Wage Negotiations

Recently The Irish Times published an article which predicted a 10 percent wage increase for 2016! Hard to believe but unions will be delighted reading this. However the article was based on the experiences one of the major recruitment agencies in Ireland. Now recruitment agencies have an interested to get wages increased as their fees are normally a percentage of the wage of the selected candidate. A ten percent wage increase would increase their fees with ten percent as well.

The economic growth of 6.5 percent in 2015 indicates that the economy is strongly growing and in 2015 the majority of companies increased their wages with an average of 2.5 percent. With the economy growing again in 2016 pressure to give further wage increases is growing.

Since the collapse of the National Wage Agreements and it is back to local bargaining. A lot of managers would have little experience in local bargaining. Here are some golden rules to apply if wage bargaining is to be an issue: -

1.       Do not negotiate if you do not have to. In most small and medium size companies there is no union recognition and no agreement with the union that new salaries have to be negotiated. So if you do not have an agreement with a union, your industry is not under Employment Regulation Orders or Registered Employment Agreements do not negotiate even if the unions would like to have a place at the table.

2.   Setting the agenda. Many companies have been caught out by starting talks and not sorting out the agenda and procedure. You could be making a far reaching deal with the union officials only to be confronted with the fact that the union members have the final say on it and reject it. The already far reaching deal has to be renegotiated to include even more concessions. Set up and organise a clear agenda and procedure under which the negotiations take place. Make it clear that what happens when a deal is negotiated and if the union insists that their members have the final vote before it can be accepted, maybe your management board has to have the final vote on it as well and can reject it as well as too far reaching. 

3.   Setting your own objectives. Establish what wages increases you can afford and define three possible settlements from your company’s point of view: the ideal or best possible deal, a realistic or best possible settlement and the worst, though still acceptable settlement. Before setting these objectives make sure you know where your company’s stands compared to other companies in areas such as salary, benefits, compensation, economic growth etc. Know your salary levels compared to your industrial sector and regional salary levels. Is your company paying above or below the average salary levels in your industrial sector and region? Are your benefits and compensation par with other industries? Most likely unions will start negotiating with companies they perceive as easy targets to set a trend in wage negations. Always focus on your own situation and make it clear to the union that your company cannot be compared to these easy targets.

4.   Preparing the case. Once the objectives have been defined, it is necessary to put a case for negotiation together. The bargaining process is one in which attitudes are swayed by a complex mixture of facts, logic, interest, fears and pride. Preparation involves consideration of the information which will be needed to support the case being made. It is essential to consider this from the other party’s view point. Try to establish the unions and employees objectives at the wage negotiations. Try to find out what they negotiated at other companies. Hold a mock bargaining round and let some managers play devil’s advocate, examining your company’s position and probing the company’s arguments for weak points and prepare your answers for the real event.

5.   Communicate. Before, during and after the wage negotiation keep communicating with your staff, in particular your managers, supervisors and team leaders regarding the company’s point of view and needs. Make sure that your managers and supervisors are all aware of these essential points which will ensure the company’s survival. I do not mean to give away the bargaining plan, however, keep them abreast of what you can do regarding wages and benefits and if union objectives are in the interest of the company. Very often only the union communicates effectively with employees during this phase and this will lead to high and unrealistic expectations and difficulties with staff once an agreement is reached.

These are just a few of the practical personnel solutions regarding wage negotiations. There are many more issues to address and many pitfalls to watch out for.

Recruitment - A Major Investment

SME companies want employees with excellent skills with a great attitude to work. It is as simple as that. They want employees who can help them to grow and improve their business, who can work on their own without too much checking and correction. Who have initiative and come up with simple ideas on how to improve their work and their output. They want employees who make things easier and not more difficult. And they are right. Life is difficult enough at the moment for SME companies and any assistance employees can give to make the life of the Owner/Manager easier is much appreciated. If only employees performed their job well that would be a great help. The truth is that getting it wrong and hiring the wrong candidate can be very costly and no company can afford this in these economic challenging times.

