Darren Bourke Business Coach to SME owners on the rapid shift in Employee power and strategies for Employers to adapt to this new paradigm.

[00:00:00] Hi, it's Michael Kerr here presenting Small Business Banter. A healthy micro and small business sector means a successful economy and a more vibrant society. Small Business Banter is about helping regional business owners better prepare for current challenges but also for the next stage of business success.

[00:00:27] I'm Michael Kerr, founder of Kerr Capital, advises to business owners. Each week I interview a fellow small business owner or an expert and they share their stories, their lived experiences, the wins and the losses and their best advice to help you,

[00:00:49] the listener, get the most you can from your own business. Small Business Banter is brought to you from the studios of 104.7 Gippsland FM and is heard across Australia on the community radio network. Thanks also to Kerr Capital supporters of the show.

[00:01:21] Welcome into another edition of Small Business Banter Community Radio and Podcast. Darren Bourke is my guest today. Darren is a business coach, mentor to small and medium sized businesses so he's an author, he's going to tell you a little bit about himself shortly.

[00:01:38] Welcome in Darren, great to have you in. Thanks Michael, thanks for having me. I reached out to Darren a little while ago. He's been coaching SMEs for an awful long time now so Darren do you want to give us a little bit of your background

[00:01:54] and current business as a coach and mentor? Sure Michael, originally Michael I was chartered accountant with Deloitte and picture partners and that was a wonderful foundational time. I then had my first start-up business, a boutique recruitment consultancy in Collins Street here in Melbourne

[00:02:13] and I did that for six years and for the last 25 years I suppose I've combined my love of people and business into a boutique sort of private stable of SME owners where I coach mentor and consult to a private suite of probably somewhere between 16 and 20 private businesses.

[00:02:36] Yeah and they're all small and medium sized businesses. Small and medium sized businesses Michael, that's right. Yeah and your start-up interestingly, the themes for today's discussion I know you cover a lot of things with your clients when you coach and mentor them

[00:02:52] but we're really talking today about this post pandemic shift in power from employers to employees or at least that's what I think and you're going to tell us some more about that why that shift came about and really what owners can do

[00:03:10] I haven't spoken to many owners in the last 12, 24 months that haven't registered managing employees as a key challenge for them and interestingly you said you had that start-up in HR or recruitment and that's fed into the work you do with owners on managing their businesses

[00:03:33] so can you just tell us a little bit about the kind of work you do with SME owners now particularly as it relates to helping them manage their employees? Absolutely, well I always have a bit of a laugh when people say

[00:03:48] what do you talk the most about with your SME owners and I say well think of the Fleming and Race course and that long straight right on the winning post more than 50% of all our conversations are generally people-based

[00:04:01] and that means generally internally, sometimes externally, sometimes partnership or family business issues but fundamentally there's people and then daylight and of course what's happened is we've seen that people issue become probably 10x through the pandemic, my work went from consulting, coaching and mentoring

[00:04:20] through the pandemic to basically welfare and checking in on my owners and helping them hold the fort together and then of course when we came out of the pandemic we then were struck by this incredibly new emerging workplace

[00:04:37] which I'm sort of referring to as the virtual or hybrid workplace and then the issues that came out of that and of course there was no roadmap for that Michael because this was all basically done on the run

[00:04:48] so we're sort of living what I call a live Harvard Business Review case study right in front of our eyes and no one's really got the final act and no one's got the research because of the lag

[00:04:59] and so what we've had to do is we've had to hustle and we've had to basically make up policy on the run to combat this and the first key change there which you flag

[00:05:10] is probably there was a period of 8 to 10 years where we didn't have a lot of real wages growth the whip hand was definitely held by the employer and it was really the status quo of the traditional industrial age you know 100 year model of the elephant and the flea

[00:05:27] you know the flea being the employee comes to the central workplace and does a 40 hour working week and in return for that they get paid hopefully a market salary and really we hadn't shifted away from that for some time

[00:05:41] and then we went from you know a rusted on model to this hybrid model that was changing and evolving almost on a certainly on a weekly and a monthly basis as we caught up with the new workplace post pandemic

[00:05:55] So it's been that dramatic and that quick in terms of the shift? Absolutely and it's been driven by the employees and of course the employees had a taste I believe we went we fast forwarded 10 years 10 years plus of workplace evolution in 1 to 2 years

