James Davis the Director of the Pax8 Academy in Asia hosts Karen Hillen from Your HR Expert to discuss the importance of implementing HR best practices in your business. Karen talks us through the practical things we need to have in place in our business to not only mitigate risk of issues that could affect your business, but to give your employees a stable and predictable environment to work in.
[00:00:03] Hello everyone, it's James Davis from the Pax8 Academy. Again in this time I've
[00:00:24] got Karen from my HR partners. How are you doing Karen? I'm good how are you?
[00:00:28] I'm well thank you. I've got a bit of a tradition of asking people where they
[00:00:33] are in this wide walk. Is there a bit of a global economy these days? So where
[00:00:37] are you based? My office is in Tweed Heads New South Wales but I actually
[00:00:43] live just over the other side of the border in Queensland in Cullingata.
[00:00:48] In Australia?
[00:00:49] That's awesome to hear. I'm very excited as always to have another guest on and
[00:00:57] this time it's going to be a bit of fun but it's probably a topic that people
[00:01:02] trying to avoid until they run into issues and it's all about how to
[00:01:07] properly manage HR in a small business. So I'm very curious from all your
[00:01:11] experience what you do is where's the sort of maturity level and the
[00:01:18] practices of how people undertake HR? What does that look like in the world for a
[00:01:23] small business?
[00:01:25] Yeah look I think with a small business a lot of the time it's non-existent.
[00:01:31] People start off, they might start off. I find in a lot of small businesses
[00:01:37] they might start off bringing in a friend or a family member then they might
[00:01:41] grow a little bit more or they might just stay sort of the same for a while and
[00:01:47] I think people just tend to not really even think about it so it's not
[00:01:52] because people are trying to get out of doing the right thing and having HR
[00:01:58] processes in their business. A lot of people just don't know. So mostly
[00:02:04] I find with small businesses it's not until they start growing that they feel
[00:02:08] like they need to put a bit of structure in place but yeah I would say the majority
[00:02:14] of small businesses don't even know what they need.
[00:02:18] And what does that impact them? That sort of ignorance or they don't know
[00:02:23] what they don't know? What sort of happens to them through that impact
[00:02:27] of that organic growth and the lack of maturity with this?
[00:02:31] Yeah so sometimes nothing. Sometimes you know there won't be an impact.
[00:02:35] They'll have some really good employees and nothing will ever go wrong.
[00:02:40] Everyone's happy so there won't be an impact but what I find is quite common.
[00:02:48] There could be issues with pay so sometimes if you're a small business
[00:02:52] you don't really know what an award is or what minimum pay rates are.
[00:02:58] You just start off by saying okay I'm bringing someone into the business
[00:03:01] this is what I'm going to pay then and off we go. That's fine but sometimes
[00:03:07] because award pay rates and minimum wages increase every year sometimes you'll
[00:03:13] get yourself in a situation where you don't even know that all of a sudden
[00:03:16] you start underpaying someone so I find a lot of the time it's the not
[00:03:22] being sure about the correct pay rates and what people are entitled to.
[00:03:27] Even things like what leave people are entitled to I know sometimes when I
[00:03:32] have conversations with small businesses they'll give them details about
[00:03:36] leave entitlements and they'll say oh yeah I'm not going to worry about
[00:03:39] giving those leave entitlements. I'll just give them the annual leave
[00:03:43] and the sick leave not realising that all of those other types of leave
[00:03:47] are actually legislatively required so I find a lot of the time it's
[00:03:52] just educating people they just don't know.
[00:03:55] And like you said a lot of the times people will not get away with it but
[00:04:02] they don't have any negative impacts. What happens when that catches up with
[00:04:07] them what's sort of the risk of not doing this right?
[00:04:11] The risk can be somebody might go to fair work and the risk can be
[00:04:19] that it costs you a lot of time and energy if somebody does end up
[00:04:23] going to fair work because there's an underpayment or you haven't followed
[00:04:28] a correct process if you have had to let someone go.
[00:04:32] So I find the biggest risk is the time and the energy and the stress
[00:04:37] that somebody's going to have to go through if somebody doesn't
[00:04:42] address an issue with you and they go directly to fair work.
[00:04:45] So it's the compliance issues of not understanding what even
[00:04:52] the risk might be until it hits you.
[00:04:59] And so that sort of compliance side and what you just said there around
[00:05:03] the risk of burning a whole lot of time and mental energy is like
[00:05:07] you said most people here aren't trying to rip people off.
[00:05:10] We're just trying to be good employers.
[00:05:15] What are the sort of things that we can start to roll out
[00:05:19] from a practical sense to mitigate these risks and I guess
[00:05:24] have better structure for our employees as well.
