Business Plus June 2017 by EMA

ISSUE 148 JUNE 2017

Make new connections ...through networking at our events – P10

Pay equity law in the spotlight

P11, 15

It’s war out there! You need a strategy

P20

Export AwardS finaLists announced

P26

Overhaul of business pays off for new owners

P30

...AND MUCH MORE!

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On the cover: Pictured at a recent Policy Forum at EMA in Auckland are (l-r) Christina Leung [NZIER], Kurush Ganjia [Kiwi Pallets] and Jeremy Hall [Ministry of Foreign Affairs and Trade]. BusinessPlus is published by The Employers and Manufacturers Association (Northern) Inc (EMA) EMA is the major shareholder of national lobby group, BusinessNZ. BusinessPlus is attached to EMA’s fortnightly email newsletter, e-report.

Editor: Mary MacKinven T +64-9-367 0939, M +21 636 089 E mary.mackinven@ema.co.nz Designer: Ripeka Mikaere Printer: MHP

Every one of the scores of events that EMA holds each year allows time at the end for networking, with refreshments provided. The aim is to help you, our members, make connections with each other and with our specialist presenters, to help your businesses succeed. Each month BusinessPlus features photos of people who have attended a Forum or other presentation during the past month, to give you an idea of the range of enterprises that take part in our functions.

See more page 10

Contents

ISSUE 148 JUNE 2017

Make new connections ...through networking at our events – P10

Pay EqUIty law In thE SPotlIght

P11, 15

It’S war oUt thErE! yoU nEEd a StratEgy

P20

ExPort awardS fInalIStS annoUncEd

P26

ovErhaUl of bUSInESS PayS off for nEw ownErS

P30

...and MUch MorE!

“Helping business succeed”

Distributor: Rocket Mail

Commentary

Advertising sales: Colin Gestro, Affinity Ads, M + 27 256 8014 E colin@affinityads.com

EMA’s CEO Kim Campbell on: Infrastructure investment vital part of Budget 2017 Alternative ways to build the facilities we need Work, work, work. Big opportunities for businesses hiring young people BusinessNZ CEO Kirk Hope on: Reserve Bank – keep it simple

ISSN No. 1176-4953 EMA Head office – Auckland: 145 Khyber Pass Rd, Grafton, Auckland, NZ Private Bag 92066, Victoria St West, Auckland 1142. P +64 9 367 0900 E ema@ema.co.nz

Employment

Tauranga: ExportNZ Bay of Plenty Smart Business Centre, 65 Chapel Street, Bay Central, Tauranga, 3110. PO Box 13202, Tauranga Central, Tauranga 3141. P +64 7 571 0600 AdviceLine: NZ 0800 300 362 AUS 1800 300 362 E 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: Kayne Franich External Relations manager: Val Hayes Advocacy & Industry Relations manager: Mark Champion Learning manager: David Foley Enterprises & Strategy manager: Mauro Barsi Industrial Relations & Safety manager: Paul Jarvie Finance & Technology manager: Paul Yeo Corporate & Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye

BusinessPlus is free to EMA members

6 8 9 10

Seen @ EMA events in Auckland

Hamilton: EMA/ExportNZ Waikato 103 Tristram Street, Hamilton. PO Box 490 Waikato Mail Centre, Hamilton 3240. P +64 7 839 2713

Pay equity on the move

Defining relationships: employee or contractor?

How digitally mature is your business?

New tool to address OSH breaches out of court

Case Law: Navigating the Equal Pay and Pay Equity storm Employment Chat – Q and A: Responding to shocking emails and human rights confusion How to become a Disability Confident Employer

Build resilience to cope with work

16 18

In Business It’s war! Develop a long-term business strategy

ICT: The Internet of Things is transforming supply chain management

Selling up: Ensure your goodwill is protected Property: Commercial property sector bears brunt of infrastructure costs Congratulations! Winner of the “Patrick Seaman Excellence Award” (Trainers Choice) How to win government tenders

22 23 24 25

International Trade Celebrating NZ’s best on the world stage

Prepare to be tracked and traced

Winning the race to brand recognition in Singapore

Member Profile Allflex Packaging: Overhaul of packaging business pays off

Bramley: Bend it, shape it, any way you wantJune it training courses. + Inside Training Plus insert detailing

BusinessPlus June 2017

Advocacy helping business succeed As an EMA member you are part of a 4000-plus business collective This collective voice is extremely powerful. It allows the EMA Advocacy successful. The team has honed its approach to advocacy and the key issues it will

Advocacyâ&#x20AC;&#x2122;s key areas of focus Coping with the challenge of growth and development, in particular how this relates to infrastructure development, transport and the resource management system Addressing skills development, education and training Health and safety and all employment law related matters Export and trade opportunities for growth

CEO Commentary By Kim Campbell

Infrastructure investment vital part of Budget 2017 While the Government’s Budget 2017 had a distinct social impact flavour to it, the most significant initiative for business and economic growth was the investment in infrastructure to drive national prosperity. The budget confirmed an additional $11 billion for infrastructure over the next four years, kicking off with $4 billion for this year. It is heartening to at last have recognition that this is necessary in order for this country to move forward and grow. We need to have large scale investment in the country’s infrastructure to unlock the latent prosperity which is sitting there. The detail behind how the first $4 billion will be put to good use, was announced just as the June edition of BusinessPlus was going to print. However, rest assured we will be working towards understanding how this money will be accessed, what it will be used for and keeping you informed about this. This is certainly a leap forward from previous years – where, arguably, infrastructure investment was left waiting in the wings while we marched steadily to a budget surplus. Now, the country’s books are in good shape. The diversified economy means we can ride the highs and lows without being beholden to one sector, growth rates are knocking around 3 per cent and we have one of the highest labour participation rates in the world. With this financial buffer in place, central Government now has the luxury of looking out medium to

long term. However, as always we’re impatient to get this much-needed work underway. It can’t come quickly enough.

Initiatives such as infrastructure bonds, congestion charging, public private partnerships are all worthy of consideration.

Investors waiting in the wings

In the business world we’ve all had to learn to deal with the tough times, and cut our cloth accordingly. Sometimes that means selling down those assets superfluous to the core strategy. Likewise, local authorities need to focus on their core reason for being and how they can best serve their constituents. Selling off noncore assets needs to be seriously considered too.

And here’s where I get frustrated. We seem to struggle to break out of these traditional funding models. Yes, central government has a crucial role in all of this – and likewise does local government. But we can’t rely on the taxpayer or the ratepayer to be the main funder of these initiatives. We need to investigate a more modern approach to enabling much-needed development and economic growth to ensure New Zealand’s resilience now and in the future. We need to look at new funding options. Where is the discussion around using tools other than relying on central government coffers to fund much-needed investment in infrastructure? Government will always be riskaverse, and rightly so. Therefore, how do we make best use of the capital that’s available to us? How do we identify and implement new funding options for local government, to enable these local authorities to ably cope with their issues. Whether that’s investing to enable growth or investing to cope with growth – either way the ratepayer funded model is sadly lacking for any project of scale. There are many ways to access capital and there are investors waiting in the wings. But we seem to be scared of being bold enough to embrace this wholeheartedly.

Whenever I raise this, I’m always asked, “but what about the dividends these assets generate?” My response is that the capital tied up in these assets can deliver far greater dividends if it is unlocked. How much more productivity could we get from Auckland if we could free up the congestion that impedes residents getting to and from work, and hamstrings many businesses from effectively conducting their daily business? Whether that’s tradesmen trying to get around the city to service the needs of customers, or companies trying to deliver products across town to fulfil their requirements as a supplier – we’re finding more evidence that business and the economy are losing money. The economic payback of fasttracking infrastructure projects by releasing capital now would be far greater than the ongoing dividends generated by keeping that capital tied up.

Kim Campbell is chief executive of the Employers and Manufacturers Association. Email kim.campbell@ema.co.nz BusinessPlus June 2017

commentary By alan mcdonald

Alternative ways to build the Chancellor rejects the Commission’s strategy or a major project, the Chancellor must publicly justify that decision and provide an alternative.

Pictured on the left is the new, $2.7 billion Queensferry Bridge in Edinburgh, a critical transport link from Edinburgh to the south and east of Scotland. Originally conceived as a replacement for the existing bridge on the right, built in 1964, which was earmarked for closure at the end of 2016, remedial work means the life of the original bridge has been extended.

Recent infrastructure news is good for business, with Government promising $11 billion for building infrastructure during the next four years, and the Auckland Mayor saying he will consider using the region’s port assets to help meet a funding shortfall for local infrastructure. The EMA has a long-held view that infrastructure leads development, and that New Zealand has a lag of required projects to assist economic development. However, $11bn is still not enough to meet the historical underspend. These announcements, and the continuing pressure that growth is putting on several centres in the EMA’s region north of Taupo, throw an even brighter spotlight on our planning for infrastructure spending, its current funding and its delivery. Recently I was part of a business delegation led by Infrastructure New Zealand to the UK with a particular focus on Scotland, looking at infrastructure strategy, planning and funding systems. Why Scotland? Well it has similar features to New Zealand: five million people compared to New Zealand’s 4.5 million, difficult geography, multiple local authorities and isolated communities. The delegation heard from top civil servants in the sectors of planning, infrastructure and environmental management, as well as leading international private sector infrastructure providers in London, 6

BusinessPlus June 2017

Glasgow and Edinburgh. Also on our itinerary were visits to Crossrail, the new cross-city, underground in London; HS2, the new high-speed rail link from London to the north; Edinburgh’s $2.7bn Queensferry Bridge and new light rail system; and housing regeneration projects such as the Glasgow Commonwealth Games village upgrade. In New Zealand we have a cumbersome system that misses opportunities to create scale and share knowledge; it duplicates systems, procurement and paperwork multiple times.

