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Exclusive EMA news, advice, learning and networking I ssue 50 + Ju ly + 2008

■ Emissions trading: latest report■ Why your staff are your best asset■ What's behind ACC's cost increases

In this issue:

Stagflation bitingStaff not being replaced, prices going up: Survey

How often do you check your business

security?

EMA Northern & Central are the major stakeholders in:

How to quadruple a patisserie

What's holding upthe R&D tax credits?

DHL Export Barometer report

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Do you plan to increase wages this year? (Disregard you contributing

to KiwiSaver)

Our Vision. Your Success PagE �

FINANCE

NETWORKING

TECHNOLOGY

MANUFACTURING

RECRUITMENT

Security updates low priority for many

Stagflation bites: Staff not being replaced, prices going up

ACC cost increases will be big

Rules drawn up for HSNO group standards

Icing on the cake - Florentines Patisserie

Washable keyboards

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Auckland reform not about saving money Alasdair Thompson explains.

DHL Export barometer report

Report from Wellington: The Emissions Trading Bill with Phil O'Reilly of Business NZ

Lucky again for exporters

Standing firm against agressive behavior at work - EMA AdviceLiner

People: Your most important asset

Navigating the R&D tax credit regime - EMA's E&Y Tax Tips

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FINANCE

NETWORKING

TECHNOLOGY

MANUFACTURING

RECRUITMENT

FINANCE

NETWORKING

TECHNOLOGY

MANUFACTURING

RECRUITMENT

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How much is commercial goodwill really worth?Charles Tapper's 'How much is your business worth?"

17 hot freight packaging tips

Are you wearing too many hats? - Get a Grip

Walking managers and line stoppers - Lean Production

EMALERT Inside back cover

FINANCE

NETWORKING

TECHNOLOGY

MANUFACTURING

RECRUITMENT

Making desserts and cakes has proved a good decision for Mt Maunganui business Florentines

Patisserie, so much so its factory is about to quadruple in size. Owned by Donna and Greg

Knight, Florentines Patisserie won the Export New Zealand Emerging Exporter of the Year Award in

2007. Full story on 21.

In this Issue...

05

is published for:

EMa northErn

159 Khyber Pass Rd, Grafton,

Private Bag 92066 Auckland

Ph: 09 367 0900 or 0800 800 362

Email: [email protected] Website: www.ema.co.nz

Chief Executive

Alasdair Thompson

Advocacy Manager

Bruce Goldsworthy

Manager, Employment Advice

David Lowe

Manager EMA Learning

David Foley

Manager EMA Events

Mauro Barsi

Waikato

Denis Quigan 07 839 2995

Bay of Plenty

Kim Stretton

07 577 9665

EMa cEntral

PO Box 1087 Wellington

Ph: 04 473 7224 Fax: 04 473 4501

Email: [email protected]

Website: www.emacentral.org.nz

Chief Executive

Paul Winter

Gisborne office

06 863 2438

Hawke’s Bay

06 843 3419

Taranaki

06 759 4006

Manawatu/Wanganui

06 350 1825

Nelson

03 548 4528

Editor

Gilbert Peterson 09 367 0916

Published by

TPL Publishing Services

Project Manager

Pam King 09 529 3024

Advertising Sales

Colin Gestro (09) 444 9158

[email protected]

ISSN No. 1176-4953 Register NOW for the 2008 Salary survey

More Info on page 8

17

22

MeMber profiles

PagE � EMa business Plus Magazine - Exclusive EMA news, advice, learning and networking

By Alasdair Thompson, Chief Executive, EMA Northern

The changes EMA Northern proposes to Auckland’s local government councils won’t mean huge reductions in ratepayers’ bills.

We made this clear to the Royal Commission of Inquiry into Auckland governance at its hearings early this month, backed by a new report done for EMA by Deloitte consultants this year.

That cost-benefit analysis estimates the proposed reforms would have a one-off cost of about $306 million, with a pay back of two and a half years. Ongoing resulting annual savings are estimated to be $132 million.

But with an infrastructure deficit of around $16 billion hanging over the region, we have always said that there were never going to be big savings in rates.

What the reforms will do is make sure that decisions are made in a timely, cost effective manner with good governance structures in place to future proof Auckland.

The reforms are to ensure our urban region – a single new city - can become far more competitive and productive.

New points we made to the Commissioners were to supplement EMA’s written submission, including that the mayor of the Greater Auckland Council should be elected at large, ie, from the whole Auckland region.

The person so elected would enter office with a mandate from the general public and any council would need strong public support and solid reasons if they were to oppose such a person’s policies.

An elected mayor would also gather about him or her councillors voted in on the same or similar public sentiment and direction as he/she, thereby supplying the mayor with council support.

Most important, although the mayor has only one vote, because of their mandate, he/she has the advantage of moral persuasion over other councillors. So our view is that a mayor not able to leverage this power to garner the support of councillors, would probably not be the right person for the job.

Another point made strongly was that local communities should decide their own electoral boundaries in conjunction with the Local Government Commission.

Transition to the newWe were also able to outline a

concrete plan for managing the transition from the current eight councils in the region, to one Greater Auckland Council with a number of small local councils, but with a single new bureaucracy or administration. The bureaucracy would have a division responsible for regional issues, and another division to administer local issues and amenities.

Regional issues (and council committees) would be for:■ water services, ■ transport, ■ economic development, ■� regional cultural and recreational

amenities, and ■ regulation and planning.

An appropriate transition process to the new governance structure is critical to the successful implementation of recommendations of the Royal Commission. What we propose is:1) An Establishment Committee be

set up, comprised of representatives of the eighteight councils being disestablished. Since this is an internal re-organisation issue, it should be handled by the eight council CEOs and/or their delegates.

2) A parallel group of elected people from the eight councils (eg, their mayors and the ARC chairman) could act as the Establishment Committee’s “Governance”.

3) The new Establishment Committee would develop an Establishment Plan which would outline objectives, the process to meet those objectives (.g., a staffing plan and an asset transfer). And the Establishment Committee would set the milestones to be met.

4) The Establishment Committee would also appoint a Transition Project Team to implement the plan, perhaps comprised of senior executives of each of the disestablishing councils, and also drawn from other sources.

5) The Establishment Committee “Governance” group would appoint a chief executive of the Greater Auckland Council, who would take over the responsibility for implementing the Establishment Committee’s plan and setting up the new Greater Auckland Council and Local Council bureaucracy.

Obviously the entire process would require enabling legislation for the structure to be in place by early 2010 in time for the Local Body elections in October that year.

EMA’s submission was on behalf of Auckland’s 1.4 million people, not just for business. It has been developed over nine years of consultation and debate with hundreds of people, and more than 70 other organizations including in government, unions, social agencies, business and the community.

You can read the whole submission at www.

ema.co.nz under Advocacy-submissions.

Detail of the EMA reform proposal, and public

feedback, is also on www.fixauckland.com

Auckland reform not about saving money

"The proposed reforms would cost $306 million,

with ongoing annual savings estimated at $132 million."

PagE �Our Vision. Your Success

Thrive New Zealand 2008, the premier business gathering for opinion leaders and decision-makers, announces today the lavish array of speakers and performers for the event, which is taking place at the Aotea Centre, Auckland, Thursday August 14.

Thrive New Zealand has become the well established day out for the business community, with business leaders featured as show time stars. The spotlight in 2008 falls on some of the country’s famous organisations going global, from George Adams, managing director of Coca Cola Amatil (NZ) on the L&P story, through to Dion Nash of 42 Below and the iconic Bro’Town crew.

Delegates can expect to gain unique insights on the knowledge and expertise that transforms national business

triumphs into global successes. Alasdair Thompson, CEO of

the Employers and Manufacturers Association (Northern), believes New Zealand businesses can continue to achieve worldwide success as they embrace the great Kiwi ‘can do’ spirit.

“We operate in a global economy which is increasingly competitive,” he says. “If we are bold, creative and confident, the essence of what makes us uniquely Kiwi will help us shine both at home and abroad.

“The speakers at this year’s event have a tremendous record of achievement and it’s exciting for delegates to have the chance to sit down with New Zealand’s best in business.”

The event MCs are actors Robyn Malcolm and Oscar Kightley.

