BusinessPlus - February 2016

ISSUE 133 - FEBRUARY 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

TRAIL-BLAZING IN THE WAIKATO OUTDOORS READ MORE: PAGE 30

MORE STORIES Page 8:

Traffic survey: 100% dissatisfaction

Page 10: Meet new BusinessNZ CEO Page 18: Cross the digital divide: SuperTech 2016 Page 27: Latin American markets beckon PLUS:

Summer Member Briefings schedule on Page 31

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

Member Briefings

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

Information that you need, as you need it.

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

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Available Monday to Friday, 8am - 8pm.

Free call 0800 300 362.

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

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

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

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

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

“To champion New Zealand business and help our members succeed” ISSUE 133 - FEBRUARY 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

EMA head office: 159 Khyber Pass Rd, Grafton, Auckland, New Zealand Private Bag 92066, Victoria Street West, Auckland 1142, NZ Ph: +64-9-367 0900 Email: ema@ema.co.nz

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AdviceLine: 0800 300 362 (in NZ) or 1800 300 362 (from AUS) or advice@ema.co.nz Phone 8am-8pm weekdays for information about employment and more, plus referrals to EMA Legal lawyers and your local EMA consultant in employment relations and/or occupational health and safety.

Visit www.ema.co.nz for owner and staff training programmes, conferences and other events, employer guides and templates, manufacturer services, media statements and submissions, export development and more EMA contacts Chief executive: Kim Campbell Membership manager: Roger Carson External Relations manager: Val Hayes Advocacy and Industry Relations manager: Mark Champion Learning manager: David Foley Enterprises and Strategy manager: Mauro Barsi Head of Legal: Charlotte Hatlauf Industrial Relations and Safety manager: Paul Jarvie Finance and Technology manager: Paul Yeo Corporate and Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye Editor: Mary MacKinven, +64-9-367 0939, mob +21 636 089, email mary.mackinven@ema.co.nz Writer: Gilbert Peterson Designer: Ripeka Mikaere | Printer: MHP | Distributor: Rocket Mail Advertising sales: Colin Gestro, Affinity Ads, mob + 27 256 8014, colin@affinityads.com ISSN No. 1176-4953

READ MORE: PAGE 30

The South Waikato District is woven with 103km of cycling and walking tracks for all levels of fitness and adventure.

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

PO Box 490 Waikato Mail Centre, Hamilton 3240.

Ph: +64-7-839 2713 In Tauranga: ExportNZ Bay of Plenty Smart Business Centre, 65 Chapel Street, Bay Central, Tauranga, 3110.

PO Box 13202, Tauranga Central, Tauranga 3141.

Ph: +64-7-571 0600

TRAIL-BLAZING IN THE WAIKATO OUTDOORS

Full story, p30.

CONTENTS

MORE STORIES Page 8:

Traffic survey: 100% dissatisfaction

Page 10: Meet new BusinessNZ CEO Page 18: Cross the digital divide: SuperTech 2016 Page 27: Latin American markets beckon PLUS:

Summer Member Briefings schedule on Page 31

Commentary/news 5 6 8 9 10 11 13

EMA’s CEO Kim Campbell on OSH: checklist for keeping out of harm’s way Exploring Canada’s experience for funding NZ infrastructure EMA traffic survey: 100% dissatisfaction Elections will put the heat on this year Meet Kirk Hope, new CEO of BusinessNZ The Paris climate agreement and business impacts Emissions trading review will increase energy costs

Employment 14 15 16 18 19

Remuneration: Considerations for CEOs’ employment contracts Make health and safety routine: WorkSafe NZ CEO Employment Chat – Q and A: Changing roles, recouping holiday pay, wary of discriminating Learning: Cross the digital divide - SuperTech 2016 Case law: Search employees for evidence of theft, with care

In business 21 22 23

Tax: Deductions for charitable gifts depend on associated benefits Marketing: Taking the leap into LinkedIn Intangible assets: … are the future of a business

International trade

EMA is yours

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

25 26 27

Smoothing the waters for exporting Fixing the weakest link in country reputation Mixed outlook in Latin American markets for 2016

Member profiles 28 30

Theta: More than just techie people Waikato River Trails: River access opens up local adventure

31

Summer Member Briefings: BOOK NOW

+ Inside: TrainingPlus insert detailing February-March training courses, and more

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

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

Let’s get a healthier team

CEO COMMENTARY

By Kim Campbell

Keeping out of harm’s way If you are like me, you will be reassured every time you get on a commercial ‘plane by seeing the pilot and co-pilot going through a safety checklist and the co-pilot walking around to see all the bits are in place. The airline staff often say “we are ready to go except for completing the paperwork”, which is code for completing the safety checklist.

No matter how often they take off, they go through this same procedure every time.

Just because they did it on the first leg of the flight, does not mean they do not go through the same process on the next leg with new passengers.

Can you honestly say that when it comes to safety in your workplace you are doing the same thing? Thoroughly checking systems every day, every shift, every cycle?

In terms of safety, many of us are often in similar peril to someone in a commercial airliner – even if we don’t know it.

The new law, and subsequent regulation, for workplace health and safety goes live in two months on April 4.

The intent of the Act is to reduce the unacceptable number of New Zealanders killed or injured at work. But what does this mean? In terms of the new Act, what are the key watch-outs?

One is the introduction of the term “Persons Conducting a Business or Undertaking (PCBU)” as the entity responsible for the primary duty of care. The PCBU will be in the best position to control health and safety risks, for its workers and others associated directly with its site.

Secondly is the requirement of PCBUs to engage their workers on matters of health and safety. This means relevant information must be shared with workers in a timely manner, and the PCBU must have practices that provide reasonable opportunities for workers to participate in improving health and safety on an on-going basis.

Thirdly, “officers” as defined under the new Act must actively be involved in health and safety issues for their PCBU. An officer is defined as a person occupying a position of significant influence or management over a PCBU such as a chief executive, director or board member.

Simple checklist So what do we do before “takeoff”, to use the airline industry analogy? Before our employees switch on the factory lights, sit at their desks, hop into their vehicles or step onto the remote work site, for example?

Our leader in occupational safety and health (OH&S) compliance, Paul Jarvie who many of you have seen conducting ACC audits at your workplace or delivering messages at training courses and conferences, has a sample of checks for you to use to get ready for the new regime designed to prevent death and injury at work.

Health and safety checklist: 1. Review your systems of work: are they safe and correct?

2. Identify which tasks or functions pose the greatest risk of causing injury.

3. Manage those high risks comprehensively.

4. Check all staff have been trained and have training records.

5. Insist on all staff following the correct rules and procedures all the time, no exceptions.

6. Talk with staff and identify their safety concerns.

7. Provide a system whereby staff can be actively involved in OH&S, eg, as Health and Safety Representatives or on OH&S Committees, or whatever works best for your business.

8. Check your emergencies plans: are they up-to-date and complete?

9. Check that all personal protective equipment is correct, maintained and used every time.

10. Has the Board/CEO become involved in OH&S matters under due diligence?

11. Are your staff trained as first aiders, chemical handlers and forklift drivers, and for working at height and in confined spaces, etc?

12. Ensure that all contractors on your site have safe systems of work and are monitored by you.

Having got your checklist ticked off, strap yourself in and get ready for Take-off 2016.

It’s going to be a great flight.

Investigating OH&S breaches – focus of Policy Forum, March 7 We are opening our March 7 Policy Forum in Auckland to all members, with WorkSafe NZ chief executive, Gordon MacDonald, as our featured speaker.

We’re also taking this forum on the road with similar free, member-only events in Hamilton, Tauranga and Whangarei later this month.

Mr MacDonald will talk about his organisation’s approach to implementing the new legislation in April, and the tools and assistance WorkSafe NZ is making available to employers.

He’ll also cover roles and responsibilities for owners and directors, so bring your questions!

Watch for your email invitation.

• Kim Campbell is the CEO of EMA. Email kim.campbell@ema.co.nz BusinessPlus February 2016

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COMMENTARY

By Alan McDonald

Exploring Canada’s experience for Deciding how to fund infrastructure in Auckland, and in New Zealand in general, is a taxing question.

Auckland’s issues are just a microcosm of New Zealand’s problems in the provision of public roads, rail, water supplies, buildings and other physical infrastructure.

Like many countries, New Zealand has an infrastructure deficit: we have ageing structures in many areas, a pressing need for new infrastructure in many places, and a shortfall in the funding and political will to go ahead with building those muchneeded projects.

A recent delegation to Canada led by the New Zealand Council for Infrastructure Development (NZCID) looked at how the Canadians are dealing to a similar infrastructure deficit. The focus was on their smarter procurement (contracting of the building work) and the extensive use of the public-private partnership (PPP) model.

All Canadian Government projects costing more than $100 million are mandatorily assessed as possible PPP projects before getting the green light. Around 12-15 per cent of all projects across many sectors including transport, health, education and water reticulation go ahead as PPPs. The country even has a Canadian Council for PPPs, which promotes their use and acts as a centre of excellence. It even surveys voters nationwide to assess their support for the use of the model. Support currently sits at 62 per cent in favour.

How did Canada get to implement this approach, and what can New Zealand learn from them in order to address our own infrastructure needs?

The road to PPPs It took some significant Government procurement disasters to help establish the grounds for use of PPPs. For example, a C$220 million contract for fast ferries for Vancouver turned into a $450m blowout. The chosen ferries could not run in the difficult sea conditions and were eventually sold for just $20 million.

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BusinessPlus February 2016

“Our focus was on their smarter procurement (contracting of the building work) and the extensive use of the public-private partnership (PPP) funding model.”

In other instances, an under-construction hospital project halted when the foundations fell over, and another newlycommissioned hospital was bulldozed because design flaws made it unusable.

Those failings led to the introduction of the PPP model of procurement and the establishment of dedicated offices such as PPP Canada and Partnerships BC (British Columbia). Their expertise and resources in overseeing and successfully launching PPP projects are applied to many new developments.

For example, Partnerships BC has worked through nearly 230 projects valued at approximately $73 billion.

Mark Romoff, CEO of the Canadian Council for PPPs, highlighted average savings of

8-15 per cent to the Federal, Provincial and Municipal Governments through this process.

This funding model has delivered projects such as the Canada line project in Vancouver – an above- and below-ground light rail link from the city centre to the airport - saving the Federal Government an estimated $90m Canadian. It was also delivered on time for the Vancouver Olympics – a critical deadline.