How do you get those employees with the right skills and attitude? One method is to look for them when you are recruiting for new staff members. The selection of new recruits is an important moment when you are deciding does this employee have the right skill set and the right attitude to work. Many SME managers miss that opportunity. Why? Because they haven’t really thought about what they are looking for. They haven’t identified the skills set and attitudes are which are required to be successful in their job. They are busy and just hope they will meet the right candidate at the interview. Well it takes more than that to be successful in recruiting new employees.

A HR consultant who specialises in SME companies can be very helpful in putting a recruitment process in place which solves your recruitment of new employees. At the end you have a process in place which delivers you the right candidates for the right investment while you have been trained on how to interview candidates and decide which are the best for your company. Campbell International can help you to organise your recruitment process and find those candidates which will help to develop your company.

Recruitment is a major investment in any company. The average industrial wages in Ireland is €36,000 and multiply that by 10 years. As you could expect that an employee would stay with you for at least 10 years and you are talking about a major investment of €360,000. A lot of Owners / Managers would seriously deliberate before making such an investment and look at it from all sides. Yet I know managers who would hire an employee in an afternoon without giving it much thought. Human Resources is a serious business which can develop your company into a serious player on the market. 

Ignoring human resources can fatally harm your company and send the company to the graveyard...

Turning Strategy into Great Performance

You have devised a great strategy for your company and all the indicators show that you should get a big return on investment. Yet when the year comes to end the results have brought not what the strategy suggested. What has happened? You spent so much time in getting the strategy right and now there is little to show for it. Unfortunately, this scenario is more common than you would think.

Companies only realise about 60% of their strategies potential because of defects and breakdowns in planning and execution. If you review the most common causes for the failure of strategic plans the findings are revealing and troubling.

Research into the strategy to performance gap published by the Harvard Business Review shows that virtually all companies surveyed struggled to produce the financial performance forecast in their long-range plans. Furthermore, the processes they used to develop plans and monitor performance make it difficult to determine whether the strategy to performance gap stems from poor planning, poor execution, both or neither. The biggest problems are: -

v  Companies rarely track performance against long-term plans – the research shows that less than 15% of companies compare the business results with the performance forecast, drill down to analyse why the performance was not achieved and take this information into account when making new plans.

v  Multiyear results rarely meet projections – This is demonstrated by a dynamic common to many companies. The 4 – year plan projects modest performance for the first year and a high rate of performance thereafter. Management meet its modest target for the first year and is recommended and prepares a new plan with a modest growth for the first year and a high rate of performance thereafter. The process is continued over the next years with only modest results over the projected years.

v  A lot of value is lost in translation – Given the poor quality of financial forecast in most strategic plans it is probably not surprising that most companies fail to realise the strategic potential value. What emerges from the research is sequence of events that goes something like this: strategies are approved but poorly communicated. This makes the translation of strategy into specific actions and resource plans all but impossible. The lower end of the organisation doesn’t know what they need to do and when they need to do it and as result the expected results don’t materialise. If no one is held responsible for the shortfall the cycle of underperformance gets repeated over and over again.

v  Performance bottlenecks are frequently invisible to top management – When plans are realistic and performance falls short, executives have few early warning signals. They have often no way of early detection whether actions were carried out as planned, resources were deployed on schedule, competitors responded as anticipated etc.  As result it is impossible to take corrective action on time.

v  The established gap fosters a culture of under performance – If the strategy underperformance becomes the norm over the years’ then commitment cease to be binding promises with real consequences. The organisation becomes less self – critical and less honest in its shortcomings. Consequently it loses its capacity to perform.

However, there is a way out as a number of high performance companies have dealt with above described problems. They have created clear links between planning and execution and raising the standards of both of them. There are seven rules to follow and these are: -

1. Keep it simple, make it concrete – Ensure that all staff member know the strategy and how it affects their day to day performance. Make certain that all employees know what they have to have delivered at the end of the year.