The full list of speakers is as follows:■ John Key – National Party Leader ■ Andrew Ferrier – CEO, Fonterra■ George Adams - Coca Cola (NZ)

■ Dion Nash – 42 Below■ Sam Knowles – CEO, Kiwibank■ Temepara George & Stefano Olivieri

- Dancing with the Stars 2008■ John Hart – Vodafone Warriors■ Derek & Geoffrey Handley

– Hyperfactory■ Mai Chen – partner, Chen Palmer■ Martin Snedden – CEO Rugby

World Cup■ Carmel Fisher – Fisher Funds■ Al Brown – Hunger for the Wild■ Mark Inglis - mountaineer■ Bro’ Town: Morningside 4 Life -

Elizabeth Mitchell, Oscar Kightley, Shimpal Lelisi & Mario Gaoa

Thrive New Zealand 2008 is sponsored by Telecom, Bartercard, Southern Cross Corporate Solutions, DB Breweries, Newstalk ZB, The Goodwater Company and Discover Distant Land Wines.

To Register: www.thrivenz.co.nz

Business stars in the hot seat

If you’re afi nancial member

by 31st July 2008 you go in the draw

EMA Central WIN 1 of 3EMA Northern WIN 1 of 7

This could

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Employers & Manufacturers Association (Northern) IncPrivate Bag 92066, Auckland Mail Centre, Auckland 1142 • Telephone 0800 800 362

Email [email protected] • Website www.ema.co.nz

EMA Northern 0800 800 362 • EMA Central 04 473 7224

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A surprisingly high number of businesses don’t conduct regular audits of their security measures on their premises or other assets such as cash and documents.

According to the inaugural EMA Northern Business Security Survey 42 per cent of businesses never audit their security. The next biggest segment of respondents (33 per cent) audit annually, with the rest checking more often.

The survey measured the types of systems and services business owners used to protect buildings, cash and other assets from damage or loss due to fire or other threats such as burglary.

A total of 161 businesses took part during May this year. Most businesses leased their premises (59 per cent) and the rest own them.

Less than half (37.5 per cent) had experienced a security breach in the past five years, but 17 respondents had been under attack five times or more.

Electronic security pervasive All but four respondents had some

form of electronic security to screen or protect against unwanted visitors such as burglars breaking in, and most had more than one form.

Most businesses had intruder alarms (87 per cent) and 80 per cent had combination of intruder alarm with alarm monitoring.

Around a third (32 per cent) has a door access and audit system such as swipe cards or door codes with just over a quarter (27 per cent) utilising CCTV (closed circuit television) in their security system.

Just under one in five (18 per cent) screened their vistors i.e. checked their identity before allowing entry. Only 4 per cent utilise all these options i.e. visitor screening, door access control, monitored intruder alarm, and CCTV to secure their premises.

Portable fire extinguishers were the most common system used to fight

fires, but not all have them - just 89 per cent of respondents. This means one in eight businesses do not have a fire extinguisher!

Next most common was automatic fire detection and alarm systems. (75 per cent) 39 per cent had sprinklers installed.

But when it came to the cash, the computer and small valuables, trust abounded. Fourteen per cent of firms had no asset security system. For those who did, safes topped the list (67 per cent). Just over half had a fire resistant data protection cabinet to hold documents or electronic media.

As well as providing security against theft, fire resistant cabinets protect contents for longer from heat and any water spray used in fighting a fire.

Most businesses also hired some kind of protection service for their property such as patrols (43 per cent) or security guards, (10 per cent). 11 per cent did not.

Security updates low priority for many


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Business success is declining but employers are soldiering on, keeping their operations in New Zealand, mostly retaining their staff and even planning to give pay increases this year.

These are among findings from the 932 respondents to the inaugural survey of employment plans conducted by the Employers and Manufacturers Association (Northern) in June.

However, while most businesses aren’t planning to downsize, they are putting up prices and not taking on new staff.

Eleven per cent have definite plan to make staff redundant, but another 20 per cent (187) are wavering or fairly sure they will. 52 per cent definitely will not be making redundancies and another 11 per cent probably won’t.

“Business is on a bit of a decline but there seems to be uncertainty about the future rather than expecting a rout; business is not expecting to crash and burn. People seem to be hopeful,” says David Lowe, EMA Northern manager of employment services.

Furthermore, when any staff leaves, 50 per cent of employers won’t replace them. 21 per cent definitely will replace them.

The staff being made redundant or not replaced are equally likely to be skilled (in the case of 27 per cent of employers) as unskilled (28 per cent), or both skilled and unskilled (45 per cent).

Resignations had not increased or decreased in the three months to June.

“This indicates employees are not feeling a change in their job security – not particularly insecure (holding onto their jobs) or secure (changing jobs), “ Mr Lowe says.

Employers had noticed in the previous three months that it was easier to hire skilled staff (for 71 per cent of employers), but slightly harder to hire unskilled staff (for 52 per cent of employers).

Disregarding the employer contribution to KiwiSaver, 81 per cent of employers will increase staff wages this year. The most common increase band is 2-3 per cent - for 36 per cent of employers and then 4-5 per cent - for 26 per cent.

A general downsizing is not planned in most cases: 54 per cent are definitely not. Only 10 per cent are definitely planning to downsize.

Business success was static for 72 per cent of respondents compared to three months earlier. As usual for some, success had improved (24 per cent) and even improved rapidly for 4 per cent.

Till the end of the year most respondents forecast a similar state of success (23 per cent) or a decline (another 35 per cent). But 42 per cent anticipated improved success.

Are businesses coping by putting their prices up? For 70 per cent, yes. The planned increase will be more than 10 per cent for 7 per cent of businesses, but mostly less: up to 5 per cent for 37 per cent of respondents and 5-10 per cent higher prices for 26 per cent.

“This is a responsible increase in line with the Reserve Bank’s inflationary cautioning,” says Mr Lowe.

Staff not being replaced, prices going up

KEY: Where 1 = very unlikely and 5 = definitely

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Parliament voted narrowly (61 to 60) to ignore its own Select Committee’s recommendation that the Minimum Wage and Remuneration Amendment Bill not proceed. Though the Select Committee outlined major changes needed to the bill, its report concluded it was unworkable.For it to work the Bill had to be completely rewritten, and it has been, but it is still a mess and the public and businesses will have no opportunity to point this out.Setting a minimum rate of pay for contracting businesses fundamentally interferes with the way business is done.Its another example of disastrous and unnecessary law making like the Electoral Finance Act.

Minimum pay for contractors worrying

EMA has written to Revenue Minister Peter Dunne asking for a review of the Motor Vehicle Reimbursing Rates published by IRD, and the Minister has responded advising a review is underway.

The rates, which haven’t changed since 1996, are for the self employed, and for employers to compensate employees when they use their private vehicles for work purposes.

They ensure the payments won’t attract a tax liability as long as they stay within the guidelines published.

Section CW 18 of the Income Tax Act 2007 allows employers to make a reasonable estimate of costs incurred by employees when using their vehicle for work purposes and provided they are fair and reasonable and correctly applied, they will be tax free.

Employers can use rates published by a reputable independent New Zealand source, representing

a reasonable estimate (eg the Automobile Association mileage rates) giving employers four options:■ actual expenditure incurred by

the employee; ■ an employer’s own reasonable

estimate of expenditure incurred by an employee;

■ published mileage rates, as long as they represent a reasonable estimate; and

■ the rates published by Inland Revenue in the February 1996 Tax Information Bulletin.

Review of mileage rates underway By Brandon Brown, EMA Northern AdviceLine consultant

The new alliance between Export New Zealand (ENZ) and the Business NZ group (Business NZ plus the four regional associations) has resulted in some significant structural changes.

New Export NZ divisions in the regions mirror and replace former Export New Zealand structures with Export NZ head office based at Business New Zealand in Wellington.

In the north, the new EMA Export Division comprises three committees: Export NZ – Waikato; Export NZ – Bay of Plenty; and Export NZ – Auckland. The committees will have their own local area

phone numbers and share a postal address of: c/o Export Division, EMA Northern, Private Bag 92066, Auckland Mail Centre, Auckland 1142.

National activities of Export NZ will be run out of the Business NZ in Wellington, giving strength to its central government advocacy role.