[00:05:29] Yeah, absolutely. And you're 100 percent right.
[00:05:33] The majority of the small businesses that I've had dealings with
[00:05:37] people aren't out to rip their employees off.
[00:05:39] They're not out to do the wrong thing.
[00:05:41] It usually is inadvertently they haven't known something.
[00:05:45] So so I think the thing is educate yourself as a small business
[00:05:50] owner in relation to what award might cover your employees.
[00:05:56] And if you don't know what an award is,
[00:06:00] you can go on to the Fair Work website.
[00:06:01] There's some great information on the Fair Work website about
[00:06:04] things like awards and pay rates and entitlements.
[00:06:08] So I think the number one thing is make sure you understand
[00:06:12] what those things are.
[00:06:14] Make sure that you do understand where to find that information.
[00:06:19] And like I said, the Fair Work website is a great place to start.
[00:06:22] It's got lots of really great information.
[00:06:25] If you happen to have an industry association,
[00:06:27] that's another good place that you can look at.
[00:06:30] Business chambers often will have help and advice as well.
[00:06:35] And then there are people like me as well.
[00:06:37] So you can get advice from from HR,
[00:06:40] advisors, consultants.
[00:06:43] But I think the thing is it really is about making sure that you do
[00:06:45] understand what those compliance things are.
[00:06:47] So having an employment contract,
[00:06:50] making sure you understand what needs to go on a pay slip.
[00:06:53] The fact that you've got to give people a pay slip every week or fortnight
[00:06:57] or however often you get paid.
[00:06:59] Sometimes, you know, I'll see people complain and say,
[00:07:03] I'm an employee and haven't received a pay slip for six months.
[00:07:07] It might not be because the business you work for
[00:07:09] is trying to rip you off or do the wrong thing.
[00:07:12] They might just not have the right systems in place.
[00:07:15] They might not even know that that's a requirement.
[00:07:18] So I think the biggest thing for small business owners,
[00:07:22] it doesn't have to be expensive.
[00:07:23] You don't have to, you know, subscribe to, you know, an expensive provider.
[00:07:31] As long as you know where to go and look for the information
[00:07:34] and make sure that you are covering yourself
[00:07:37] and that you're also open to if your employee asks you a question
[00:07:41] about something, that you go out and find out the answer.
[00:07:46] Yeah. And I think a lot of the time from my experience,
[00:07:50] a lot of small business owners, they
[00:07:54] because they don't know often they get a little defensive
[00:07:57] when they start hearing that they're doing things wrong.
[00:08:00] But what you've just said there around getting help and advice is very important.
[00:08:04] And I think it's worth highlighting that
[00:08:10] you've mentioned the awards a few times that are seen in the technology space
[00:08:14] where often over way overpaying the awards and stuff.
[00:08:17] But that doesn't mean that we can't
[00:08:20] that we can just shift away responsibility.
[00:08:23] Doesn't buy overpaying or there's still still things that are legislated.
[00:08:28] Yeah, absolutely.
[00:08:29] And look, there are a lot of positions in in the IT arena
[00:08:33] that aren't even covered by an award either.
[00:08:35] So then you just have to make sure that, you know,
[00:08:39] you've got a fair package for somebody.
[00:08:41] So so that's a really important point.
[00:08:44] But it is important to understand that if you do have an award
[00:08:48] that covers your employees, even if you're paying way above award,
[00:08:53] the award sets the minimum entitlements.
[00:08:56] So if you're paying somebody, I don't know,
[00:08:58] $100,000 a year, that's going to be way above an award rate.
[00:09:04] But you still have to understand things like, you know, legislative entitlements
[00:09:08] like four weeks annual leave, two weeks personal care as leave,
[00:09:12] which is sick and care as leave.
[00:09:15] You need to understand that those things are sort of baseline entitlements.
[00:09:20] People are entitled to compassionate leave
[00:09:22] if they need to go to the funeral or care for an immediate family member.
[00:09:27] Those types of entitlements, a lot of those sit outside of an award as well.
[00:09:32] And they're covered by the Fair Work Act.
[00:09:34] So again, making sure you understand what those things are.
[00:09:38] And yes, look, I think a lot of the people that we're probably talking to
[00:09:44] paying minimum wage and they're not paying, you know, low wages.
[00:09:48] They're paying very good, good salaries to people.
[00:09:53] But understanding that, you know, there does come a responsibility
[00:09:56] to make sure that you do know if you might be near an award rate
[00:10:02] that you just need to keep an eye on it.
[00:10:04] But yeah, you're right.
[00:10:05] I think a lot of the people that we're probably talking to
[00:10:08] won't have to worry about an award at all because they may not be covered by one.
