Fear is the greatest enemy of small-to-medium enterprises (SMEs) when it comes to disputes with employees, according to a rising star on the employment relations front.
Kay Chapman, head of Chapman Employment Relations, says the biggest issue facing New Zealand SMEs is that many become paralysed by fear when things go wrong with staff.
"We have seen it quite a bit," she says. "Companies can become too scared to do anything because they are fearful a grievance action against them could cost them $30,000-$40,000.
"If they are fortunate enough to be making a profit, that is often all their profit for a year, especially when companies are getting started."
Chapman, based in Nelson but just beginning entrepreneurial changes to her company that she hopes will see it go national in three years, says her clients come from all over New Zealand.
"I'd say nine out of 10 times we see problems arise because an employee has not been performing. It might be that the employee's behaviour and performance is not satisfactory - but the company has to jump through a number of hoops to come out the other end with a good result.
"Employees are much more litigious these days than they used to be. In previous times, disputes would be resolved far more amicably.
"Legislation changes favouring the employee are one reason; another is that people are far more able to access representation these days and can have a go at employers with very little risk to themselves."
Once a dispute has surfaced, Chapman says SMEs' biggest mistake is then not to follow the correct process.
"Let's say someone has stolen something from the workplace," she says. "You can't just confront them and say: 'You're fired'. You have to follow the principles of natural justice.
You have to put the allegations in front of them, give them an opportunity to respond, give the matter fair consideration - and even after all that, the employee can still raise a grievance."
However, if the company did not follow the correct procedure, the chances of an employee taking action against them and winning - even if the employee had been guilty of the theft - were much higher.
"That's why we see so many companies deciding to settle the matter when they haven't actually done anything wrong."
Chapman, 49, heads one of three SMEs selected by the Bank of New Zealand for its Supersize SME programme. The bank launched the scheme in conjunction with NZME and Newstalk ZB to find SMEs with growth ambitions which can be mentored to reach the next level of business success.
She pitched her growth plans to an expert panel, including Newstalk ZB's Mike Hosking, BNZ's Director of Partners Shelley Ruha and The Icehouse CEO Andrew Hamilton before being selected.
The holder of a Bachelor of Arts in Chinese and studying towards a postgraduate diploma in Business (Dispute Resolution), Chapman has had 23 years' experience in employment relations, industrial relations and human resources management - and says she loves the problem-solving aspect of her job.
She started her company, aimed at advising employers, in 2011 after working overseas and in New Zealand in employment relations - and is now basing her hopes for expansion on a new app which will be unique in the field here.
"It will change our interaction with clients," she says. "We've had feedback from them that they want to handle issues and topics that crop up themselves - but they do not know how to do it.
"Many of these issues are, for us, quite routine - we often find ourselves giving the same answers to the same questions from different clients. So we hit on the idea of using an app to give our clients a resource they can access which enables them to do it themselves.
"That leaves us free to pursue much more higher-value interactions with clients while we also have an always-on, 24/7 resource clients pay to access."
Chapman says the demand for such interactions with clients is already greater than her company can manage, so the app will be key in its development for the future: "Since we started the business, demand for our services has increased incredibly significantly - not just because of the more litigious environment but also because of the legislative changes and some confusion over the ground rules."
Follow the journey on The Mike Hosking Breakfast on Newstalk ZB and at SupersizeSME.co.nz