He also talked of the 290,000 jobs connected directly to PPPs, a $25bn boost to GDP, a savings of $9.9bn to the Federal Government and most importantly, a $7.5bn boost to tax revenue. Canadian governments - Federal, Provincial and Municipal - all look at infrastructure as a tool for economic development, getting their bang-for-the-buck from an enhanced

COMMENTARY

funding infrastructure in NZ tax take at all three levels of government.

Getting the politics out of PPPs So what can Auckland and New Zealand pick-up from the Canadian model of meeting infrastructure needs?

First, we need to get over the antipathy towards the model. We know the world is awash with cash and it’s never been cheaper. In Canada the politics is absent from the PPP structure.

As the head of oncology at the Abbotsford Clinic in Vancouver told the delegation: “Who cares who owns or operates the building? The doctors and nurses still provide the care and I only have to call one number to get anything fixed”.

The private company operating Abbotsford had a $33.9m maintenance contract over 30 years.

There is no shortage of money willing to invest in New Zealand, but there is a shortage of willingness to allow it to happen. Perhaps we need Auckland’s next mayor or one of our key Government Ministers to take up the challenge of leading the way to allow more PPPs in New Zealand – after all, in Canada and elsewhere they are now just commonplace tools to get things done.

Secondly, we need to add more resources to the team of three that

currently sit within Treasury looking at projects that may fit the PPP profile.

A well-resourced and dedicated office, with the capability and the political support to get these projects underway is critical to build the trust with those private finance and construction companies involved. A key focus would be to create a pipeline of projects and more importantly to build the procurement knowledge and processes to deliver first-class projects across all sectors that are crying out for infrastructure development in New Zealand.

“Canadian governments Federal, Provincial and Municipal - all look at infrastructure as a tool for economic development, getting their bangfor-the-buck from an enhanced tax take at all three levels of government.”

And what are the benefits of using the PPP model more extensively in New Zealand?

In August the New Zealand Government announced its NZ$110bn National Infrastructure Plan. Based on the Canadian model, this would deliver savings of up to 15 per cent - or put another way, roughly one in seven projects would be free.

This could mean there would be enough savings to build Dunedin’s new hospital, finish the Waikato Expressway, build Auckland’s central rail link and proposed East/West Motorway link, finish the Auckland-Manukau Eastern Transport Interchange (AMETI), complete Auckland’s Central Connector separation of water and sewage and start the work on another harbour crossing.

Now, wouldn’t that be worth considering?

• Alan McDonald is EMA’s Policy Director, email alan.mcdonald@ema.co.nz

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7

COMMENTARY

By Alan McDonald

Traffic survey:

100%

dissatisfaction Grumpy staff, higher costs for customers and significant productivity losses are the day-to-day effects of Auckland’s increasing traffic congestion, as reported by EMA members in our recent telephone survey.

Among respondents were transport service providers, electricians, plumbers, cartage companies and small firms criss-crossing Auckland to service their customers.

The survey of more than 120 EMA business members just before Christmas targeted businesses likely to be servicing customers in and around Auckland throughout the day. We wanted to get a picture of what it’s like in traffic across the city and the impacts traffic congestion is having on the “white van” type businesses and the smaller firms that are the lifeblood of the Auckland economy.

We will feed members’ comments into the Auckland Transport Alignment Project (ATAP) process. That process has so far had a focus on the heavy transport and commuter traffic issues facing Auckland while overlooking the impact on small business – and 80 per cent of EMA members are classed as small to medium enterprises.

Around 240 of our members identify themselves as being in the transport sector in Auckland, which includes the likes of taxi firms and courier companies, and we also targeted firms in sectors that obviously have to spend plenty of time in traffic making their ways to calls around the city.

Avoiding the traffic Some of those firms provided GPS data and some gave us their anecdotal feedback, but 100 per cent of those we spoke to said traffic congestion was getting worse and that was coming at a cost to their businesses and customers.

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BusinessPlus February 2016

“Some of those firms have GPS data and some gave us their anecdotal feedback, but 100 per cent of those we spoke to agreed that traffic congestion was getting worse and was coming at a cost to their businesses and customers.”

Several transport firms surveyed have had to stagger start times to beat peak traffic periods and maintain productivity.

One cartage company running a regular return route between Papakura and Penrose has gone from a 6am start to move seven loads in an 11-hour shift to a 3am start to complete the same workload. That shift change has occurred in the past two to three years as congestion in the area has become worse.

In other examples, a firm involved in fitouts for retailers sends its delivery vehicles out as early as 6am to ensure materials are on-site for its fit-out teams, and a secure disposal company highlighted the loss of jobs from clients as they were unable to guarantee pick-up times.

To overcome congestion, network electricity company Vector sought and recently gained permission to use bus lanes to give its crews

faster access to work sites, to carry out critical repairs to the city’s electricity networks, especially during weather disruptions.

Productivity loss For some businesses the duration of the productive period during a working day continues to drop as staff spend more time in traffic getting to their next job.

That means falling productivity within the business, with less work carried out by the same number of staff, and more staff being hired to meet the work shortfall.

That increased staffing cost is then passed onto customers.

A drop in trade parking in the city was another issue highlighted by service firms: the loss of trade parking space to bus stops is causing an increase in costs that was also being passed on to customers.

And for some firms the daily commute leads to a grumpier workplace as frustrated staff arrive at work in the mornings or return to base from jobs, after delays in traffic.

I’d like to thank EMA member firms that contributed to the survey during a hectic time of the year. From more than 4100 members across all spectrums of the business community, the information you provided is invaluable in influencing those making decisions that will affect doing business in Auckland and the wider region.

• Alan McDonald is EMA’s Policy Director, email alan.mcdonald@ema.co.nz

COMMENTARY

By Alan McDonald

Elections will put the heat on this year Local body elections and policies that impact businesses in the regions will be high on the EMA’s agenda, as we enter the 2016 work cycle after the Christmas and New Year break.

An American friend commented the quickest way to improve productivity in New Zealand would be to reduce the holiday period in December-January to just two weeks. He’s certainly right but where’s the fun in that?

Auckland has a plethora of issues for local body politicians to get excited over, such as the location of the port, progressing the city rail link (CRL), keeping pace with rapid urban growth and the pressing need for much improved transport links (public transport and roads) that are already front of mind for potential mayoral candidates.

Funding all of those developments will also be of interest to Auckland’s hard-pressed ratepayers – in both the residential and business sectors. We will be demanding better cost control and pushing for more pragmatic thinking and less ideology when it comes to finding Auckland City’s contribution to infrastructure building and funding.

Tauranga is also facing pressure from its rapid growth. There are concerns the city centre is diminishing and its port growth may also soon raise similar issues as those facing Auckland’s port.

– has re-emerged at the start of the local body election year.

Latest figures out of Northland show that economic growth in the region has been reasonably strong in 2015 but the perennial

We’ll also be interested to see what comes out of the Prime Minister’s late January announcements about infrastructure spending in Auckland. It is widely predicted that funding for the CRL will be brought forward but there are other critical projects that also need funding and a raised priority for the Auckland region.

“We will be demanding better cost control and pushing for more pragmatic thinking and less ideology when it comes to finding Auckland City’s contribution to infrastructure building and funding.” problems of skill shortages, developing new jobs and linking school leavers and others with jobs in the region remain big issues for our northern members.

Policy planks: RMA, traffic congestion, OH&S, pay gap, infrastructure Late in 2015 we saw further Government announcements around reforms to the Resource Management Act (RMA), again aimed at streamlining the process of the RMA rather than overhauling its fundamentals. The reforms are welcome but the EMA continues to push for the bolder step of total reform of our planning and environmental legislation.

Submissions to the Productivity Commission’s review of the three key planning acts and the way they impact on urban housing are due in March, and the findings of that investigation could have major implications in support of our

“One concern that has arisen from the legislation is defining when an accident may be serious enough to warrant closing off the work area until investigations are complete.”

Hamilton, too, has an issue with the city centre hollowing out and being pulled north, while economic development in the wider Waikato region is an area in which the EMA is already engaged. It’s interesting that the possible Kaimai connection – an expressway linking Hamilton and Tauranga

projects such as the East/West Corridor and the Auckland-Manukau Eastern Transport Initiative (AMETI) to be given greater priority and for their construction completion dates to be sped up.

campaign for RMA reform.

We will also feed the results of a member survey on traffic congestion in Auckland into the Auckland Transport Alignment project process (as outlined on page 8), and we will continue our lobbying for critical

New legislation for occupational health and safety (OH&S) is being implemented in April and we are still closely involved in writing the regulations to support the legislation.

One concern is defining when an accident may be serious enough to warrant closing off the work area until investigations are complete. At the moment the threshold appears very low and our team is working with the Ministry of Workplace Relations and Safety and WorkSafe NZ to set regulation that may not be so disruptive in the workplace while a proper investigation of a serious accident is underway.

Our 2016 forum programme kicks off with an Employers Forum in late February and the first Policy Forum on March 7. The latter will feature WorkSafe NZ CEO Gordon MacDonald discussing the implementation of the new legislation. This March Policy Forum is open to our members and a chance for CEOs and company directors to get a direct read on how WorkSafe NZ is engaging with and educating businesses.

Equal pay and pay equity have already been on the news agenda in the New Year and our involvement with the Pay Equity Working Group, set up by Government to try and resolve this complex issue, enters a critical phase early in the first quarter of the year.

• Alan McDonald is EMA’s Policy Director, email alan.mcdonald@ema.co.nz BusinessPlus February 2016

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NEWS COMMENTARY

By Gilbert Peterson

Meet Kirk Hope, new chief executive of Business New Zealand The new chief executive of Business New Zealand, Kirk Hope, is measured, thoughtful and thorough.

policy. But it’s also theoretical and while we need to understand the theory, that’s not where it’s at. We need to be pragmatic.

Kirk was previously CEO of the New Zealand Bankers’ Association for the past three years and before that, executive director of the Financial Services Federation. He has also held senior positions at Westpac including head of government relations and regulatory affairs.

It’s also important to have the ability to understand what the policy levers are that can bring about change and how they can be pulled. But we don’t live in a binary world – these levers are nuanced and must be used with care and subtlety to develop mutually agreeable outcomes. No one thumps the table any more.

Kirk’s university qualifications (BA Hons, LLB and LLM) traverse financial regulation, public policy and political economy.

