Bullet Proof Your Business

Today’s Team Member – Tomorrow’s Competitor

Over the years we have worked on many cases for clients who have lost money because of unscrupulous former employees, contractors or business partners.

Most business owners rely on their staff, contractors, and business partners to undertake work on behalf of the business. These people have intimate access to all workings of the business, including:

• Client particulars or database information.
• Service, product or administration methodology.
• Pricing and marketing strategies.

Unfortunately, most businesses are so preoccupied with winning new customers and growing their cash flow that they do not implement, or think about:

• Confidentiality/Non-disclosure agreements
• Non-competition agreements
• Ethics policies
• Induction policies
• Shareholders’ agreements
• Separation interviews

The case study below highlights the risks.

The business owner had a showroom displaying and selling stock. Behind the showroom was a large warehouse where our client stored large amounts of stock. The business also had a team of mobile technicians who attended client sites, delivering and installing stock. The business provided vehicles for each technician to undertake this service.

The client received several telephone calls from loyal clients who advised that:

• Two technician employees were, during client attendances, advising clients they were starting their own business.
• These technicians were providing their own business cards, which advertised a new business that would compete with their current employer.
• Both advised that they intended to undercut their current employer by at least 20%, as they knew the firm’s pricing intimately.
• Both indicated they had a large amount of stock on hand.

The business owner wanted to achieve the following objectives:

• Lawful dismissal of both employees without litigation for unfair dismissal.
• Recover stock.
• Criminal prosecution for stealing of property as a servant.
• Civil injunction from undertaking business in competition.
• Prevention for further similar occurrence.

Taking this into account, we did the following:

• The business owner was advised to undertake an immediate, but discreet stock-take, which revealed about $32,000 worth of stock missing. This was the price at cost to the client.
• An analysis of computer records was undertaken to identify access by the suspect employees. This initiative identified that one of the employees had downloaded the complete client database, price list, supplier list and all marketing files. A forensic IT specialist was used for this task and evidence formally recorded.
• Tracking devices were fitted to both vehicles used by the suspect employees. This identified both parties attending a rented storage shed, and allowed our client to closely monitor both, while evidence was being gathered.
• Covert cameras were fitted to the client’s warehouse area, which recorded a further theft of stock. A tracking device showed this property being transported to the storage shed.
• Clients who had reported the matter were interviewed and formal statements prepared and executed. New Business cards still in their possession were recovered.
• All clients serviced by these two employees for the prior month were telephoned and interviewed. Six further statements were prepared identifying similar evidence. Again, further new business cards were recovered.
• A search was conducted and it identified the details of the new business and ownership by these two employees.
• Both employees were confronted by our investigators independently and interviewed with the allegations outlined. Both interviews were covertly recorded on video and audio. When confronted with the evidence both employees admitted to all of the allegations, including the theft of records from our client’s computer system and stock. Both employees agreed independently to show investigators the storage shed.
• All stock was photographed, clearly recorded, and returned.
• Unlawfully obtained computer records were also recovered.
• Employees were served with notices of dismissal. Company property, including vehicle and premises keys, uniforms and tools were recovered by our investigators.
• A complaint and evidence was referred to Law Enforcement Agencies.

The business owner later engaged us to implement risk-prevention strategies, such as:

• Provision of security cameras and recording equipment in warehouse.
• Strategies to dramatically increase stock control.
• Staff induction, which included counselling in relation to their obligations and expectations of our client.
• Confidentiality and Non-Competition Agreements with all staff and contractors.
• Implementation of a high standard of IT and database security.

This case study highlights the need to have a thorough set of Human Resource risk-prevention strategies in the workplace.

Human Resources

Human Resources (HR) is a crucial aspect of any successful business. It is imperative that a business attracts, develops and retains staff who are committed to achieving the business’s goals and objectives.

This is achieved through policy and procedures that promote quality, best practice, and equal opportunity employment.

This paper identifies a Human Resources framework that promotes the business aims and operations. A successful framework is designed around legislative, policy and best practice requirements. The paper will also help you maintain good industrial relations and guard against poor or incapable performance.

