My trip, a dinner with my ex-Ernst & Young colleagues, met with an inauspicious start.  As I emerged from London Bridge Tube Station I bumped (literally) into a ’top London attraction’ rep physically fighting with one of their competitor’s reps.  Given their respective statures it was like a scene from Laurel and Hardy!  This was a unedifying encounter, and reflected very poorly on their respective company’s brand (especially as both had the company logo on their chests) and it left me wondering what their employer’s would have thought?

Fortunately dinner with my friends was far more amiable but I was shocked to learn that after 20 year’s of dedicated service they received nothing, not even a thank you email from their employer.  Is there not a direct correlation between employee loyalty and business profitability and success?  Much is done to retain customer loyalty and the cost of selling to a customer versus the cost of winning a new customer is well understood, but do the same principles not apply to employees?  Don’t get me wrong, they weren’t complaining, and weren’t expecting any recognition.  Clearly this is the way big firms run, but I couldn’t  help but feel a little sorry on their behalf that their loyalty wasn’t recognised.

Mike O’Connell, CEO, Isosceles Finance

What is the true cost of an accountant?

The true cost of a £60,000 accountant is actually closer to £100,000 or £445 per day during their first year.   So what is the cost if you incur all the recruitment and training costs and then you find out after six months that you have recruited the wrong person?

I feel another blog coming on.

(Click here to see table for my full calculations)

Getting up to speed

In terms of training and induction, the heaviest load will be the first three months.  There is usually a month’s handover with the member of staff being replaced at zero productivity. The cost of getting up to speed is therefore £5,000 (plus NI and loaded costs).

Tools for the job

The cost of office space, rent, rates, service charges, utilities, reception, photocopier, fax, is about £50 per square foot in the South East; an average desk space per person is about 75 square feet per person.  So the cost per annum is £3,750 per person.

Productive time

The other issue that employers fail to take account of is the actual productive time of an employee.  There are 260 working days in the year, however after holidays (say 25 days) bank holidays (8 days) sickness, company meetings, appraisals and training days it is unlikely that there are more than 220 working days.

Employee management

The final issue is what is the cost of managing and developing an employee? This includes the cost of appraisals, setting objectives, informal one-to-one meetings to discuss career aspirations or providing feedback on progress.  This is likely to absorb at least three days of management time (£1,500 cost or £3,000 opportunity cost) across the year and much more than this if issues arise.

Final instalment coming shortly ………

 Mike O’Connell, CEO, Isosceles Finance

If you have a particularly youthful workforce, you may feel that retirement is not a relevant issue to your business – an issue to be addressed in the future; however, at some time your existing and future employees will near retirement. 

The removal of the DRA is an opportunity for employers to review their practices and processes for managing employees (whatever their age) and their performance.  All any employer wants to ensure is that employees are performing and when issues or deterioration in performance occur, take corrective action – irrespective of the age of the employee.

Good employment practice ensures that employees understand their roles within the organisation through the establishment of competency frameworks which clearly define the knowledge, skills and behaviour required to properly perform a specific role.  They enable employers to manage performance in an objective and measured way, allowing for sensitivity and compassion when dealing with the issue of declining performance with age and plan retirement.

Isosceles is an experienced provider of HR Services and competency frameworks are an important aspect of our services.  They can help you to engage in effective recruitment and employee performance programmes and with the abolition of the DRA, provide an approach to managing declining performance.

Whilst the Justice Minister has tried to reassure us that “no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix” lawyers have been quick to counteract that the statute is open to different interpretations.  Failure to comply could  result in a fine and even imprisonment.

There is plenty that can be done to ensure that your systems and procedures are compliant with the Act.  The first step is to conduct a risk assessment – to get you on your way click here for a FREE risk assessment form.  The green, amber or red light at the end of the form will identify your level of risk but you will also need to:

1. Put comprehensive and robust policies and procedures in place
2. Select a ‘champion’ to be responsible for ensuring compliance
3. Communicate and train your staff on this important issue
4. Review any relationships you have with JV (joint venture) partners, agents, contractors and suppliers

 Mike O’Connell, CEO, Isosceles Finance

Ten highly motivated Dietathletes entered the competition.  It is a straight fight, the person losing the highest percentage body fat over the course of 12 weeks would be declared the winner.  We nominated an independent adjudicator who oversaw an official weigh-in at the start.  We have also had unofficial weekly weigh-ins to monitor progress.