For five years he was a member of the Commercial and Business Law Committee of the New Zealand Law Society.

Yes, but the growth needs to be sustainable. Extreme peaks and troughs can be destructive. Business policy has to be about achieving sustainable long term growth.

Announcing Kirk’s appointment, BusinessNZ President Laurie Margrain said Kirk’s experience and leadership would create strong value and continue BusinessNZ’s record of successful advocacy.

What are most important issues?

Kirk’s predecessor, Phil O’Reilly, has taken up a public policy consultancy role in Wellington, after 11 years at the helm.

Sometimes regulations just impose costs, and the bureaucracy needs to be made aware of this when it occurs.

The government absolutely needs to be responsible and accountable for its rule-making. There needs to be a clear understanding of when the rules are working and when they’re not. Rules and regulations are not “set and forget”.

The following are Kirk’s responses to our interview.

Kirk says he used to be a surfer and that he still gets into the surf when he can. He’s part Maori, of Ngai Tahu descent.

Why did you want the BusinessNZ job?

I’ve spent the past 10 to 15 years in the financial services sector so the opportunity to broaden out and represent the wider business community was very attractive.

I can bring my skills in law and political economy to bear on the wider business issues. I have never practised law. The law is just one component to apply to public policy; one of the tools I have for analysing public

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Can NZ grow faster than it has been?

BusinessPlus February 2016

The process for selecting the changes needed for regulatory reform has been good but the implementation process has been poor.

Government has done what it can to push the agenda for change for stakeholders like BusinessNZ and others.

I can understand the frustration of business because delays caused by the RMA processes impact, and they cost. Dealing with the various layers of regulations of central and local government can add to the costs.

Climate change?

Business needs to acknowledge this is a real issue, and it goes back to sustainability.

There is a lot of technical detail in the recent Paris Agreement which requires careful examination because it’s in this detail where the rubber hits the road for business and we need to proceed carefully.

Productivity?

Productivity is always a challenge. I think it’s directly related to the efficiency of capital markets - that’s a big part of it - and for business being always able to attract the capital needed.

Innovation?

We have the capacity to be highly innovative but a big challenge is how to retain our intellectual property and monetise it, to ensure we see ongoing returns from it. We need to be able to protect and develop the value of the ideas we produce.

Welcome on board Kirk!

The Government’s Business Growth Agenda is an important agent.

Elements of the tax framework could be changed for the better.

And a goal of the IRD’s business transformation process should be to eliminate delays for business.

The RMA? Changing the Resource Management Act (RMA) presents political challenges. The Kirk Hope

NEWS COMMENTARY

By John Carnegie

The Paris climate agreement and business impacts by countries so far, would see temperatures rise to at least 2.7°C. To encourage more ambitious efforts, under the Agreement countries will talk again in 2018 and take stock of collective efforts in how to progress towards the long-term goal. They will also need to update their current emission reduction pledges by 2020 and then every five years after.

The expectations are now set.

The newly minted climate change agreement – called the Paris Agreement - has signalled a global desire to address climate change.

The final Agreement was more comprehensive than many expected and it shifts the world’s trajectory towards a low-carbon economy.

“The final agreement was more comprehensive than many expected and it shifts the world’s trajectory towards a low-carbon economy.”

The Agreement aimed for a common goal for reducing greenhouse gas emissions around the world. It is a finely tuned document that has shifted the negotiations along a bit further. In other words, it is pragmatic and realistic.

While it has been hailed as a breakthrough, the hard work now begins to put it into operation.

Across the New Zealand business sector, even before the Conference of the Parties (COP21) met in Paris, members of BusinessNZ’s Sustainable Business Council and the Major Companies Group had identified some of the biggest business opportunities in accelerating the shift to a low-emission economy. Those included addressing transport emissions, improving energy efficiency and creating urban environments that promote collaboration and support low-emission business solutions to scale.

So what does the Agreement change for those businesses? In some respects it’s too early to tell. There’s a lot of detail still to come over the next few years.

Unique Agreement But there are also some significant differences already evident when compared with previous agreements. For example, unlike the Kyoto Protocol, this time everyone is expected to play their part – both developed and developing nations.

The big goal agreed at Paris was to reach a global peak in emissions as soon as possible, and capping temperature increases at 2°C above pre-industrial levels.

Parties also agreed an aspiration to limit temperature increases to 1.5°C. New Zealand was part of the group of countries calling for the 1.5°C limit to be included.

This level of ambition is more than many expected and is now an important signal of direction of travel.

Meeting temperature targets matters Businesses can and are already thinking about the impacts and opportunities of that big shift in focus. With the world reorienting towards low carbon products and services, new industries that capitalise on the shift will benefit either through new business opportunities or increased efficiencies.

The first assessment or ‘global stocktake’ in 2023 will assess the collective progress towards the goals, and at regular intervals.

Whether the target is achieved will depend on several important elements including the level of transparency achieved, the reviews, compliance, financing, and whether domestic settings support the right investment and mitigation that support the shift to low-emission economies.

Better transparency will see more pressure on countries that are underperforming.

The Agreement introduces a framework for monitoring, measuring and verifying emissions reductions. It includes some reasonably robust information requirements to be submitted.

While the Intended Nationally Determined Contributions (INDCS) won’t be legally binding there is a strong relationship to the transparency, review and reporting provisions. INDCs submitted will, for example, continue to be made public. And they must be appropriately accounted for, with the expectation that the rules from the UN Framework Convention and the Kyoto Protocol that continue to have some value under the new Agreement will be taken into account.

Over time, the price of carbon is likely to continue to increase. Businesses that haven’t factored that in to long term strategies and investments may end up bearing costs that their competitors do not.

Carbon markets

There’s no doubt that capping temperature rises to 2°C presents a big challenge.

Intended Nationally Determined Commitment (INDC) plans submitted

Under the Agreement, the role of carbon markets is set to expand. Countries can club together and, subject to some accounting and carbon unit quality rules to be developed, can engage on a voluntary BusinessPlus February 2016

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NEWS COMMENTARY

basis in markets that involve trading units towards nationally determined contributions.

The Agreement also sets up a “mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development” which is possibly something like the Clean Development Mechanism, but this is as yet unclear.

New Zealand businesses and Government are now in the process of reassessing what this means for some of our domestic policy settings.

Finance was, as expected, key to unlocking the new Agreement. Public and private sources will mobilise US$100 billion per year to 2025, with a new goal to be set at that point. The Agreement calls on countries to take into account the adaptation needs of developing countries, especially those particularly vulnerable to climate change, the least developed countries and small, island developing states.

Businesses are working alongside government where necessary to provide input into the policy settings that will speed up and ease the transition to a lowemission economy. This includes feeding into the review, currently underway, of the Emissions Trading Scheme. The New Zealand Government currently views this as its principal policy response to climate change – although whether that is the most effective response is up for debate.

NZ land use reflected

In the period to 2020 (before the new Agreement comes into force), the Agreement promotes much more encouragement and discussion, co-

New Zealand’s interests around landuse appear to have been reflected in the Agreement. It contains a reference to “the

12

fundamental priority of safeguarding food security and ending hunger, and the particular vulnerabilities of food production systems to the adverse impacts of climate change.”

BusinessPlus February 2016

operation and information sharing. The Sustainable Business Council and the Major Companies Group will be reconvening groups on short term action they plan to lead over the next four years, from early this year.

The Agreement also introduces a long term goal for net zero emissions by sometime in the second half of the century. In the long-term, low-emission growth isn’t going to be enough. The planet will continue to warm as long as we emit more than we can capture and store.

A group of business leaders are already exploring the long-term systemic change New Zealand businesses need, to steer towards a net zero emission economy, and these discussions will continue throughout 2016.

• John Carnegie is manager energy, environment and infrastructure at BusinessNZ. www.businessnz.org.nz EMA is the biggest shareholder in BusinessNZ.

NEWS COMMENTARY

By Hans Buwalda

Emissions trading review will increase energy costs A review of New Zealand’s emissions trading scheme (ETS) for greenhouse gases is underway and you have a chance to have your say by making a submission to the Government.

The New Zealand Government introduced the ETS in 2008 with legislation requiring the scheme to be reviewed in 2015.

The ETS required upstream energy suppliers (ie, the first producer, or importer ,of fossil fuels such as Solid Energy, Todd Corporation), and the users of imported fossil fuels such as bulk liquid fuels and coal (eg, Z and BP), and industries with CO2 process emissions, to surrender a New Zealand Emissions Unit, for every tonne of greenhouse gas (GHG) that would subsequently be emitted.

Upstream suppliers pass on the costs of these emission units to downstream users of that fuel, who include everyone from large industrial consumers to individual consumers.

“The NZ ETS is New Zealand’s main tool for reducing emissions and will play an important role in this, although other measures will also be needed.”

The Government was aware that energyintensive, GHG trade-exposed industries would suffer competitively if they were fully exposed to this cost. It therefore provided a free allocation of up to 90 per cent of the emission units required, to these industries. It provided a price cap of $25 for an emissions unit.

In 2009, the new incoming Government made some amendments to the ETS, in recognition of the effects of the global financial crisis. It reduced the requirement to surrender emission units, to one unit for every two tonnes of GHG emitted.

It delayed indefinitely the planned phase-out of the free allocation of units to energy-intensive, trade-exposed industries.

The aim of the review is to ensure that the ETS contributes to a change to a lowcarbon economy, which readily adopts new, energy-efficient and renewable energy technologies.

Balance needed in policy and pricing The Government believes that the New Zealand economy needs to transition to a low emissions economy. The NZ ETS is New Zealand’s main tool for reducing emissions and will play an important role in this, although other measures will also be needed.

Earlier this year, it announced a new climate change target to reduce GHG emissions to 30 per cent below 2005 levels, by 2030. This new, more ambitious climate change target will apply from 2021 to 2030, and will be more challenging to achieve than past emission reduction obligations.

The ETS transitional measures will therefore be considered during this ETS review. The discussion paper has made the “one-for-two” emission unit requirements a priority issue for submissions, along with managing the cost of moving to this. It states that this was a transitional measure and the rationale for this no longer exists. The proportion of emission costs within total energy costs, is therefore likely to increase in future years.

This will be an issue for energy-intensive, trade-exposed industries. For these industries, it is important that free allocation continues until such time as international competitors are also subject to costs on their emissions.