UK: separating strategy from operations By contrast in the UK, planning for infrastructure needs is carried out by the National Infrastructure Commission (NIC), a well-resourced, independent Government agency that sets strategy over a 30year framework with five-year renewals. Its focus is on policy, and its governing principle is the development of infrastructure strategies to support growth, competitiveness and quality of life across the UK. The NIC holds the Government to account for delivering its strategies. It does report to the Chancellor of the Exchequer (New Zealand equivalent of the Finance Minister) but the Chancellor is also accountable to the NIC. If the

NIC Deputy Chair Sir John Armit noted one key question the Commission always asks, something we don’t emphasise enough in New Zealand, is: “What does the alternative look like if we do nothing?” Delivery is managed by the Infrastructure and Projects Authority (IPA), the Government’s centre of expertise for infrastructure and major projects. It currently manages a $1000bn pipeline of projects and oversees $900bn in active projects, reporting to both the Cabinet Office and HM Treasury. The IPA sets standards and measures performance, provides expertise in project delivery and project finance, provides independent assurance and unlocks private sector investment. It also advises Government on the availability and policy implications of private finance. It also runs PPP and Private Finance 2 (PF2) teams supporting Government departments, from inception to delivery; sets policy for using PPPs and PF2; supports the management of operational contracts and administers the guarantees for infrastructure and major projects on behalf of HM Treasury.

Scotland: social outcomes included Scotland has a National Planning Framework that incorporates its major infrastructure strategies and projects in a spatial plan for the whole of Scotland. This incorporates major projects from the NIC’s strategies. It looks at the built environment (towns and cities), separately from rural development. The Framework sits across all

facilities we need

and targets, with a payback period over 25-30 years to Government through identified value capture mechanisms. PPPs are widely used and actively encouraged by both central Government and local authorities, with the specialist agencies supporting these projects.

Above: The iconic steel rail bridge across the Firth of Forth near Edinburgh sits just beside the two road bridges pictured on p6. Built in 1890, this is still one of the major rail links into the Scottish capital.

Scotland’s 32 local government authorities, and shares its resources by targeting seven cities, 14 enterprise areas and two targeted National Developments. The current infrastructure budget is $8bn annually, with 74 per cent coming from the UK Government, and the remainder an even split of borrowing and investment. Underpinning the entire plan is a focus on closing the gap between advantaged and disadvantaged communities within Scotland. Social outcomes were given equal, and in some cases greater weighting, than Business Cost Analyses for green lighting infrastructure projects – especially in urban regeneration. Scotland also has an independent agency, the Scottish Futures Trust (SFT) of 80 agency members, which sits outside Government with an independent board, assisting with project delivery. The Trust’s goal is also to improve the efficiency and effectiveness of investment and prioritising of infrastructure in Scotland, by working collaboratively with public bodies and industry.

Funding models to consider In the UK, local government authorities are given greater access to a range of funding tools than their New Zealand counterparts. Central Government is also more willing to devolve decisions on finance and

funding to local authorities, providing there are clear financial reporting targets and the money is tracked to performance. For example, the $30bn Crossrail project in London, and the associated Bakerloo and Northern Line upgrades on the underground system, are funded one third from Government, another third from London’s Top 200 businesses through a targeted rate over 30 years – Government was talked into accepting this by London’s equivalent of the EMA – and the final third was from targeted rates and value capture (targeted rates). The “areas of benefit” for that value capture were widespread. The City of London is also able to retain 7 per cent of the tax uptake for 25-30 years as part of its City Deal package with central Government. In addition, Tax Incremental Finance (“TIFs”) were in wide use across London and in Scotland. The City Deals had a mix of components. Some allowed a city or a group of local authorities to establish a transport fund through a grant from central Government that was then leveraged through debt funding. Government backed the debt. Others were for grants for specific projects such as IT Hubs, job training schools embedded in regeneration projects or specific transport, IT or energy projects. All feature measurable economic gains

The Wiri prison in South Auckland was actually mentioned by two of our UK contacts as being internationally recognised as a very successful PPP. Scotland also uses Growth Accelerators, projects the Trust identifies for Government assistance that will kick-start economic development in a region or city. Scotland has also developed a Hub model to accelerate the provision of infrastructure projects. Scotland has divided its five million population into five Hubs of a million each (roughly). Within those Hubs, infrastructure maintenance and economic development projects are aggregated into a pipeline of projects which are attractive to major infrastructure construction firms. The projects are procured, with assistance from the Trust, which provides significant cost savings, while also green-lighting the necessary small projects as well as the larger works. There are certainly aspects of the UK system that could be adapted for New Zealand, to help overcome our infrastructure lag. The independent stature and governance of the planning agencies in the UK and Scotland help de-politicise strategic planning and delivery of critical infrastructure. All such measures could help deliver critical new infrastructure more quickly in New Zealand. You can read the full report of the delegates’ visit, Infrastructure Delegation to the UK in March 2017 - Comparing funding and delivery models with New Zealand’s approach, at www.ema.co.nz

Alan McDonald is EMA’s policy director. Email alan.mcdonald@ema.co.nz BusinessPlus June 2017

commentary By Abbie Reynolds

Work, work, work. Big opportunities for businesses hiring young people New Zealand’s young people are acknowledged as very important to business leaders, but there’s a gap between that sentiment and the actual outcomes for young Kiwis. According to OECD data, 13.2 per cent of New Zealand’s 15-to-24year-olds are unemployed and actively looking for work. That’s more than double Iceland’s and Japan’s youth unemployment rates, which are 6.5 and 5.2 per cent respectively. In fact, we’re trailing behind 17 other countries in the developed world. Mexico and Germany are way ahead at 7.7 and 7 per cent, and the UK and Australia are marginally better, at 13 and 12.7 per cent. The numbers are troubling because young people who leave school and don’t get a job, risk becoming disengaged from their communities. And we know the effects of that can be far-reaching. Research suggests 60 per cent of people who go on a benefit before they turn 24 stay on a benefit for life. Our future prosperity depends on the success of our children, grandchildren, nieces, nephews and neighbours. As does their own sense of wellbeing. Our members, who make up 25 per cent of New Zealand’s private sector GDP, tell me they don’t want to see anyone left behind. They understand

there is no easy fix and that business has a critical role to play. And the good news is that this issue is actually an opportunity for business. Many of our members are focussed on being inclusive workplaces, because they know that diversity strengthens their businesses over the long-term. But the recruitment process itself can be a barrier. Most businesses try to make the process as efficient as possible, using “positions vacant” templates. But the language and questions in those templates sometimes puts young talent off.

Recruitment tips Keep the language simple and take a look at the requirements: Does the position actually need a person with a full driver’s licence? Do you really want to see identification documents like a passport at an early phase of recruitment? These are requirements young people may not be able to meet, and may be a barrier to completing the recruitment process. Also consider the tone of your advert: Is it appropriate, for the position and the kinds of people you want to attract? Would you go for an entry level position if it was being pushed as a “career” opportunity, when what you’re looking for is a job? Do you really need applicants with

previous experience, or would you consider someone who’s positive and eager to learn? And do you want a tradesman, or a tradesperson? Businesses report a significant increase in the number of female applicants if they explicitly write “we welcome applications from women”. Another recruitment hurdle is the choice of advertising channel. Social media and word-of-mouth advertising can be effective ways to find young workers. Ask your staff if they know of anyone looking for work, and consider posting on Facebook, Instagram or Twitter, for example. Also review your screening process. SKYCITY is part of our successful Welfare to Work programme pilot. When staff reviewed their recruitment process they found the best way to screen young applicants was actually with a phone call, not an online portal. They got a much better sense of a person from a conversation. Business spends a lot of money and time trying to understand what motivates Generation Y and Millennial consumers. They are very media- and marketing-savvy, with a strong radar for insincerity and inconsistency. They have grown up with environmental and social issues on their Facebook feed. They are more socially conscious than any generation before. Many business owners have told me that ALL the applicants for graduate roles ask about their environmental and social policies. There could be generational bias built into your recruitment processes, entirely unintentionally. You could be talking past young people and missing out on great talent. Perhaps the gap that exists in the labour market reflects, in-part, a gap in how different generations communicate. We have much to gain from trying new tactics, and helping young people get into work.

Abbie Reynolds is executive director of the Sustainable Business Council. Visit www.sbc.org.nz 8

BusinessPlus June 2017

COMMENTARY By Kirk Hope

Reserve Bank – keep it simple Political parties’ policies on the Reserve Bank are beginning to emerge. National has not released its policy yet but has begun a review coinciding with the signalled departure of the Reserve Bank Governor. Labour and the Greens have indicated they want to change the Reserve Bank Act, proposing to broaden its objectives to include a commitment to full employment. NZ First wants to go further and include objectives for the exchange rate and economic and export growth as well as employment. With Labour, NZ First and the Greens all looking to broaden the mandate of the Reserve Bank, it is worth looking at what that might mean. Currently the Reserve Bank’s main monetary objective is keeping consumer price inflation between one and three percent, with a target of two percent. (It also has a separate responsibility for prudential supervision of the banking and financial sector.) The Reserve Bank’s key objective of restraining inflation has served New Zealand well over the last few decades. Since its establishment there have been no instances of runaway inflation such as experienced in the 1970s and ‘80s. It can be argued that this singular focus on inflation has enabled this success.