[00:10:12] But if they are, they're probably way above having
[00:10:16] an employment contract that states that that annual salary covers things
[00:10:21] like overtime, penalty rates and those types of things is important too
[00:10:27] to make sure people understand that, yes, you get a really good salary package
[00:10:31] and it covers you for things like if you've got to work on the weekend,
[00:10:35] you won't get a penalty rate because that's covered in your above award
[00:10:40] annual salary, for instance.
[00:10:42] And this is where I think people haven't worked it out already.
[00:10:47] That's why it's so important to get that advice.
[00:10:52] You know, there are a lot of resources out there,
[00:10:54] like you said, to get the generic level stuff.
[00:10:56] But when we're talking about what we're doing,
[00:10:59] this is why it's so important to reach out to someone and
[00:11:03] align your practices up from the start.
[00:11:06] So you're just mentioning there the employment employee contract
[00:11:11] outlining that sort of stuff.
[00:11:13] What's what's our sort of typical best practices with a contract?
[00:11:17] You're outlined things like overtime and your salary.
[00:11:22] What else should sort of high level be in an employment contract?
[00:11:27] Yeah, so the obvious things like start date, salary, location,
[00:11:35] things like if there are qualifications,
[00:11:39] the right to work in Australia, so having the correct visa.
[00:11:44] Those things can be covered in a contract.
[00:11:46] But yeah, also the things what's included in your salary.
[00:11:49] So, you know, things like overtime allowances.
[00:11:54] Is there travel involved?
[00:11:57] What are the expectations in relation to the hours that you work?
[00:12:00] So again, if I use a round figure and your salary of $100,000 a year,
[00:12:06] you might want to say what that compensates the employee for.
[00:12:10] So it could be things like we have an expectation that
[00:12:13] although a standard working week is 38 hours a week,
[00:12:18] that covers reasonable additional hours and there may be weekend work
[00:12:22] involved or you may need to be on call.
[00:12:26] You you may even cover things like issuing a credit card to an employee
[00:12:31] and the use of those sorts of things.
[00:12:33] Does somebody have to wear a uniform, drug and alcohol,
[00:12:38] payment of public holidays?
[00:12:39] There are a lot of things that can be covered.
[00:12:41] Also things like restraint of trade.
[00:12:44] So if you have a restriction on where and who people can work for
[00:12:51] after they leave your employment, those things can be covered as well.
[00:12:55] Confidentiality.
[00:12:58] How to how to give notice when you're resigning.
[00:13:02] Lots and lots of things can be covered in an employment contract.
[00:13:04] So it's really clear and there are no misunderstandings about
[00:13:09] what's covered in your term of employment.
[00:13:14] In the employment contract isn't just for the
[00:13:18] you know me as a small business owner, it's not just there for me to screw over my employees.
[00:13:22] Is it that what you're saying is that clarity for both sides
[00:13:26] to get rid of any ambiguity?
[00:13:29] Yeah, for sure.
[00:13:30] You can have a verbal employment contract, but it's hard to prove.
[00:13:35] So having a written employment contract is always going to be better
[00:13:38] because as you say, it covers both parties.
[00:13:41] So it's not just about an employee getting all the details.
[00:13:46] It's the employer being clear about what their rights and responsibilities are
[00:13:52] and what the expectations are of their employees.
[00:13:54] So it's a great way to start the relationship, too, I think.
[00:13:58] If an employee gets an employment contract, they might get, you know,
[00:14:02] a bit of an orientation or induction process.
[00:14:06] They feel welcome in the business straight away.
[00:14:08] So they feel like, yeah, this business has really got it all together
[00:14:11] because I've got an employment contract.
[00:14:13] I'm clear about what my entitlements are, what my rights and responsibilities are.
[00:14:20] And that comes with an employment contract and also some some policies possibly.
[00:14:25] And I think importantly, a good induction orientation process.
[00:14:29] So people feel welcoming your business from from the first day they come here.
[00:14:35] And you mentioned the sort of the policies.
[00:14:39] What are what are the typical policies that we want to want in place
[00:14:44] to help the employees understand expectations,
[00:14:48] but also make sure we're covering regulation or any other sort of risk or or issues?
[00:14:54] Yeah, so there are a few there are a few that are sort of,
[00:14:57] you know, explaining some legislative responsibilities rights and responsibilities.
[00:15:02] So things like harassment, bullying,
[00:15:07] discrimination, those types of things.
[00:15:09] But then there are also things like drug and alcohol policy.
[00:15:12] So you can explain what's appropriate and not appropriate in the workplace.
[00:15:17] Those sorts of things can even cover, you know, if you've got to go
[00:15:21] and do some networking for for your business, for the business that you work for.