If our energy-intensive, trade-exposed industries are exposed to these costs

“The outcome of this review will impact on both the efficacy of New Zealand’s climate change policies, its energy prices and its international competitiveness.” ahead of international competitors, then they will become uncompetitive. Either their exported products will not be competitive in international markets, or their domestic products will be subjected to unfair competition from imports.

Internationally, the term “carbon leakage” is used to describe this.

The risk of climate change results from global GHG emissions. It does not matter where they occur. Therefore, if New Zealand reduces its emissions by “exporting” industrial emissions, it may appear to improve its own emissions profile, but it is not contributing to reducing global climate change risks.

The outcome of this review will impact on both the efficacy of New Zealand’s climate change policies, its energy prices and its international competitiveness. There is a balance needed here, and constructive business submissions can help the Government to find that balance.

Submissions on these issues will be due by February 19, 2016, while submissions on other ETS issues can be made until April 30, 2016.

You can find the review discussion paper at the website of the Ministry for the Environment (www.mfe.govt.nz) under “climate change – New Zealand’s ETS”.

Hans Buwalda is a consultant at EHSconsult and Total Utilities. He has been actively engaged in developing NZ’s climate change policies domestically and internationally for more than 20 years. Email: hans. buwalda@ehsconsult.co.nz BusinessPlus February 2016

13

Employment

By David Shannon

Considerations for CEOs’ employment contracts This article is part 2 in our series on employment contracts and golden provisions for chief executive officers (CEOs). Part 1 was published in BusinessPlus (November 2014, p14).

Employers write employment agreements for executives who are vital to the success and growth of their organisations primarily to attract, motivate and retain those people.

Such agreements will legally specify the conditions of employment, and should be designed to achieve all or most of the following objectives for both employer and executive employee.

Employment contract goals for the employer: • To encourage the best performing executives to remain with the organisation; • To ensure continuity of management in a specific position by providing for a notice period that gives sufficient time for replacement and induction of a new employee; • To enable the employer to terminate the employment contract legally and ethically; • To reasonably restrict the use of time, other directorships and activities of the employee.

Goals for the employee: • To encourage new employees to join, or current employees to remain, by offering supplemental compensation as a management incentive; • To covenant the employee for his/her best performance during employment and impose restrictions should termination occur; • To detail specific financial and nonfinancial considerations in the event of relocation and/or re-assignment of duties; • To protect the employee from changing circumstances within or outside the control of the employer, eg, merger or acquisition;

14

BusinessPlus February 2016

“When deciding whether to have a fixed term contract, the employer and employee should think carefully about what can be a double-edged sword” term contract, the employer and employee should think carefully about what can be a double-edged sword. The employee sees Duration of employment contracts the benefits of a long, fixed term, but fails to recognise the downside of leaving early While setting a timeframe for a contract without adequate provision. From the sounds simple enough, trying to balance employer’s side, restrictive covenants can be conflicting interests is not easy. useful, but it is uncertain how far a restriction can go and still be enforceable. The word Probably the most fundamental decision is whether to have a fixed term, usually followed “reasonable” is the ultimate loophole, and by a defined notice period, or an open-ended opens any clause to interpretation and argument. contract that rolls over regularly if no action is taken.

There is no solid data on the typical length of employment contracts in New Zealand.

From the employee’s point of view, it might appear that the longer the fixed term, the Generally speaking, such contracts run for better. This enables the employee to claim any period from one to five years, and a compensation for the balance of the term if number are open-ended. The length of the a takeover or other strategic change leads to contract is more a matter of organisational dismissal to make way for a new appointee. style.

However, if the employee on a fixed term decides to leave early, the employer could claim for damages. While the employer Contract termination cannot practically stop the employee leaving, It is critical to note that existing employment damages imposed for the cost of recruiting laws and accepted practices tend to override and training a high-level replacement any provisions that may be written into the can make departure less attractive for the contract. employee. More commonly, the “damages” will consist of forfeiture of any separation As decisions of the Employment Court tend to payments. favour the employee in questions of contract termination, the only practical means of From the employer’s perspective, a fixed term terminating a contract, even at the end of its may give peace of mind that a key employee designated period, is through an effective has an incentive to stay, but if the employee performance management system. The has to be ousted, the price, though clearly organisation can only choose to not renew a defined, can be high. contract simply and cleanly, regardless of the designated period, by clearly demonstrating Another practical consideration is the that the executive failed to meet agreed employer’s failure to renew a fixed-term performance standards. contract may technically be considered dismissal for the purposes of the employee You can read Part 3 on the application claiming unfair dismissal or redundancy. Legal of golden parachutes in New Zealand, in decisions have consistently come down on the BusinessPlus (April 2016 issue). side of the employee in issues of this nature.

• David Shannon is EMA’s remuneration When deciding whether to have a fixed consultant. Email advice@ema.co.nz • To provide for retirement income when the employment ceases.

Employment

By Gordon MacDonald

Make health and safety routine At this time of year it can be a struggle being at work. The weather’s great, the beach calls and the memory of summer holidays is fresh in the mind. Even if you love your job it can be hard to settle back into the work routine.

Work is often very much about routine.

Most of us turn up to the same place, at the same time, to see the same people, to tackle familiar tasks. Not that routine is all bad – there is a certain comfort in it. And good routines can be an important part of staying safe on the job.

Health and safety should be part of what you do at work every day. If it’s not, with the new Health and Safety at Work Act coming into force on April 4, it’s time to lift your game. Even if you think your workplace is good at health and safety, the new law is a great opportunity to review what you’re doing now and see if any improvements can be made.

Simple, really But don’t panic. Despite what you might have heard, the new law does not automatically mean your business faces a great stack of new paperwork and compliance costs. In fact, good health and safety is good for business.

Last year I met with a forestry contractor who employed a gang of 10 workers. As an industry, forestry has had its safety issues but has made great strides over the past two years. This contractor told me he now spent a good chunk of his working week on health and safety. I took a deep breath – assuming he was going to say he couldn’t afford it, but instead he said it was the best time he’d ever spent on his business.

“I’m working more closely with my guys than I ever have before,” he said. “And it’s had huge spin-offs, including better morale and higher productivity. If I’d done it 10 years ago I’d be a far richer man.”

That’s how good health and safety should work. That contractor was doing the basics well: showing leadership, talking and listening to his workers, identifying risks, ensuring effective and proportionate

controls were in place and were being used day-in, day-out.

Any law change naturally creates some uncertainty but health and safety doesn’t have to be complicated. For most businesses it’s pretty straightforward and the requirement to take practicable steps to manage workplace risks has been in place for 25 years.

The Health and Safety at Work Act just sharpens the focus on ensuring that those who are in the best position to manage a workplace risk are responsible for doing so.

Not possible to eliminate all risks That means it’s not just up to managers and supervisors. Under the new law everyone from directors down to the casual labourer has a role to play in keeping our workplaces safe. And where there’s more than one business working at a site, they need to talk to each other and agree on sensible health and safety measures. These measures should be based on the level of risk and who is best placed to manage that risk.

Critics of the new law would have you believe that you’re somehow expected to eliminate all risks. That’s not possible and is certainly not what WorkSafe expects.

Risk is part of life. What you need to do

“That contractor was doing the basics well: showing leadership, talking and listening to his workers, identifying risks, ensuring effective and proportionate controls were in place and were being used day-in, day-out.”

is identify your significant risks and their consequences and take sensible steps to manage them.

You don’t necessarily need an expensive, off-the-shelf health and safety system and manual. In fact you should be wary of anyone trying to sell you a quick-fix health and safety system. There is plenty of information freely available on the WorkSafe and ACC websites as well as from many trade associations.

Often I hear organisations say “our people are our number one asset”. Surely the first step in making that fine sentiment mean something is to look after them. So to get ready for the new law, do your research now. Review your current health and safety set-up. Talk to your staff and your colleagues about staying healthy and safe at work. Make a start today.

“What you need to do is identify your significant risks and their consequences and take sensible steps to manage them.”

• Gordon MacDonald is chief executive of WorkSafe New Zealand.

Visit www.business.govt.nz/worksafe He will be addressing EMA’s Policy Forum on March 7 at EMA’s Head Office, 159 Khyber Pass Road, Auckland. WorkSafe and EMA will also be conducting similar forums in Whangarei (Feb 16), Hamilton and Tauranga (Feb 17). Please contact Alan McDonald at email alan.mcdonald@ ema.co.nz for further details.

BusinessPlus February 2016

15

Employment CHAT

Changing roles, recouping holiday Q. I need to massively change a role but keep some of its functions. Do I need to make the person in that role redundant or just offer him a new job description and if he won’t accept it, fire him? - Si

Dear Si Termination is not an option as the person has done nothing wrong, so it would be important to distinguish between restructuring the position and making a variation to the current job description.

If the new role includes minor changes to the current role then a variation may be sufficient, after consultation and consent from the employee.

However, if you are completely changing the role, the original position would have to be disestablished. This of course would require a formal consultation process including a minimum of three meetings with the employee affected. During the consultation process, redundancy would have to be treated as a last resort, so if it is possible to offer this new role that is being created to the employee then redeployment should be considered. If an employee has a few of the skills and experience from their previous role then further training could be offered.

However, if the role is completely different

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

16

BusinessPlus February 2016

increasing productivity in other ways or managing inventory to reduce stock levels.

“However, if the role is completely different and training does not seem like an option, then redeployment is out of the question.”

On the people side, you can request holidays be taken at a time that works for the revenue pattern of your business, but you won’t make friends with staff if they can’t take leave when they really need to.

At the end of the day, if you have no work for one or more staff, of course you can make the positions redundant, and design a new job as business lifts.

and training does not seem like an option, then redeployment is out of the question.

It is important to remember that any changes in a role require consultation and consent through some formal process. Please call Adviceline for a thorough breakdown of the consultation process for a restructure.

Make sure you follow correct procedure and that the redundancy is genuinely for a position no longer needed/justifiable.

Q. Now that Christmas is over and I’ve paid out so much holiday pay, we are facing a cash flow problem. Should I make someone redundant? - Larry

Q. How can I ask a candidate to tell me about themself, without appearing to trap them into disclosing personal details on which to discriminate against them? You look them up on LinkedIn and form all these biases in your head…. – Sharron

Dear Larry

Dear Sharron

It’s important to plan and budget for staff wages and leave - starting now for the year ahead.

It’s a good issue you raise in this international climate of fear and discrimination among people for their religion, political beliefs and so on.