The objectives of the alliance and the future shape of the organizations were outlined to Export NZ members in recent ‘road show’ presentations. For further information, contact Bruce Goldsworthy tel 09-367 0948 or email: [email protected]

Exporters gain support of Business NZ

By David Lowe, EMA Northern Employment Services Manager


Nature loves it when you switch off.

genesisenergy.co.nz

GED

9836

GED9863 Switch hlf pg H EMA.indd1 1 11/1/07 12:47:59 PM

The changes to ACC starting next month are unfair and unworkable.Furthermore the levy increases that will result, given that the ACC No 2 Bill introducing them was to continue a “fair and sustainable” compensation scheme, are to the contrary wild and unfounded.

One estimate from ACC suggests that employers could face a 12 per cent increase. Low end estimates the increases likely to be at least 3.8 per cent across the employers account.

The increases are just for the proposed changes that introduce ‘work related mental injury” intended to compensate employees who see, hear or witness an event that is sudden and could be expected to cause mental injury trauma to people generally.

Employers will incur further costs for Gradual Process conditions. These are expected to be in the region of $12

million a year and ultimately built into the employers account.

They are to cover conditions that, if there is a work exposure and a non work exposure causing a condition or illness it will assumed the work place caused it.

On the plus side ACC will be charged with investigating such claims at their expense. Every employer will be watching their performance.

The new law will substantially raise employer levies though its not clear by how much. In Australia mental injury claims have been numerous and costly.

ACC estimates their cost for New Zealand employers ‘somewhere’ between $7.6 million and $72.2m. It’s like asking employers to write an open cheque.

The new law is also unfair because for example, treatment for mental injury from witnessing a trauma should be available to everybody, not just employees. It should therefore

be paid from Vote Health rather than ACC levies.

An example: the eight-year-old boy who recently witnessed his mother being run over and killed in an Auckland robbery is not eligible for compensation under this Bill, because he didn’t witness the tragedy as a ‘worker’. But a supermarket trolley boy who witnessed it would be covered.

On the other hand, a train driver would be covered if his train knocks down someone on the tracks, but the family out strolling who rush to help get no cover.

The wording in the law is also very subjective. Lawyers and medical professionals such as psychiatrists will be the only winners in advising whether an employee suffered mental injury, or if an incident was a sudden unexpected trauma.

We don’t think the law presents a fair way to handle mental injury.

ACC cost increases will be big

By Paul Jarvie, Manager of Workplace Health and Safety, EMA Northern


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In an open letter to importers and manufacturers of products regulated under the Hazardous Substances and New Organisms (HSNO) law, the chief executive of ERMA NZ, Rob Forlong, has clarified the safety data sheet (SDS) requirements for products approved under a group standard.

Group standards were introduced to create a framework so industry can self-manage the HSNO approval status of the products they import or manufacture.

An important part of this is to recognize the global market in which chemicals are produced and traded, and to reflect this the Safety Data Sheets must be set out using a ’16 header format.’ In order for chemicals to be

managed safely it is also important for New Zealand specific information requirements to be available as well.

So ERMA writes that the SDSs must be consistent with the requirements of the New Zealand Chemical Industry Council’s Code of Practice for the Preparation of Safety Data Sheets (published in September 2006), and the Draft National Code of Practice for the Preparation of Safety Data Sheets (published in December 2006).

These require New Zealand specific information such as the New Zealand supplier’s contact details and an emergency contact number, exposure limits (e.g. workplace exposure standards) and the HSNO approval number or title of the group standard.

The group standard provisions for safety data sheets for this purpose come in to full effect from July 1.

A successful remuneration strategy is vital for employee recruitment and retention. It requires access to comprehensive and reliable information about the latest market trends on wages and salaries, employee benefits, and remuneration practices. Our National Employers Wage & Salary Survey (now in its 15th year) - a joint initiative of New Zealand’s four regional employer organisations - is designed to meet this need. Register to participate in the survey for preferential access to New Zealand’s most authoritative and comprehensive pay information at www.nzsalarysurvey.co.nz Participation will take place during the month of August and reports will be available early October 2008.

Register NOW for the 2008 Salary survey

Rules drawn up for HSNO group standards


It’s still a great time to be a New Zealand exporter once again, despite the clouded outlook on the domestic front.

Exporters are tipping their orders to rise substantially over the next 12 months, with 59 per cent anticipating growth. Though this is down from 63 per cent last year, the NZ/Australia currency cross rate is now well below its 10 year average, and exporting across the Tasman has not looked better for a generation.

Given Australia is our largest export destination, and that their currency is projected to rise against the US$ while ours falls, now is the right time to rejuvenate relationships, or start one across the Tasman.

But for many of our exporters China is expected to be the fastest growing export destination over the next 12 months, up from fourth in 2006.

These and other aspects of the picture emerging from the DHL Export Barometer are most encouraging. Exporters appear less down about their prospects than businesses facing recessionary conditions at home.

Though 74 per cent of exporters report the exchange rate has impacted negatively on sales over the past 12 months (72 per cent last year), and the hit from rising fuel costs affecting 59 per cent (52 per cent last year), a net 25 per cent more exporters said they made headway over the past 12 months. They say, too, they are expecting faster growth to come over the next three months.

The Barometer registers a call for the government to work harder on securing better market access (39 per cent) and a big tick for its efforts on free trade agreements (34 per cent). But 56 per cent also want marketing grants to assist their exporting work.

The Barometer may well be read as a sign New Zealanders are ready to launch again on a new, overdue era of export-led growth. I certainly hope so, and as exporters hold my deepest admiration I wish them the best of fortune.

Alasdair ThompsonChief Executive, EMA Northern

Fortune favouring exporters

NEW ZEALAND GOVERNMENT

A change in the New Zealand Government would have

a positive impact on exporters’ business, according to

68 per cent of those surveyed for the 2008 DHL Export

Barometer. Manufacturers lead the charge with 75 per

cent believing a change in government would positively

impact their business. Hot on the heels of manufacturers is

the agricultural sector (73 per cent positive impact). Those

in the tourism sector, however, believe a change in the

current government will have no effect (63 per cent) on their

business.

Report extracted from DHL Export Barometer, July, 2008

PagE �0 EMa business Plus Magazine - Exclusive EMA news, advice, learning and networking

When Bill rang to say one of his truck drivers had been involved in a road rage incident, I smiled wryly to myself.

I thought, poor old Bill. These misbehaviors at work – or in his case in public on the street, with a sign-written truck – are among the biggest headaches for employers. And it wasn’t the only road rage call we’ve had lately.

As usual there are no quick fixes. What’s worse, Bill’s guy didn’t just

spit and swear at the driver who pulled out in front of him – he allegedly kicked and dented the opponent’s vehicle during the incident. The police took the employee away shortly after.

Two other drivers had to take time off to bring the truck back to work.

Bill investigated the incident but had very little evidence other than what the employee said, as he knew of no other witnesses, such as co-workers ,who he might usually have been able to ask.

He gave a letter to the truck driver as the culmination of the disciplinary process that had included: Giving notice of the allegation of misconduct and the likely consequences if the allegation was found to be correct and notice of a formal disciplinary meeting for the employee to explain the allegation, checking the facts and reviewing the employee’s personal file, and considering the driver’s explanation.

The letter said ‘this is a final written warning [of possible termination] pending further facts arising from the court case.’

Ah, the court case. The employee has sought to stay it indefinitely, so it could be a very long time away.

Bill wondered if he was limited to just the final written warning, or whether he could dismiss the employee (people used to say ‘fire’, but that’s not socially acceptable anymore).

Patience is the keyBill could have suspended

the employee while waiting for the outcome of the court case, if suspension was an option in the driver’s employment agreement, after consulting with the employee. When the allegation impinged on the employee’s ability to carry out their job safely a suspension from work would be for the shortest possible period of time to conduct a proper investigation. That might be in order because there was no feasible alternative. e.g . The employee should be paid while suspended, unless their

agreement said otherwise. It’s best to get professional advice

before launching into this option.So I advised that basically yes, Bill

was limited to that final warning. However, after checking with Bill I discovered the warning letter had not clearly outlined the reasons for the warning and potential dismissal. So I suggested that from a strategic perspective Bill could call the employee back into a meeting with a support person, as soon as possible, and give him an extra document advising just what the final written warning referred to specifically.

