. On access to Australia: “AQIS 20 (Australian Quarantines Inspection Service) inspection and fees 15 delay product getting to market and often feel like a non-tariff 10 barrier.” “The Australian costs of entry 5 compliance are crippling.” Another issue raised by several 4 5 1 2 3 0 exporters highlighted the conextent of constraint
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By Mary MacKinven
IN OUR REGULAR SNAPSHOTS OF EMA MEMBER COMPANIES WE DESCRIBE THE BUSINESS OF ELLIOTTS KING BASED AUCKLAND. 23
A juicy story about kiwifruit After a year of exporting its kiwifruit and feijoa juice drinks, Auckland company Elliotts King of Kiwi is about to enter the New Zealand market!
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he company showcased its kiwifruit and feijoa drinks at the annual Food Show Auckland earlier this month just as BusinessPlus was going to print. Formerly a documentary maker and now the company president, Glenn Elliot started Elliotts King of Kiwi in 2009. One hot summer’s day he had an overwhelming urge for a flavoursome but most importantly, healthy drink. Struck by the lack of good tasting healthy kiwifruit-based drinks available, he decided to create the world’s best kiwi juice. Two years of tests, recipe improvements, product design and lots of tasting later, Elliotts launched in Hong Kong with two flavours: Green Kiwi and Gold Kiwi. The Elliotts range has no preservatives and no added sugar or water, just pear juice to soften the strong taste of pure kiwifruit. The juice is also processed in a way that retains as much of the fruit’s beneficial components as possible: it
is pasteurised using a system with far less impact on the nutrients and flavour than flash heating and cooling. The kiwifruit are selected from Te Puke orchards by staff experienced at growing, buying and processing kiwifruit. The fruit is then graded at Elliotts’ nearby packhouse where only premium fruit are selected for outsourced processing and bottling using state of the art technology to ensure “maximum flavour and goodness are in the bottle, not in the storage tanks,” says Elliott. The company’s website www. elliotts.me is in English and Chinese. According to the owners of the domain name, the suffix, Me is ‘useful, meaningful and memorable, but most importantly …you want your online presence personalized ASAP.’ A change of distributor enabled the push into China, and before the first container of Green Kiwi and Gold Kiwi arrived in China, the buyer had ordered another. The juice is also sold in a high-end supermarket chain in Japan. Other countries are showing interest. Packaging and distribution arrangements are ready for online sales. Glenn says, “It’s been a really hard slog,
Glenn Elliott
what with massive hassles from suppliers, and the PSA disease threatening to collapse the kiwifruit industry in New Zealand. “Mum mortgaged her house to help me see my dream through. “We think it’s so important New Zealanders are more aware of the sugar-filled fruit drinks that saturate the market. We want to give them a far healthier option.” He says research shows kiwifruit is the most nutrient-rich of 27 most commonly consumed fruits. For instance, one kiwifruit has almost twice the vitamin C of an orange, and more potassium than a banana.
Nightside re-energises aircraft engine turbines
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ir New Zealand Gas Turbines (ANZGT) which specialises in the overhaul and repair of multi-million dollar aircraft engines, had to replace the machines used to do a key part of the work recently and they called on Nightside Test Design. (www.nightside.co.nz). Each turbine is disassembled and each component inspected, measured, tested and cleaned before reassembly. If the slightest misalignment were to occur on any of the turbine’s 700 blades on 7 disks, with the rotor spinning at 10,600 revolutions a minute, large vibrations would add wear and tear or worse, cause a catastrophic failure.