There are many ways to make up a shortfall such as borrowing money, selling shares, selling assets, reducing waste and costs,

A good rule of thumb is to make no assumptions about a person. Your

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Employment CHAT

pay, wary of discriminating assumption could just as likely be wrong, as correct.

It is against the law (Human Rights Act) to discriminate against a person on the basis of their religion, political beliefs, marriage and parental status, age, gender …in fact anything personal, unless you can show a clear business case for needing to discriminate.

Lawful examples of discrimination can be accepted in an employment context. Some of these examples would include health and safety requirements or in the case of a person’s age, to be able to insure them as licensed drivers to drive company vehicles, or to advise about KiwiSaver contributions, for example. In the latter case, employees aged under 18 or over 65 years do not have to contribute to KiwiSaver and neither do their employers.

It is also reasonable to point out that you have a dress code and other policies that they would need to comply with. For example, you could point out that the wearing of a crucificx on a neck chain could be a safety hazard but never a reason for discrimination on religious grounds. You could ask if wearing a turban would interfere with wearing a hard hat, if relevant.

“It is against the law (Human Rights Act) to discriminate against a person on the basis of … anything personal, unless you can show a clear business case for needing to discriminate.”

For example, you could say you require them to be at work from 7am to 7pm or on some statutory holidays – “would that be a problem regarding childcare or other personal circumstances?”

Asking personal questions could be assumed to be for the purposes of discriminating against the candidate.

Making the assumption that a person won’t fit in because you think their religion is not popular among staff, is not reasonable. Not only might you be quite wrong and have lost a very suitable candidate, but a job candidate feeling discriminated against can take you to court.

• By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s

AdviceLine. All names are fictional.

The information in this article is a guide only and not to be used as business advice without further consultation.

EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within NZ), and 1800 300 362 (from Australia), 8am-8pm weekdays.

Alternatively, email advice@ema.co.nz

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17

LEARNING

By Nirupam Sakar

Is your business digital yet?

The number of people in the world with an internet connection is growing at an exponential rate and has now reached 40 per cent.

Technologies such as mobile, wearable devices and the internet of things are accelerating this change. This massive spike in digital-driven connectivity is having an immense impact on people and their everyday lives and how they interact with businesses and products and services.

In this article we will look at four key phenomena that will be instrumental in determining whether businesses are geared to succeed in a future that is clearly digital.

1. Digital disruption Business models that are able to leverage off technology and innovation are reshaping entire industries. Uber has changed the taxi industry, AirBnB the hotel industry, Netflix has changed the way we watch TV and Pandora is re-inventing radio.

Self-drive cars will soon engulf the automative industry and ongoing improvements in 3D-printing pose a significant threat to the manufacturing sector.

To stay ahead in this disruptive

environment, the key lies in the ability of businesses to not only invest in technologies that will retain their current customer base but also to identify and invest in technologies that future generations will demand.

2. The digital consumer The profile of “the consumer” has changed dramatically over the past decade. This is no longer a passive block of people you can mass-market to on one-way advertising media Today consumers are connected and empowered individuals who can seek out the best product or service to meet their requirements, with the click of a button or a swipe on their smart devices.

Their hyper-active digital profiles present a world of opportunities for businesses to identify the individuals and provide personalised interaction and enhanced customer experiences, in the digital world and on the shop floor.

With well thought-out marketing and engagement strategies, businesses are in a position to effectively source prospective customers, engage them and convert them into loyal customers.

Digital channels enable businesses to attract the right customers, track their behaviour, customize products and

services, identify developmental pathways and deepen the relationship between the brand and the customer.

In the future, customer digital profiles are set to expand beyond email IDs, social media profiles and smart devices, to include the internet of things, and that is going to be a seismic shift.

For example, an intelligent refrigerator will be able to assess the food stock and place an online order for groceries when stocks run low, from stores offering best quality or value. So in this case only stores geared to process orders from smart household appliances will survive.

3. Data and information Data is increasingly recognised by business as a core asset that is fundamental to the growth and success of business, especially in the digital age.

With all the digital and technological advances, nowadays it’s possible to collect and store data from a multitude of sources such as business transactions, marketing initiatives, social media platforms, wearable devices, sensors, smart machines, etc.

All these data sets consisting of both structured and unstructured data come together to form large volumes of data termed “big data”.

Businesses are seeing the utility of putting high quality analytics in place to understand big data and derive relevant information from it. This is then applied to improve and customize their products and processes with quick turnarounds, and deploy targeted, data-driven marketing.

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Employment

By Brent Torrens

Search employees for evidence of theft, with care Anecdotal evidence attests to lots of property disappearing from workplaces, including employers’ stock, money or other assets, as well as employees’ belongings.

And it’s tempting to search employees for proof.

However, legal cases point out tricky issues for employers in relation to how far they can go in searching an employee’s personal property for stolen items.

In the recent case before the Employment Relations Authority (ERA), of Lim v Meadow Mushrooms Limited, an employee’s cellphone went missing. The employer had information from a third party that tracking software showed the cellphone’s location was the lodge where yet another employee, Mr Lim, lived.

Two representatives of Meadow Mushrooms went to the lodge and asked its security guard if Mr Lim was home, advising that a cellphone had gone missing. Mr Lim was not at home so the employer returned later and, finding him home, watched from the door as the security guard searched his room. The phone was not there, but was later found in the bushes outside.

Meadow Mushrooms followed a disciplinary process after which it told Mr Lim he would be dismissed, but gave him the option of resigning.

Mr Lim claimed he had been unjustifiably dismissed and that Meadow Mushrooms

Continued from pg18

4. Leadership Leadership perhaps remains an understated but a crucial factor likely to define and ensure success for business in a digital landscape.

With no parameters or benchmarks, most business leaders are hesitant in creating the digital ecosystems needed to sustain

had breached his privacy. The ERA did not have jurisdiction to determine the privacy claim, but found that the employer’s telling the security guard about the missing phone while asking to see Mr Lim, the employer breached the duty of good faith to maintain trust and confidence. The ERA also found that the employer’s complicity in the search of Mr Lim’s room was a breach of the duty of good faith “not to do anything to destroy the trust and confidence in the employment relationship”.

Consequently, the ERA found Mr Lim’s dismissal was unjustified and awarded him $4,840 in lost wages plus $3,000 compensation. The Employment Court subsequently increased compensation to $12,000.

Privacy law Searching an employee’s belongings or vehicle can be seen as collecting “personal information”, so the Privacy Act principles apply.

Principle 1 requires that information is collected for a lawful purpose connected with a function or activity of the employer; and that the collection of the information is necessary for that purpose.

In one case before the Privacy Commissioner, a company’s security policy allowed a search of all bags and vehicles entering or leaving the employer’s site. The Commissioner agreed that was for a lawful purpose connected with the company’s functions and activities – namely, after a series of property losses.

and grow their businesses. Leaders will also need to learn to cede control and invest in mutually beneficial relationships with employees and customers and create collaborative environments facilitated by digital technologies. And finally, leaders need to be able to use big data in executive decision-making.

These are just some of the areas that businesses should focus on as they move

It was OK to search sports or carry bags, as they could conceal such large items as scales or laptop computers that had been stolen in the past, but not to search handbags according to Principle 4.

That principle provides that personal information must not be collected by an agency by unlawful means or by means that, in the circumstances, are unfair or intrude to an unreasonable extent upon the personal affairs of the individual concerned.

Points to keep in mind • Always obtain the employee’s consent for a search of their personal belongings.

• If seeking consent for a one-off search on suspicion of stolen goods, ensure the employee is aware they do not have to consent.

• Ensure the employee is present when the search takes place.

• Only search to the extent necessary for the purpose, to avoid any unreasonable intrusion on an employee’s affairs.

Never search an employee’s private residence – this would likely be seen as an unreasonable intrusion.

• If you wish to conduct routine searches, ensure a robust policy is put in place first and ensure that staff are aware of the detail.

• If the problem of lost property is serious, develop and implement a policy allowing searches.

• Make staff aware of the problem and consequences of conduct such as theft.

• Searching should be a last resort. If you can solve the problem by other means, that would be a better outcome.

• You may like to consider engaging private investigators.

• Brent Torrens is an employer adviser at EMA’s AdviceLine.

Email brent.torrens@ema.co.nz

towards building a digital ecosystem for their business.

To hear more on these topics, come to SuperTech 2016 at the Spark City Conference Centre on March 17.

• Nirupam Sarkar is EMA’s Portfolio Manager for Online Learning, and Computer, Web and Digital Media Training.

Email Nirupam.sarkar@ema.co.nz BusinessPlus February 2016

19

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IN BUSINESS

By Joanna Doolan and Claire Dilks

Deductions for charitable gifts depend on associated benefits Businesses are constantly asked to support good causes, and they often assume their donations will be fully tax deductible.

That’s not always correct.

The IRD is trying to provide clarity about this, in a discussion document for public feedback due February 11.

Most of that document is straightforward, but one proposal that concerns us is the notion that where there is a mixture of gifting with material benefits received, the IRD does not consider you can split the donation into gift and non-gift components for tax purposes.

The critical point is to understand what is involved at the time you are making the decision, and understand the relevant tax implications. This allows you to get the paperwork right and to understand the real cost to you.

Clarify intentions at the start The first step is to determine if you are giving an unconditional gift, or else payment more in the nature of a sponsorship where you expect to get something in return.

Sponsorship is defined as providing a payment with the intention of advertising and promoting your business. The payment amount should be deductible to your business and you will need to add GST to the amount paid. You also need to receive a tax invoice if you want to claim back the GST.

“The first step is to determine if what you are giving is an unconditional gift or more in the nature of a sponsorship where you expect to get something in return for what you are giving.”

If your intention is to benefit the charitable organisation with no expectation of your business being promoted as a result of your paying them, or that any such promotion would be only incidental, then the amount is more likely to be a donation.

Often things are not that clear-cut and what you are providing is more in the nature of a donation with benefits coming back to you in the form of some sort of acknowledgement of your business, and benefits such as free tickets to the donee’s event(s).

Sponsorship deductions To obtain a deduction for sponsorship expenses you need to establish there is a link between your business and the expense. This means showing IRD that your agreement with the charity you are supporting provides for promotional activities for your business.