[00:15:25] So you can talk about, you know, it might be appropriate to go to
[00:15:28] an out of hours networking event and maybe have a drink.
[00:15:32] But but you know, what's appropriate?
[00:15:35] Making sure that if people do go to an out of hours event
[00:15:39] that they're responsible in relation to not drink driving on the way home,
[00:15:44] those types of things.
[00:15:46] A leave policy is another really important one.
[00:15:49] And from the point of view of what am I leaving entitlements as an employee?
[00:15:54] But also how do I apply for leave?
[00:15:57] How many weeks notice do I have to give if I am going to apply for annual leave?
[00:16:02] How do I inform my manager if I'm sick?
[00:16:06] So all of those things can be covered as well.
[00:16:08] But it also gives the employee understanding of what their entitlements
[00:16:13] are in relation to leave code of conduct is another good one,
[00:16:16] because it sort of sets like the rules of the business
[00:16:19] in relation to expected.
[00:16:22] Behavior and conduct as an employee and what the business expects.
[00:16:26] Lots of other policies, you know, there might be a policy on expected
[00:16:30] wearing of a uniform or accepted level of what you wear to work.
[00:16:36] And that's going to be different from industry to industry.
[00:16:41] Social media is another big one, making sure that people understand
[00:16:44] what the business expectation is in relation to posting on social media.
[00:16:49] A lot of employees might have an element of social media posting
[00:16:54] on behalf of the business.
[00:16:56] So setting out the rules in relation to what's appropriate, what's not appropriate.
[00:17:01] And so how do we sort of manage this process of the policies
[00:17:07] and the contracts?
[00:17:08] It's not just writing it and checking it out to them.
[00:17:11] And that's we're done.
[00:17:13] I assume there's more to it.
[00:17:15] Yeah.
[00:17:17] That's a really good point.
[00:17:17] And I was talking to somebody about that today.
[00:17:20] It's a really good idea to have some policies in your business.
[00:17:23] So you might have, you know, a policy handbook that has a number of policies.
[00:17:27] But just issuing it to somebody, getting them to sign to say they've read
[00:17:31] and understood it and then packing it away.
[00:17:35] At least you covered from a compliance point of view.
[00:17:39] But did your employee actually read the policies?
[00:17:42] Do they actually really understand them?
[00:17:44] Having them sign to say they have is going to cover you if you've got
[00:17:48] to take discipline reaction on something they've done wrong, for instance.
[00:17:51] But I think as an employer, you really want to make sure that people
[00:17:56] have actually read it.
[00:17:57] So, you know, in a team meeting, you might want to talk about
[00:18:01] a particular policy each time.
[00:18:03] So, you know, if you've got a staff meeting, you might say, OK,
[00:18:06] well, today we're just going to spend a five or 10 minute part of the meeting
[00:18:11] to get some of the policies that you might be able to do.
[00:18:14] Just going over the leave policy and getting people to ask questions
[00:18:19] if you're not sure about something.
[00:18:21] So I think it's a really good idea to make sure that you're always
[00:18:24] talking about the policies so people feel comfortable asking questions
[00:18:28] about them, but they can also get the idea of the practical
[00:18:32] application of those policies.
[00:18:34] So it's not just something that you got emailed or something
[00:18:38] that you had to sign off electronically or even if you've
[00:18:41] been given a paper copy of, you know, 100 pages of policies,
[00:18:45] that it's more meaningful because you're always talking about those things.
[00:18:53] And that makes a whole lot of sense to be a lot more proactive about it.
[00:18:57] What other sort of proactive practices
[00:19:01] should the listeners be thinking about when they when they're thinking about HR?
[00:19:07] I think communications are big one in HR,
[00:19:10] making sure that your employees know that you're approachable
[00:19:15] and that if they've got concerns or they've got a question that they can come
[00:19:18] and talk to you about those things.
[00:19:20] We're all human, you know, it'd be very easy to try and say
[00:19:24] employees should come to work and never bring personal problems
[00:19:27] into the workplace and never be affected.
[00:19:29] And, you know, but realistically, sometimes people's performance
[00:19:35] might be affected because they're dealing with something outside of work.
[00:19:39] So I think if you've got a really good culture in your business
[00:19:43] where people know that they can come and talk to you about those things.
[00:19:47] You probably won't even end up with a performance management issue
[00:19:50] because you've been able to have a conversation
[00:19:53] with somebody about the fact that I've got a few things happening outside of work.
[00:19:58] And I'm really struggling with some of some of my work at the moment.
[00:20:01] So you might be able to come up with some ideas
[00:20:04] of how that person can cope with those things in a work sense.