Of course, not all businesses require an extensive HR framework. However, the principles of good Human Resources management should be applied by all businesses.

Defining Human Resources

Human Resource (HR) Policy is essentially the ability to effectively deal with the business’s most valuable asset: its staff. Key elements of HR involve the ability to deal with all aspects relating to:

• Staff recruitment and selection.
• Staff orientation.
• Staff development.
• Development of policy and procedures.

All of the above items have to be in accordance with the relevant legislation, including industrial relations and equal opportunity laws.

Assessment

To determine whether you feel your business deals with Human Resources issues, ask the following questions:

• Do you have a HR policy that is adequate for your business?
• Does it allow you to recruit the right person for the position?
• Does it deal with equity and diversity issues?
• Does it deal with employee confidentiality?
• Does it protect your business against misconduct by employees?
• Does it protect your business against poor performance?

Policy

A business HR policy does not need to be extensive and should be tailored to meet the individual needs of a business while meeting the relevant state and federal industrial relation requirements.

The policy should at least contain:

• A statement outlining the business’s purpose and expectations of its staff.
• The rights and obligations of the employer and employee.
• Reference to the relevant employment awards and legislation.
• Actual employee entitlements.
• Procedures for handling complaints or issues.
• Examples of what the business believes to be inadequate conduct by staff.
• Counselling and disciplinary procedures.
• Termination of employment policy and procedures.

Recruitment

Hiring the right staff is the most important aspect of HR. If you are able to advertise for and select the right person this will contribute greatly to the business and reduce the risk of getting under-skilled or poor-performing staff. Key steps in the recruitment process are:

• Advertising for a person that the business needs.
• Selecting the right person.
• Clearly outlining the conditions of employment and responsibilities of staff.

In many cases a business may identify a person it wants and actively pursue employing that individual because they know the person has the right attributes. Even in this instance, the company still needs to follow a formal HR policy.

Position description

Before advertising for an employee the business needs to identify what it requires from that position and the key duties that the employee will be responsible for.

The business should develop a Position Description for all the different positions or roles it has within its structure. The Position Description will help businesses identify what it requires from staff, prevent job duplication and clearly demonstrate to prospective employees what is required of them. The job description can be attached to employment agreements and used to help all parties’ measure performance and where relevant, agree on working conditions.

When developing a position description, consider the following:

• That the duties comply with industrial relation legislation.
• The duties do not require the employee to undertake any unlawful act.
• The duties do not breach anti-discrimination legislation.

Advertising the position

To attract the best possible pool of applicants a business should consider advertising the position as widely as possible, and consider such things as cost and whether the business is willing to pay for relocation expenses.

Consider the following issues for the job ad:

• That the process is based upon a merit process.
• The level of experience required.
• Whether a resumé is required, or if there is selection criteria which the business would like the applicant to address.
• Mandatory requirements, for example, a driver’s licence, qualifications, tertiary or trade requirements.
• Salary.
• Conditions of work – relevant Awards and entitlements.
• Whether relocation costs will be paid.

Job ads are expensive, but placing more information in the ad and paying a little more may save time and money because you will deal with fewer unsuitable candidates.

Selection criteria vs resumé

The type of position being advertised will normally determine whether a business will require a resumé only, or ask an applicant to submit a claim against any set selection criteria. If selection criteria is to be used a resumé should also accompany it.

Selection criteria claims do not need to be exhaustive as is often seen in the public sector. It may only consist of a statement of why the applicant believes they are the best person for the job.

However, it is recommended that if a business is going to use selection criteria it derives them from the key duties that they want the person to undertake. A good approach is to limit the length of the application for each criterion. By doing this the employer will also be able to assess whether the applicant has good written communication skills and an understanding of the job advertised.

It is recommended that if a business is requiring a higher level of skill, including qualifications or extensive experience, that a more formal claim for the position will be requested.

Merit-based selection criteria

The merit-based selection criteria should:

• Identify the purpose, role, and responsibilities of the position.
• Set out minimum qualifications, competencies, knowledge, skill-sets, experience, or abilities required by an appointee to perform the role.
• Ask the applicant to provide evidence of their achievements against each criterion.