Conflicts, politics There are problems with a central bank having multiple objectives. First, multiple objectives could mean conflicting objectives. If objectives around growth, exports or

employment conflicted with inflation objectives, which one would take priority? There would be a danger of inflation control being always subject to other priorities. Second, growth and employment objectives are intrinsically linked to a political viewpoint. Any Government that changed the Reserve Bank to include growth or employment targets would presumably do so from the standpoint of its own political outlook. Widening the Reserve Bank’s mandate to include these objectives could put its political neutrality at risk and there’s a danger of political objectives trumping the good work of inflation control. Third, multiple objectives could upset the balance of powers currently existing in New Zealand’s constitutional arrangements. A Reserve Bank charged with controlling employment, growth and currency outcomes would have enormous power that could challenge the Government’s own power to govern. Perhaps the main issue around Reserve Bank objectives other than inflation is whether they can actually be achieved.

employment growth, but by directly controlling inflation it indirectly helps economic and employment growth over the longer term. BusinessNZ has consistently advocated for retaining the Reserve Bank’s single-minded focus on inflation. Hopefully Government’s review of the operation of the Reserve Bank will affirm this focused approach. It could also consider looking at the Reserve Bank’s responsibilities for prudential supervision. The Reserve Bank’s rebalance of responsibilities following the global financial crisis has included more emphasis on regulation of banks and financial institutions. Its resulting loan to value restrictions have harmed the prospects of young and first home buyers while failing to significantly reduce house price inflation. The Reserve Bank’s objectives for prudential supervision should be scrutinised with a view to ensuring they do not lead to counterproductive regulation.

Uncontrollable factors

A Reserve Bank with clear and appropriately narrow objectives can bring great benefit to the economy.

It has been demonstrated that the Reserve Bank can control inflation outcomes - inflation control is an achievable objective.

Election policies signalling change to those objectives should be carefully debated.

But there is no evidence to suggest that it can directly control outcomes such as employment or economic growth. Of course there is a link between inflation control and other economic outcomes, but it is an indirect, flowon effect. A central bank may not be able to directly control economic or

Kirk Hope is chief executive of BusinessNZ. Email khope@businessnz.org.nz BusinessPlus June 2017

Seen @ EMA events

Chris Reid [Metro Performance Glass] and Michelle Hooper [SafetyCulture]

Alan Jefferson [Coda] and Mike Brewer [KYND Wellness]

Ann Lake and Desai Link [Brosnan Construction]

Miranda Redwood [Dredging NZ], Niel Arnesen [Hamburg Sud New Zealand] and Mark Thompson [Dredging New Zealand]

Nick Kent and Jarred Johnson [NZ Document Exchange]

Marshall Hudson [Hudson Strategic], Li Burgess and Stuart Savill [Savill Coordinates]

Willow Lovell, Alex Voutratzis and Tom Anderson [Property Council of NZ]

Oliver Haydon and Tara Robinson [Jasmax]

Helen Oâ&#x20AC;&#x2122;Sullivan [Ockham Residential] and Tony Garnier [T G Enterprises]

Luke Bycroft and Andrew Elliott [Advanced Aerospace]

Dr Alisyn Nedoma and Dr Mark Battley [University of Auckland]

BusinessPlus June 2017

Amelie Lecomte and Jarrod Nancarrow [Kelly Services]

EMPLOYMENT By Paul Mackay

Pay equity on the move April was a busy and significant month in employment relations in New Zealand.

Preparing to claim for pay equity

First came the Government’s outof-court settlement in the longrunning pay equity dispute between Government-subsidised Terranova Homes and Care Limited - New Zealand’s largest, aged residential care home - and its former employee Kristine Bartlett. The settlement effectively addressed the pay equity concerns of nearly 55,000 workers in the aged care, home care and disability support services.

That said, one or two large groups of government-paid workers will be working on their claims ahead of the law being passed, using the same bargaining approach adopted for the aged care workers’ settlement.

The following week came the release of an exposure draft of the Employment (Pay Equity and Equal Pay) Bill. Once passed, this Bill will replace the Equal Pay Act 1972. It represents the Government’s response to the recommendations of the 2015 Pay Equity Joint Working Group, chaired by nowGovernor General Dame Patsy Reddy, which recommended a set of principles and a process for managing future pay equity claims. While these outcomes arguably are milestones in New Zealand’s employment relations history, the aged care settlement is not the end of the matter. Several thousand separate claims were lodged in the months following the Court of Appeal’s 2014 decision determining the Equal Pay Act could be used to decide questions of pay equity. The Terranova settlement will have extinguished many of these claims, but many more remain. These will now be managed under the auspices of the new proposed Employment (Pay Equity and Equal Pay) Act, once it is passed.

Transitional provisions will provide a process for progressing existing claims, using criteria the new law will set out.

Education Support workers and their union representatives are about to start negotiating with the Ministry of Education, claiming this group of workers is underpaid in comparison with a male-dominated group of workers doing work of equivalent value. And social workers will be taking claims to the Ministry of Social Development. Nonetheless, there is now a clear sense of direction on an issue where direction has been lacking since the 1980s. Until the Terranova case, the Equal Pay Act 1972 was regarded as inapplicable to pay equity issues. Not since the clerical workers took their (unsuccessful) case for pay parity with carpenters to the Arbitration Court in 1986 has there been a serious, let alone successful, challenge under the Equal Pay Act. Various initiatives to bolster support for pay equity concerns in the intervening years included Labour’s short-lived Employment Equity Act 1990, and the Labour Government’s now defunct Pay Equity Research Unit, established in the mid-2000s.

Claims management will not be the same in the private sector, though. The principles underpinning the proposed law require claims to be resolved in negotiation between employees and their employer in the first instance, using the good faith bargaining principles of the Employment Relations Act. Even if comparisons are drawn with work done outside the employee’s company - or industry - all comparisons will simply inform the bargaining between the employee(s) and the employer. More than one employer can become party to the bargaining, if they agree. The Bill’s approach means pay equity claims can be regarded as simply another employment matter to be bargained over, albeit with specific criteria to distinguish it from “ordinary” wage claims. This does not completely remove pay equity issues from the jurisdiction of the courts. As with the provision made for facilitation, parties to a pay equity claim will be able to access the Employment Relations Authority for assistance, should they be unable to come to an agreement. However, the proposed establishment of a bargaining process makes the point that the equitable remuneration that should be paid is something for employees and employers to decide for themselves, taking account of both parties’ needs; and that pay equity matters should not be decided by the courts, whose jurisdiction does not involve pay fixing in the normal course of events.

At the moment, all the pay equity action is in the public sector, where it will be managed in large(ish) groups directly with government.

Paul Mackay is manager of employment relations policy at BusinessNZ. Email pmackay@businessnz.org.nz BusinessPlus June 2017

employment By kent duffy

Defining relationships: employee or contractor? Engaging contractors and/or employees to perform work is common in business, but the distinctions between each arrangement, or the form of engagement, are important and often misunderstood. This is particularly relevant when disputes arise relating to contractors. Contractors sometimes bring legal claims against businesses they are working with, alleging that they are employees, which can potentially give rise to a number of issues. It can be confusing!

Definition of employee So what does the term “employee” mean? An employee is somebody who is employed under a contract of service. A contract of service is for the employment of an employee. Section 6 of the Employment Relations Act 2000 defines an employee as a “person of any age employed by an employer to do any work for hire or reward under a contract of service”. This section also sets out the considerations a court must apply in deciding whether or not somebody is an employee. From a legal perspective, it’s important to understand that an employment relationship gives an employee access to a number of different legislative rights and protections which aren’t available to genuine contractors. For example, employees have access to personal grievance provisions, the minimum wage and leave entitlements under the Holidays Act 2003.

Definition of contractor So what does the term “contractor” mean? Generally speaking a contractor is somebody who agrees to carry out work as in independent contractor, not as part of the employer’s business under a contract for services. Some common examples of this type of relationship are where a business enters into a commercial agreement with a labour hire company to engage its workers on a contractor only basis; an occupier of a home engages a plumber to do plumbing work on their property; a business engages a professional IT consultant to do work on their computer systems; or when a business engages a transport company to move its goods, under a commercial agreement. At its core, an “independent contractor” is somebody who is genuinely in business on their own account. This means they should have a large amount of autonomy over the work they perform. However, this is not always the case. The greater the dependence of the contractor on a business, the more likely that the relationship becomes blurred. A business engaging a worker as a contractor should be aware that if a dispute arises, the Employment Relations Authority and Employment Court (the courts) have jurisdiction to look beyond the label of the agreement. What is meant by this, is that the courts are able to determine the “real nature of the relationship” in terms of assessing whether somebody is an employee or not. The courts rely on a series of indicia

and tests which have been developed in case law when making decisions on this issue. These indications can be summarised as follows: •

the intention of the parties in creating legal relations; and

•

the “control test” – being an analysis of who decides what work is done and how it is done; and

•

the “integration test” – being an analysis of how integrated the individual is into the business of the alleged employer; and

•

the “fundamental test” – being an analysis of whether the individual is in business on their own account; and

•

Industry practice, method of payment and taxation, among other factors.

Risks of getting it wrong Incorrectly classifying an employee as a contractor may entitle that person to ask the courts to determine the relationship, and if classified as an employee, the courts could order you to repay that person any unpaid holiday pay, unpaid public holidays, sick leave and more. Additionally, if a contractor is dismissed in accordance with their contract but is subsequently held to be an employee, they may be able to argue that their dismissal was unjustified. This could give rise to courts imposing remedies such as for lost remuneration and compensation for injury to feelings.

Kent Duffy is an employment advisor in EMA’s Adviceline that operates for free to members, 8am-8pm weekdays. Email kent.duffy@ema.co.nz, phone 0800 300 362 (from NZ) or 1800 300 362 (from Australia) 12

BusinessPlus June 2017

EMPLOYMENT By Nirupam Sakar

How digitally mature is your business? Digital transformation has had many definitions over recent years. And while many businesses are aware of their need to incorporate digital technology to grow, compete and become more productive, most are unsure about the best path to take. Some focus on their marketing and online presence, and others on applications to help their employees become more productive. But often there is a lack of synergy between the digital initiatives driven by the various parts of a business. This is where a “digital maturity” approach may be more beneficial for business leaders who want to step through the process of growing into digital enterprises. While there are many digital maturity models with varying parameters for evaluating the digital maturity of businesses, some of the more important criteria are: • The rate of adoption and use of the most current and emerging technologies in a business, • A business’ ability to collect and analyse customer data to define strategy,

• The aptitude and attitude of leadership towards technology and innovation, and • The empowerment of employees to adopt and drive innovative technology based processes. Based on the parameters described above, there are usually four categories that businesses tend to fall into. The labels for these categories, as well as their key defining features, vary under the different models. The following interpretation of the various models will give you a fairly good idea of what these categories are.