[00:20:07] Might be some flexible work arrangements.
[00:20:10] It might be, you know, some some allowances for a week or two
[00:20:15] if somebody's got something that they're dealing with.
[00:20:18] I think, you know, the whole issue of communication
[00:20:22] and setting that really good culture in your business.
[00:20:26] So people feel valued and they know that they can talk about a problem
[00:20:31] rather than it getting to the point where it's been a problem for six months.
[00:20:35] But you're a really nice person as a business owner
[00:20:38] and you just don't want to bring it up because you don't want to appear mean
[00:20:42] or you don't want to appear that that you you're being nasty to the person.
[00:20:47] That's going to make things worse if you don't approach things as soon as you can.
[00:20:53] And the way you approach it can help to, you know,
[00:20:55] being understanding, providing support.
[00:20:57] Does the person need a bit of extra training or mentoring?
[00:21:00] So I think it's really that that communication
[00:21:05] having a having a great place to work and having that really clear communication
[00:21:12] will help and having that open door policy
[00:21:15] so people can feel comfortable coming and telling you if they've got a problem.
[00:21:18] And that might be something outside of work that's impacting their work
[00:21:21] or it could be a problem in work that they need help with.
[00:21:25] There's some with some great advice.
[00:21:27] And I what springs to me now is
[00:21:31] you're doing that good stuff.
[00:21:32] You being a bit more proactive of your communications.
[00:21:36] When does when do things flicking to
[00:21:40] actual performance management and what should good performance management
[00:21:44] actually look like?
[00:21:47] Yeah, so I talk to businesses a lot about, you know, when to start the process.
[00:21:53] And I think if you can have that good communication,
[00:21:56] it might start off informally.
[00:21:58] So you might just informally say, look,
[00:22:01] I've noticed that you've been struggling.
[00:22:05] What's happening?
[00:22:05] What's going on?
[00:22:06] And you might be able to sort of solve it informally,
[00:22:10] give the person some supports and mentoring some training.
[00:22:14] They might pick it up and that might be all you need.
[00:22:17] But if you've had those informal conversations or it's something more serious,
[00:22:22] then it's really good to understand
[00:22:25] implementing a process to bring the person in for a formal meeting,
[00:22:31] invite them to the meeting, give them notice of the meeting,
[00:22:33] let them have time to bring a support person if they need to.
[00:22:38] I find a lot of the time people won't bring a support person.
[00:22:40] They're happy just to attend the meeting,
[00:22:42] but it is something Fair Work like to see.
[00:22:46] And then you can formalize it.
[00:22:47] So if it's a matter of having to put in a performance improvement plan
[00:22:53] that you talk to the person about that and that you set goals
[00:22:56] and you set times when you're going to review
[00:22:59] how the person is progressing to meet those goals.
[00:23:03] If they don't meet the standards that you set,
[00:23:06] they might need to get a formal warning.
[00:23:08] Then if you meet again and you're progressing that
[00:23:11] and you're monitoring that progress
[00:23:14] and they're still not meeting the goals and the targets you've set,
[00:23:17] they might get another warning.
[00:23:19] So it's important to make sure that you do have that process in place.
[00:23:23] So if you have to get to the unfortunate
[00:23:27] position of having to terminate someone's employment
[00:23:29] because they just haven't improved, if they do go to Fair Work,
[00:23:33] you can show that you've been really fair about the process.
[00:23:37] You've given the person a chance to improve.
[00:23:39] You've supported them.
[00:23:40] You've given them all the things they need.
[00:23:42] So then if they were to go to Fair Work
[00:23:45] and lodge an unfair dismissal claim, for instance,
[00:23:48] that you can feel pretty confident that you'll be able to
[00:23:51] defend what you've done because you've got that really good process.
[00:23:56] And if those processes are in your HR policies, for instance,
[00:24:01] your employees will know to what to expect.
[00:24:03] They'll know that's the process if they've done something wrong
[00:24:07] or they need help with improving on something that they might be liking.
[00:24:12] I hear a lot of times small business owners
[00:24:18] have the opinion that it's just you can't you can't sack staff.
[00:24:23] It's just it's not it's not possible.
[00:24:25] What you're describing there is just a fair and reasonable process
[00:24:30] to give an opportunity for someone to improve.
[00:24:34] Yeah, you absolutely can terminate people's employment
[00:24:38] as long as you have followed a fair process.
[00:24:41] There's also a probation period.
[00:24:42] So I usually recommend six months to put
[00:24:47] that as a probation period in an employment contract.
[00:24:51] And then if somebody is not performing in that probation period,
[00:24:54] it is simpler to terminate somebody's employment
[00:24:58] within the probation period.