Bill could rightfully say the final warning was based on the admitted verbal altercation in the street, which had likely brought the company into disrepute.

But the uncertain matter of the employee bringing the company into further disrepute by spitting at someone and vandalizing another person’s property was a separate case of misconduct. If the employee was found to be guilty of this additional matter, or any other misconduct, it would constitute serious misconduct and warrant dismissal. Not that you have to dismiss anyone for any reason whatsoever if you want to give them another chance.

A warning letter is generally enforceable or ‘alive’ for a maximum of 12 months. Meanwhile, the employee is

still driving Bill’s truck… Then Marion phoned about

her problem with an employee being aggressive towards other staff.

I confirmed that she, as an employer, had an obligation to protect staff from aggression under health and safety law, but she had to be sensitive in handling the issue.

This was a staff member who was usually very competent and valuable. It could be a good idea to offer help for the employee, such as an anger management course through an employee assistance programme. Of course, if the employee undertook counseling it would be voluntary, confidential and at their expense, although Marion could offer to pay for some sessions.

Contact us to find an assistance programme or for any other advice: phone 0800 800 362 or for EMA Northern members 09-367 0909 or EMA Central, 04-473 7224, email [email protected]

The AdviceLinerWhat employers are ask ing AdviceLine th is month

Standing firm against aggressive behavior

"...after checking with Bill I discovered the warning letter had not clearly outlined the reasons for the warning and

potential dismissal."

PagE ��Our Vision. Your Success

Most ways to riches involve risk taking and leverage. I am sure we all understand financial leverage; invest $4 borrow $3 so each dollar in your wallet is geared up with three dollars from other people’s money.

But if you are reliant on your own funds and skills to create your wealth you will need to be extremely gifted or extremely hard working to have much left after paying the grocery bill.

People, the profit opportunity through low risk leverage

By far the most profitable, and often the lowest risk leverage is people leverage. One brain managing 20 pairs of hands making widgets means the profits on the labour of 20 are enjoyed by the one. OPL if you like, other people’s labour. Karl Marx eat your heart out.

Of course people are not widget making machines - they actually have a mind of their own and their own agendas, and that is what makes them such a pain to manage.

But your team is not the enemy. Most people want to be the best they can. They want to develop as useful people in their jobs and their life. They want to create and be recognized for it, and they want to feel they belong. If ,as a team leader, you can harness the creativity of your team and bring out the best in them, there is no doubt that people will be your most important asset. But this is only true if you make it so.

It starts and finishes with you and your leadership.

LeadershipTo be a leader you have to be

going somewhere with others following. So you have to have a vision and a purpose that others believe is worthwhile, convincing

enough for them to follow you into the wilderness. They have to believe in your honesty and constancy of purpose.

Pulling togetherYou need to know where you’re

heading, and why. If everyone knows where they are heading and why, they will be running towards the objective and continually looking for shortcuts, and guess what, you will get there sooner. So if you can share your vision, purpose and passion with your team so they adopt it as their own, the journey will be fun as well as short.

But sharing the vision is not enough. It’s a bit like a conquering Roman army. The leaders could never keep the army moving on the promise of how great it will be to conquer Gaul; if successful the soldiers were also offered grants of land. In short, sharing is about sharing the spoils as well as the vision.

Sharing the visionThis comes down to collective

belief. You cannot begin to share your vision and purpose until you have a clear understanding of yourself and your objectives. You must at first examine your own values and define your objectives and purpose.

Then, knowing what you want to achieve means nothing unless you communicate it, including to your customers and team. This is not about words on a bit of paper. It is about what you do and how you do it.

Rule number one is be yourself. Don’t pretend to be what you are not. If you are a complete bastard and non-PC, just do it. Rule number two is be consistent. Don’t be nice sometimes and horrid at others - just be horrid all the time. If you are consistent those around you will understand your values. You will

have communicated to others. If you are always comfortable with

what you do and how you do it, and do it consistently, and when tested you are transparent and honest and attempt to fix things that go wrong, you will be understood by those around you sufficiently well so they can decide if they want to join your team.

Building a teamIf you have people who do not fit,

pay whatever you have to, to get rid of them. It’s cheap at twice whatever you have to pay. If you recruited them in the first place, be generous. It was your poor judgment that employed them.

Forget trying to lock people in with money. Good people will stay if they believe in what you are doing, and get from their involvement enough value to justify the effort. We are not talking money here, at least not exclusively.

Once you have a base team of people who want to be in your organization and understand you, and the organization’s values, get your team to recruit from then on.

Sharing the rewardsHow do you design a rewards

programme that gets what you want and shares it with those you need on board? First you need to know what you want.

In business at least part of what you want will involve making money. However anyone starting a business just to make money will probably fail. All businesses are selling organizations but if your business is committed to building relationships and servicing them, and this is understood by your customers, the money will look after itself.

Bruce Sheppard is a partner in the accountancy firm Gilligan Sheppard and chairs the NZ Shareholders Association Inc.

People: Your most important assetBy Bruce Sheppard

PagE �� EMa business Plus Magazine - Exclusive EMA news, advice, learning and networking

I would like to report back to you on the progress of The Emissions Trading Bill. This is important to business, as the bill as currently drafted could mean big costs for New Zealand enterprise.

Many businesses support the idea of an emissions trading scheme, being a market-based system rather than a carbon tax. But there is concern at the particular kind of scheme that seems to be taking shape in Parliament.

One problem is that protection for competitiveness-affected businesses would be phased out extremely early, by 2030. This could see our businesses facing heavy carbon costs from 2030 onwards, while competitors in other countries were protected from having to pay for emissions.

Another big problem its reliance on a ‘cap’ – an overall upper limit on emissions allowed in any one year. This would prevent companies from growing beyond a certain point and would therefore constrain New Zealand’s growth.

We would like to see a different method used – an emissions-intensity approach, where companies could gain carbon credits if they could show they were on the

path towards world best practice standards in low intensity emissions - more on that later.

What happened in select committeeThe bill was referred to the finance and expenditure select committee earlier this year. Numerous organisations and individuals made submissions on the bill, and a great deal of opposition was expressed to many of its provisions.

It was hoped that the select committee would take on board the views expressed; however the bill has emerged from the select committee with its general thrust unchanged. The select committee has made about 900 drafting changes, but these are mostly minor wording adjustments.

Supporters claim the changes have made the bill more business-friendly, but unfortunately this is not the case. Areas where the bill could have been significantly improved are unchanged, while most of the changes that have been made are actually detrimental to business.

Bill still contains a cap on growthThe bill is still based on emissions-volumes (the ‘cap’

approach) not emissions-intensity. A purely emissions-volume approach would result in less production and therefore less emissions (good for the environment, but bad

for the economy). We believe emissions-intensity is a better approach

because it’s aimed at producing more output with less emissions (good for the environment and the economy).

Generally, business would appreciate intensity measures within an emissions trading scheme, as this would acknowledge their good work in moving towards more carbon-efficient production.

Bill still doesn’t cover forestry offsetsThe amended bill still doesn’t cover offsetting emissions

by replanting pre-1990 forests or planting new ones, because international rules don’t yet permit this. This is another indication that New Zealand is progressing too fast with emissions trading and an indication that the legislation is being advanced too quickly.

Still more about appearances than effective actionThe bill would still allow for emissions trading after

2012 even without an international market for carbon. However there would be no point in having a scheme operating in New Zealand if the rest of the world wasn’t doing it too – a standalone scheme in one small country simply wouldn’t happen. This is an indication that the bill is more about making a statement than making a difference to climate change. Persevering with an emission trading scheme when no-one else was would mean an exodus of businesses and people out of New Zealand, fleeing carbon-driven costs.

Report from Wellington: The Emissions Trading Bill

By Business NZ’s CEO Phil O’Reilly


Report from Wellington: The Emissions Trading Bill

Phil O’Reilly

New border taxesAn unfortunate development in the

bill is that it now includes the equivalent of a border tax on visiting ships. Under the bill, foreign vessels operating in our waters would be required to surrender credits to cover their emissions. But new taxes for special purposes – like border taxes – have the effect of reducing the simplicity and efficiency of the overall tax system.

Why is emissions-intensity the best way forward?

Business NZ believes emissions-intensity should be the key driver of New Zealand’s emissions trading scheme.

