Restructurer urges firms to be sensible

Restructuring and resizing Otago-Southland businesses is taking up nearly three-quarters of the time Polson Higgs senior human resources consultant Ross Hanson spends at work.

While there were signs the worst of the recession could be over, it was too early to say the bottom of the cycle had been reached.

"I estimate that close to 70% of my work with clients is around restructuring and resizing. I am being called on most for my human resources expertise, to restructure businesses or, in the worst case, shut them down," he said in an interview.

"Most New Zealand businesses are small, so I am trying to put as much value into that process as I can. I am pushing businesses to make changes now.

"It's a tough call, but don't make a soft change now and wish you had made a different call six months later."

The list of kneejerk responses, including cutting too many staff now and not being ready for the inevitable recovery, could be avoided by managing costs, identifying star performers and rewarding them, and keeping employees up to date on business issues, Mr Hanson said.

Speculation in the market had been that some employers were using the recession to get rid of staff they did not want or like.

However, Mr Hanson said that had not been his experience in the South.

The people with whom he was working were dealing with genuine recession-based adjustments, rather than wanting to get rid of particular staff members.

"That reflects Otago-Southland employers being pretty upfront. If you have a problem with an employee, you already know that. You don't have to wait for a recession."

Polson Higgs had joined with Mercer to prepare the 2009 total remuneration survey, which analysed remuneration data from 216 organisations.

The survey found that the median pay increase in New Zealand was around 5% for the year to February.

Mr Hanson said people were wondering how that figure could be true, but it had to be remembered the survey was historical; the 5% was based on contracts signed about a year ago.

It seemed "a million years" since this time last year, Mr Hanson said.

Now, people were talking about no wage increase, or a 1% maximum lift.

Futhermore, 8% of organisations planned to reduce workforce numbers, while 17% of organisations had put a freeze on hiring.

That also was historical data, and if a snapshot were taken now, those figures would be higher, Mr Hanson said.

Otago-Southland businesses were doing as well, if not better, than other parts of the country, because the region was still somewhat reliant on the agricultural sector, which was well positioned to deal with a recession.

Farmers were well used to dealing in commodities and seeing prices go up and down at regular intervals, Mr Hanson said.

However, some closures of businesses were inevitable, particularly if they were manufacturing or retail based, he said.

It was a case of being in the wrong place, at the wrong time, in the wrong industry.

If businesses relied on central or local government for their income, not much had changed, he said.

Asked about the nature of the closures, Mr Hanson said many were family-owned small businesses with a small number of staff.

That made it harder, as some of the staff had been with the business for 20 or more years.

He urged those businesses to seek professional help and assist staff who were made redundant.

Often, the help might not be monetary; it could be a verbal reference, or finding other jobs for staff within existing industry networks.

Two businesses of which he was aware had found staff new jobs by telephoning others in the same industry and asking them to take the staff on.

Mercer senior associate David Little said employers had spent the past two to three years working hard to attract and retain talent when talent was scarce.

Employers were now reluctant to let this talent go, and were looking for other ways to cut and control costs, he said.