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Human resources Issues Accountants Need To Understand.
Biz Momentum
Friday, 10th April 2009
 
If you are reading this article it is written by an Accountant (Fellow) who does not practice accounting anymore but is a person qualified in industrial relations law, human resources and workplace health & safety (and naturally accounting) and a consultant delivering a wide range of employee and human resources services to business.

Biz Momentum have frequently lectured to accountants and business people on industrial and human resource matters as well as providing advice and services to many accountants and their clients.

Naturally knowing the profession is a clear advantage. We have clients Australia wide.

Many Accountants, small and large practices and corporate practitioners have difficulty in understanding their human resource and employment relations obligations!

This is understandable given the raft of legislation and regulations governing (drowning) the employment environment and this lack of understanding are fraught with danger and expensive consequences to your business when things go wrong.

In this publication Biz Momentum will outline important employment matters that will assist in reducing the ‘stress' factors and possible misunderstandings you may be experiencing.

Did you know?
  • There is a serious shortage of experienced Accountants and the war to get new Accountants on board has heated up in the market place (we are frequently asked if we know any good Accountants available or looking to move on);
  • Generation X & Y will not give you the loyalty you expect: are more transient and often do not have your best interests at heart. We can attest to the fact through many conversations with Accountants and assisting them;
  • It has been reliably estimated that 90% of small businesses in Australia do not have an employee agreements and employment related policies & procedures. In the event of a dispute the law will decide for you and this almost always goes against you, the employer;
  • Bullying and sexual harassment claims are escalating in Australia. The average cost of a claim is $36,500 (Tasmanian Study) and recently one employee was awarded $1,000,000 for bullying;
  • Workplace stalking through employees following, sending emails, voice messages and gifts is becoming more prevalent and is resulting in increased absenteeism and resignations;
  • Misuse and unlawful use of your facilities for personal gain is increasing;
  • It has been reliably proven that some employees use up to 2 hours per day of your email and internet facilities for personal gain and to access unlawful sites such as hate literature and pornography not to mention chat lines. YOU can be fined for various industrial and criminal offences!
  • Many Accountancy Practices deliberately flout occupational health and safety rules which is resulting in increased staff turn over, fines and costly pay-outs to employees;
  • Many managers do not understand or have the experience in the know how of how to manage and lead their employees. People skills are paramount to your business success;
  • Not having an adequate job description and controlling management behaviours can be a cause of psychological injury resulting in hefty fines not to mention the process of litigation which we have seen take up to 3 years to resolve.
This is far from an exhaustive list but covers a number of growing issues in which Biz Momentum has noticed in recent years affecting the Accounting industry.

The ‘Basic Ingredients' for managing employment risks:

There are certain steps you can take to minimise your employment risks. Biz Momentum have provided some general employment advice regarding managing employment risks however we need to advise you that each business has its own unique profile and therefore decisions must be made on that businesses individual merits. You must assess your own situation.

1.     Job Descriptions

A simple yet effectively written job description cannot be overlooked when employing an employee or manager.

Employees and management need to understand what they are responsible and accountable for as well as what core skills they require to safely perform their duties.

Case 1 – The Accountant who thought paperwork was a waste of time

Recently an Accountant was sued by an employee for $299,346 for psychological injury. The employee had worked in their position for five years and asserted that they had been injured because they didn't receive a job description.

The claim is completely spurious and yet the legal system is set up so that the employee will be compensated. The business did not have a job description. Employees are more inclined now to take you on and engage contingency fee lawyers to sue you (no win – no fee lawyers)

It is not only the cost of litigation but preparation, meetings, affidavits, interviews and stress on the business owner. We have even witnessed that these problems in some cases have severely impact on the personal lives and marriages of the business owner.

2.    Employment Agreements

An employment agreement sets out the boundaries and expectations of the employment relationship and is a critical document for the protection of your business.

Employment agreements must contain employee benefits and obligations. Failure in having a well written employment agreement leaves you open to the courts and tribunals interpreting your obligations for you.

Common clause include hours, leave, goodwill, business records, restraints for management, confidentiality, intellectual property, remuneration and benefits, requirements of the position, privacy, ethical constraints, use of business assets, warranties, responsibilities and much more.

There are many types of agreements that your business can choose from but each business must be assessed on its own circumstances and merits.

CASE 2:    The Partner that changed their mind

A Sydney Accountants' business was severely impacted when a Partner working in a small practice for many years left and the other partners had not bothered arranging an agreement or restrictive covenant clause or in fact any employment agreement at all.

When the partner left the practice they started for a competitor around the corner.

The original practice lost a great deal of their previously loyal patronage.  It is not uncommon for customers to quickly find out you have lost a key person in your business and follow them elsewhere.

This was a very costly error resulting in much goodwill and profit leaving the business. This could have easily been averted by ensuring that all parties signed a well written Partnership and Employment Agreement containing restraints, ownership of goodwill to name a few clauses.

Now may be a good time to ensure you have up to date employee agreements for all levels of employees including senior management. Senior Management is often overlooked and you ignore this is to your peril.  The days of trust have disappearing where your best employee today can be your worst enemy tomorrow if things go wrong.

Imagine the consequences to your business if this happened to YOU.

