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Business Finance Consulting

Financial Ratios – Profitability Ratios

A recent article in the Australian Financial Review explained that the three main reasons for business failures were: Poor Financial Management (28% of failures), poor Accounting (16%) and lack of Management experience (15%).

So Poor Financial Management is the main culprit in business failures. The Directors and the owners of a company need to monitor the financial performance of the business. Revenue, Gross Profit, Operating Profit are important elements, but they have limitations: Firstly, they vary considerably with the ups and downs of Revenue (seasonality), and secondly, an increase in Operating Profit does not always reflect good performance (if Operating Profit increases by 5% for example, while Revenue increases by 20%, it is a poor result).

Ratios do not have these limitations and that is why they are widely used to measure financial performance.

Let’s look at the first set of financial ratios: The Profitability Ratios.

Profitability ratios measure the business’ ability to generate profit as compared to its costs and expenses, over a period of time.

They are: The Gross Profit Ratio, the Operating Profit Ratio and the Profit Before Tax Ratio. Read more

Surviving the Growing Pains! – Managing Staff in a Period of Growth

One of the common features of many of the businesses we come into contact with is that they are experiencing a period of rapid growth. They have a proven product or service, they’re doing the right thing by their customers and they’re reaping the rewards of their efforts – terrific!

But life is not always wine and roses as they say, and a number of businesses going through this phase also experience “Growing Pains”. Growing pains can develop in any area of the business – it could be that product or service quality is beginning to suffer, or it could be that your IT, accounting or communications systems are not keeping up with the increased pace. It might also be that you’re having difficulty in attracting and retaining quality staff to enable you to continue to provide the level of customer service that has contributed to the success of your business. Read more

HR Consulting

How Strong Are the Links in Your Management Chain?

I’m sure we’ve all had the experience at one time or another of seeing apparently sound decisions fall apart at the point of implementation, or otherwise proceed but result in unintended consequences.

This can of course happen in connection with any type of decision, and staff-related decisions are certainly no exception. Indeed, training initiatives, recognition programs and performance review systems are classic examples of well-intended business improvement initiatives that can go awry.

Of the many possible reasons for things going off track (poor project management or inadequate resourcing, for example), one of the most common concerns the role of middle managers/supervisors. Read more

What are your People Management Priorities for 2016?

The start of a new year prompts many of us to think about our goals and priorities for the year. Indeed, we’ll be working with the management teams of several of our established clients over the coming weeks to help them clarify their priorities, particularly in respect of their people management strategies.

Based on our recent work, here are a few common themes we expect to emerge (in no particular order):

1. Clarifying vision and strategy – Sure, a regular paypacket is a good “satisfier” for many, but to really optimise the efforts of your people it needs to be clear just where the team/business is heading, how you plan to get there and what role you are asking them to play in helping you get there. Ideally, formulation of vision and strategy will be a joint effort in order to encourage further “buy in”. Once you have a clear vision and strategy, be sure to review to ensure people-management practices are aligned (eg. if it’s part of the strategy to be number 1 in customer service, staff bonus/incentive plans shouldn’t be entirely about sales volume). Read more

Succeeding in the Culture Change Playground

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” – Socrates

I saw this posted on Linked In the other day and it reminded me of a question I am often asked by clients when speaking with them about potential workplace culture change programs.

The question usually arises while I’m extolling the virtues of taking a structured, collaborative approach to assessing, envisioning and managing workplace culture as a means to improving engagement, productivity and bottom line results. The client or prospect often nods knowingly, then looks thoughtfully, before asking the question, usually along the lines of:

“Yeah, well that’s great, but we have a couple of individuals/teams that are very resistant to change and I just can’t see them coming on board. What do we do with them?” Read more

Are You Prepared To Be Less Of A D*ckhead To Be A Better Leader?

As usual, the annual Conference on Culture and Leadership presented by Human Synergistics Australia earlier this week delivered the goodies, with some great speakers sharing their personal leadership and workplace culture experiences with an enthusiastic Sydney audience.

One of the many things on the day that resonated strongly with me arose out of a performance piece by the talented corporate dramatists from Coup, which successfully highlighted the challenges and opportunities typically presented by leadership and workplace culture change.