Interview

If a business has advertised or by some other means identified a prospective employee and intends to interview the person or group of people for a position, it should consider:

• The party that selects the applicant, be that a manager or selection panel.
• The type of interview, consisting of one or more of the following:
• Formal or informal.
• Involve direct questions to the applicant.
• Scenario.
• Role play.
• Presentation.
• Practical exercise.
• Location and time of interview.
• Methodology used to determine the most suitable applicant.

Selection panel

If a selection panel is used, consideration should be given to the person experienced in the field of work applied for, management representative and if possible a person who is seen as independent to other selection panel members.

Consideration may also be given to using a recruitment agency to assist in or conduct the whole recruitment process.

Tips for interviewing

Here are some tips to help you choose the right person:

• Prepare a flow chart of the interview process and a list of questions. Note visual and verbal responses to the questions.
• Keep a copy of the job ad and any other documentation on hand (including applications and position descriptions).
• Make the applicant comfortable and provide water for the applicant and interviewer/s.
• Sit around a table instead of opposite the applicant.
• Inform the applicant of the interview process and how it works.
• Ensure every applicant undergoes the same selection process if possible (although this may be hard when a telephone interview is involved).
• Make accurate notes of the applicant’s responses.
• Provide the applicant with an opportunity to comment and ask questions at the end of the interview.
• Maintain all records and keep them confidential.

Commencement

Once you have selected an employee it is important you give them accurate information about:

• Their duties and responsibilities.
• The operation of the business.
• Their entitlements.

It is recommended that you have provided formal documentation to the new employee when they commence. This documentation may consist of the following:

• Letter of offer and conditions of employment.
• Deed of confidentiality.
• Code of practice/conduct.
• Induction program.
• Specific policies relating to the operation of the business.

It is further recommended that the business obtain confirmation from the employee that they have been provided with the information where relevant, and that they understand and agree to abide with the policies and responsibilities.

Letter of offer and conditions of employment

The new employee should be provided with a letter of offer that informs them they have been successful in gaining employment with the company. This letter should contain the employment conditions that set out at least the following:

• Wages and conditions.
• Probation period.
• Annual leave and other entitlements.
• Superannuation.

Other conditions of employment that should be considered for inclusion are:

• Reimbursement of company expenses.
• Business hours.
• Grounds for termination.
• Confidentiality.
• Code of conduct or practice.
• Dress standards.
• Workplace health and safety issues.
• Medical history.

Deed of confidentiality

The purpose of the deed is for the employee to undertake to the business that he or she shall not provide confidential information as outlined in the deed to any other person, during the course of the employment or afterwards.

This will assist a business in protecting itself against unscrupulous competition as well as taking action against an employee if they breach the agreement.

Code of conduct

Good businesses implement a code of conduct for all employees to comply with. This assists in promoting the professionalism of the business as well as preventing or deterring inappropriate conduct that can affect the viability of the organisation.

The code or policy should be within legislative restraints, written in plain English and made available to all employees. This code will often form the basis on which disciplinary action may be required to take against employees. It is within this code that a business can outline the requirements of its staff as well as how it will treat and manage its employees.

When considering the development of a code, or policy of conduct, the business should consider the following:

• What is required of the staff – what their role is and the standard of work expected; for example good customer service, applying a courteous and professional approach.
• Are staff suitably trained to deal with situations they face?
• External factors such as the type of customer they deal with or elements which are simply beyond their control.

Ethics

Apart from the standard responsibilities that a business may require its employees to comply with, such as attendance and dress standards, there may be more specific areas the business requires its staff to be aware of and avoid being involved in.

This may include:

• Acceptance of gifts from external parties – which may inappropriately influence a business decision.
• Misuse of information, including the disclosure of confidential information.
• Secondary employment that conflicts with the business’s interests.
• Personal interests that conflict with the business’s interests.
• Respect for the business and its employees, which may involve anti-social behaviour including bullying and intimidation by some employees.
• Breaches of the criminal law – including fraud, theft, and assault that may affect the reputation of the business or impact upon the workplace.
• Misuse of business assets – include vehicles, telephones, and the Internet and office equipment.