Digital maturity level The Beginners – Businesses that are just beginning their digital journeys and are working through a thinking shift at the top, rather than the tools of change themselves. They tend to have decentralized organisational structures, with traditional technology, and lack the correct digital talents in their organisations to start with. The Amateurs - Businesses that have started to invest in key changes and digital infrastructures, mainly

around marketing and social media. Their marketing departments are usually very digitally savvy, but there is a digital talent gap with other areas of the business. The Professionals – Businesses that have started to use data to collaborate across and to breakdown silos, to deliver strong customer experiences. They have a good digital strategy but their risk-averse approach can sometimes dampen the innovation needed to grow into a true digital leader. The Leaders – The pinnacle of digital maturity, where businesses have a high proportion of digital talent and sufficient investment in technology deployment across all functional divisions. They have a true digital culture that fosters innovative thinking to maintain and grow their digital advantage over others. There are many digital maturity models out there from key players who also usually include free assessment tools to help businesses assess their level of maturity and plan a roadmap for further development. Research has shown that digitally mature businesses demonstrate strong growth and financial returns. Also as a gradual process, the digital maturity approach offers an entry point to businesses at every stage, making it a less daunting prospect than a one-size-fits-all transformation initiative. Learn more at our Digi_X conference on this month.

Nirupam Sarkar is Portfolio Manager – Digital Learning at EMA. Email Nirupam.sakar@ema.co.nz

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BusinessPlus June 2017

EMPLOYMENT By Paul Jarvie

New tool to address OSH breaches out of court New enforcement tools came with the introduction of the Health and Safety at Work Act 2015 in New Zealand a year ago. One of these tools was an Enforceable Undertaking. This new tool allows the regulator and enforcer of occupational health and safety, WorkSafe NZ, to accept an undertaking from a person (the company) that they will address a number of pre-selected and agreed conditions, rather than WorkSafe pursuing a prosecution or other enforcement measure. The Enforceable Undertaking may be accepted by WorkSafe in connection with a matter relating to a contravention or alleged contravention of the Act or its regulations. This implies the undertaking is submitted to the regulator by the business (PCBU or Person Conducting a Business Unit) as part of the dialogue between the parties, before the regulator has issued any summons or other enforcement measure. It is therefore a strategic decision by the PCBU and its legal counsel, relating to an injury or accident. However, a business’ offering an enforceable undertaking does not constitute their admission of guilt in relation to the matter in question. And while an agreed and accepted enforceable undertaking is in effect, the regulator may not bring any other proceedings against the PCBU in relation to the same matter. Once an enforceable undertaking has been “discharged”, ie, completely complied with, the regulator cannot bring any other proceeding against

the PCBU in relation to the same matter. If WorkSafe has begun other proceedings against the PCBU, the regulator can still accept an enforceable undertaking. When this occurs WorkSafe must make reasonable steps to discontinue those other proceedings. However, WorkSafe must not accept an enforceable undertaking if it believes the contravention or alleged contravention is considered to be reckless under Section 47 of the Act. The enforceable undertaking is a “contract” in so much as the PCBU agrees to a set of predetermined conditions and actions in relation to the incident. These conditions are enforceable by the District Court and if not complied with, create another contravention of the Act, with penalties ranging from $50,000 to $250,000.

Pros and cons Is working through an enforceable undertaking a quick fix? On my reading of the first enforceable undertaking accepted by the regulator, it would appear the contracted conditions are not small or minor. The enforceable undertaking agreement was 16 pages of detail. The total of the monies set aside (minimum) for the undertaking was $85,000. On top of this the company would be facing legal costs and reputational damage. Interestingly, within the costs were the regulator’s costs of some $8,000. What is to be made of this tool? Firstly, there is no admission of guilt, which is a valuable position. Secondly, the costs are lower overall. There would appear to be no lessening of monetary penalties, given the $85,000 in the first case. Continued pg24

Paul Jarvie is manager of employment relations and safety at EMA. Email paul.jarvie@ema.co.nz 14

BusinessPlus June 2017

EMPLOYMENT By Alexandria Till

Navigating the Equal Pay and Pay Equity storm Submissions on the Draft Employment (Pay Equity and Equal Pay) Bill closed on May 11, bringing the Bill one step closer to becoming law. The EMA was actively involved in discussions around the content of the Bill, through representation on the Pay Equity Working Group. EMA Legal is already advising members on settlements that are taking place in advance of the Bill coming into force.

Purpose of the Bill The Court of Appeal’s recent judgment in the case of TerraNova v Service and Food Workers Union (now E Tu) endorsed a broader interpretation of the Equal Pay Act 1972 (EPA). It also provided an interpretation that the EPA incorporates a pay equity regime as well as equal pay. The decision meant that the EPA targeted equal pay and pay equity for work that was exclusively or predominantly performed by women. However, the EPA does not provide practical guidance for fair process for claims of equal pay and unlawful discrimination. The purpose of the Bill is to eliminate and prevent discrimination, on the basis of gender in relation to remuneration and other terms and conditions of employment. The Bill enables employees to make two types of claims: · pay equity; and · equal pay.

Equal Pay and Pay Equity defined As the commentary document for the Bill explains: “The term equal pay is commonly used to refer to the principle that women and men should

receive the same remuneration for doing the same job. An example of equal pay is where there is no difference in remuneration to a male drain layer and a female drain layer based on gender.

none of those exist, they must look for an appropriate comparator in the same industry or sector. Comparators from a different industry or sector can be selected only if none have been found by that point.

“The term pay equity, on the other hand, is commonly used to refer to the principle that women and men should receive the same remuneration for doing different jobs that are of equal value”.

The question is: When a comparator is used, what should that comparator be and how approximate should it be to the industry that is negotiating it? This has yet to be fully resolved. The parties would be permitted to agree to a bargained outcome at any point. Where bargaining reached an impasse, the parties would be permitted to access mediation or facilitation or determination by the Employment Relations Authority.

Claiming inequity The Bill proposes that any employee may raise a pay equity claim with their employer, and on receipt of such a claim, the employer must assess and determine the merit of the claim based on factors set out in the Bill. The employer’s decision to refuse a claim can could be challenged by the employee.

Resolution of claims In the event that an employee would be able to establish a claim, they would be treated as follows:

If the employer accepted that the claim had merit as a pay equity claim, the parties would have to enter into pay equity bargaining.

•

pay equity claims would be made and resolved in accordance with a new part of the Employment Relations Act (ERA),

In the Bill, bargaining is guided by principles on how the work is assessed (whether the work is predominantly performed by women) and whether there are reasonable grounds to believe that the work has been undervalued historically and continues to be. This involves an assessment of the nature and remuneration of the work, and the work of suitable comparator occupations.

•

equal pay claims would be treated as claims for recovery of wages and under section 131(1) (b) of the ERA; and

•

unlawful discrimination claims would be treated as claims of discrimination under section 103(1)(c) of the ERA.

The issue of comparators is one that has become publicised, and the tension lies in occupations that women may use to claim their job is underpaid. Women making a claim first need to look for a comparator within their employer’s business. Only if none exists, can the women look for a comparator in similar businesses. If

Timing of claims Where a pay equity claim was settled under the Equal Pay Act prior to enactment of the Bill it will be recognised as a pay equity settlement. Other existing or potential pay equity claims prior to enactment, which have not reached an outcome but where Continued pg21

Alexandria Till is a senior solicitor at EMA Legal. Email advice@ema.co.nz BusinessPlus June 2017

EMPLOYMENT

Responding to shocking emails Q. What’s all this stuff about human rights coming into play when staff get disgruntled? Aren’t all employment and people issues about human rights anyway? Miranda Dear Miranda Yes, but…in terms of employment disputes, the legal system has specific definitions and processes for dealing with different types of complaints. And as with most law, there are no absolutes and it takes case history or a new situation to define the legal response. There are multiple laws relevant to fairness and resolving disputes in the workplace, with three key ones for you being the Employment Relations Act 2000 (ERA) and its amendments, the Human Rights Act 1993 and Bill of Rights Act 1990. The Human Rights Tribunal can hear complaints relating to breaches of human rights and privacy in employment,

BEST E H T EST YOU WE T R O F ...

There are multiple laws relevant to fairness and resolving disputes in the workplace, with three key ones for you being the Employment Relations Act 2000 (ERA) and its amendments, the Human Rights Act 1993 and Bill of Rights Act 1990.

eg, discrimination, sexual harassment, racial harassment and breach of privacy under the Privacy Act 1993. While these topics are talked about in the ERA, the ERA does not define these as employment issues but rather as human rights issues. As an employer at an EMA member organisation, you can always check with our

contracted employment relations consultants or inhouse lawyers, to be sure of the ground you stand on. Q. I’ve been reading a terrible email exchange between two staff members. I gather they are talking about supplying and buying drugs off each other. What should I do? – Chris Dear Chris You can only respond if you have already warned staff that their emails are being checked – that “the usage of your computer is being monitored”. Without this clear policy in your workplace, you would have no right to be looking at their emails, and cannot legally raise your concerns with them. However, assuming you have permission to read emails, you can indeed call in the two employees separately and raise your concerns about their use of company time, their use of email/equipment for personal use, and the worrying content

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and human rights confusion of their “legally monitored emails”. Perhaps the amount of time they spend on non-work activity is in question. Ask them what their emails are referring to, and if necessary, explain that the content of their emails could be evidence of illegal activity that could bring your business into the territory of criminal offending and lower your reputation. This discussion could be sufficient to stop the behaviour. They could also be breaching company policy, which could be misconduct or even serious misconduct (depending on your policy wording and employment agreements with these particular individuals), leading to disciplinary action. If an employer conducts a fair investigation and disciplinary process and then decides that serious misconduct has taken place, they may choose to dismiss the employee.