[00:25:01] There's also another period, what's and it's called
[00:25:03] the minimum employment period.
[00:25:05] So for a small business with less than 15 employees,
[00:25:10] that's 12 months for a business with 15 or more employees.
[00:25:13] That's six months.
[00:25:15] So it's an easier process if you're within
[00:25:18] that minimum employment period or probation period
[00:25:22] to be able to move someone on.
[00:25:25] If if things just haven't worked out,
[00:25:28] they might not be a good fit for the position or the or the business.
[00:25:32] It might be a mismatch.
[00:25:35] They may have promised more than they can deliver
[00:25:39] in the recruitment process, or it might just be that things
[00:25:43] haven't worked out the way you thought.
[00:25:45] So that probation period is a good way to assess that.
[00:25:48] And it's good to to have that assessment process
[00:25:52] within that probation period.
[00:25:54] So if you do need to move someone on in that period,
[00:25:59] excuse me, it's easy to do.
[00:26:02] And that and that makes sense.
[00:26:04] I think what I'm getting from this conversation today
[00:26:09] while I was just setting up simple practices
[00:26:12] and making sure you maintain that as you as you continue on in business
[00:26:16] and not sort of get complacent about it.
[00:26:19] One of the biggest areas I seek complacency on
[00:26:22] and I'd be very curious to hear your opinion is
[00:26:25] is how how people are managing the increase of pay
[00:26:29] and setting the expectations of pay rises
[00:26:32] and the methodology around that.
[00:26:34] So what sort of your opinion and different ways
[00:26:38] to look at look at that process?
[00:26:41] Yeah, I think again it comes down to communication.
[00:26:44] If you have in your employment contract that, you know,
[00:26:47] a performance review will be conducted every six months,
[00:26:52] every 12 months, whatever that is.
[00:26:53] So you set that expectation right from the beginning.
[00:26:57] And again, you have a process in place.
[00:27:00] Look, I know, you know, HR compliance is boring,
[00:27:04] but if you have that in place,
[00:27:07] it does make it easier just to follow those processes.
[00:27:11] You might also want to say to someone that
[00:27:13] when we have that performance review,
[00:27:16] it's not an automatic salary increase review.
[00:27:20] It's a performance review and
[00:27:23] we'll discuss those things at the time.
[00:27:26] Sometimes I talk to businesses, especially small businesses,
[00:27:29] where they may not be able to afford
[00:27:33] a salary increase at the performance review.
[00:27:36] And sometimes that can be hard news to deliver.
[00:27:40] But I think if you've got that process in place
[00:27:43] and people understand what that process is
[00:27:46] and they know, you know, if I meet all my goals
[00:27:50] over the previous six or 12 months,
[00:27:53] I'm guaranteed a salary increase because that's the process.
[00:27:57] Then people should expect that.
[00:28:00] But if that's not the process
[00:28:01] and it's really clear that, you know,
[00:28:04] a salary increase isn't tied to the performance review.
[00:28:07] Again, I think you can walk through those things
[00:28:10] that might become awkward
[00:28:12] if you're not setting out what the process is from the beginning.
[00:28:16] I've talked to businesses before where
[00:28:19] they think their employee is doing a fantastic job.
[00:28:22] You know, they're a star, they're fantastic,
[00:28:24] but the business isn't right at that moment
[00:28:27] in a position to give a pay increase.
[00:28:29] So I think it's making sure
[00:28:31] that you communicate that really clearly.
[00:28:34] We love what you're doing.
[00:28:36] These are all the great things that you've done.
[00:28:38] Go through the performance review
[00:28:39] and, you know, talk about all the great things,
[00:28:41] but then also explain, unfortunately, this time
[00:28:44] we can't do this or we can only give you a small increase
[00:28:48] or whatever that might be and be really open about it.
[00:28:51] So employees don't go away thinking,
[00:28:55] oh, I'm not appreciated.
[00:28:57] I've done such a great job over the last 12 months
[00:29:00] and they don't even appreciate it
[00:29:02] because I'm not getting a pay rise.
[00:29:04] Because if somebody is on a salary that's way above a ward,
[00:29:08] they might be sitting around the appropriate rate
[00:29:12] for what they're doing.
[00:29:14] And how do you look at what is appropriate and what's not?
[00:29:20] It's really difficult.
[00:29:21] I think it depends on so many factors.
[00:29:24] Being a small business could be one of them.
[00:29:28] And I think, again, it's really,
[00:29:30] I suppose, doing a little bit of benchmarking,
[00:29:32] especially if you are a business that pays way above a ward.