Employee induction

It is good business practice to formally induct a new employee. The induction should include an overview of the business, detailed description of their duties and training with respect to the position. During the induction process the business should:

• Ensure the employee understands and agrees to policies, guidelines, values, and behaviour including the code of conduct/practice.
• That the employee is willing to comply with business obligations; for example, health, safety, environmental or legal requirements.
• Make the new employee feel welcome and assist in settling that person into the position.
• Offer a point of contact for the employee to ask questions.

Performance and development

Developing an employee and monitoring their performance are important goals for any business. It is recommended that all businesses introduce a plan to develop the skills of their employees and set goals for staff to achieve and deliver results.

A performance plan does not have to be a complicated document. A good plan:

• Ensures the employee clearly understands what is expected of them and how their contribution achieves the desired outcomes.
• Sets goals or achievements (performance indicators) that an employee can work towards with a view to increasing productivity.
• Provides an effective evaluation process for an employee’s performance, including formal feedback from management.
• Identifies current and future development and training opportunities.
• Targets areas that require improvement.

Performance indicators

Performance indicators should be agreed upon with the employee. They need to be:

• Realistic in that they can be achieved.
• Measurable.
• Where possible include timeframes.
• Set an agreed period to review.
• Regularly reviewed throughout the period and feedback provided to the employee.

Dealing with under-performance

Dealing with employees who under-performs can be time-consuming and cumbersome. It is extremely important that under-performance is acknowledged as early as possible and the contributing factors identified.

Reasons for under-performance include:

• Lack of job skills or knowledge, for which appropriate training needs to be arranged.
• Poor work environment or job design, boredom, and/or lack of job satisfaction which may be solved by improving systems, procedures, equipment, or work design.
• Health problems that are preventing an employee from performing their job effectively.
• Unacceptable work habits such as chronic lateness, absenteeism, aggression or disobedience that may be addressed by disciplinary interview and/or other disciplinary responses.
• Personal problems (for example, family problems or substance abuse) which are affecting work performance.
• Bullying, victimisation, harassment or intimidation.

Dealing with employee complaints

All businesses should be able to deal with staff complaints or grievances in respect of HR issues.

An effective complaint or dispute resolution policy will minimise the risk of a business’s efficiency and effectiveness being threatened by unhappy, disgruntled, or disengaged staff.

When developing a complaint policy, the business should consider:

• That the policy promotes a fair and equitable treatment of all staff.
• Confidentiality of all parties.
• Access to the policy by all staff.
• Those complaints are resolved in a timely and effective manner.
• Senior and respected staff are assigned to deal with the matter.
• Open discussion between parties is encouraged.
• Where possible, the complaints are put in writing to minimise confusion over issues.
• Issues identified from the complaint are assessed and learnt from to minimise the risk of them occurring again.

Disciplining employees

Most businesses need to continually strive to maintain, or if they are lucky enough, increase their market share. Sustainability can only be achieved by management and staff working collaboratively as a team. Unfortunately, there may be occasions when members of staff need to be disciplined for failing to comply with the lawful requirements of the business, which should have been clearly outlined and promoted to all employees when joining the business.

It is recommended that all businesses possess a discipline policy that:

• Promotes fairness and equity for all. Equity is a broad concept encompassing the principles of fairness, impartiality and non-discrimination.
• Adheres to due processes for resolving performance and behaviour problems. Due process is the gathering and considering of all relevant facts of a matter or issue before reaching a conclusion and includes the concept of natural justice. Due process seeks to protect the individual rights of all employees.
• Is structured to use discipline in a constructive way to provide an opportunity for improvement of performance or behaviour, rather than applying punishment.
• Encourages compliance with the law and business policies.

Employee rights

Dealing with employee rights requires careful consideration of all HR issues including equity, due process, and natural justice which is to act fairly, in good faith, without bias and to give each party the opportunity to adequately state their case.

