How human resource compliance and best practice can positively impact the recruitment, management and retention of skilled staff
Author: Liz Jamieson (Rimfire Resources) | Date: 12 Feb 2019
Take home messages
- Know the law – review and implement employment documents and processes in line with Fair Work legislation
- Keep updated – amend these documents and processes following business or legislative changes
- Invest in training managers
- Remunerate staff fairly
- Embrace workforce planning
Good people are the heart of every successful agribusiness. Managing the components of human resources (attraction, retention, remuneration, safety, compliance and training) are therefore core functions of any business employing staff.
However, the reality of small to medium-sized businesses means that HR is often woven into standard business practices rather than being an explicit business function. Rimfire Resources’ 2018 Agribusiness HR Review found that over 40% of Australian agribusinesses do not employ any dedicated HR staff.
Figure 1. Ratio of HR professionals to staff members in Australian agribusinesses.
For these businesses, there are substantial opportunities to improve both compliance and profitability through good HR management – whether this is internally or through an outsourced HR provider.
What does poor HR management cost?
The estimated cost of replacing employees ranges from 20% of annual salary for low-wage, high-turnover roles to more than 200% of annual salary for highly-educated executive positions. We are now in a candidate-driven market with high labour mobility and skills transference, combined with nearly full employment and a worsening labour shortage. This combined with typical staff turnover rates in agribusiness of 4-10% in 2018 means our sector is losing millions of dollars per year on vacancies. Therefore, the recruitment, management and retention of staff is more important than ever.
Figure 2. Factors that influence employees’ retention rate.
Why is HR compliance important?
In simple terms, compliance is important because all organisations must comply with employment law, rules and regulations. Fair Work Inspectors have the right to enter a business at any time to spot-check HR practices – and this is neither an idle threat nor an isolated occurrence.
In an increasingly complex and regulated workplace, a lack of HR compliance exposes the business to risks of fines, hefty back-payment bills, adverse publicity, litigation in court, reduced staff performance and employee turnover.
How can HR compliance help attract and retain staff?
Small businesses can manage their HR duties without employing a dedicated HR resource, but they must dedicate time and resources to developing, executing and maintaining healthy HR practices. By doing so they will not only protect their single most important asset – people – but also increase profitability.
Each business needs to understand its own situation, but there are some common areas growers should understand their HR obligations in. These can be roughly grouped into stages of the employee lifecycle.
HR compliance throughout the employee lifecycle
- Hiring employees:
- Recruitment – know what to do before you hire (i.e. create a position description, write a job advertisement, interview, reference checks, make an offer etc.) and after you hire (i.e. create an employment contract containing the 10 National Employment Standards, set up an induction, etc.).
- Paying employees:
- Award compliance – know which award or agreement will apply to your workers, the minimum wage for the role and any penalty rates and allowances. The award also determines how often employees should get paid.
- Be careful not to misclassify employees as independent contractors, casuals or seasonal workers if they have regular work – this could entitle them to employee benefits e.g. superannuation and leave.
- Keeping the right records:
- Payslips, timesheets and rosters are mandatory parts of running a business and will help manage finances while avoiding risks of fines and penalties.
- Offering leave and other benefits:
- Leave – know the leave entitlements of different employees under the law (e.g. annual, sick, parental, domestic violence, community, long service leave etc.) and whether employees are entitled to ask for flexible working arrangements.
- Dealing with a difficult or underperforming employee:
- Discrimination, harassment and bullying – know the differences and courses of action.
- Performance management – help employees work at their most productive level and address underperformance if it occurs.
- Ending employment:
- Appropriate workplace behaviours – have a code of conduct or policy in place that outlines what behaviours are appropriate in your workplace. This will also help with managing difficult or underperforming employees.
- Termination – know your rights and obligations when it comes to dismissal, notice and final pay for employees, in order to avoid future unfair dismissal claims and penalties.
It is then important to stay up-to-date with legislative changes that effect HR practices to ensure you continuously meet your legal obligations.
The 2019 labour market outlook shows an increasing demand for skilled and motivated staff, who are more mobile between roles due to low unemployment. This means vacancies and non-compliant HR practices could cost growers more time and money than ever before. Focusing on HR compliance can foster a fair, safe, ethical, diverse, inclusive and profitable workplace which in turn will help attract and retain the right people.
Some useful online resources for managing your HR duties include:
- Fair Work Ombudsman
- Pay and Conditions Tool – PACT)
- Pastoral Award 2010, which covers many employees working on broadacre field crops including grains
- Clerks Private Sector Award 2010, which covers many administrative employees working in sectors including grains
Rimfire HR Review 2018.
Agribusiness Salary Review 2019.
0423 842 474
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