Without this clear policy in your workplace, you would have no right to be looking at their emails, and cannot legally raise your concerns with them.

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

own, undermine or destroy the relationship of trust and confidence between an employee and employer. An instance of misconduct would not justify a dismissal unless it was repeated.

EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within New Zealand), and 1800 300 362 (from Australia), 8am-8pm weekdays NZ time; or email advice@ema.co.nz

If you have no policy and are unable to act on your suspicions, now is the time to put a policy in place and make sure everyone knows about it.

An instance of misconduct which is not serious doesn’t, on its

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BusinessPlus June 2017

employment By Adrian Coysh

How to become a Disability Confident Employer New Zealand’s previous Prime Minister John Key launched a campaign late last year called “Employer Disability Confident”, in conjunction with the Minister for Disability Issues, Nicky Wagner. This launch was supposed to send an important message to employers that they could employ and retain disabled people as part of their diversity strategies, and showed them how. The campaign was pitched at BusinessNZ’s Major Companies’ Group of members, however, anecdotally small-medium enterprises (SMEs) hire many more disabled people than large companies do. This hiring difference is partly because the SME business owner or general manager can make such a decision, rather than it getting lost in the process that often stifles larger employers. The stronger hiring inclination of SMEs occurs despite employers’ generally-held belief that employing a disabled person is too difficult, too expensive, and likely to result in lower productivity. In fact, a 2011 report by Deloitte for the Australian Network on Disability found that the cost of recruiting disabled employees is generally lower, and most disabled workers display better attendance, higher productivity and lower health and safety issues than non-disabled staff. Disabled workers appreciate the opportunity they have been given and this commonly leads to loyalty and longevity in a role. Further, only 10 per cent of disabled

people require assistive technology or adaptations to workplaces to enable them to do their jobs. But if this help is required, Government “Support Funds” are available via Workbridge, for any special computer software or alterations such as to toilets or installing ramps for wheelchair users. Exponential improvements in technology are quickly opening up alternatives, eg, enabling more people to work from home. This is very important to disabled people for whom mobility is a daily challenge. Their work life would be vastly improved by the likes of better computer reading systems for the blind, more advanced cochlear implants and audibility devices for the deaf and more mobile wheelchairs. In addition, more thought going into the design of buildings and workplaces would help.

Connecting employers with willing workers A real hindrance for employers can be finding and choosing which organization(s) to work with to employ someone who has disabilities. The Ministry of Social Development funded Possibility, a website designed to overcome this barrier. The website also shares stories of employed disabled people and how they have adapted to do their jobs. Possibility links to The Kumara Vine, which is an employment site focusing on Maori and Pasifika. Both are connected to the website, JobCafé, where employers can advertise jobs and source job seekers. People with disabilities, who often get ignored in the recruiting process, can register

Adrian Coysh is the Auckland partner of JobCafe. Visit www.jobcafe.co.nz 18

BusinessPlus June 2017

as job seekers for free and engage with employers looking for diversity. Hiring managers: here is a challenge. Take a chance, look to hire people with disabilities. Hopefully you can eliminate or lessen the preconceived ideas we all have. This in turn will lead to more businesses hiring disabled people. The disability sector is not one to be ignored. In New Zealand it is the second largest sector after gender, and greater than the combined populations of Maori and Pasifika. Furthermore, people with disabilities and their families and friends are an important market for many of your products and services. However, without CEO or Government Ministers making clear expectations to senior management, as well as providing resources and measuring the results of employing people with disabilities, real change will never occur.

Next EMA Employers Forum: June 15 – disability issues in employment You can register now for our next Employers Forum in Auckland, being held on June 15. You will hear from the Minister for Disability Issues, Nicky Wagner, about strategies for employers and the Government help available to employ people with disabilities, plus the current ‘Disability Confident’ campaign that ends this month. For more information and to register to attend, email michael.burgess@ema.co.nz

employment By julie kidman

Build resilience to cope with work Today’s workplace is challenging. Participants may have to survive continual change, illogical decisions, unfair managers, increasing complexity, pressures from home and other everyday stresses.

Don’t be afraid to think big here: we all contribute in this society and have a choice about how we spend our time.

One in five kiwis struggle with workrelated stress and one out of 10 are unhappy with their work-life balance, according to Statistics New Zealand.

A simple technique when you are faced with a worry or stress is to take the following steps:

Resilience has become an essential capability for success. Specifically, workplace resilience is “the capability to manage the everyday stress of work and remain healthy, to rebound and learn from unexpected setbacks and prepare for future challenge proactively”, as defined by organisational psychologist Kathryn McEwen in her 2016 book Building your Resilience: How to Thrive in a Challenging Job. It’s not just a matter of soldiering on. People need to understand the elements that contribute to building strength and what they can do to ensure they have the resilience, not only to survive but to thrive. Implementing small changes in several everyday routines can help build strength. A lot of work has been done on this topic and McEwen, in conjunction with Dr Peter Winword, have developed a Resilience at Work formula identifying key areas that interrelate, contribute and influence our overall workplace resilience. Key areas are:

Control One of the most important elements in reducing stress is to take back control, become proactive and spend time and energy on things within your control.

1. Identify the issue. 2. Determine what is in your control and what is not. 3. If there is something you can do – do it! Or if there is nothing you can do, accept the situation and let it go. I find the Disney Frozen song, “Let it go”, a useful mantra here. Keeping things in perspective and focusing on the positive will also help.

Purpose Another simple technique to build resilience at work is to remind yourself of why you do what you do. Maybe you have a vocation, a passion you have had since childhood, or you may have ended up in a “job” to pay the bills. Either way, we all need a purpose. Perhaps considering who benefits from your efforts and how they benefit can help. It is also useful to think about what greater good your work contributes to: is it a safer environment, education, health outcomes and/ or economic prosperity in the region? Don’t be afraid to think big here: we all contribute in this society and have a choice about how we spend our time.

Feedback If we are going to cope well, having a robust personal and professional network is also essential. We need friends and colleagues we can go to for ideas, to celebrate, to commiserate, to give us feedback and guidance. If you are not getting enough feedback at work, seek it out. Ask for peer reviews, offer up your thinking for comment and consider who you can help and support.

Care The final element in building strength is something we all know: look after yourself. This includes eating well, getting enough exercise and sleep, and taking time out to relax. A simple walk on the beach or through the bush can do wonders for your wellbeing. As the US president’s wife Eleanor Roosevelt famously said: “If you think that life is fair then you have been sorely mislead.” There is no magic formula to help you cope with the fires, dragons and other nasty stuff, but understanding what makes a resilient employee allows us to recognise what we need to focus on and how we can support those around us. Stress-related illness at work, headaches and panic attacks and lack of enthusiasm can be all too common, but with a few simple techniques you can build your capacity to cope, to feel happier and more in control.

Julie Kidman is a certified Resilience at Work coach and consultant at Mindstep. Email Julie@mindstep.co.nz BusinessPlus June 2017

in business By peter elder

It’s war! Develop a long-term business strategy A former manager of mine was fortunate enough to go to Harvard University to study business management. Upon his return I asked him what the key difference was between New Zealand and the US regarding our approaches to business. He answered that Americans treat business like going to war. He noted that as a result of this approach, all American companies spend a large amount of time developing their strategies and preparing action plans to implement those strategies. Their view was that it was unthinkable you would go into a new year and not have some form of strategy that would guide the company’s approach for the coming three-to-five years. The reasons they took this approach included the intensity of competition (both at home and abroad) and the fact that so many managers in the US had a military background and training. To a large degree New Zealand has caught up with the US, because competition in business today is exceptionally intense for us, with many people very busy dealing with never-ending complexity, numerous challenges and lower margins and profits. In an environment of this nature, unless you are an industry leader, the only advantage you can have relative to the opposition, is through developing a business strategy. My experience is that very few smallto-medium sized businesses have well-developed strategies. They might have a one-to-two-year business plan, and usually focussed on financials - not a long range business strategy. The idea of having a clearly-stated plan relating to what the business may be

like in three, five or 10 years is foreign to many New Zealand companies. Strategic planning is largely a simple process that involves committing management time, on a regular basis, to thinking about what the future holds and how that future can be realised, and who needs to be responsible for making that future happen. There should also be a well-defined structure about how the process will work, to ensure the right thinking is engaged, with the right people. Finally, strategic plans and the expected outcomes should be reviewed to indicate whether the strategy has been achieved, and if not, why not. The steps needed to implement a long-term strategy are discussed below in more detail. Step 1. Organising the first planning session Set aside time to ensure that the initial strategy planning meeting will have some structure. Usually this will involve no more than two-to-four hours to set a structure in place. This structure-setting includes consideration of: • who is going to be involved, • how much time will be committed to the strategic planning session, • where the session will be held, and who will make the arrangements for catering etc, • what the programme for the session will include, such as what specific matters might need to be addressed that are important for the long term health of the company/organisation, and • who will facilitate the session, eg, an external resource or the owner manager.