The IRD will also look at the extent and prominence of the exposure your business gets as a result of your sponsorship, and without appearing too commercial about your good works, it is important you spell it out. For example, show any evidence that your potential customers attend these types of events; or that your product or service is able to be actively promoted during the event via a display.

If your sponsorship involves the right to advertise in the organisation’s magazine this will be subject to GST and is likely to be deductible to you.

If you receive free tickets to a dinner as part of the package agreed at the time you give the donation, it is best to get the donee to provide a separate invoice for the cost of these as, unless you can clearly establish this is merely incidental to your support, the cost of these will be subject to the entertainment tax regime – with only 50 per cent of the cost being tax deductible and only 50 per cent of the GST cost able to be claimed back.

But if, for example, the organisation you are supporting later invites you to an event in

“To obtain a deduction for sponsorship expenses you need to establish there is a link between your business and the expense.” appreciation of your gift, this is likely to be incidental, as it was not part of the offer at the time you made your gift.

Unconditional gift deductions If the amount you give to a charity has no requirements or benefits attached, and your gift is unconditional, you are able to claim a deduction for this against your company’s taxable income. However, this is limited to taxable income, so if you do not have taxable profits in the year concerned, the benefit is lost and it could be better to make the donation as individual shareholders.

To claim for unconditional gifts you need a donation receipt, and ensure the organisation you are giving to is an authorised donee: generally these are societies, institutions (including public institutions), associations or trusts whose funds are applied wholly or mainly to charitable, benevolent, philanthropic, or cultural purposes within New Zealand, and listed in schedule 32 of the Income Tax Act. Another word of caution is to ensure the organisation you are supporting is legitimate and has reputable governors, otherwise the brand association and other benefits you are expecting could turn negative.

You would be surprised at how often the right tax treatment is an after-thought, and what should be a great opportunity with benefits, turns into a costly exercise for business.

• Joanna Doolan is a tax partner and Claire Dilks is an associate director at EY. Email joanna.doolan@nz.ey.com; claire.dilks@nz.ey.com BusinessPlus February 2016

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IN BUSINESS

By Rosina Webb

Taking the leap into LinkedIn If you’ve never taken the leap into the LinkedIn world, it is important upfront to set clear objectives for your use of the world’s largest internet-based, professional network.

Is your focus on building profile? On lead generation? On thought leadership?

LinkedIn is a network with more than 400 million members, in more than 200 countries and it’s continuing to grow.

“A key concept to grasp when utilising LinkedIn is to listen and to focus on other people’s needs, and then provide assistance or insights that meet those needs.”

Creating content: The content and information you share on LinkedIn, whether created afresh or sourced elsewhere, needs to be relevant and of a high standard. If you can regularly share content that is informative and valuable to your network, you will position yourself in the minds of your clients or potential clients as a leader in your field, and will likely be top-of-mind for them when they have a need.

Connecting: Obviously your first port of call is to connect on LinkedIn with existing clients and professional contacts with whom you already have a relationship, or who you have networked with at an event or seminar.

Secondly, you can work through LinkedIn ‘groups’, which are industry-related groups, client-related groups, etc, that provide articles or threads and can also generate additional connection opportunities.

Lastly, utilise ‘interest groups’. Find forums of interest where you can regularly contribute, but also take the time to read others’ queries and the solutions submitted, in order to learn from others.

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BusinessPlus February 2016

•

Start discussions or comment on discussions in relevant LinkedIn groups.

Prospecting: Identify ‘groups’ that are relevant to your original LinkedIn objectives, and join them.

Defining your LinkedIn objectives will assist with developing relevant strategies to achieve those objectives.

Setting up your profile: The information and presentation of your LinkedIn profile is the face of your business to the network. It needs to be concise, informative, relevant, professional and it goes without saying that it needs to be proof-read for spelling mistakes or obvious and embarrassing errors.

If you see a client or contact has a work anniversary or promotion, for example, send them a message via LinkedIn to congratulate them, and maybe organise a catch-up to hear about their new role and create a reason to meet.

• If you see an opportunity to connect two of your contacts for their mutual benefit, offer them the chance to connect through you.

LinkedIn’s ability to reach businesses and to connect with professionals in general, ensure it is a powerful platform for business-to-business (B2B) social media marketing.

When you are ready to leap in, here’s how:

•

Planning: Setting a content plan is a good way to organise what you will produce or share, including allocating dates on which to post that content. It ensures your content is regular, and helps you keep track of what you share.

You could set up a ‘library’ of content that you can draw on as needed, rather than scramble to post something at the last minute.

Keeping top of mind: Consider what a client would find interesting and engaging and what would be relevant to them. Here’s how:

Asking questions, posting content and comments or ‘liking’ others’ posts, as applicable, are great ways to build your profile and your credibility. Posting answers and helpful information to issues raised in LinkedIn groups by potential customers benefits them, and makes them more likely to approach you for further advice or business opportunities.

Another feature of LinkedIn worth investing time in is ‘traffic driving’. LinkedIn has a social sharing button that enables you to share content in your status updates. The information you share is visible on the homepage and so it works well if you have business content that can create a viral sharing effect.

•

Keep abreast of news or topics that are trending in your area of expertise, and allow for some movement in your content plan to address and post topical content.

A key concept to grasp when utilising LinkedIn is to listen and to focus on other people’s needs, and then provide assistance or insights that meet those needs. This helps build rapport and create a meaningful connection.

•

Share, comment or ‘like’ some of your clients’ content.

•

If you see an article that is particularly relevant to a certain contact or group of contacts, send them a LinkedIn email to share it with them in a more personal way.

Building relationships firstly within the LinkedIn forum, and then offline, is the key to making the LinkedIn platform work best for you and your business.

• Rosina Webb is founder and managing director of Energise & Associates.

Visit www.energise.net.nz

IN BUSINESS

Intangible assets are the future of a business Every day thousands of engineers, designers, scientists, product managers and factory staff across New Zealand come up with new ideas, or improve on old ones.

The outputs of their activity are intangible assets (the old term being intellectual property), and include both registered forms such as patents and trademarks, and unregistered forms such as confidential information, trade secrets and know-how.

More than 80 per cent of most businesses’ value now resides in intangible assets and is fundamental to their success. However, despite the value and importance of intangible assets, many New Zealand organisations view them as a secondary consideration, and few manage them well.

Regardless of the industry you are in or the product or service you produce, the strength (or weakness) of your intangible assets will have a critical impact upon your business’ bottom line.

Role of intangible assets in business If you are in business, then you have intangible assets. Granted, you may not have patents or trademarks, but intangible assets are much more than patents and trademarks. The most important and valuable intangible assets are things like trade secrets, copyright, confidential information and know-how. Your carefully cultivated distribution channels, the knowledge that you have to add X before Y in the manufacturing process, the

customer details in your database and/or the code in your software platform are all intangible assets.

They provide you with competitive advantage and enable your business to run. Could you run your business for a week without relying on any intangible assets? The answer is almost certainly no, and that is why intangible assets are so important.

By Paul Adams

not them, owns a core piece of intellectual property, or their latest “breakthrough technology” actually broke through 10 years ago and they are now infringing someone else’s intangible assets.

Manage your intangible assets Make 2016 the year to get your intangible assets in order. Start by understanding what intangible assets you have now, and how you should manage your newly created intangible assets.

Things you can do right now are: 1. Find an independent intangible asset specialist (not a patent attorney) who can provide you with expert and unbiased advice.

2.

Put intangible assets at the top of your to-do list and keep them there.

When it comes to your intangible asset position, a “stitch in time saves nine” and remember it is extraordinarily expensive to fix things up once they have gone wrong.

3.

Revise company policy on matters such as confidentiality, data security, ownership of intangible assets, information published on your website, visitors and third party meetings - with intangible assets in mind.

4.

Look into getting training or coaching programmes for your employee(s) by experienced intangible asset specialists. Generally, in small companies all employees should have a good understanding of intangible assets, while larger companies should educate all managers and staff who attend customer or supplier meetings, have contract negotiations, technical discussions or engage in visits to external parties.

5.

Create a culture in your business that recognises and values its intangible assets.

NZ behind the eight ball So why is New Zealand behind the eight ball when it comes to managing intangible assets? The reason is twofold.

Firstly, when the topic of intellectual property comes up, most people talk to the traditional advisors in this field - patent attorneys - who focus almost exclusively on patents and trademarks.

Unfortunately, patents are not the kind of intangible assets inside most New Zealand companies. It is not uncommon for companies to spend a fortune on patents, only to realise later they have wasted their money; their intangible asset was actually know-how, which they have now disclosed to the public (and their competitors) via their patent application.

Secondly, intangible assets are seldom a burning issue for managers and are all too easy to put off. These assets only get to the top of the agenda for most businesses when something goes wrong: managers discover a contractor,

• Paul Adams is CEO of EverEdgeIP, a global intangible asset specialist.

EverEdgeIP assists senior management, boards and investors to identify, manage and generate value from their intangible assets. www.everedgeip.com BusinessPlus February 2016

23

the the the fast track fast track fast track to export to export to export success success success

ExportNZ exists to help more Kiwis transform their companies, to get onto more the world and stay there.

ExportNZ exists to help Kiwisstage transform their We are a not-for-profi t, non-government membership association runtransform by exporters forstay exporters.

Through our ExportNZ exists toonto help more Kiwis their companies, to get the world stage and there. nationwide network of more than 2500 exporters, we provide the connections, capability and collective voice to companies, toenvironment get onto stage and there. create best possible formembership you the to tradeworld globally. run We are a the not-for-profi t, non-government association by exporters for stay exporters.

Through our nationwide network of more than 2500 exporters, we provide the connections, capability and collective voice to We are a not-for-profi t, non-government membership association runkey bypeople exporters forthe exporters.

ExportNZ have collaborated with New Zealand’s top exporters and from extensiveThrough businessour create the best possible environment for you to trade globally. nationwide network ofinmore than 2500 we provide the connections, capability andNew collective voice to support eco-system developing the exporters, Export Excelerator Programme with a view to getting Zealand’s early create the best possible environment for you to trade globally. stage and emerging exporters theZealand’s fast track top to export success.