The reason why this is important is tied up with New Zealand’s ‘three big growth issues’:

1. We have to export. Our small population means our economy can’t grow just by trading among ourselves - we have to export goods and services overseas.

2. We have to get scale. If all our exports achieved only small market share overseas, that small share would get even smaller over time as larger contestants elbowed us out. We can operate successfully in niche markets, but to get strong economic growth we need at least some exports that get good market share in major markets.

3. To get scale, we have to have growth in exports.These growth issues are fundamental.

If we ignore them we are on the way to becoming an impoverished country. But the ‘cap and trade’ approach as laid out in the bill currently in Parliament would sabotage our growth prospects.

Cap & trade system = a cap on growth

The idea behind cap and trade is that businesses can trade their carbon credits and debits so that they can remain within a cap - an upper limit on emissions allowed in any one year.

But this would in effect be a cap on growth

Having a cap would mean our big exporters having to buy lots of carbon credits once they got above allowed emission levels, and that could make them uncompetitive, preventing them from achieving scale and stunting their export earnings.

Another problem with the cap is that some of our big exports have a lot of emissions associated with their production – the industrial plant that uses heat to convert milk into milk powder for example, or the mills that produce pulp & paper, or aluminium smelters.

It’s just a fact of life that industries that produce milk powder, pulp & paper and aluminium produce emissions, and when these industries grow, their emissions do too.

We need emissions trading scheme that allows for economic growth

So we need a kind of emissions trading scheme that can cope with growth. It still needs to do the important job of reducing our emissions overall – but without that growth-inhibiting blunt instrument, the cap.

An outstandingly important fact is that our big exports – milk products, pulp & paper, aluminium and so on - are world leaders in emissions-efficiency. They create less emissions in producing their goods than just about any other producers in the world. Their emissions intensity is low, and low intensity is good. The whole planet needs to move towards low emissions intensity.

The best possible outcome for the planet would be low emissions-intensity producers gaining market share and edging out high emissions-intensity producers.

So, when New Zealand’s big exports gain market share in global markets, it’s good for the planet. It makes no sense to interfere with that by imposing a cap, since it would simply stop our big exporters from increasing their market share and would make New Zealanders poorer.

On the other hand, intensity measures in our emissions trading scheme would reward our exporters for increasing growth while at the same time keeping emissions to a minimum.

How an emissions-intensity scheme would work

It would work like this. Industrial producers would keep a record of their energy intensity (amount of emissions per amount of output), and compare this against world best practice emissions-intensity standards. Carbon credits issued under the emissions trading scheme would be based on those standards. Companies would only get carbon credits if they could show they were on the pathway towards best practice standards.

The process would see high emissions-intensity producers improving their processes and technology in order to compete – and along the way total emissions would reduce without any need for a cap.

This is the kind of market-based option the Business NZ family would like to see considered as our Parliamentarians debate an emissions trading scheme for New Zealand. It’s also the reason why we believe the debate should not be rushed. This is a complex and cutting-edge step that New Zealand is embarking on, and we need time to be sure that we have a scheme that not only protects the environment but our economy also.

Phil O’Reilly is Chief Executive Business NZ


The value principles affecting the recognition of goodwill and the amount a buyer may be prepared to pay for goodwill on acquisition of a business are:

■ For goodwill to have value it must be transferable with the business

■ It must be somewhat lasting in nature

■ Its value is a function of its earnings potential

Value formula for goodwillTotal asset value less tangible assets

(debtors, fixed assets etc) = intangible value

Total intangible value minus identi-fiable intangibles = goodwill

Identifiable intangiblesThese intangible assets can be

identified and valued separately from the business goodwill. Examples include:

Intellectual propertyEnsure the appropriate registrations

are in place to protect the various forms of intellectual property you own such as patents and trademarks.

Software and databasesGenerally speaking, computer

software and databases are considered intangible assets although they may exist on tangible media such as discs.

Manufacturing Know-howEnsure this aspect of the business

is well documented and the various controls are well identified.

Commercial GoodwillCommercial goodwill is represented

in the quality of the business as a marketable entity and is largely reflected in superior earnings generated as a result of a blend of management and technical ability, customer and or supplier relationships, strategic

geographic locations, corporate and product images based on past advertising expenditures, research and development activities, and everything else that influences the ongoing business success. Value tip: By default, for goodwill to have value it must be ‘sticky” to the business.

For goodwill to exist in a commercial sense it must be supported by cash flows. After a return is calculated on the tangible and identi-fiable intangible assets, the remaining cash flow is attributed to goodwill. A multiple is applied to calculate its value. The multiple is highest for the tangible assets, lower for identifiable intangibles and the lowest for goodwill (remember the higher the risk, the lower the multiple). Value tip: As a general rule, the larger the business the more likely it is the goodwill is saleable, due principally to a reduction in high risk dependencies on people, products, customers and suppliers.

Commercialise goodwillPreparing a business for sale involves

commercialising the goodwill, which could involve the following:■ The owner transferring more

of the day-to-day control to the management group

■ Locking in key employees with management contracts

■ Reducing other dependencies such as key suppliers by sourcing product from alternate sources.The extent of the quantum of

goodwill can be reduced by recognising full value in the asset base and identi-fiable intangibles, such as:■ Revaluation of fixed assets■ Inventory replacement value■ Value of licences. For example

it could be argued there is no goodwill in a transport company as all intangible value is soaked up by the licenses to operate. No license no earnings!

The quantum of the goodwill must make economic sense. Remember it is not tax deductible to the purchaser. Ask yourself – how many years of future after tax earnings does the asking price for the goodwill represent? Is the payback period appropriate given the level of risk involved? Will your friendly banker be prepared to fund this level of goodwill. Ie is the deal bankable? Value tip: Buyers and their bankers do not like goodwill. The more value that appropriately can be ascribed to the tangible and identifiable intangible assets, by default the lower the residual goodwill value inherent in the purchase price.

Rules of ThumbIn a number of industries goodwill is

priced using a rule of Rule of Thumb. For instance, the goodwill of a funeral home can be expressed as so many dollars per body processed, although it is hard to make an immediate connection with repeat business in this particular instance.Value tip: It all comes back to earning power. Rules of thumb should be used only as a reference point. Each case must stand on its merits.

Shareholders’ AgreementThis contractual document,

which binds shareholders, will often contain a formula for valuing a business, which may or may not calculate the appropriate amount of goodwill, if any, that should occur on a share transaction between existing shareholders (say on the event of death of one the shareholders). A poorly drafted shareholders’ agreement could see substantial value being transferred between the parties if the value formula is wrong!

Charles Tapper is a Director of Advisory Services with Northington Partners, an investment banking firm specialising in business sales, capital raising and business valuations (www.northington.co.nz). Phone him on 09 913 4606.

How much is your business worth? - Goodwill By Charles Tapper

How much is commercial goodwill really worth?


Last year’s Budget saw the introduction of a 15 per cent R&D tax credit incentive for companies undertaking R&D New Zealand. At that time a number of businesses were actively talking about bringing R&D activities onshore to New Zealand. However, continued uncertainty around the application of the regime is limiting the extent to which this is becoming reality.

The R&D regime is already factored into the cash-flow position for many companies that are typically research intensive. Ernst & Young is seeing some tax paying companies taking the expected R&D tax credit into account when calculating provisional tax payments.

Businesses across a broad range of industries have been navigating the practicalities of the regime for the 2008/09 income year. Common themes are emerging around the mechanics of asserting an R&D tax credit claim. Some uncertainties include: ■ Effectively documenting and

substantiating R&D tax credit eligibility is not a one size fits all approach and can vary from business to business and industry to industry.

■ Navigating issues associated with ineligible entities, associated persons and company grouping rules involving crown research institutes, tertiary institutions, district health boards and joint ventures.

■ Determining effective ownership of project results is a particularly contentious issue in the construction industry and for NZ companies with offshore related companies.

■ Internal software development R&D and how it fits into the regimeIt is not uncommon for the

introduction of a new body of legislation to stimulate debate regarding its interpretation and ensuing impact. Inland Revenue continues to consult widely on the practical application of the legislation, particularly on

the internal software development, agricultural and construction arenas. Further Inland Revenue guidelines in these areas will be released in the near future. We expect to see a continuing consultation process leading up to the first R&D tax claims and beyond.

