KEY POINTS:
Business mentors say the Government must go further in overhauling the Employment Relations Act if New Zealand enterprises are to survive their toughest time in a decade.
Restrictive employment law, plus capital and liquidity issues, will be the major hurdles for small to medium enterprises (SMEs), the backbone
of our economy, as they struggle to pull through the year ahead.
Ninety-four per cent of businesses surveyed by coaching company the Results Group say unworkable employment law is the primary issue they face.
SMEs cite restrictions such as the practical difficulty of even requiring a medical certificate from staff suspected of routinely abusing sick leave unless they are absent for three consecutive days.
National's move to introduce a 90-day trial period for new employees at firms with fewer than 20 employees is welcome, but the Government must go further in overhauling the Act, says Results Group managing director Ben Ridler.
Prime Minister John Key has last week announced a summit on employment to be held next month.
Minister of Labour Kate Wilkinson says it should "offer a good opportunity for businesses and unions to raise their primary concerns and promote any initiatives, particularly with respect to productivity and employment opportunities".
Wilkinson says the Government is "monitoring the Act and is always willing to consult business groups who have concerns about the legislation".
Ridler insists an overhaul of employment law is overdue. "There is a need to review the entire Act in light of the extent to which it is harming business," he says.
There will be very few companies able to carry under-performing staff, he argues.
In the meantime, "we are going to see a much larger percentage [of established companies fail] than any we've seen in the last 10 years", Ridler says. "This year is going to be a lot harder than last year.
"If you have a negative person impacting your organisation's culture detrimentally, you're still better off getting rid of them, even if it does cost you a lot of money that it shouldn't."
The widening recruitment pool offers employers the chance to build stronger teams by "replacing C players with A players", says Ridler.
At the same time, businesses must learn to hire well, communicating the right role descriptions and accountability to help employees succeed.
Capital and liquidity issues are also foremost, with most small business owners often securing company liability against their homes. As property values plummet, companies will be unable to renew their overdrafts.
Many organisations will "hit the wall" as the year unfolds, Ridler says, and the business coach's role is to "ask the hard questions" before that happens.
For SMEs, this year's business plan must address survival in the face of negative growth and spell out their cash position. "Everyone has a plan till they get punched in the face."
Market share growth will occur for the best-placed as less prepared firms falter and strongly placed companies will seize the clients - or the complete businesses - of those that founder.
Every business phase throws up choke points: resource constraints; under-capitalisation; the owner trying to do too much; hiring the wrong people - these are consistent mistakes business owners make. The important thing is to learn from them fast and do things differently the next time.
"It's a year of execution," he says - execution of a strategic plan. Winning businesses will be those who concentrate on sales and marketing.
Restructure to reduce costs by all means, but remember: "You can only do so much with cost reduction; in most companies, the biggest opportunity is the missed opportunity. No one ever failed for lack of opportunity; they failed for lack of focus."
Get disciplined about identifying and realising opportunities you could have taken for granted when times were good.