[00:29:35] Sometimes it is good to be able to have a look at those
[00:29:39] salary surveys that are out there
[00:29:41] to get an idea of what this position
[00:29:43] is being paid in my industry.
[00:29:46] There are quite a few different sort of recruitment firms
[00:29:49] that do salary surveys every year.
[00:29:51] So you can have a look at those and get a feel
[00:29:53] for where you might be sitting in relation to,
[00:29:56] you know, where you're at.
[00:29:59] And sometimes looking at places like, you know,
[00:30:03] job boards seek things like that
[00:30:06] and getting a feel for what's being advertised out there.
[00:30:10] I find a lot these days,
[00:30:12] positions that are being advertised
[00:30:14] aren't necessarily advertising salaries,
[00:30:16] so that can be a little bit more difficult.
[00:30:20] But I think you've got to use the award rate
[00:30:22] as the absolute base.
[00:30:23] That's the award rate.
[00:30:24] That's the minimum entitlement.
[00:30:28] But as we said earlier,
[00:30:29] like if you're on a salary that's way above,
[00:30:31] it can be a little trickier.
[00:30:33] You might, some businesses I work with
[00:30:35] will set up a bonus or a commission or incentive structure
[00:30:39] where, you know, there's a base salary
[00:30:41] and then if you hit these targets
[00:30:43] and you hit these goals,
[00:30:45] you'll get a dollar amount or a percentage amount.
[00:30:49] So there are a few different ways you can do those things.
[00:30:51] And it depends on the type of business
[00:30:53] and how your business is structured as well.
[00:30:56] And bottom line, if you can afford it.
[00:30:59] And I think I'd point out is with the market these days,
[00:31:03] you can't be complacent around just leaving people salaries
[00:31:07] on the same for years and years and years.
[00:31:11] They only need to look up and they'll go earn
[00:31:13] a lot more than what they're doing now
[00:31:15] and that's a lot more costly.
[00:31:16] So again, it goes back to that productivity and process.
[00:31:21] Yeah, absolutely.
[00:31:23] That's a great point.
[00:31:24] And I think you can't afford to be complacent and say,
[00:31:28] oh well, you know, I pay $40,000 above award per year.
[00:31:33] So I don't have to worry about it.
[00:31:34] You know, my employees haven't had a pay rise in five years
[00:31:37] but it doesn't matter because they're on a good salary
[00:31:40] because people will look elsewhere.
[00:31:46] A pay rise isn't always the most important thing
[00:31:49] on people's minds either.
[00:31:50] So you've got to look at the balance
[00:31:52] of all of the other things.
[00:31:54] People sometimes will value flexibility
[00:31:56] more than a pay rise.
[00:31:58] They might value being able to work from home
[00:32:02] either completely or for part of their time.
[00:32:05] So there are lots of factors in relation
[00:32:08] to what makes people happy and what makes people stay.
[00:32:12] But let's be honest, everybody loves a pay rise.
[00:32:14] So you do have to make sure that you are still on par
[00:32:16] with the industry benchmark
[00:32:19] and hope that you're keeping your employees happy
[00:32:23] so they're not looking elsewhere
[00:32:25] to a business that might be paying
[00:32:28] a fair bit more than what you are.
[00:32:32] And this is, it's been a very interesting conversation
[00:32:35] and like you said very early on in the piece,
[00:32:39] a lot of people find this boring
[00:32:41] but I think that's more of the excuse
[00:32:43] is I don't know what I don't know
[00:32:45] so it's more uncomfortable.
[00:32:47] So as we've gone through all of those different topics
[00:32:50] I'm very curious to get you a sort of your wrap up
[00:32:53] of like what should people really be thinking of
[00:32:57] as they look at HR and what should they do
[00:33:02] if they've identified from this conversation
[00:33:04] that they've got room for improvement?
[00:33:06] How do they get started?
[00:33:09] I think the thing, like I said earlier on
[00:33:12] is just make sure you educate yourself.
[00:33:13] So you do understand what you should have in place.
[00:33:17] So if you're a business and you're listening to this
[00:33:20] and you think, okay, I've got nothing in place
[00:33:24] think about the risk that you might have in your business
[00:33:27] if you don't have these things in place
[00:33:29] and find a provider that can help you with that.
[00:33:34] You know, I think a lot of the time
[00:33:35] when you go into business
[00:33:37] you get yourself a bookkeeper,
[00:33:38] you get yourself an accountant
[00:33:40] but a lot of the time you don't even think about
[00:33:43] having HR support because a lot of the time
[00:33:45] you don't even know it's something you can get.
[00:33:48] But I think, yeah, just make sure that you do understand
[00:33:51] where the risks might be as well.
[00:33:54] So you can cover those risks as much as possible.