Biz Momentum recently assisted another Sydney accounting practice reach a satisfactory outcome in a similar situation as the other partners took advice quickly while there was time to rescue the situation.

3.    Policies and Procedures

A human resources policy and procedures manual is an essential tool protecting your business only if the manual is implemented and used appropriately.

Failure to implement effective policies and procedures and to comply with them will result in the courts and tribunals interpreting your obligations for you in what will be an expensive exercise.

In addition not having the correct policies and procedures can constrain you from taking certain actions that could have been taken in the event you had clearly stated policies and procedures and employees had been inducted.

Drug and Alcohol testing is one area that many in the accounting profession have fallen foul of by making rash decisions and firing the employee only to find themselves being subjected to litigation.

Common policies and procedures Biz Momentum recommend for the accountancy industry include appointment policy, EEO, children at the workplace, customer/employee relationships,  code of conduct, computer user policy, anti discrimination prevention, drugs and alcohol, employee dress and grooming, laptop computers and equipment, leave, use of mobile phones, motor vehicles, privacy and freedom of information, sexual harassment prevention, stress prevention, termination of employment and employee discipline, travel, workplace harassment and workplace health and safety.

These policies must be tailored for each section of your business;

Case 3 - Unfair Dismissal & Sexual Harassment

In another unsatisfactory situation an employee was dismissed for consistent poor performance. Her Lawyer subsequently suggested that she sue the employer for unfair dismissal and sexual harassment.

Clearly this is extremely stressful for the business owner.

The situation could have easily been averted by a discipline and termination policy and procedure and a Sexual Harassment Prevention Policy.

Sexual harassment and workplace bullying are rapidly immerging as one of the scourges of all businesses and in our experience it is particularly prevalent in some sectors of the accounting industry. Time-off by the employee, a stress or bullying claim is expensive to your business.

Biz Momentum has assisted the accounting industry in advising in these situations.

However you need to be additionally aware you are required to have a workplace rehabilitation assistance program in place should the person be willing to return to work or not and that's just a start of what you must do.

4.    Induction Process

Inducting employees into your ‘Business' should be structured process!  Your employees are taken through your practice policies, procedures and work manuals in a formal manner.

Whether Management or line staff they must complete the process with a sign off procedure to say the have understood the requirement to comply with your policies and procedures.

The importance of this process cannot be overstated. Recently we assisted a business who was being sued for $300,000 for an employee asserting they had not been inducted and the employee lost because the business could produce and prove that induction had taken place.

Biz Momentum can takes you through an induction process that is streamlined and takes less than 1 - 2 hours for a new employee depending on the size and complexity of your business. Biz Momentum often conducts inductions on behalf of the business as we are considered experts in this area.

Case 4 – Stressed and Depressed

A corporate accountant was bullied and was not provided with any support by a well known Brisbane business.

After a period of years had elapsed the accountant found they were clinically depressed and suffering from severe anxiety and stress.

The business did not induct its employees, did not have a stress policy, return to work policy and subsequently the Accountant went on 5 months paid company leave (the business did not want to go to workers compensation). This left a large hole in the business as the accountant was in a very senior position which was critical to the business's operations.

The company had to pay the salary, cop resultant bad publicity, and engage in a long rehabilitation process guided by a psychiatrist and a law firm.

Eventually the accountant was rehabilitated and subsequently left with a hefty pay-out resolved by a deed of settlement to avoid common law litigation.

It is the small things that are overlooked that can cause your business grief.

The moral of this case study (which is true as are all the case studies) is to act swiftly and investigate promptly if you receive a complaint. Biz Momentum have been involved in assisting many businesses with these issues and can attest to the pain and costs that have affected all parties concerned with these issues.

5.    Communication

Communication is the oil that makes a business work effectively and efficiently. Most grapevines and gossip thrive in a communications vacuum.

Be quick to correct your concerns on a day to day basis with your employees and avoid the cost of procrastination whereby time and emotion now interplays and the issue gets all blown out of all proportion.

We can show you how!

6.    Reward and recognition

We all appreciate a ‘thank you' and ‘well done' from our customers and other people who matter to us. Employees are no different and regular positive feedback at times reinforced by a tangible reward goes a long way towards establishing a culture of trust and high morale.

We all know that costs are increasing however develop a generous spirit with your employees and ensure they are remunerated fairly and well.

The reward to you will be diminished turnover and a good reputation. Studies have shown many of your employees will remain with you because of the work environment and morale even when they are headhunted with a better offer. Money is not always the key dominant factor in retaining valuable employees.

Many managers try the carrot and the stick approach to managing employees and it has been estimated that up to 80% of managers in the accounting profession are ill equipped to manage people and are seriously lacking common skills such as courtesy, understanding, tack and listening skills.

It's really like letting a bull run rampant through a china shop. The disaster becomes apparent and it is often too late to fix.

Biz Momentum has many years experience in advising businesses in employment issues.  We regularly conduct seminars to educate business owners in their obligations and have assisted many businesses and their clients in the accountancy industry with practical solutions, training and mentoring in employment matters.

Further Information
Philip Lye is Managing Director of Biz Momentum Pty Ltd. He works with businesses assisting them with employee relations, human resource management, change management and how to implement practical change and risk minimization strategies. For more information on Philip, Contact Us:
phil@biz-momentum.com
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