[00:06:14] and what that meant was that we had to catch up that quickly and of course the employees you know people aren't silly so they suddenly realized hang on a minute I've been enjoying not having to commute I've been enjoying working remotely potentially a tree change, a sea change

[00:06:29] changing the way our family or household dynamic interacts with work and it's really changed the whole way people go about their working day at a very micro level so by extension that has then presented many challenges for the employer

[00:06:45] to catch up with how they marry up their offering to their employee cohort based on these new expectations wants and demands of the employee cohort So you said earlier that you've been by the side of a lot of owners through this period because it's completely new ground Absolutely

[00:07:07] and so what were some of those shifts and demands coming back? You talked about I don't want to go into the office as much as I used to but what else was there that the owners were having to deal with? Okay so there was certainly

[00:07:26] well there was pushback around some traditional forms of structured attendance which we've talked about but by extension of that that went into wanting to be more independent in their work supervision often a reluctance to attend meetings

[00:07:45] or sort of be briefed or scoped as much as they had been in the traditional workplace so there was kind of a splintering of the connectivity between owners and management and their operational frontline workers So that's on I guess a terms and conditions type basis

[00:08:04] and then the quantitative side of that was that they were faced by in addition to those changes the double whammy was that they then had I suppose out of turn in some cases expectations around changes in remuneration

[00:08:22] and in some cases we had people asking for pay increases as much as 30% Michael So it's kind of a double whammy dramatic changes in the work environment coupled with changes with remuneration and expectation around their share of the pie Yeah so these owners

[00:08:43] we're talking about the kinds of clients that you work with how many employees would they have in their business typically for you? Yeah look typically if I pick the bell curve you're normally talking about somewhere between half a dozen employees up to maybe sort of 30 or 40 employees

[00:09:05] in those medium sized organisations and these are traditional small to medium business owners I want to just highlight this for your listeners my work with them is not coming from a place of you know employers and bosses are wonderful and employees are the enemy

[00:09:26] what I'm trying to do is I'm trying to facilitate an outcome where we get a win-win situation out of what these changes are and of course I must remind everybody we've got this character that's sort of to the side of this story called the customer

[00:09:39] and guess what they don't care how you do things they want the outcome and the outputs they're not remotely interested in the how and this has also been an interesting dynamic in sharing that with some of the employees and to an extent the owners

[00:09:54] in that this doesn't take away our obligations in terms of delivering our product or service on time cost and quality and productivity is a little bit like electricity you can't see it, you can't smell it and the jury's out, we can't measure it

[00:10:07] and I'm really concerned around some of these anecdotal lag data where we're going to find potentially some very worrying outcomes in terms of when we get to the end of this post-2, 3 year period well you know it's great to say productivity doesn't change with a virtual workplace

[00:10:24] but I'm not convinced about yet Michael so I've got an open mind to seeing where we get to with that Yeah it's been a relatively short period in terms of measuring whether that's a long term shift or a long term gain but yeah so it's interesting

[00:10:43] so from a couple of years earlier owners are going through a lot of complications dealing with some businesses did incredibly well through that period others didn't so then laid on top of that just to meet customers requirements which is what all these businesses built on

[00:11:04] the owner might have not that many years ago had a perhaps had the as you said the whip hand and not had to deal with these issues of dealing with remote staff dealing with requests for increased salaries so it's been an incredibly challenging period

[00:11:29] for those owners and you've been right there so what are some of the practical steps you work with the owners on to address these very challenging issues Yeah and then you're getting to the heart of how to proactively tackle it rather than just simply being the victim

[00:11:46] and the things that we're doing is you've got my first word that I used to describe an open mind approach is curiosity so you're going to lean in and start by saying well you know get closer to your employees make sure that you go out of your way

[00:12:05] it's very easy to hide in this virtual workplace so impose yourself and encourage them to impose themselves so if you're having an operations meeting via zoom as opposed to your traditional stand up meeting in the factory floor or in the break room

[00:12:19] make those meetings a little bit more dynamic where you're actually able to check in on how the team members are actually going and I recommend that the businesses you know managers whether it be the owner or they've got an intermediary group of managers that manage the operational team

[00:12:37] you've got to come back and try and come up with a number of different forums Michael where you can actually have those touch points with your employees so certainly email and the operations meeting on zoom but that serves its purpose

[00:12:52] but you might have to break that up with some in person meetings where you agree that you have a particular day in the workplace where everybody's in attendance so it's like an all hands type day where we get that ability to bounce off each other