[00:33:57] And I think a big risk is making sure
[00:34:01] that your employees are happy,
[00:34:04] that they're not planning on going somewhere else.
[00:34:06] So recruiting people is expensive.
[00:34:10] So you wanna make sure that if you've got somebody
[00:34:13] who is doing a good job in your business
[00:34:15] that you're doing everything possible to keep them there.
[00:34:18] So making sure that you've got a little bit of structure
[00:34:21] it doesn't have to be expensive.
[00:34:22] You don't have to be signing up to,
[00:34:24] you know, a five year contract
[00:34:26] with somebody that's gonna charge you
[00:34:29] tens of thousands of dollars to look after your HR.
[00:34:32] You just have to satisfy yourself
[00:34:33] that you've got the basics in place
[00:34:36] and you feel comfortable with the level
[00:34:38] that you have in relation to,
[00:34:40] it might be a HR system
[00:34:42] but it might just be some policies and contracts in place.
[00:34:47] So you feel comfortable that you've got what you need in place
[00:34:50] and you also know where to go to get the answers.
[00:34:54] I think that's super critical is not to try and overdo this
[00:35:01] and get too mature.
[00:35:02] It's a continual improvement journey.
[00:35:04] Make sure you've got something in place
[00:35:06] and keep cycling and keep improving as you go.
[00:35:08] And it's very much what you're talking about
[00:35:11] and describing for the working with the people
[00:35:14] and your employees being proactive
[00:35:16] and continually communicating with them
[00:35:19] and improving your relationship with them
[00:35:23] and then managing those issues as they start to come up,
[00:35:27] dealing with them before they become a major problem.
[00:35:31] I think way to me people aim for the 100% best practice
[00:35:37] rather than seeing this as a long-term journey.
[00:35:40] Yeah, and I think that's the thing.
[00:35:43] As long as you're comfortable with what you've got,
[00:35:46] some businesses will only be comfortable
[00:35:48] with having every little policy they need.
[00:35:51] Other businesses will say,
[00:35:53] I don't need to go to that extent
[00:35:55] but this is what I need
[00:35:56] and I'm happy with this level of compliance that I have.
[00:36:00] So every business is gonna be different.
[00:36:03] Like I said, I know some of my clients
[00:36:05] have a CloudBest HR system.
[00:36:08] Other businesses aren't interested
[00:36:09] in having another system.
[00:36:10] So it really comes down to knowing
[00:36:13] what you should have in place
[00:36:15] and feeling comfortable with what you've got.
[00:36:18] And that's where getting advice is important
[00:36:20] because if you don't know what you don't know,
[00:36:22] it's very hard to make clear decisions
[00:36:24] and that should be fairly obvious to all of us,
[00:36:26] especially when we're dealing with regulation
[00:36:29] and legislation and compliance from a cybersecurity side.
[00:36:33] This is just the same with more humans involved.
[00:36:38] Yeah, and I think the thing is too
[00:36:40] that's really important to remember
[00:36:42] is don't be scared if you have made a mistake.
[00:36:45] If you didn't have something in place
[00:36:47] or you've discovered that you didn't give somebody
[00:36:51] any entitlement they should have had
[00:36:52] or for businesses that are paying award rates
[00:36:56] or close to,
[00:36:57] if you've discovered that you have been doing something wrong
[00:37:01] or you've underpaid somebody.
[00:37:03] The main thing fair work, honestly,
[00:37:05] is that if you discover something that you've done wrong
[00:37:08] to fix it, to get the help you need
[00:37:11] and to do your best to fix what you've done.
[00:37:15] So I think don't be afraid to reach out
[00:37:18] and ask for help if you are in that position
[00:37:21] because everyone makes mistakes.
[00:37:24] Small businesses are doing their best to do the right thing
[00:37:28] and people understand that you're not out
[00:37:30] to try and rip your employees off.
[00:37:32] But sometimes you might make a mistake
[00:37:34] because you didn't know something
[00:37:35] or you didn't know where to go looking.
[00:37:37] So I think that's important to remember.
[00:37:39] Don't be too hard on yourself if you do find
[00:37:41] that you've done something wrong
[00:37:42] because it's usually easily fixed.
[00:37:46] It's a great point to wrap up on
[00:37:49] and it's been a great conversation.
[00:37:51] I hope the listeners are taking a lot out of this
[00:37:56] and can take steps to maturing their practices,
[00:38:00] irrelevant of where they are on their journey.
[00:38:02] So thank you so much for joining me, Karen,
[00:38:04] and no doubt we'll get you back on in the future
[00:38:06] to talk more.
[00:38:07] No problem at all.
[00:38:08] Have a great day.