In circumstances where disciplinary action is being considered, an employee should be given (where relevant):

• Reasonable notice of a disciplinary interview.
• Information on the matter under discussion.
• The right to contact their union.
• An opportunity to state their case.
• An opportunity to have a nominee present.
• An opportunity to participate in the development of solutions to problems.
• Receive fair and equitable treatment.
• Receive a copy of any record of disciplinary interview.
• Be given access to information relating to the complaint resolution process.

Workplace harassment

Workplace harassment cannot be tolerated in any workplace. Management must ensure supervisors and employees do not engage in this type of behaviour either internally or towards customers or other members of the public.

Supervisors who become aware of such harassment are required to act promptly to end the behaviour and to take measures to prevent it from occurring again. Bullying of, or by employees, must not occur. Failure of a business to prevent or not act against harassment can expose the business to civil litigation.

Defining harassment and discrimination

Workplace harassment is defined as any form of behaviour that is unwelcome or unsolicited that makes the workplace unpleasant, humiliating or intimidating for the person who is the target of that behaviour. This can be verbal or non-verbal, and includes sexual harassment and bullying behaviour.

Sexual harassment is any behaviour of a sexual nature, which is unwelcome to the receiver. It is important to realise that what constitutes sexual harassment to one person may be acceptable and inoffensive behaviour to another. Sexual harassment includes, but is not limited to:

• Physical contact such as touching, patting, pinching, deliberately pushing against a person, kissing or embracing someone against their will, sexual assault and rape.
• Verbal comments, for example innuendo, sexual jokes, suggestive comments about someone’s appearance or body, offensive telephone calls or emails, persistently inviting someone out, unwelcome or uncalled for questions about a person’s sex or private life, requests for sexual favours.
• Non-verbal actions such as leers, stares, displays of sexually explicit material, pictures or posters with sexual connotations, offensive body and hand movements, suggestive letters and drawings and indecent exposure.

Bullying is the repeated, less-favourable treatment of a person, which may be considered unreasonable and inappropriate workplace practice. Bullying behaviour intimidates, offends, degrades or humiliates a person, possibly in front of co-workers, clients or customers.

Discrimination may occur on the basis of gender, marital status, pregnancy, parental status, breastfeeding, age, impairment, race, religion, political belief or activity, trade union activity, lawful sexual activity and association with, or relation to, a person identified because of any of the above attributes. Both direct and indirect discrimination are unlawful.

Direct discrimination occurs when individuals or groups are treated less favourably because of differences that are irrelevant to the situation. It also includes actions which apply a direct discriminatory rule or practice, as well as actions, based on stereotype assumptions about individuals based on these differences; and

Indirect discrimination occurs when seemingly neutral rules and practices applied to all people contain unreasonable requirements that cannot be met by most people of a particular group.

Discipline investigation

Business owners need to address poor performance, misconduct, or work behaviour problems in a prompt and impartial manner. All relevant facts should be gathered before reaching a conclusion on the appropriate action. During the investigation, consider the following factors:

• Seriousness of the work behaviour or poor performance.
• Employee’s explanation of their conduct.
• Employee’s past work record.
• Previous disciplinary action taken.

The business owner must first determine whether there is a disciplinary situation and identify the performance issue or work behaviour requiring intervention. They will generally determine this through observations, another employee, or an accident or incident.

During this stage, all relevant facts regarding the situation should be considered, including discussions with the employee, witnesses and others who may be able to provide information on the matter.

At the end of this stage, the business owner will make a decision to either improve the performance of the employee or move towards disciplinary action.

Disciplinary action

Taking disciplinary action is not easy, even though a business must protect its staff, reputation, and operations. A business must also guard itself against allegations by disgruntled former employees alleging unfair dismissal. When determining what disciplinary action to take, the business should consider:

• The type of conduct.
• Previous disciplinary action taken against the employee.
• That the proposed action is equal to the type of conduct by the employee.

Some recommended actions are:

• A warning letter issued to an employee for minor breaches of policy that the business believes requires disciplinary action.
• Formal reprimand in writing for serious first-time breaches that indicates that a further breach of this calibre may result in dismissal.
• Dismissal – for ongoing breaches of policy where there is a disregard for the business and its other employees or for a serious breach of the business’s code of conduct policy that may involve a criminal act or potentially affect the viability of the business.

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