Even with the introduction of guidelines from Inland Revenue, uncertainty in some areas will remain until the legislation is tested and business specific Inland Revenue Determinations can be obtained from 2010. In the meantime adopting interpretations used globally, and reviewing international practice and precedent, particularly in Australia, will assist New Zealand businesses work through uncertainties.

The New Zealand R&D regime has incorporated some of the more competitive aspects of the existing

global R&D regimes. The new R&D regime presents two significant advantages over its Australian counterpart. The first is that the rate is effectively double the Australian rate. The second is that the NZ regime does not impose a cap on group R&D spend and turnover to be eligible for a cash refund. For all industries and particularly the biotech industry, this regime presents an additional incentive to keep the research capability in NZ.

By Colin De Freyne who is a Tax Director and Ernst & Young’s NZ R&D leader and Dr Hank Scriberras who is an Executive Director with substantial R&D incentive experience in Australia and has 11 years’ experience in technology-related roles in the biotechnology and hi-technology industries, and is currently based in NZ.

EMA's TAX TIPS

Navigating the R&D tax credit regime…Comparison of the New Zealand and Australian R&D regimes

New Zealand Australia

Rate of credit: 15% Rate of credit: 7.5% (effective rate)

Credit can be treated as income tax paid or received as a cash refund

R&D tax offset only, subject to R&D group turnover and R&D expenditure of the group

No restriction on type of entity that can claim

Must be a company incorporate in Australia

Supporting activities may qualify if wholly or mainly for the purpose of, required for and integral to core R&D activities

Supporting activities may qualify if directly related to core R&D activities

No formal R&D Plan is requiredCompanies must prepare R&D plans. Deductions are not allowable for activities not included in an R&D Plan

R&D activities conducted outside NZ may qualify for the credit, subject to a cap

Companies must receive approval in advance to secure a credit for eligible R&D conducted overseas

Eligible internal software development costs capped at $3 million

Internal software development excluded as R&D unless its developed for the purposes of sale, renting, licensing, hiring or leasing to two or more non associates of the company

Effective R&D business planning can assist an organisation capture its R&D tax credit entitlement in the most efficient manner. Setting internal policies and procedures to isolate and capture information on R&D activities is a good start to ensure that your company’s R&D tax credit benefits are not forfeited.


NZ Trade and Enterprise is opening a New Zealand Concept Centre in Shanghai in October this year to offer an entry point for New Zealand businesses looking to China.The initiative aims to help companies build connections, brand visibility and capability to grow their business in the highly competitive market in the lead up to the Shanghai Expo 2010.“The Concept Centre is stake in the ground and a real heart and home for New Zealand businesses in Shanghai,” said Liz Te Amo, NZTE Director Projects, North Asia. Companies will have access to a multi-purpose function and event space, a demonstration kitchen, meeting rooms featuring smart technology and hot desks.“Businesses will have the opportunity to demonstrate the best

of New Zealand capability in a highly branded and professional environment. Business, trade and investment opportunities can be leveraged and supported on an on-going basis through the Concept Centre,” Te Amo said.The Concept Centre is a component of NZTE’s expansion plans in Asia which include opening up to five more offices across China in the next four years, development of the Beachheads programme and Food and Beverage Taskforce led participation in Food and Hotel China.

To register your interest and receive updates on the NZCC Shanghai, email the project team with your name and contact details at [email protected]

NZTE to open Concept Centre in Shanghai

Exporting to Australia from New Zealand has not looked brighter for years thanks to a firm Australian currency.

And, if anything substantial comes from the annual Australia-New Zealand Leadership Forum talks recently – and it must with such a turnout of Aussie heavyweights – our exporters should turn their money making priority once again across the Tasman.

First, the currency. For those not paying attention, the long term average cross rate places the kiwi dollar at 85.8 cents to the Australian. In fact in April this year it was 86.2 cents. Now its around 78 cents, a lift to the potential New Zealand bottom line of nine per cent from the 10 year average.

Furthermore the Australian currency is picked for parity with the US dollar within months whereas the kiwi goes down every time there’s a wobble in the US currency. It seems our current account deficit woes present a risk to global fund managers every bit as great as they do in the US.

Add to this that private employment growth in Australia went up six per cent over the past year according to a Grant Thornton survey whereas New Zealand employment grew just one per cent. Translated that means more people earning, and we know as well

from comparing trans Tasman income tax figures they earn more on average than us.

Second, the leadership talks. More particularly, when we will see evidence of the much hyped Single Economic Market (SEM)?

There is only one major issue in the way, not counting apple exports, and that is achieving the mutual recognition of imputation or franking credits on dividends.

Successive New Zealand governments have raised the double taxation of dividends for the past 20 years. This century the Australian government began saying the potential cost to the Australian government would be $1 billion, though how they arrived at such a figure remains murky.

Imputation credits are allocated in proportion to the percentage of shareholders residing in either country, and they act as a huge magnet for locating head office operations in Australia.

Simply put, once Australian resident shareholders in New Zealand companies outnumber those resident in New Zealand they vote the company’s head office into Australia. That way they avoid paying tax on their dividends twice.

With Australian investment in New Zealand continuing to grow, the likelihood that the head offices of

companies such as the Warehouse will sooner or later follow such as Lion Nathan across the Tasman.

But in doing so Australia mortgages its own future; it cannot be in the longer term interests of Australia to forever have New Zealand as an economic colony dependent on it.

As Fran O’Sullivan pointed out in a recent column, a fiction presented by a (now past) manager of the Australian Treasury’s tax treaties unit, Paul McBride, was: “If you start recognising tax paid offshore and let that flow through to the shareholder level, then you lose that driver for companies to pay tax in Australia.”

The issue has always been about getting more companies to pay more of their tax in Australia, including erstwhile New Zealand companies.

The issue has also been a core reason why EMA has argued and lobbied for the past eight years for cutting the New Zealand company tax rate. We need it to be below Australia’s 30 per cent rate, partly to offset the double taxation penalty.

If the double taxation of dividends issue can be satisfactorily resolved it will mean a new era for investment in New Zealand, particularly for businesses aiming to export to Australia, to benefit from our temporary exchange rate advantage.

Australia, lucky again for kiwi exportersBy Bruce Goldsworthy

First published in the Independent Financial Review, June 18, 2008


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1. Under-filled boxes are likely to collapse; overloaded ones may burst.

2. Always consider strength, cushioning, and durability when selecting your wrapping supplies.

3. Choose boxes of corrugated cardboard, with good quality outer liners. Use heavy-duty double-layered board for valuable items.

4. Make use of cushioning materials, especially to stop your packaging contents from moving.

5. Put fragile goods in the centre of a package. Ensure they don’t touch the sides. Cushion well on all sides.

6. Store liquids in leak-free containers, packed with a lightweight, strong, internal material (for example, Styrofoam) and sealed with a plastic bag. Always remember bad packaging can cause damage to surrounding items.

7. Seal semi-liquids, greasy or strong-

smelling substances with adhesive tape, then wrap in grease resistant paper. Always remember bad packaging can cause damage to surrounding items.

8. Place powders and fine grains in strong plastic bags, securely sealed then packed in a rigid fibreboard box.

9. Use “arrow-up” label for non-solid materials.

10. Repack gifts properly. Many goods sold in attractive packaging may not be suitable for shipping.

11. Use triangular tubes not round tube-type cylinders to pack rolled plans, maps and blueprints.

12. Always pack small items in flyers appropriately.

13. Protect your data discs, audio and video-tapes with soft cushioning material around each item.

14. Write the address clearly and completely, using uppercase letters (on handwritten labels) to

improve readability. 15. When shipping sharp items, such

as knives or scissors, ensure you fully protect the edges and points. Heavy cardboard is suitable. Fix the protective material securely so it cannot be accidentally removed in transit.

16. Always use cardboard dividers when sending flat, fragile material (such as vinyl records).

17. When re-using a box, remove all labels and stickers.

17 hot freight packaging tips


We constantly hear the work/life balance drum being beaten these days. Do you sometimes wonder if you’ll ever stumble across that mystical Holy Grail of perfect life balance? Or does it seem like something that only happens for others?

If life is too busy, maybe it’s time to step back and evaluate. Are you trying to fit too much into every day, every week? How many hats are you wearing?