ExportNZ have collaborated withon New exporters and key people from the extensive business support eco-system in developing the Export Excelerator Programme with a view to getting New Zealand’s early ExportNZ have collaborated with New Zealand’s top exporters and key people from the extensive business stage and emerging exporters on the fast track to export success. support eco-system in developing the Export Excelerator Programme with a view to getting New Zealand’s early stage and emerging exporters on the fast track to export success.

www.exportexcelerator.co.nz

www.exportexcelerator.co.nz www.exportexcelerator.co.nz

Professional brand strategy & creative design that’s uniquely you -

› Brand strategy & design › Website design & implementation › Print, label & packaging design › Information graphics › Language translation

We worked with ExportNZ to design and build the Export Excelerator website and brochure. Let us understand your business and see what we can do to accelerate your business.

› Content marketing

Talk to Bill Lissington on 021 358 208

International TRADE

By Catherine Lye

Smoothing the waters for exporting Exporting is not plain sailing. Making mistakes on the international stage can be costly and even crippling for your business.

However, there is an extensive business support eco-system - a labyrinth of government agencies, local economic development agencies, private service providers, country-focussed business councils and business support organisations such as ExportNZ, providing the knowledge and networks to help your export drive.

Pitfalls and risks can be mitigated by accessing this network.

ExportNZ has collaborated with 10 of New Zealand’s top exporters and other key people from the business support eco-system in developing the Export Excelerator Programme, with a view to getting New Zealand’s early stage exporters on the fast track to export success.

Special thanks to Air New Zealand Cargo who join us as a strategic partner in helping drive accelerated and sustainable export growth for your business and New Zealand.

What is Export Excelerator?

The goal of the two-step programme is simple: 1. Completing the online survey helps you

identify gaps in your export capability.

2. The survey results will: a. allow ExportNZ to guide exporters to educational programmes, organisations, qualified advisors or providers with expertise in the area where you may require assistance; b. assist ExportNZ identify exporters with strong export capability who will be invited to engage in ExportNZ’s focused mentoring programme; c. benchmark your business against 10 of New Zealand’s top exporters.

What is the value to my business?

This programme will ensure you embark on your export drive with your eyes wide open, avoiding making costly mistakes many exporters before you have made.

The overriding aim of the mentor phase of the programme is to encourage and support your business in achieving your designated goals, as well as providing a distinct pathway to a successful and sustainable export outcome for your business.

The mentors will identify and challenge your thinking on issues such as these: • Where your business is at; • Where the export opportunities are; • How you bring your export vision to a reality; • Logical steps for export success and how

to avoid the pitfalls and traps (and there are plenty of those…); • How you fund, cope and plan financially to grow exports.

Helen Thompson-Carter, formerly General Manager at Kagi Ltd, engaged in the programme and had this to say: “It is all about the ‘value add’ … Export Excelerator is outstanding!

“It is about the opportunity to spend time in a ‘think tank’ with some of the most highly regarded executives in their field, who are experienced in export and willingly invest time and energy into your business.

“The programme facilitates discussions, asks the hard questions and sets you on a path bound for success. The advice and direction you get from the Export Excelerator programme will be the most valuable you will ever get. If you are serious about export and are given the opportunity to be part of the programme – take it! It will be the best ‘export’ decision you ever make.”

Committed to export success? Visit http:// www.exportexcelerator.co.nz/30-minutesurvey/ and take the first step.

• Catherine Lye is manager of ExportNZ, a division of EMA. Email catherine@exportnz.org.nz BusinessPlus February 2016

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International TRADE

By Brendon Wilson

Fixing the weakest

link in country reputation

Much reputational risk in international trade is based on countries’ rankings in Transparency International’s World Corruption Perception Index. For some years New Zealand has held a high ranking and benefitted from the reputation that gives us.

So it makes sense that all parties look after their own reputations by their own internal, top-down commitment to policies, processes and ethical practice; showing reporting, plans, training and compliance with, for example, the recent Organised Crime and Anti-Corruption legislation.

However, there have been worrying signs recently that New Zealand is slipping in many measures, against competitive countries.

And it makes equal sense that if there is any part of New Zealand’s structure which lowers our international ranking or endangers our overall reputation, this is a mill-stone around all our necks in the world of trade - we should all demand that those weak links be repaired, and fast.

We need to understand just what New Zealand companies, and our country’s governance, need to do to ensure we don’t trip up, for the sake of our country’s trading health. New Zealand needs to improve in its reputational practices and focus on the gaps, even more than competitive countries that have been working harder at it.

There are two sides to New Zealand’s ranking: •

•

26

individual companies’ and structures’ reputations and trust are largely the responsibility of, and within the control of, those organisations, which demonstrate trustworthiness individually and also combine to make up New Zealand’s reputation; and New Zealand’s overall ranking and reputation that we all rely on as we do business. We can’t individually control this, but if it slips away we all suffer, and we are all left to try to fix it.

BusinessPlus February 2016

As an example, companies that have built their business and strength by providing goods or services to Volkswagen must be very anxious about risk to their business by recent public exposures, so it must be difficult for them to show their own investors, suppliers and trading partners’ reassurance of their own long-term stability. The solution is in rigorous action to investigate and repair the VW problem. Weak links need to be fixed so all business is not damaged – and doing so before the crisis is better than after.

Tip for 2016: be upfront In a recent address to Transparency International New Zealand, Adrian Orr, chief executive of the NZ Superannuation Fund, opened up about the success of the Fund based on its responsible investment framework set by rigorous standards of trusted ethical, responsible, open policies and reporting.

From his experienced view of New Zealand companies’ values, Adrian is sure that without upfront, unambiguous, indepth reporting on ethical standards and investment, New Zealand companies will be in trouble.

A guide is the now-normal overseas expectation by companies looking to set up trade relationships or buy into worthwhile investment opportunities that now refuse to consider companies that don’t normally and clearly report on their ethical standards and investment.

Traders and investors expect to be shown both the governance and daily practiced processes to prevent bribery and corruption. Without this focus and the reporting on it, many companies will be unable to gain investment and to conduct worthwhile trade, and so could be out of business by 2020. International business expectation really is that high – a gathering storm for those who ignore it.

The latest country rankings on Transparency International’s World Corruption Perception Index will be released soon. We anxiously wait to see if our international reputation is being maintained or is falling – if it falls, we all need to focus on the immediate remedies to repair it, or we are all losers.

• Brendon Wilson is a consultant to Transparency International New Zealand.

Visit www.transparency.org.nz

International TRADE

By Thomas Manning

Mixed outlook

in Latin American markets for 2016 The New Zealand Government’s “pivot” in international trade policy last year towards Latin America was a timely new strategy in light of China’s recent economic slowdown.

Recent visits by PM John Key and MPs to Mexico, Brazil, Chile and Colombia have raised New Zealand’s profile and strengthened bi-lateral frameworks to facilitate trade, especially in education, agro-technology and IT. And resources have been increased for both New Zealand Trade and Enterprise and Education NZ in the region.

As a whole, Latin America (Mexico, the Caribbean, Central and South America) is the fourth largest economy in the world with a population of around 595 million and vast natural resources. The purchasing power of its burgeoning middle classes provides an enticing proposition for New Zealand exporters.

In the past, so-called “golden decade”, Latin America enjoyed stellar economic growth on the back of high commodity prices driven by demand from China. With the exception of Argentina, Brazil and Venezuela, all the regional economies strengthened their domestic capital markets and to varying extents lessened their dependence on commodities.

Decelerating growth in China has driven commodity prices down and caused severe recessions in Brazil and Venezuela, which rely heavily on crude oil exports.

But Latin American GDP will grow 0.2 per cent during 2016 (and excluding Brazil and Venezuela the regional growth will be 2.4 per cent) *.

Mexico, Latin America’s second-largest economy, will grow GDP 2.6 per cent* due to close economic ties to firming US markets.

“Latin American GDP will grow 0.2 per cent during 2016 (and excluding Brazil and Venezuela the regional growth will be 2.4 per cent).”

Other economies with close ties to US markets are: Panama, which will grow 6.2 per cent* on the back of financial services and a new port on the Panama Canal; followed by the Dominican Republic at 5.2 per cent, supported by tourism and services; and Costa Rica at 3.3 per cent* from agricultural exports and high-tech products including microchips.

Bolivia will grow GDP 4.5 per cent* with the investment of US$8.2 billion in hydroelectricity projects and infrastructure.

Chile, one of the region’s most businessfriendly and robust economies, will experience a soft rebound in investment and rising consumption, with 2.1 per cent* growth.

An ambitious infrastructure development plan and increasing consumption will power 3 per cent* growth in Colombia.

Paraguay’s output will also grow 3 per cent*, on the back of a diversified manufacturing sector.

Increased mining export volumes will enable Peru’s GDP to grow 3.4 per cent* this year, and 6 per cent in 2017, as mining mega-projects coming on-stream lift copper production by 80 per cent.

Overlook the difficulties Argentina, Brazil and Venezuela are in recession as a result of populist economic policies, which became unsustainable when commodity prices fell, leading to massive fiscal deficits plugged by printed money that has led to high inflation.

A new government in Argentina, Latin America’s third-largest economy, will improve output as capital and currency controls have been removed and fiscal tightening is underway, which will dampen inflation that was 29.1 per cent in 2015.

The Argentine economy will grow 0.8 per cent* in 2016 as reforms push a rebound in growth, as investment strengthens on renewed investor confidence.

Output in Brazil, the largest economy in the region and seventh largest in the world, will contract 2 per cent* in 2016 (after contracting 3 per cent in 2015). Economic confidence and government stability in Brazil are beset by inflation (10.4 per cent in 2015), a pervasive and ever-widening corruption scandal, efforts to impeach President Dilma Rousseff and the lowering of Brazil’s sovereign debt rating to junk status.

Venezuela has been hit hard by the fall in crude prices, upon which it depends for 80 per cent of its national budget, and from economic mismanagement, which has resulted in the world’s highest inflation (179.6 per cent in 2015) and volatile politics.

It’s fair to say the economy is cratering as GDP will contract 7 per cent* in 2016 after contracting 6.7 per cent last year.

New Zealand’s early exporters to China were confronted with political volatility and roller-coaster economic conditions but, as well-established traders by the time conditions improved, they ultimately reaped handsome rewards. New Zealand exporters taking the same path in Latin America will profit just as handsomely for their prescience and perseverance. * Source: 2016 Latin America GDP Forecast by the United Nations Economic Commission for Latin America and the Caribbean.

• Thomas Manning is governing director of Latin American business consultancy Manning Group Limited; a founding member, former vice-president and long-standing director of the Latin America New Zealand Business Council and a regular Buenos Aires Herald correspondent on New Zealand/Latin American trade matters. www.manninggrouplimited.com BusinessPlus February 2016

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Member PROFILE

More than just

techie people

Rob Lee joined New Zealand IT company, Theta, some nine years ago as one of its first employees, and three years later took up the role of chief executive.