The topic of conversation in the office has been about nothing other than food.  Some of the dietathletes have become excessively competitive, there has even been talk that some have spiked the drinks of others with full fat milk.  There may even be a case for random drug testing to be introduced because of the high rates of weight loss being observed.

We are now five weeks in and I am happy to report that everyone in the team has lost weight.  The front runners have lost a stone and in total the combined weight loss is around that of a small person so we may have to recruit again soon.

Mike O’connell, CEO, Isosceles Finance

There has been a great deal of discussion in the media and there is no doubt we, and all of our clients, are under increasing pressure from changing workplace legislation and the associated costs of compliance.  Of course, I am in favour of measures which protect employees, but I am really worried the UK will end up developing the kind of employment laws which have strangled many businesses in the EU.  The UK must build a climate which enables SMEs to compete and grow in the current difficult trading environment.

I personally have mixed feelings about the latest changes.  The fewer barriers put in front of employing individuals, whether permanent or contract the better. Every piece of new employment legislation put in place is another question to answer in deciding whether a business really needs to employ this individual.

Some of our clients are venture backed technology companies, early stage or ‘bleeding edge’ dealing in immature markets.  Some require heavy investment and are some way off break even.  The changes which will come into effect during the next 2 years will bring even more cost pressures that may at best stifle their growth but I fear it could well see the demise of some, already struggling in the recession.  I am concerned that the financial burden of giving agency workers the same rights in certain areas as permanent staff, for example, and the eventual enrolment of staff into a pension scheme, could be a financial burden too big to bear.

Sadly we, together with many other small firms have had to withdraw the provision of childcare vouchers (which was a very nice perk for employees) because legislators started to hint that instead of a simple salary sacrifice this should form part of an employee’s contractual terms and conditions, thus giving employers ongoing liabilities during periods of maternity and paternity leave.

But there is much to be positive about, we have to remember that much of the motivation behind recent changes to employment law has been to promote family friendly policies and this is a good thing.

The best promoter for family friendly policy is that it simply becomes part of what good companies do, companies gain competitive advantage through it, they retain and recruit the best staff.  As an employer you need to have these types of policies if you want to be considered amongst the best.   This has the added benefit of sorting out what legislators believe are family friendly policies from those that employees vote for with their feet.

Mike O’connell, CEO, Isosceles Finance

Whilst it would be imprudent of me to tell you that its is possible to eliminate the chance of a claim it is definately possible to minimise the risk or mitigate  the impact of any claim by taking a few basic precautions and ensuring that your employment contracts comply with this new legislation.  

Speak soon? moconnell@isoscelesfinance.co.uk

Mike O’connell, CEO, Isosceles Finance

In the course of these discussions I have come to realise that there is a universal constant – the amount of money that most executives, especially sales and business development directors, want to be able to make from their equity – the answer is £2M. Everyone wants to make £2m in the next 3 years.

This constant works irrespective of sector, maturity of business or past performance. The only thing that can affect it is the age of the executive. Younger executives don’t usually express an expectation as a monetary figure it is more likely to be descriptive “lots”, “enough to be comfortable”, “millions”. Perhaps this is it, perhaps £2M is the sort of money an executive in their forties needs to feel satiated and secure, it pays off the mortgage a few bills and allows semi-retirement in your fifties.

Perhaps it is a recognition – felt more acutely by sales directors – that age and ageism is a real threat to their careers particularly in the technology sector. I have not met many sales directors in technology business aged 60 or above. This may be a more acute issue for technology companies because technology moves so fast and often in waves.  I am a generation after the social media explosion perhaps these concepts need to be sold by people of that generation to people of the same generation. I feel a new blog coming on!

 Mike O’connell, CEO, Isosceles Finance

The Department for Business, Innovation & Skills (BIS) recently revealed that 20% of business owners are worried that they are getting their employment obligations wrong, while a further 34% believe that employment legislation is not relevant to their business.  That adds up to a high proportion of employers at risk of infringing employment law.

It comes as no surprise therefore that the most recent Employment Tribunal statistics (to March 2009) show that claims have rocketed again this year to 266,542 – a rise of some 40% - the cost to employers was £2.6bn 

Whilst it would be inprudent of me to tell you that its is possible to eliminate the chance of a claim it is definately possible to minimise the risk or mitigate  the impact of any claim by taking a few basic precautions and ensuring that your employment contracts comply with the lastest employment legislation.

Never let it be said I’m not a generous man.  Click here for a bit of free consultancy and your own copy of Employment Legislation – 10 Ways to Mimimse your Risk  Exposure.

Mike O’connell, CEO, Isosceles Finance