How many roles are you currently committed to?

Take a minute and write down all the roles you juggle – they might include parent, adult child of aging parents, grandparent, sibling, friend, employee or employer, taxi service to various child-based activities, contributor to voluntary organisations, church or community group member, sports activities, ….. How many categories do you have? And – have you put ‘self ’ in there?

Around the world I’m now hearing the phrase ‘energy management’ as opposed to ‘time management’. Consider those multi-layered hats you wear – can you grade each on an energy ratio? When do you experience your highest energy? What lights you up? And what drains you? Most of our close relationships are non-negotiable (sorry, you can’t return that messy 12 year old!), but what about some of the more peripheral ones? Do you find yourself reluctantly putting in ‘time at mill’ on some of those committees

or activities? Does the family feel stretched like a sick rubber band as you or your partner run children to endless classes and events, leaving no time for relaxing? Do they really need to belong to everything?

Here’s the key – minimise, simplify, cut back – until you feel in control. There are no prizes for being a martyr. If we try to do everything we’ll end up doing nothing properly. We’ll also burn out, be snappy, poor company, tired parents and lovers, and less-than-effective workers.

Apart from minimising your involvements and paring back to a more simple life, you might like the following strategy.

Every six weeks have a work-free weekend

The temptation is, when you’re learning a new job or carrying a very heavy schedule, to just keep going. After all, we can catch up on evenings and weekends, can’t we?

However, and probably just as well, our bodies were never designed to run non-stop. Think of your body as a rubber band. If it’s at stretch all the time it will snap much more quickly than when pressure is released from time to time.

It was explained to me this way by a nutritionist.

‘It all relates to stress,’ she said. ‘If you think of all the events in your life as individual stress bricks (positive as well as negative), every time you experience a stressful situation or are particularly busy you’re adding another brick to the stress wall around yourself. If you

just keep going the wall has nowhere to go but up. Many of the people who live this way spend the first part of their annual holidays (if they take them) exhausted and often sick.

‘The best way to keep the stress wall at a healthy level - enough to keep you vibrant and alert - is to take a complete break of a few days about every six weeks. This knocks some of the bricks down and keeps the wall always at a manageable height. On this ‘do nothing’ weekend don’t take your computer with you, don’t take ‘catch up’ work, and get someone else to take any work-related calls or emails.’

If you’d like more ‘take time for me’ ideas download ‘23 Simple Strategies To Keep You Sane, Happy & Healthy’ at http://www.gettingagrip.com/articles/index.html

■ Simplify your life. Look for things to let go of – commitments, additional roles, projects, even magazine subscriptions (but not this one!).

■ When you’re not sure whether to take on a new activity ask yourself: ‘Does this light me up?’ Your intuition will know the answer – listen to it!

■ Take a break about every six weeks – no work, no commitments. Turn off the Blackberry and computer – let your brain defrag!

Robyn Pearce is an international produc-tivity and time management speaker, author and productivity coach. Check out http://www.gettingagrip.com for articles and other free information, including a short Top Time Tips e-zine every few weeks.

Are you wearing too many hats?

get a griphot tips for higher productivity

By Robyn Pearce www.gettingagrip.com

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PagE �0 EMa business Plus Magazine - Exclusive EMA news, advice, learning and networking

It’s evident to those visiting a Lean manufacturing plant that the system relies heavily on visual cues to facilitate production. The visual ‘library’ comprises:

■ 5S Diagrams■ Kanban■ Standard Practices■ Standard Operating Procedures■ Andon Boards■ Productivity achievement data

In this series we’ve seen how each of these is individually applied but the cumulative effect of their use allows MBWA (Management By Walking Around).

Under MBWA it’s possible to determine the exact status of all factory operations simply by observing what’s happening in the workplace. For example, by looking at the 5S diagram you can see if the work area is orderly and capable of accommodating production, and a visit to the assembly line Kanban system reveals if production is ‘in balance.’

The actions of operators can be verified by referring to Standard Practices and Standard Operating Procedures and the system of coloured lights in each department (Andon Boards) shows the status of production in all areas of the factory.

Finally, by posting productivity results on the staff notice board all staff can be informed about current production trends and assist in the planning process.

The beauty of MBWA lies in its simplicity; if anything is amiss (out of balance) it is immediately obvious and, because remedial measures are well understood among staff, they can be dealt with quickly and efficiently. Under this regime there is simply no need for close monitoring of staff or processes; supervisory staff are able to devote more time to planning activities.

Line stop procedure (Jidoka)

Problem resolution methods in the Lean factory are very different from conventional operations. In a conventional system there’s huge pressure to keep machines and labour working at ‘full throttle.’ This focuses attention on getting a problem out of the way as quickly as possible. All too often, this involves a ‘work – around’ which does nothing to eliminate the true cause of the problem. All too often, this skirting around issues guarantees the problem will resurface and adversely affect production again.

During a visit to a factory in Japan, I witnessed an assembly worker pushing the Line Stop button when he encountered a problem that had prevented him from fitting a component. His action caused 3,000 workers to be idle whilst the issue was resolved. I was deeply concerned at this but my guide told me that staff are encouraged to stop the production line if they encounter a problem which could affect downstream workstations or the end customer.

The philosophy behind this is simple; if a problem is not identified and dealt with immediately there is a possibility it will become ‘submerged’ and re emerge at a later date.

When Line Stop is initiated, a well rehearsed set of actions is put in motion. Lights on Andon Boards illuminate the factory to show the location of the problem so Team Leaders from adjacent work areas can make their way to the site of the problem. These people, in consul-tation with work station operators, decide on a course of action to allow production to continue ‘safely’ before allowing the line to start up. In the Japanese example quoted, this process took about 30 seconds.

Every incident is documented on an ‘Improvement Form’ which is passed to the department’s Improvement team who are responsible for investigating the cause of a problem and developing procedures to ensure it cannot reoccur.

Once they have been determined, Standard Practices or Standard Operating Procedures governing an activity are changed to reflect the new conditions. Stopping the line may seem extreme but its true value lies in its triggering a response which prevents recurrence of a problem.

Barry Nolan is the principal of Lean Production Consulting. He was National Distribution Manager for Toyota NZ from 1977 to 1996.

Walking managers and line stoppersLean Production Part 12 By Barry Nolan

Microsoft recognizes Kinetic groupAuckland-based Kinetics Group Ltd were a finalist at this year’s Microsoft Worldwide Partner of the Year Awards in the Small Business Specialist category.“Kinetics is proud and excited to be recognised as a finalist in a global awards programme,” said Andrew Hunt, Kinetics Group CEO.“It’s quite something to be one of only three companies worldwide to be recognised as leaders in this specialist market,” he said.

Winners are chosen from a pool of more than 2,000 entrants worldwide. Nick Fletcher, Partner Group Manager, Microsoft New Zealand, said “Kinetics is the only New Zealand organisation to have ever been selected as a finalist in these Awards.” Kinetics earlier wins include the 2007 New Zealand Microsoft Partner Award for Infrastructure Solution of the Year – Small Business.


Making desserts and cakes has proved a good decision for Mt Maunganui business Florentines Patisserie, so much so its factory is about to quadruple in size.

Florentines managing director and shareholder Greg Knight says, “When we first moved into the current factory about five years ago, we had to shout across the floor to each other, but the space has filled up.”

The firm won the Emerging Exporter of the Year Award in 2007 and sales have doubled since. It sends a container of sweet treats to Australia every fortnight and there’s still plenty of demand there.

Florentines has 40 staff manufac-turing and marketing for the food service and retail sector, including hotels, cafes, restaurants, caterers and fast food franchises such as Pizza Hut and Nando’s.

Knight owns the firm with his wife Donna and his parents. His father Barry also works for it as business manager; Donna also helps run the original business, Zaggers 80-seat café in Tauranga.

Ten years ago the patisserie started out then gradually expanded its offering, at the same tim moving into Australia and other parts of the Pacific.

Improved governance is part of its present push into a bigger exporting operation – into more of the Pacific and maybe Europe.

But growth is hampered by space and funding, Knight says. A larger factory will help, as the capacity has to come before the sales.

Trade and Enterprise, and Export New Zealand have helped a lot along the way, he says, with grantsand by setting up meetings in several countries such as Singapore..