ANZGT called in Nightside to build a replacement a system for their aging rotab measuring machines. “We need incredible accuracy – the ability to measure down to a hundredth of a thousandth of an inch – and we needed an expert partner who could build the system around it,” said Brian Manning, Production Leader at ANZGT. Nightside designed and quickly built a replacement system. Not only was it vast improvement but ANZGT estimate they’ve achieved an additional 30% time savings; the new system will pay for itself within two years. Business Plus – Exclusive news, advice, learning and networking
Out & About Eco Smart Business workshop in Hamilton
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| 1 Dick Coetzee & Steve Burrows [Aeromotive Oceania Group] & Ross Wilson [International Certification] | 2 Dave Chadwick & Walter Tuakana [Inex] | 3 Kerry Watson [Waipa Networks] | 4 Falguni Shah [Stainless Steel Design] | 5 Matt & Sean Stacey [Unicus] | 6 Paul Henare & Simon Jordan [NZ Food Industries] | 7 Mike Van Der Hoek & Geoff Foster [Thomsons Timber Supplies] | 8 Christina McGuire [Veterinary Enterprises]
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Air New Zealand Cargo ExportNZ Awards Auckland 2012
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| 1 Tanya Carey, Diane Hurford, Glenn Hawes, Nicole Hielkema, Christina Bilkey [Brolly Sheets] | 2 Scott Kington [Madeblunt] & Brent Carter [TNT Express] | 3 Mike Kayes [QBE Insurance] | 4 Derek Bartosh [Canary Enterprises] | 5 Jo & Paul Martin [TNT Express] | 6 Elizabeth Marvelly [Singer] | 7 Ian McCrae [Orion Health] & Mike Riley [Endace] | 8 PM John Key & Sir Ken Stevens [Glidepath Group] | 9 Chris Komatas [Endace]
AUGUST
EMA Alert Health & Safety 22-23 Representative Training (Workplace) Stage 2
Disaster & Business Recovery Series: HR Policies, Employment Issues & Payroll
Review and build upon the skills, knowledge and competencies developed in Stage 1 and the role of the representative. Focus on specific hazard identification and control including the use of Approved Codes of Practice.
Business interruption can come in a whole host of guises, from power outages to natural disasters. EMA has put together a cost effective series focused on the practical steps you need to prepare your business for any type of business disaster or interruption.
Auckland | Contact Craig
Auckland | Contact Karen
Managing Customer Complaints
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16th Annual Managers & Team Leaders Conference
Complaints happen. We will show you how to deal with these difficult situations and diffuse them with less stress and how you can use complaints to improve your customer service. Auckland | Contact Deborah
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Learn to Fly... A rare opportunity to explore and discuss ideas, problems and solutions with experienced supervisors and first line managers. How do other managers and supervisors communicate, assign tasks, deal with conflict, motivate employees and enhance the overall performance of their teams? Learn proven techniques and essential skills.
SEPTEMBER
Contact Rhonda Spence rhonda.spence@ema.co.nz Mobile 021 664 321
Essential Selling Skills Previously known as Sales Dynamics - This workshop covers all required facets of professional selling through the sales process from initial prospecting through to securing the sale.
First Line Management – An Introduction
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This course is the first two days of the National Certificate in Business (First Line Management) Level 3. It is a great way to gain an introduction to FLM without completing the entire National Certificate. Auckland | Contact Deborah
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Induction Programme Design It is important to make new employees feel vital to your organisation, and safe. Learn to plan and implement their development programme. Auckland | Contact Deborah
Time Management – 27 Personal Effectiveness Concentrate on results, not on being busy. You will learn how to identify your time management problems and ways to fix them and the difference between productive and non-productive time. Hamilton | Contact Deborah
Dealing with Workplace Bullying & Harassment
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Bullying and harassment can have a highly detrimental impact on workplace performance. By allowing it to occur, there is a risk of costly and time-consuming legal claims. Auckland | Contact Deborah
Auckland | Contact Karen
Did you know, EMA Tailored Training can deliver a wide range of workshops fully customized to reflect your workplace… at your workplace?
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Personal Image & Professionalism in the Workplace
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Do you want to convey an image that is ‘professional, committed, organised, friendly, approachable’? Your course leader has a diploma in fashion design and tailoring and was the founder of Total Image. Auckland | Contact Deborah
Conference Contacts Karen Joe | 09 367 0959 | conferences@ema.co.nz Training Contacts Lotta Bryant | 07 839 2710 | lotta.bryant@ema.co.nz Kevin Chambers | 09 367 0958 | kevin.chambers@ema.co.nz Craig Garner | 09 367 0907 | craig.garner@ema.co.nz Deborah Law-Carruthers | 09 367 0947 deborah.lawcarruthers@ema.co.nz
Auckland | Contact Deborah
www.ema.co.nz | learn@ema.co.nz
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