In the piece, one of the dramatists playing the role of “the Ghost of Business Future” (with all due respect to Charles Dickens), asked the struggling CEO if he wanted to become a better leader in order to save the business from its projected downward spiral. Of course he said yes, to which the Ghost of Business Future responded quite simply “Great…. so are you prepared to be less of a d*ckhead?”

The laughs from the audience suggest that I wasn’t the only one for whom this comment resonated. As much as we might typically use more accepted corporate language, structured models and frameworks to diagnose and improve leadership effectiveness, I couldn’t help but think that this phrase, as undiplomatic as it might be, provides some fundamental truths. Read more

Enhancing Employee Performance

Thinking About Thinking – Enhancing Employee Performance

We all know that effectively managing employees is fundamental to the success of our business. We variously rely on our employees to serve our customers/clients, to market and sell the goods and services of the business and to implement the processes and systems that keep the business flowing.

As business owners or managers, we can’t be there all the time, so it’s absolutely critical that our employees clearly understand what is expected of them. This in turn means that our ability to effectively communicate with our employees can have a direct and significant impact on the performance of the business.

Read more

Workplace Bullying Laws – Progress Report

With the workplace bullying provisions of the Fair Work Act having now been in place for over 12 months, it’s timely to reflect on the changes, how they are working in practice and the associated costs and responsibilities.

The Legislation

Under the legislation:

  • bullying at work is deemed to occur when “an individual or group repeatedly behaves unreasonably towards a worker or group AND the behaviour creates a risk to health and safety”. Bullying does not include one-off instances of insensitivity or rudeness, or reasonable management activities carried out in a reasonable manner
  • a worker who believes that they have been bullied, and anticipates that the bullying will continue, can apply to the Fair Work Commission for an order to stop the bullying
  • “Worker” has a broad definition and includes, for example, employees, contractors and subcontractors, an employee of a labour hire company, apprentices, trainees, students gaining work experience and volunteers
  • the Fair Work Commission is required to start to deal with an application for an order to stop the bullying within 14 days of it being received
  • courts can impose significant penalties on individuals and/or businesses that fail to comply with an order to stop the bullying
  • the Commission can also refer the matter to Work Health and Safety regulators which could ultimately result in the imposition of fines or a prosecution for a breach of WHS laws.

Read more

HR Consulting

Why are Position Descriptions A Lot Like Politicians?

Q. WHY ARE POSITION DESCRIPTIONS A LOT LIKE POLITICIANS?

A. THEY ARE BOTH BORING BUT NECESSARY!

I probably don’t need to spend too much time convincing you that they are both pretty boring as far as topics of conversation go, but you may need a little more convincing that they (position descriptions at least), are necessary.

Put simply, a position description is a document which outlines the key purpose, relationships and responsibilities of an individual role within the business. In most cases it also details the skills and experience that would be required of a person in order to competently perform the role.

So just what goes into a well-written position description and why are they important for your business?

In terms of their benefits, position descriptions (or job descriptions as they are sometimes referred to) provide:

  • an opportunity to consider and ultimately be clear about important aspects of all positions within the business, including reporting relationships, key task requirements and expectations relating to behaviour/attitude;
  • a good safeguard for you and your business in the event of grievances, disputes, claims of unfair dismissal etc…;
  • clarity for staff and supervisors around just who does what within your business, therein reducing confusion and also providing opportunity for greater efficiency and ultimately profit;
  • opportunity to reduce the risk of non-compliance with employment-related legislation including Work Health and Safety;
  • a sound basis for recruitment and selection, ensuring you get the right person for the job based on their mix of skills, qualifications, experience and demonstrated behaviours/attitudes, and;
  • a sound basis for effective performance review and training and development.

Read more

Here’s an I.D.E.A. – Provide Effective Feedback!

A common challenge for many supervisors and managers when it comes to managing people is providing effective feedback. This is particularly the case where they need to give feedback to a team member who is presently not meeting expectations and/or where they have done something wrong.

Some supervisors and managers become paralysed by fear that the recipient of the feedback may not take it well – they might be upset, your current good relationship might be damaged or, even worse, they might argue against the feedback and become openly hostile toward you. Other supervisors and managers have no trouble telling people exactly what they have done wrong and what they need to do to improve, but they deliver the news in a way that causes people to react negatively, with the result that their efforts to improve the situation result in the recipient becoming angry and/or disengaged. Read more