2. Debate assumptions not forecast – Strategies are often based on assumptions and to make them come true staff need to know what you are thinking in order to engage in the process. When they understand the fundamentals and performance drivers they understand what exactly is required and understand better how to deliver on the performance.

3. Use a rigorous framework, speak a common language – The specific framework a company uses to ground its strategic plans isn’t that important. What is critical is that the framework establishes a common language for dialogue between the management and employees one that strategy, marketing, finance and operations all understand and use!

4. Discuss resource deployment early – Companies can create more realistic forecast and more executable plans if they discuss up front the level and timing of critical resource deployments.

5. Clearly identify priorities – To deliver any strategy successfully managers must make thousands of tactical decisions and put them into action. Companies should agree on priorities, communicate relentlessly and hold managers accountable for executing against their commitments.

6. Continuously monitor performance – Continuous monitoring of performance is particularly important and proactively monitoring the primary drivers of performance. Putting the Key Performance Indicators on the agenda of every management meeting should ensure that all keep the eye on the ball.

7. Reward and develop execution capabilities – No list can be complete without a reminder that companies have to motivate and develop their staff, as at the end of the day no process can be any better than the people who have to make it work. This also includes development of staff members who have made it work.

The prize of closing the strategy to performance gap is huge – an increase of performance from 60% to 100%. However, the true benefit for companies who create tight links between their strategy, plans and performance is that will they experience a multiplier effect, as a result of their efforts they are willing and able to take on stretch commitments that inspire and transform companies.

Bullying, Harassment and Sexual Harassment

Some eight percent of the European workforces suffer from bullying and mobbing in the workplace. This causes European business to lose profit through absenteeism, staff turnover and on a personal level, leads to some three suicides per week in Belgium alone. In Ireland a survey carried out by SIPTU reported that 87 percent of those questioned indicated that they were aware of bullying behaviour taking place in their workplace. Almost 40 percent said that bullying was a regular occurrence in their workplace and young and inexperienced workers were the most vulnerable people to work place bullying.

The introduction of the Equality Acts expands the definition regarding Harassment, Bullying and Sexual Harassment and is forcing employers to take action to stop harassment in the workplace or face the consequences of possible litigation in the future and severe penalties.

The equality laws introduced over the last number of years place employers under obligations to ensure a safe and positive work environment for all employees. What was up to now considered by many as normal behaviour in the workplace should now seriously be re-examined.

All the equality legislation is coming from European Union Directives and has to be implemented into Irish law. The scope of these directives is to stop discrimination on grounds of gender, marital status, sexual orientation, religion, age, disability and specifically in Ireland membership of the travelling community.

Harassment is seen as a form of discrimination and Sexual Harassment is seen as a form of gender discrimination. The employer is responsible if the harassment takes place within the scope of the employment. This could mean the following: the harassed person is an employee; the harasser is an employee, the employer, client, customer or business contact. The employer is responsible for taking reasonable action to prevent the harassment from happening when the harassment took place where the employee is employed or it is related to the workplace.

The effects of harassment should be studied as well. If employees are treated differently than is the norm by other employees, for instance nobody talks to them, all avoid this person, then this could amount to discrimination and seen as harassment.  Once an employer has been notified regarding this behaviour then the employer should take action to solve the problem. Taking no action exposes the employer to serious risks of employee litigation.

The defence for employers against all these developments is to take harassment and bullying seriously and develop a positive culture in your workplace. The following actions should be taken: -

Ø  Develop policies stopping discrimination and harassment in the workplace

Ø  Develop a company code of practice regarding discrimination and harassment

Ø  Train key staff in handling discrimination and spotting harassment

Ø  Take reasonable steps when harassment occurs to stop it happening again

 

The most important thing an employer should do is to take harassment seriously and prevent it from happening.

There are also huge benefits for a company from this legislation. Companies can gain through more contented workforce, a better work climate, lower absenteeism and lower staff turnover. All these will contribute to the bottom line of a company.