[00:13:07] I had a head of a legal firm who suddenly realised that some of his young lawyers were actually going stir crazy one young guy was living in a one bedroom apartment with a young baby and he was going stir crazy in that small environment

[00:13:22] working his five days through lockdown so he took it upon himself to go and visit this young lawyer every two or three weeks and just have a walking meeting with him for an hour and he found that by actually having that human in person contact

[00:13:37] it helped the employee be more candid and sharing where his performance gaps and his barriers were and they're able to work out a work plan that was then complemented with those other digital and email based check-ins

[00:13:53] by phone and we came up with a more robust, broader way of interacting and it's things like that that are going to make you able to retain those team members and engage and empower them as opposed to just thinking that it's a one size fits all

[00:14:07] Yeah, I mean it happens so naturally when everyone's in the office or in the factory Absolutely, we call them collision zones Yeah Just briefly on today's edition of Small Business Bantic Community Radio podcast chatting with Darren Burke from Business Influence SME coach and mentor and author

[00:14:29] We'll talk about that at the end So what we're talking about just before that was culture really in a lot of ways there was a way of employers and employees interacting and good, bad or otherwise that was how those conversations took place

[00:14:48] and the tone it set and expectations that were set So now that some of the work is to force owners and to think about different ways to engage and that was a great example where it's probably kind of build a deeper connection with that particular employee

[00:15:07] I mean how much bandwidth an owner has got to do that with every employee I'm not sure, but Yeah It's a kind of thing that is that something that you might see as a positive different way of doing things forced upon us

[00:15:23] I think so and there's always a way So I think my thing has been how do we break that up across our scene where it can be shared by a number of parties So often you've got, typically might have in my example of those businesses

[00:15:38] you might have three or four key people well they normally fall under the responsibility of the one or more owners or partners but then we can basically break down within those key people and those managers a number of team members, each of them may be able to

[00:15:54] foster that sort of relationship with So it's just thinking about how do we get those appropriate robust touch points across our team in a sustainable way so that we don't fall over Yeah, is that going towards to organisational design? Isn't it really like

[00:16:13] Well it is, yeah that's a really good point I mean it's a reset of the traditional law chart and the master-servant relationship and it's more of a collaborative consultative fluid working model Yeah Yeah, okay I do want to touch on Thank you for that

[00:16:31] I do want to touch on salary because there's to receive a request from multiple employees to have an increase in salary and it's your biggest cost in just about every business the salary and wages line So how has that been dealt with

[00:16:52] and how do you continue to deal with that on an ongoing basis? Yeah, no and this again is a key area within what we're talking about today Michael My big thing with this is that we've got to at least set out

[00:17:06] North Star as being paying at or above market salaries I can accept employees leaving for a vocational change or a relationship or a family circumstance or whatever but if they leave because of market salary differential that really sticks in my grades because we should have addressed that

[00:17:28] So the obvious question to your point is how do we do that? Because we can't be all things to all people because we've got a thing called pricing pressures and margin pressures So some of the things that I'm working with my clients is

[00:17:41] I always do annual remuneration reviews with all my clients where we step through each of our staff member annually and get them on the same timeline normally set with our financial plan for the year ahead and then within that we look at are people within a probationary period

[00:17:59] or performance period where there's no pay increase is there a cost of living increase that we can pass on is there a merit based increase for a particular individual where their roles changed or somebody can actually pitch their business case

[00:18:14] as to why they should get a pay increase Then what I do is I then marry that up with what are the non-financial benefits that we can look at that might be able to complement their pay so that they look at it more holistically

[00:18:29] and those sorts of things Michael are mentoring travel, exposure to industry events professional development, flexible work a more specific three to five year career path looking at those areas so that it's not just a money conversation And then the final piece in the jigsaw is

[00:18:48] I ensure that we do at least we review pricing annually and in some industries like hospitality six monthly so we used to have a joke with one client in the hospitality industry we have price increases often and little So putting 50 cents or a dollar on a Parmesaner

[00:19:05] or putting 50 cents on the price of a pot rather than not putting in price increases for three years and having these big obvious price increases that your punters can see and respond to it's a little and often the government does the same thing with tax bracket creep

[00:19:22] right so absolutely yeah we should embrace this and the fear that I have in business owners and your listeners will appreciate this is that people are generally terribly scared to increase their prices and I say well if you don't increase your prices you will have margin erosion