Step 2. The planning session It is critical that planning sessions take place off-site, to ensure the people involved are committed to being totally focussed and not tempted to engage in day-to-day work activities. It is also important that the session takes place in an environment where people can feel relaxed and can derive some enjoyment from the process. The common techniques being undertaken in such a session will be a SWOT analysis, looking at what the business is like at the present time and then setting out what the company/ organisation is wanted to look like in five-to-10 years’ time. There may also be specific current issues restricting the long-term situation, which need to be addressed at the session. Last but not least, a gap analysis needs to be conducted to decide what actions will be taken to achieve the desired future, and who will be accountable for those actions. Step 3. Subsequent actions` (i) Communication and Implementation Process Following the strategic planning session, specific actions need to form part of each designated manager’s defined objectives for the short-, medium- or long-term, to help drive the strategy. In addition it is critical that the strategy is communicated internally to the company’s/organisation’s employees so there is a broad understanding of where the company wants to head. The most effective way is for the organisation’s chief executive to lead this process by way of a PowerPoint or other visual and face-to-face means. Continued pg28

Peter Elder is an employment relations consultant to EMA members. Email peter.elder@ema.co.nz 20

BusinessPlus June 2017

in business By David Spratt

The Internet of Things is transforming supply chain management This is the final article in our four-part series on how companies can use the Internet of Things to be more efficient, cut wastage and to compete locally and globally. Expanding the effectiveness of a company’s supply chains in their local and global markets can benefit from the Internet of Things. Any fisherman will tell you about their mobile phone battery going flat in short order once they sailed out of coverage. With objects transiting the oceans, the energy requirement becomes an even greater issue. Battery life becomes the constraint.

The cost and compatibility of millions of tracking devices

(IoT) where millions or even billions of devices are all merrily chatting away together. Data is also expensive when its use is uncontrolled. Switch on roaming mobile data when visiting Rarotonga, and the resulting $1,000 bill for one week’s use should act as a salutary warning to anyone considering using mobile data services to track their goods worldwide. Even the least technical of us would understand that tracking billions of components globally is no easy matter. Currently, what is used is a very expensive combination of computer and software. But does it need to be expensive? Perhaps not.

Today’s Bluetooth, Wi-Fi or mobile solutions have complex electronics and can be expensive.

One network carrier technology that uses very low speed connections to track billions of unique objects across the globe is SigFox.

This is even truer when a business tries to get its supply chain device and data budget to talk to each other, in the environment of the Internet of Things

It’s a cheap, readily available and network-independent solution available worldwide and in part of New Zealand, to be available nationally later

this year. Based in Europe, Sigfox is rolling out the first global IoT network to listen to billions of objects broadcasting data, without the need to establish and maintain network connections. Importantly, SigFox technology works where objects are not attached to the network. This is ideal when an object or device in a supply chain is going in and out of coverage. All its network and computing complexity is managed in the Cloud, rather than on the devices – again, ideal for systems that need to work across the globe. All those features add up to a cheap, very low energy-consumption and low-cost option for supply chain connected devices. • My next article will explore the emerging force of artificial intelligence (see BusinessPlus, July 2017). Disclaimer: David has no financial or other interest in SigFox.

David Spratt is a director of Total Utilities Management Group. Email david@tumg.co.nz

Continued from pg15

Navigating the Equal Pay and Pay Equity storm a formal agreement to bargain for pay equity has been entered into, will be continued under the new legislation if:

The claims to be transferred to the proposed legislation will be deemed to have merit as a pay equity claim.

•

there is a written and signed agreement entered into by the employee and employer; and

•

the agreement is to bargain to establish a pay equity rate for the employees who are a party to the agreement, where that bargaining involves an assessment of the nature of the work and the identification of appropriate comparators.

Cases which arise from conduct engaged in before the repeal of the EPA (and the new Bill comes into force), where no formal agreement to bargain for pay equity has been entered into, will have to be commenced under the terms of the Bill. The intent of such negotiations is to resolve the Terranova case out of the Courts, so as to enable the

Government to better manage the pay equity claims and processes. Business New Zealand chief executive Kirk Hope has said: “The highest-risk sectors tend to be where labour markets are being Government-funded: health and welfare support workers, childcare, education aids…. At moderate risk are heath therapy professionals, agricultural, medical and science technicians. And lower risk are things like hospitality workers, checkout operators and sales support”.

Alexandria Till is a senior solicitor at EMA Legal. Email advice@ema.co.nz BusinessPlus June 2017

in business By Michael Fokkens

Protect your goodwill When appraising and selling a business, I often find that a significant portion of the selling price is made up of goodwill.

he had a conditional agreement on his business, which was expected to change hands.

Goodwill is defined as the value of a company’s brand name, solid customer base, good customer relations, good employee relations and any patents or proprietary technology.

What happened next was catastrophic. The customer took this opportunity to say it was going to commence manufacturing the product itself, and that the supplier’s/ vendor’s services would not be required in the future.

But in the case I’m about to describe, goodwill got wiped off the sale price.

This information was duly disclosed to the purchaser, and the deal fell over.

I was asked to sell a business of medium size that manufactured widgets for local and export markets.

Fortunately, however, the large customer bought the manufacturing equipment and the stock it was able to use; but was not prepared to pay for any goodwill.

My starting point was establishing the value of the business. It became apparent that one customer accounted for 60 per cent of revenue. This posed a significant risk to the business, and to buyer demand and for the ultimate purchaser. The arrangement with this large customer had existed verbally for 18 years. I suggested formalising the arrangement in writing, prior to taking the business to market. However, the vendor did not want the expense of drawing up this legal agreement and he wanted to avoid a possibly confrontational discussion with his largest customer. So we took the business to market anyway, and within three weeks signed a conditional sale agreement. After much discussion, the vendor rang his major customer to advise

Reduced value Due to the inaction of the vendor in future-proofing his business and protecting its intellectual property and goodwill, several hundred thousand dollars of goodwill was wiped off the business, as it became a partial asset and stock sale only. This owner/vendor could have protected his business with the following: • Signing an appropriate supply contract detailing the terms of engagement and with clear rules around cancellation of the agreement, giving either party plenty of notice of any impending change for time to adjust; • Finding more customers, when one customer accounted for 20 per cent or more of revenue; • Looking at ways to increase sales to other existing customers;

• Looking for new markets for his products/services; • Considering expanding his offering through product development or acquisition, if the business had limited growth potential with the existing product offering. There are other associated risks in having a small customer base, which some business owners ignore till it’s too late, such as: • Pricing Pressure: Large key customers who are also major players can often exert price pressure, which can erode profit margins. • Ability to Dictate Terms: Large customers can manipulate the terms of trade. • Financing: Lenders may also see customer concentration as risky business, passing on the business altogether, providing less than the desired loan amount, or offering the buyer sub-optimal terms. • Impact on Capacity: The supplier might not have the capacity to meet the needs of its own other customers, or to take on new customers. If your business relies on handshake agreements, or you have one customer that makes up a sizeable percentage of your income, you may want to consider other strategies to spread the risk and to reduce the impact this may have on goodwill when it comes time to sell.

Michael Fokkens is a business broker at LINK Business Broking (Licence REAA08). Email michaelf@linkbusiness.co.nz 22

BusinessPlus June 2017

in business By Connal Townsend

Commercial property sector bears brunt of infrastructure costs Commercial property seems to be considered a cash cow to be milked. Many actions by local government, and to a lesser degree, central government, certainly suggest they think it is. The examples are numerous. Central government is increasing fire levies by about 40 per cent to pay for the expanded Fire and Emergency New Zealand even though commercial buildings in cities will not get any increase in service. At this stage, the increase is only temporary until the levy is applied to a broader base, and unfortunately commercial buildings are unfairly seen as the easy stopgap to bridge the difference. At the local government level, commercial property is hit with rate differentials, which in major cities are 2.5 to 3.5 times higher than residential rates. These are further compounded by “targeted rates” aimed specifically at business to provide additional funds for the CBD, tourism or a pet project of local councillors. A 2016 report commissioned by the Property Council from JLL, a Fortune 500 professional services firm that specialises in real estate and investment management, showed just how debilitating that multiplier can be. For example, although both Wellington and Auckland have almost the same commercial rate differential (which is already 2.8 times more than residential), a commercial building owner in Wellington pays about 21 per cent more than for a commercial building of the same value in Auckland. It is all down to the extra “targeted rates” charged by both Wellington City Council and Wellington Regional Council.

As part of Property Council’s and EMA’s work on changing the planning system, we are making sure our advocacy includes changing the way local government is funded.

When Wellington City Council was approached about the difference, it was in denial at first. The council then claimed the revenue was needed for projects to grow the economy of the city and benefit businesses. Before Aucklanders get too smug at getting another one over Wellington, many proposed initiatives by Auckland Council could help close the gap, to the detriment of Auckland’s commercial sector. Such proposals include changes to the interim transport levy, a “bed” tax and rates to combat land banking.

Targeted rates must be spent on the ratepayers The Property Council, as advocate for commercial building owners, supports targeted rates, provided they are used to fund specific activities that clearly benefit the business sector. We also want well-designed targeted rates that are levied directly on the sector that receives the benefits (not a small portion of it like the current design of the “bed tax”). Auckland Council’s proposals do not currently meet these criteria. The Property Council and EMA are working behind the scenes with Auckland Council to find that sweet spot.

Development contributions to pay for infrastructure are another hidden cost which simply gets passed on to the home buyer, further exacerbating housing unaffordability. This is a key issue in the Waikato, where Hamilton City Council is perversely pushing to increase development contributions and calling for more affordable housing. The Property Council is fighting the council on this and has yet to see any evidence to justify the increase, making it a potentially illegal practice. It is easy to cast local government as greedy at the expense of business, and in many cases, it is. But councils are hamstrung, having only the rating system available to them to raise funds. A 1 per cent rates rise is a huge political decision, but in Auckland that percentage only raises about $14 million. That is a drop in the ocean when trying to fund the billions needed for infrastructure. Central government has been obstinate in not making other funding mechanisms available to local government, and Auckland knows that most. Until that approach changes, the commercial sector will be a target for rates increases. We can continue to fight every little proposal for new rates, but we cannot win them all. A better strategy is to change the whole system. As part of Property Council’s and EMA’s work on changing the planning system, we are making sure our advocacy includes changing the way local government is funded, to take the burden off the commercial sector by broadening funding sources. That’s another example of both organisations fighting for your long-term interests.