If there’s one thing the

Government could do for New Zealand, it’s help businesses export to the world, Knight says.

“New Zealand has fantastic companies and products but many of them just don’t know how to export. We need to be more aggressive and confident. It would be a great idea to put experienced people into companies for a year to show them in practical ways how to export.

“The world has so much more to offer if we are not scared. You have to jump on that plane and go; forget the hundreds of courses….”

After he visited a trade show in China this year to learn about opportunities for him, Knight returned with a changed world view.

“China is way more advanced than we give it credit for. I can see it becoming a world power.

“It makes you realize how insignificant New Zealand is: In China you probably wouldn’t even set

up a factory for a market of just four million people.

“And our emissions problems are codswallop! We are so clean and have far bigger issues to deal with before we beat ourselves up about that.”

The key to Florentines’ food is using competitively priced local ingredients that are traditional and natural. But quality, consistency and reliability, distribution and ease of purchase are important differentiators.

Florentines ‘shock freezes’ its products (ie, as fast as possible without affecting quality) to ensure the crème caramels, whiskey cakes and the like are delivered in good condition. Freezing also extends the product life for up to 12 months and allows for required portions to be thawed, reducing wastage.

The work is labour intensive but Knight still thinks his business can continue to be run competitively in this his beloved home country.

MeMber profileIn our regular snapshots of EMA member companies, we describe the business of Florentines Patisserie in Mt Maunganui...

Seriously Delicious

For more information, please talk to your distributor or Phone Florentines office 07 574 0101, North Island Sales - Derek 027 279 7228, South Island Sales - Jody 027 4555 261, www.Florentines.co.nz

Samples of treats made by Floretines Patisserie

Icing on the cake By Mary MacKinven

Florentines Patisserie won the Export New Zealand Emerging Exporter of the Year Award in 2007. The Knight family owners are, from left: Donna, Greg (managing director), and his parents Val and Barry (business manager).


MeMber profile... and Vertical Ascent International in Gordonton

Aiming to expand business into new areas for the fun of it and for sustain-ability, Wairere Nursery set up a new company and went product-hunting in Asia.

It was them you may have seen on Breakfast TV late last month displaying their colourful, plastic washable computer keyboards – a first product line being imported as a result of their trip, says Sol Taplin. He’s a long serving Wairere staff member and director of offshoot company, Vertical Ascent International Ltd.

Founder/owners Lloyd Houghton and Harry Janssen established the 16-year-old nursery in Gordonton on the outskirts of Hamilton. It started as a roadside plant stall with a collection box, and now has a reputation for attracting customers from far and wide, as well as providing a range of plants by mail order via its website.

Anthony Skinner, director of associated landscaping company Garden Graphix, set up Vertical Ascent this year to enter new product territory. It just felt right to try a new direction and a new product range, says Taplin.

Four of their team travelled to four trade shows in Hong Kong and China in April, with no idea of what product to buy ‘till they saw it’. “We bought some more urns and water features and so on for the garden centre anyway,” Taplin says.

One of the first exciting new

products was the washable keyboard available in 11 colours, which they have subsequently imported to an encouraging response.

“People want to use them in their cowsheds; dentists who have to wrap their keyboards in Glad wrap and change it between patients…schools. It’s a fun gift too.” Vertical Ascent is the sole distributor in New Zealand.

The keyboard is foldable and fully submergible in water. Its release is timed nicely with a report from Arizona University saying there are more germs on a shared keyboard than an office toilet seat.

Getting around in China was not as hard as Taplin expected. “A lot of people spoke English so there was no real issue with language. Now back in New Zealand we can work with email and Skype. Photos help. “A lot of people there know New Zealand and like the country so they are very welcoming.”

Come up with a deposit if you need to, he suggests. International transfers and Internet banking are viable options once you have the details of the relevant banks and the supplier. Hotels, meals and access to broadband or wireless Internet were all good.

Trade shows in the USA and Europe could be next stops for new product ideas.

ABOVE: The owners of Vertical Ascent International (standing, from left): Sol Taplin, Anthony Skinner and Lloyd Houghton. Seated, Harry Janssen.

BELOW: The washable computer keyboard is fully submergible.

Nursery diversifies into washable keyboardsBy Mary MacKinven

healthy people healthy business

Southern Cross Medical Care Society, 181 Grafton Road, Private Bag 99934, Newmarket, Auckland. 11/07

wellness programmes • health insurance • health checks • injury management • seminars • fl u vaccinations

creative innovative award-winning

workplace wellnessmaking a difference

When our in-house wellness programme was recently awarded the 2007

EEO Trust Work & Life Innovation Award, we knew we were thinking differently.

Whatever your budget, we can tailor a health and wellness solution to help

you reduce absenteeism, improve staff morale and boost productivity.

To fi nd out more, talk to us today. Call 0800 438 268,

email [email protected] or

visit www.healthybusiness.co.nz.

Top tastes from Kiwi companiesEssential Cuisine Ltd of Glen Innes and Prenzel Distilling Company of Blenheim have won Superior Taste Awards presented by the International Taste & Quality Institute - iTQi – an independent institute base in Belgium. Its jury is composed of 100 European chefs and sommeliers, and members of 12 European culinary

associations who blindly assessed more than 700 products from 57 countries.The products earning the awards were Essential Cuisine Beef Stock and from Prenzel, Citrus Rice Bran Oil Vinaigrette, Southern Star Vodka, Blenheim Bay Gin and Lemon Infused Flaky Salt. All five products obtained an organoleptic evaluation higher than 70%.

healthy people healthy business

Southern Cross Medical Care Society, 181 Grafton Road, Private Bag 99934, Newmarket, Auckland. 11/07

wellness programmes • health insurance • health checks • injury management • seminars • fl u vaccinations

creative innovative award-winning

workplace wellnessmaking a difference

When our in-house wellness programme was recently awarded the 2007

EEO Trust Work & Life Innovation Award, we knew we were thinking differently.

Whatever your budget, we can tailor a health and wellness solution to help

you reduce absenteeism, improve staff morale and boost productivity.

To fi nd out more, talk to us today. Call 0800 438 268,

email [email protected] or

visit www.healthybusiness.co.nz.


TrainathonReady, set, go!

JULY

For EMA Members

Train your mind with EMA Learning’s July Trainathon offer. Register in July on more than one 2008 course and get rewarded.*

TrainathonReady, set, go!

on more

For more information and course selection visit WWW.EMA.CO.NZ or register using the registration form in the @LARGE publication.

*Conditions apply, refer to www.ema.co.nz

EMA and the wider Business NZ group have formed a

partnership with online recruitment agency QJumpers to

provide a full range of services tailored to the needs – and

lower budgets – of small-medium enterprises (SMEs).

To celebrate the occasion EMA Northern chief executive

Alasdair Thompson (centre) signs off the deal with

QJumpers CEO Mark Scapens and Sales and Marketing

Manager Simon Oldham.

The web-based service is offered at a special price to

members. www.qjumpers.co.nz

Recruitment online comes of age

Tuesday 15 July 3.30 pm - 5.00 pm Quality Hotel Plymouth Int, Cnr Courtenay & Leach Sts NEW PLYMOuTHThursday 17 July 3.30 pm - 5.00 pm Angus Inn Hotel, Cnr Cornwell St & Waterloo Rd LOWER HuTTWednesday 23 July 7.00 am - 9.00am Tatapouri Sports Fishing Club, No.2 Shed, Gisborne Wharf GISBORNEWednesday 23 July 2.45pm - 4.15 pm Napier War Memorial Conference Centre, Marine Parade NAPIERThursday 31 July 3.30 pm - 5.00 pm Duxton Hotel, 170 Wakefield Street WELLINGTON

EMA CENTRAL Register on-line at www.emacentral.org.nz, or call Sandra Webley (04) 470 9947; or email: [email protected]

Y&R

ORB

0460

EM

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We’re big on small business

To talk to a Clued Up Orb Guy call 0800 ORB COM or visit ORB.CO.NZ

Telecom terms, conditions, credit criteria and monthly access fee apply. Offer is only available to business customers in the Construction industry. Disconnection charges may apply if the Construction plan is terminated before the expiry of the 24 month term. Offer ends 31 July 08 or while stocks last.

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