At the start, Theta’s team members were all IT associates or contractors; now the company has 200 staff.

It has consultancy teams specialising in business intelligence, software development, business solutions and systems. For example, the 50-people Theta Software team builds apps, especially web and mobile, in all the popular technologies.

Theta first took shape in 1995 when four IT professionals were asked by AFFCO’s chief Information officer to team up, rather than provide their services as individuals.

“…there’s always a beer in the fridge, and people can work from home if they need to, but no one abuses the privileges.”

Twenty years later AFFCO is still a major client, as are other household name companies Genesis Energy and Southern Cross Healthcare, which used to make up 70 per cent of Theta’s workload.

Says Rob, “When I came into the company, Theta had about 30 customers with a turnover of about $7 million a year.

“Then with the GFC, growth really took off. Theta is three-and-a-half times larger

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BusinessPlus February 2016

than it was six years ago, with more than 180 customers.

“Today Theta’s target is to have 10 or more customers contributing 50 per cent of revenues, and to maintain 15 per cent growth year on year.

“After nine months of last year we achieved 105 per cent of revenue and profit for the year to date. We expect to end our March 2016 year at $31 million, with 15 per cent from acquisitions, which we think of as expansion rather growth.”

Strong governance At the start, Theta was a proprietor–led company with no formal structure.

Then, with what Rob suggests showed remarkable foresight, the original owners established a proper board and constitution for the company, initiatives which continue to serve them extremely well.

He says, “The distinction we may have from other companies is the owners don’t manage the company and don’t dominate the board. We’re strong on the separation of the roles of the board and the management.”

The business has 15 shareholders with two of the original owners still working for it. Rob points out that Susan Paterson, a highly experienced professional director, has chaired the company for many years.

“Our staff must be fully convinced the customer comes first and that we do the right thing by them. This means management must strongly back the staff in what they agree with customers,” he says.

“We deliver what we say we will. Our customers stay with us for very long periods and this is a strength. Integrity is very important to us and we strongly believe we demonstrate this.

“As part of putting the customer first we take the time to understand their business. We match that business understanding with our technical knowledge, which is very strong, to advise at a strategic level. We understand business; we’re more than just techie people.

Family values “We have a company culture with family values, which contributes greatly to attracting and retaining really great staff. We have a collegial environment here, where each person is a valued member - there’s always a beer in the fridge, and people can work from home if they need to, but no one abuses the privileges.

“The people at Theta like building smart things, and we want to provide a cool environment to work in for these seriously smart people.

We know business

“Most of our work comes as a result of word of mouth and while we would like all our valuable staff to stay with us, they do move on and this too is very often the source of work for us from referrals.”

With the ongoing digital revolution and analytics creating huge demand, Rob says Theta’s competitive advantage is always about putting the customer first.

Rob ticks off the areas driving the company growth, starting with “a very good business budgeting and

“Susan is very well respected; we get a free hit from having someone of her calibre on our board.”

Member PROFILE

forecasting application called 6 Degrees” - a product developed in New Zealand that has lots of potential.

“We have set up a global distribution channel for it, with partners already in the US, Canada, South Africa and Poland And we have other products under development, especially in the BI [business intelligence] area that could be distributed via these channels.

“The people at Theta like building smart things, and we want to provide a cool environment to work in for these seriously smart people.”

Matt Owen, one of Theta’s founders

“Our timing was lucky in that we committed to building our business intelligence practice just before the GFC. The GFC meant that with the downturn in sales many companies began looking for insights within their own operations to boost their productivity and we had the right skills in place to help them do this.

“We grew our practice in this field fivefold in three years.

“We invest in research and innovation, which means we stay well ahead of the game with new technology. An example is in our total rebuild of the user friendly INTOUCH POS ski pass system for ski field operators, which is being adopted in the US and elsewhere overseas.

Rob Lee, CEO of Theta

“Overseas opportunities are increasing and ultimately we expect to become more global.”

BusinessPlus February 2016

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Member PROFILE

River access opens up local adventure Waikato River Trails have opened up public access to 103kms of the South Waikato district adjacent to Waikato River for a variety of scenic adventure packages.

The Trails’ walking, tramping and cycling track starts at Atiamuri just north of Taupo, wending its way past the river’s many hydro power stations until arriving at Lake Karapiro.

Just 10km from the lake, in Putaruru, is where the Trails’ administrator, Waikato River Trails Trust, is based.

General manager Glyn Wooller says the number of people making the three-day adventure, for example, is rising rapidly, reaching 35,000 last year, which was up 18 per cent on the year before.

In November 2011 the trail opened. About 70 per cent of visitors are cyclists and the rest are trampers.

Glyn is pleased the project is allowing people to connect with the region’s natural assets - the river and forests while providing useful employment opportunities for locals previously largely limited to forestry and farming.

The trust employs six people on trail construction, maintenance, signage and marketing, along with supervising 100 volunteers who undertake tasks such as the planting of thousands of native trees.

The Waikato River Authority is keen to encourage activities like that, Glyn says.

Many other people are engaged in providing accommodation, cafes and cycle hire.

Storyboards are also being put up along the trail, telling the stories of the area’s heritage. In all the trail represents an investment to date of $8 million.

Lately the trust has been developing special events like The Generation, in

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BusinessPlus February 2016

April, and Taniwha in November, which are intended for local and overseas kayakers, road and mountain bikers and runners, to promote the pristine adventure facility.

“Tourism NZ is also now giving it a big push,” Glyn says.

Just 3 per cent of trail users are from offshore, but it’s early days yet for international awareness.

Back in 2006 the South Waikato District Council’s aim was to diversify employment.

With major sponsor Mighty River Power

on board, the trail venture was soon underway.

The timing proved fortuitous, as when the GFC recession triggered a hunt nationally for jobs, cycle ways were quickly recognised as winners.

“We were the first to sign a contract in 2009 for funding from the government to develop a cycling trail,” Glyn says. “Sections of the trail had already been started as a walking track and we were successful in winning dollar for dollar funding to upgrade it for cycling.”

FREE for all EMA members | To register call AdviceLine on 0800 300 362 or email AdviceLine@ema.co.nz Visit www.ema.co.nz

Summer Member Briefings Schedule 2016 Day/Date

Time

Venue

Waikato / BOP Mon. 29 Feb.

9.30am - 11.00am

The Junction Hotel, 700 Pollen Street, THAMES

Mon. 29 Feb.

3.00pm - 4.30pm

ASB Baypark, 81 Truman Lane, MT MAUNGANUI

Tues. 1 March

9.30am - 11.00am

East Bay REAP, Reap House, 21 Pyne Street, WHAKATANE

Tues. 1 March

3.00pm - 4.30pm

Suncourt Hotel & Conference Centre, 14 Northcroft Street, TAUPO

Weds. 2 March

9.30am -11.00am

Holiday Inn, 10 Tryon Street, Whakarewarewa, ROTORUA

Weds. 2 March

2.00pm - 3.30pm

Central North Island Kindergarten Association, 6 Glenshea Street, PUTARURU

Thurs. 3 March

2.30pm - 4.00pm

Bruce Pulman Park, Teamsports Centre, Walters Road, PAPAKURA

Fri. 4 March

7.30am - 9.00am

EMA, 159 Khyber Pass Road, GRAFTON Room 2C/2D

Fri. 4 March

3.00pm - 4.30pm

EMA, 159 Khyber Pass Road, GRAFTON Room 2C/2D

Mon. 7 March

3.00pm - 4.30pm

Waipuna Conference Centre, 58 Waipuna Road, MT WELLINGTON

Tues. 8 March

9.30am - 11.00am

QBE Stadium, Stadium Drive, ALBANY

Tues. 8 March

3.00pm - 4.30pm

Bruce Mason Centre, 1 The Promenade, TAKAPUNA

Weds. 9 March

3.00pm - 4.30pm

Ellerslie Event Centre, Ellerslie Racecourse, 80 Ascot Avenue, REMUERA

Thurs. 10 March

9.30am - 11.00am

Counties Inn, 17 Paerata Road, PUKEKOHE

Thurs. 10 March

1:00pm - 2:30pm

Greyhound Function Centre, Manukau Sports Bowl, Te Irirangi Drive, MANUKAU

Fri. 11 March

9.30am - 11.00am

Quality Hotel Lincoln Green, 159 Lincoln Rd, HENDERSON

Mon. 14 March

9.30am - 11.00am

Stamford Plaza, Albert Street, AUCKLAND CITY

Tues. 15 March

2:00pm - 3:00pm

Webinar: www.ema.webex.com

Weds. 16 March

3:00pm - 4:30pm

Switzer Residential Care, 71 South Road, KAITAIA

Thurs. 17 March

9:00am - 10:30am

Scenic Hotel Bay of Islands, 58 Seaview Road, PAIHIA

Thurs. 17 March

1:30pm - 3:00pm

Kingsgate Hotel Whangarei, 9 Riverside Drive, WHANGAREI

Mon. 21 March

9.30am - 11.00am

Titirangi Golf Club, Links Road, NEW LYNN

Mon. 21 March

2:30pm - 4.00pm

Butterfly Creek, Tom Pearce Drive, MANGERE

Auckland

Northland

Auckland

BusinessPlus February 2016

31

R O F W S R E R E N FF BE O EM M

BRING YOUR BUSINESS BROADBAND, LANDLINE & MOBILES TOGETHER AND SAVE.

99.85 +

$

PROFESSIONAL BUSINESS BROADBAND BUNDLE

55.85 =

$

AND ABOVE MOBILE PLANS

SAVE

5

$

PER MOBILE

PER MONTH

CHECK OUT SPARK.CO.NZ/SORTED FOR MORE INFO OR CALL US ON 0800 BUSINESS

SPA1574

Prices shown exclude GST. A 24 month term applies to all Business bundles. Early termination fees apply. $299 with Business bundles and $199 with naked. Mobile discount applies to one mobile on a Spark Business or Business+ Mobile plan, and must be on the same customer number as the Essential, Professional and Complete Business bundle. The mobile credit ends at the end of the first 24 months or if the Business bundle or mobile plan terminates before that time. Spark mobile postpaid terms and charges apply. Wiring charges and connection fees may apply.