Connal Townsend is chief executive of Property Council New Zealand. Visit www.propertynz.co.nz BusinessPlus June 2017

Continued from pg14

New tool to address OSH breaches out of court There is no court case, so legal costs would be substantially less. But obviously negotiating with Worksafe NZ and creating the undertaking’s detail would incur costs. The new range of penalties is large and to date there is no indication of where the courts may settle. So with this one case, the financial impost, while not insignificant, may be less than what the courts will order. There is no court case, so legal costs would be substantially less. But obviously negotiating with Worksafe NZ and creating the undertaking’s detail would incur costs. For Worksafe NZ an enforceable undertaking is a cheaper option than deciding to prosecute and then going to court. Any financial penalties ordered by the courts would not go to Worksafe NZ, but end up in the Government’s Consolidated Fund account.

Thirdly, a strong component of this tool is benefitting the industry or sector. The contract details can include requirements such as organising sector training programmes or creating industry guidelines to prevent injury. These activities create a ripple effect of improvement across the sector. Within the first enforceable undertaking agreement is a condition that Worksafe NZ has full access rights to any and all intellectual property created in relation to the matter. This includes rights to subsequent use and distribution.

It would appear that businesses, their lawyers and Worksafe NZ are open to using the enforceable undertaking tool. Will it last? Time will tell. I would not expect to see this tool being used as a replacement for prosecutions where the facts warrant them, but rather to make the business undertake injury prevention activities in line with Worksafe NZ’s strategic plans. Businesses must decide where to spend their dollar and reputation: either up front in prevention; or at the back end, on sector initiatives.

Paul Jarvie is manager of employment relations and safety at EMA. Email paul.jarvie@ema.co.nz

BusinessPlus June 2017

in business By catherine beard

How to win government tenders You may have thought it would be great for your company to win a government contract, but perhaps were unsure how to go about tendering for one. There are a variety of resources designed to help you maximise your chances of success. A good place to start is this webpage www.procurement.govt.nz/procurement/ for-suppliers/contract-opportunities/future-contractopportunities, which has the consolidated New Zealand government organisations’ Annual Procurement Plans, which identify anticipated projects for the coming year: You can also search by region and sector. This link shows central and local government capital intentions for the next 10 years: http://www.infrastructure.govt.nz/plan/ evidencebase/2016-capital-intentions-combineddiagrams.pdf.

Preparation is key  Companies that win numerous tenders generally do a lot of preparation before the release of the RFX (a catch-all term that captures all references to Request for Information (RFI), Request for Proposal (RFP), Request for Quote (RFQ) and Request for Bid (RFB).) Identify where you best fit in the supply chain such as by talking to buyers and other suppliers. Key stages in preparation for tendering include: 1. Understanding the buyers, 2. Understanding your competition, 3. Defining your business, 4. Knowing the rules of engagement, 5. Building visibility to gain interest from buyers, and 6. Searching for opportunities. Government advice is to follow the eight stages of tendering, as shown in the diagram above.

GETS going! Many small or medium sized businesses are winning contracts through the free New Zealand Government Electronic Tenders Service (GETS) designed to promote open and fair competition for government contract opportunities. Visit https://www.gets.govt.nz/ ExternalIndex.htm. Also useful are the GETS user guides at www. procurement.govt.nz/procurement/for-suppliers/gets/ user-guides.

Government helping SMEs bid It’s been a dedicated mission of mine to make it easier for kiwi businesses to win Government tenders, the reason being that we are never going to grow bigger companies

where we have a small domestic market, if we don’t give our businesses access to bigger projects. Who does bigger projects in New Zealand? Central and local Government – to the tune of around $40 billion a year. As a response to our advocacy, the Ministry of Business, Innovation and Employment (MBIE) set up a Business Reference Group with industry representatives giving feedback on how Government can be easier to do business with. We have had a number of advocacy wins, including the new “rules of sourcing”, which now refer to best value for money including Government taking into consideration the economic, social and environmental impacts of procurement decisions. This means that whole-oflife cost should be considered, not just cheapest price procurement. There is now some great information available from MBIE, from standardised templates (RFX docs), how to win tenders, through to what is in the procurement pipeline from the different agencies. In addition to all of this, the chief executives of Government agencies will in future be rated on their procurement performance. If more kiwi businesses are getting exposure to larger contracts somewhere in the supply chain, their capability and confidence to invest will grow. It is my hope that these businesses will go on to be successful at international government contracts, and they will be able to reference local government clients to demonstrate their credibility and capability. If anyone has any feedback on their procurement experiences – good or bad - please contact me.

Catherine Beard is executive director of ManufacturingNZ, a division of BusinessNZ. Email cbeard@businessnz.org.nz BusinessPlus June 2017

international trade

Celebrating NZ’s best on the Finalists announced: 2017 Air New Zealand Cargo ExportNZ Awards The array of finalists in the 2017 Air New Zealand Cargo ExportNZ Awards shows the exporting sector is in good heart. The judges have been impressed with the calibre of finalists - from start-up to some of the country’s most well-known companies – that are fighting it out for the top award in each category. Overall, there are 25 finalists in seven categories (see below) from Auckland, Waikato and Northland. “At ExportNZ we’re all about exporters helping exporters. Therefore the awards are a time when we take stock and celebrate the success of our peers and acknowledge the peaks and troughs they have traversed to get there,” says Catherine Lye, Regional Manager of ExportNZ Auckland, Waikato and Bay of Plenty. “We have a diverse range of finalists, from emerging to established sectors, from small to large companies.” For the year ended June 2016 exports of goods and services accounted for 28 per cent (NZ$70.9 billion) of New Zealand’s GDP. ExportNZ supports the Government’s goal to build this to 40 per cent by 2025.

2. • Ports of Auckland Exporter of the Year (export revenue $10million - $25million) • ABE’s Real Bagels • Endeavour Consumer • Mastip Technology

6. • Endace Services Exporter of the Year (export revenue $1million $10million) • Company-X • HealthLink • Straker Translations

3. • NZTE Services Exporter of the Year (export revenue over $10million) • Cognition Education Group • Hobbiton™ Movie Set • Serko • WhereScape

7. • Baldwins Intellectual Property Best Use of Commercialisation for Export • Abodo Wood • Invenco • LIC • Pollen Group

4. • BDO Exporter of the Year (export revenue $5million $10million) • Oob Foods • PowerShield

8. • Supreme Winner (selected from the winners of award categories).

5. • DHL Exporter of the Year (export revenue $1million $5million) • ENZO Nutraceuticals • Helix Flight Manufacturing Machines • Inner Mongolia Rider Horse Industry (NZ) • Olivado • Pollen Group • Savar

9. • Fairfax Media Exporters Champion for exemplary services to export (announced on Awards night). For more information, visit www.exportexcelerator.co.nz

The 2017 awards will be presented at a black-tie gala dinner on Thursday, June 29 at Sky City Convention Centre.

Finalists in each category: 1. • Westpac Exporter of the Year (export revenue over $25million) • Fonterra • Milk New Zealand Dairy • New Zealand New Milk

BusinessPlus June 2017

Finalists: Westpac Exporter of the Year (revenue over $25 million) Award From left: Trevor Farrell from Westpac, Alice Li from Milk New Zealand Dairy, David Spurway from New Zealand New Milk and Grant Watson from Fonterra

world stage Finalists announced: 2017 Bay of Plenty ExportNZ Awards With hundreds of exporting businesses throughout the Bay of Plenty region, and home to New Zealand’s largest port, the area is set up and continues to do sensational things on the world stage. ExportNZ Bay of Plentysupports export businesses by adding value, offering information and assistance to ensure exporters in the Bay of Plenty are getting bigger and better. The annual Bay of Plenty ExportNZ Awards is the perfect opportunity to do this – an event dedicated to showcasing exporting organisations from the region, and their people who are creating their own beats. Into its 27th year, the Awards recognise the innovative, the brave and the successful. They acknowledge those companies that have helped grow and transform New Zealand and local economies with exceptional export success. They bring our export community together to inspire one another and they provide us with a snapshot of amazing local business stories which

we should all be proud of, but without the Awards might otherwise go unnoticed. And of course we do all of this while having a bit of fun; transforming the awards into a different theme each year, donning costumes (or black tie) and enjoying what is known locally as the ‘Event of the Year’. After much deliberation over the top quality export award entries, the judges have made their decisions and we are pleased to announce the finalists. Finalists: 1. YOU Travel Emerging Exporter of the Year Award • George and Willy • KiwiPharma • Kiwi Produce • Roholm (Inversehair.com)

3. Beca Export Achievement Award • Felipe Aguilera – Oasis Engineering • Hyun Taek Yang – Tauranga Korean Times (a NZ recognised agency working with Education Tauranga) • Robin Piggott – Dominion Salt 4. New Zealand Trade & Enterprise Service to Export Award (No finalists; just one very surprised and deserving winner on the night. 5. Sharp Tudhope Lawyers Exporter of the Year Award • Dominion Salt • Ziwi For more information, visit www.bopexportnzawards.org.nz

2. Page Macrae Engineering Innovation in Export Award • Enzed Exotics • Radfords Software • Steens Honey

Finalists: NZTE Services Exporter of the Year (revenue over $10 million) Award From left: Stephen Dickens and David Morris from WhereScape, Chris Sullivan from Cognition Education Group, Bob Shaw from Serko and Lance Sheppard, ExportNZ chairman. Absent: Hobbiton Movie Set

Finalists: DHL Exporter of the Year (revenue $1-5 million) Award From left: Jason Vokes from Olivado, Pete Matatahi from Pollen Group, David Giles from ENZO Nutraceuticals, Yun Yun and Victoria Wang from Inner Mongolian Horse Rider, Vicky Woolford from Savar, Daniel Coats from Helix Flight Manufacturing Machines and Nicky Preston from DHL

ExportNZ Auckland, ExportNZ Waikato and ExportNZ Bay of Plenty are divisions of the Employers and Manufacturers Association. BusinessPlus June 2017

international trade By brendon wilson

Prepare to be tracked and traced Significant reforms proposed to prevent money laundering and financing of terrorists’ activities in New Zealand extend coverage to a range of non-financial sectors including some lawyers, accountants and real estate agents Also in the spotlight will be conveyancers, high value dealers such as jewellers and motor vehicle dealers, and the New Zealand Racing Board. And when the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Amendment Bill is passed in the middle of this year, as Government expects, it is proposed that lawyers and accountants come into focus first in 2018, followed by the other sectors in 2019. The Government has proposed these reforms to deter international criminals from using New Zealand as a ‘soft target’ to move their criminal

funds. The measures will introduce more transparency into financial dealings, to allow the police to identify criminals and trace their assets - in line with international standards. Businesses may already be familiar with the current law. For example, a business opening a bank account will have been asked for identification information on the owners and directors of the company. Businesses affected by the proposed law will have to have procedures in place to comply with minimum standards that will be risk-based. This means businesses are first required to assess the way in which their services could be misused to launder money or finance terrorism. The New Zealand Police and the “AML/CFT Supervisor” (proposed to be the Department of Internal Affairs) will help businesses to do this.

