Late last month the government announced plans to limit the 90 day trial period to small businesses (20 employees or less) in favour of more Union orientated advocacy – a move which has created much discussion in the engine room of Jigsaw Strategy…
Whilst few would express surprise at a labour-led government backing Union based activity (staying true to their roots) it’s worth having a conversation around whether this is a move that will help or hinder New Zealand businesses
So when you take the emotion and politics out of the picture – how does the 90 day trial period stack up and who will be the winners and losers in the upcoming changes?
THE GOOD:
- The 90 day trial period has allowed employers to become more agile in their employment decisions. Less risk = less red tape = more resources available to be focussed on helping the business to succeed.
- Although the stats say that employment NUMBERS haven’t gone up, we know from experience with our clients that ‘high potential’ candidates are given a chance more often – which is great for the employers, employees, diversity and the talent pool as a whole.
THE BAD:
- The trial period can delay the start of a committed employer/employee relationship with training, benefits and incentives not being offered until the first 90 days has passed.
- The flip side of giving ‘high potential’ candidates a chance is that there can be more of a possibility of employers taking a ‘sink or swim’ attitude – rather than the nurturing and supporting that may be required to uncover their full potential.
THE UGLY:
- There is room for abuse by a small percentage of employers who may use it to avoid on-going commitments to staff.
- In rare circumstances employees can pull out all the stops to ‘behave themselves’ until their 90 day period is up before kicking back and goofing off.
So if those are the pros and cons of the status quo – what are the potential effects of the changes proposed by the Government?
We believe the 20 employee cut-off line may be too low. Switching gears to comply with the new requirements will be more resource hungry for small businesses than the current rules – and although 20 employees sounds like a big company, it’s really not. In our experience a 20 employee business is likely to be ‘riding the edge’ of the critical mass that generates efficiencies of scale. They have a sizeable payroll that can be hard to service when lean months hit. The managers and business owners typically already wear multiple hats on a daily basis – but still only one head.
In short a 20 employee business is unlikely to have the layers of managerial resource required to easily allocate reserves to mitigate the risks involved in hiring new staff (which the current 90 day rules help do). This means business owners will be stuck choosing from 3 unpalatable options:
- Diverting internal resources away from essential operational requirements
- Hiring in outside expertise
- Crossing their fingers that nothing bad will happen
Whilst it’s not astonishing that Labour is re-strengthening the Unions – it is perhaps surprising both how quickly the changes are being bought in how rigorous those changes are.
It’s not up to us to argue the politics and whether this is the right move to be making or not (that’s the politicians job surely) – but we would champion gentler lines to be drawn in the sand, lest our vulnerable SME’s find is yet another struggle to add to the list.
Hey Jacinda – what about changing the threshold to 50 employees? Just a thought!
Read the article that covered the announcement here… Newshub 25/1/18