Affected businesses will need to develop and implement procedures an AML/CFT programme - including policies for: • staff vetting and training, • verifying the identity of their customers, • monitoring their transactions, and • reporting anything suspicious to the Financial Intelligence Unit of the NZ Police. Other businesses may also feel an impact as customers. For example, when a business buys or sells property, the conveyancing firm and real estate agent will ask for identification documents, including for the real owners of the business. This legislation will bring us into line with worldwide expectation and stop us being seen as a soft touch.

Brendon Wilson is a director of Transparency International New Zealand. Visit www.tinz.org.nz Continued from pg20

It’s war! Develop a long-term business strategy (ii) Review Process These objectives and the strategy must be reviewed to see if the strategy has either been achieved or requires review.

Other benefits of strategic planning One of the important benefits of undertaking strategic planning on a regular and planned basis is that it assists in developing a team culture and employees’ commitment, as stakeholders in the business or organisation. People who have been involved in helping lead the business and plan for it, are more committed than employees who have no such involvement. Strategic planning is not an absolute silver bullet, nor will it always result

in ongoing or endless success. However, the chance of being successful would be at least 80 per cent greater than if you did not engage in it at all. Strategy does not have to be about making significant and fundamental changes. It may just mean that you want to make small, incremental improvements, particularly if things are going well. However, by not doing so means you are probably standing still and not developing. It is also highly likely that your competition will be engaged in undertaking a process of this type. Whose odds of success would you rather back in that case? Quite a few years back I was connected with an organisation that

was highly committed to strategic planning through the specific actions of the CEO. That CEO left and was replaced by another CEO who let the established strategic planning process slip into virtual nonexistence. I engaged with an employee some years later who had experienced both CEOs. He told me that when the organisation had undertaken strategic planning he felt part of something that had a sense of purpose, a well-defined direction akin to a ship that was well-guided, and that he was in the engine room helping drive it. “But we now talk about ourselves as being corks bouncing about on the ocean,” he said.

Peter Elder is an employment relations consultant to EMA members. Email peter.elder@ema.co.nz 28

BusinessPlus June 2017

international trade By Nada young

Winning the race to brand recognition in Singapore There’s no doubt that New Zealand companies create great food and beverage products. We’ve got access to excellent raw materials, fresh water and clean air. We have sophisticated technology and we’re innovative.

Start with the story behind the brand. Take advantage of strategicallyplaced bus stop ads, in-store communication, editorials in commuter papers and ubiquitous social networks, to connect with locals.

For the gourmets among us, we make an easy connection between the quality of the boutique products on offer and the spectacularly high prices these delicious treats command.

When they are warmed up to what you stand for, the next phase of your marketing strategy can focus on geo-targeted sampling, and keeping the “talk factor” alive in the media through consistent engagement with journalists and tastemakers.

Our connection to particular brands is influenced by years of accumulated experience and manipulative marketing. The same process occurs the world over. Singapore is no exception, but the big difference is that many of the New Zealand brands we know and love simply do not resonate with Singaporeans.

Capturing attention Singaporeans are city-slickers and notorious workaholics, working some of the longest hours per week of any developed country. These urban athletes don’t have time to browse the supermarket aisles, examining the merits of one product versus another. They’re in and out as fast as humanly possible with enough food for one meal in their basket. To capture the attention of the typical Singaporean, head consultant at Platform Public Relations, Adlena Wong, recommends the following threestep strategy: 1. Think ‘long-term engaging’, not ‘short-term hard-selling’

2. Create advocacy for your brand Singaporeans are increasingly influenced by peer-endorsed reviews, so your PR blitz will be nicely complemented by engaging a brand ambassador. A case in point: local soy ice-cream brand Soyato does not look local at all. This cleverly marked brand has positioned itself as a Japanese delicacy (Singaporeans habitually think that made-in-Japan equals quality). The company selected the amiable and good- looking OonShuAn (who makes regular appearances as a celebrity reviewer on Clicknetwork TV and played a lead role in a Jetstar TVC), as their brand ambassador. Now Singapore’s hooked! The company has populated local media, and has exporters and franchisors knocking on the founder’s doors mere months after Soyato’s launch. 3. Win over the ‘Heartlanders’ Singapore has an ageing population and a large proportion of the consumers who wander supermarket aisles tend to be mature shoppers.

Competition heats up in Cold Storage fresh food supermarkets in Singapore

Charming these Heartlanders requires a more personalised approach, eg, in-store product demos and the use of specific media touch points such as the Mandarin newspapers and television channels. Ultimately, finding a way to connect with Singaporean consumers, in the same manner that you connect with your local customer base, is vital. Not only will it support your sales in Singapore, but the strength of your brand in the island nation will have a positive ripple effect across the whole region.

Nada Young is a director at Incite. Visit www.exportincite.com BusinessPlus June 2017

member Profile

Overhaul of packaging business pays off Boutique, family-run Allflex Packaging in Auckland is reaping the benefits of the major overhaul of the company that the owners bought a year ago.

The Logans’ first piece of advice to others who are also in their first year of business, is: Stack up on energy! It has been an exhausting year!

Co-owner and administration director Kay Logan says, “Already we are seeing big improvements in consistent quality and repeatability of orders. “A long, arduous and at times frustrating implementation of a complete CRM, inventory control, and manufacturing system including Bill of Materials has set us on the path of revolutionising our business practises. “We are committed to providing quality product on time. It has been fraught at times, but with the implementation of systems and processes we are well on the way and our customer satisfaction levels have increased markedly and new business – largely through word of mouth – has started coming our way.” And Kay stresses that just as important to their systems are their people. “We have doubled the number of staff to 20 since our takeover and we have a strong commitment to employee satisfaction, working with staff to involve them in the direction of the company and to understand the importance of safety and quality, and being responsible for their workmanship.” The flexible packaging company offers solutions in printed, unprinted or laminated packaging for a wide variety of industries, including being

BusinessPlus June 2017

Peter and Kay Logan

HACCP registered to supply to the food industry.

Family The original company had been founded more than 25 years ago with a single owner who had developed the business to be profitable but at maximum potential as it stood. Kay and husband Peter had spent almost 20 years offshore in Asia and Europe before returning home and buying the business.

Peter had held various roles with Tetra Pak, a leading liquid packaging company, finally as managing director of its Indonesia and Vietnam businesses. Initially he spent six years in China as sales director then moved to Switzerland to take up the role of executive vice president of Sidel International, a subsidiary of the Tetra Laval Group. Then the Logans decided to return to New Zealand and spend time with their four children. Peter had a longheld goal of buying his own business

“With the implementation of better systems, and with further stability in our organisation we hope we will reach the full potential of our current assets. An aim is to introduce a level of professionalism and quality thinking which sets us above our competition.”

Setting up in NZ Peter’s experience offshore has shown him the positives in doing business in New Zealand. He says, “There are our transparent and straightforward business practises. Added to that is the willingness to assist, in our Kiwi attitude: a lot of our supply partners have been very helpful in offering their expertise to a new operator in the industry.”

Muhammed Shamim at work with packaging film.

to take advantage of his experience, in a New Zealand-focussed manufacturing environment.

but was keen to get involved in a manufacturing environment and is learning all aspects of the business.

The challenging part is the size of New Zealand that limits market potential.

Kay’s skill in organising the family moving among countries has proved invaluable in transforming the look and feel of the company.

Kay says, “Working with family members can be challenging at times, however, with our similar core values and work ethic, a consensus is always achievable.”

However, says Peter, being able to offer a quick turnaround and flexibility provides Allflex Packaging with a niche position, which is important in a market such as New Zealand.

She says, “Creating processes and systems now are helping us to work and look smarter, and instilling a feeling of pride in all of us to be involved with Allflex Packaging.” Their son Callum has taken on the role of factory manager. He spent the past four years working in logistics in the fruit and vegetable industry

Operations The company’s film material is imported from various sources including Asia and Europe but Allflex manufactures locally and adds value within New Zealand. “We do export some finished product offshore.

The Logans’ first piece of advice to others who are also in their first year of business, is: “Stack up on energy! It has been an exhausting year! “Be very cautious and do a very conservative calculation of your cash flow requirements. Improvements come at a cost. “Our staff is our greatest asset: treat them with the respect they deserve; your business will not succeed without them. “We have worked to create a team by doing things such as supplying staff uniforms and creating as pleasant an environment as possible - supplying fruit every week, for example. “We also have a willingness to listen to any ideas and suggestions that any staff member may have. “Make sure you have the right people for the right job; and work with them to ensure that happens.”

Callum Logan works with the labelling team

BusinessPlus June 2017

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