[00:19:40] you will have increases to your cost inputs but we've got to change the dynamic rather than just having a clumsily haphazard price increase sort of periodically we need to have an open conversation with our customers so that we can explain to them why we need to address pricing

[00:19:58] in terms of retaining our important talent and in times of delivering our service or our product on time cost and quality now they may not be happy with that but they will at least respect you if you come to them

[00:20:10] prepared with a proper business case for why that's changing so having that ability to have these dry runs that my clients and I have together it can really change the dynamic of the outcome with that at the client or customer interface yeah I mean absolutely

[00:20:26] and it's because you can't sort of you can't put it all on the customers you can't put it on the employees to produce more but key to that was the conversations that you were to get away from the financials and the arrangement as being the sole reason

[00:20:44] someone works or doesn't work there I mean and a lot of people you just got to open up the conversation there's more in most people than just the dollars for the role which leads to in a 6 employee or a 20 or 30 employee business who's responsible for those conversations

[00:21:09] I mean it's a you know it's almost a lot of those businesses wouldn't have a full-time HR manager would they? No and I generally insist they don't because it's a six figure expense that we can easily handle by potentially a combination of my role

[00:21:25] and outsourcing to some other providers that are going to give us the same outcome for a fraction of the cost yeah so you fractionalize it or variableize it but it is a critically important role certainly always has been probably more so than ever now

[00:21:41] isn't it to manage your employees however you do it you're saying and this is you know I know the work that you do is a lot of it is around how to manage people on both sides Absolutely and you've got a curiosity line comes back to mind here

[00:21:58] you've got to we've got to think much deeper now I've been working on all sorts of interesting retention strategies around what I call at-risk reward so rather than just simply defaulting to adding people's adding you know to the base salary of people which can become problematic

[00:22:15] when they get up to their market rate and there's a threshold there so I prefer to complement that with looking at sort of win-win outcomes where we can have incentive schemes, bonuses, profit share and even equity models where we can put those in place

[00:22:29] you know with our team members that allows them to have a drink or an extra you know extra earn but on a win-win basis so that if the business wins I can share you know 5 to 20% of the spoils with Michael as my team member

[00:22:46] and if we have a moderate year where we might just make budget or we don't well you get paid a salary for your operational contribution and I'm okay with that so most proactive you know keen employees are very open to that and a more keen on that

[00:23:04] because they can see that they can probably get more Well from an employer's point of view to be able to be brave and share I've seen it work incredibly well it's probably the biggest single increase in inquiries I've had over the last two or three years

[00:23:24] is when employees come to the employer and say look we think you're retiring so we'd like to buy or we'd like to get involved somehow I think it's a fantastic evolution of the model to you know it requires as I'm sure you would well understand

[00:23:37] a whole lot of other disciplines and communications but where you've got a workplace that the employees link what they do every day to the success of the business and they share a bit of it it seems like a pretty good formula to me

[00:23:53] Absolutely and it used to be the more outlier early adopter progressive thinkers in the client basis that we're looking at that you know maybe 10 or 20% of the most of people now everybody has to be open to embracing this you know and because if you don't

[00:24:11] you're behind the competition Yeah well if you were thinking I'm gonna have to pay an extra 30% and that's it and then I get you just sitting in a new baseline which is possibly the same productivity output for higher cost of wages and you're not going anywhere

[00:24:32] so yeah this idea of and maybe that's a discussion for another time Darren where we chat about structuring those sorts of arrangements because I think it's the biggest single influence on any business you can have great products and you can have great systems

[00:24:51] you can have people that buy in and are motivated to the right degree communicated with we've only got a minute or so Darren thank you so much for your time I just wanted to give you the opportunity to just shout out your contact details

[00:25:09] and just put a plug in for that book of yours which yeah in the last minute Absolutely Michael, thank you People can find me at Darrenkberk.com So that's my website they can get a copy of a free ebook the success algorithm

[00:25:28] which is just by clicking on the ebook link there We'll put the links in the show notes as well Yeah great and I do blogs and videos on these issues on a fortnightly basis as well and then of course I've got my hard copy book

[00:25:45] which is called the fourth moon which is basically my summary of the thousand businesses I've worked with on SME owners creating a sustainable path to success Excellent and then you're happy for people to reach out to you probably linked in will be a good place if they

[00:26:03] Linked in is a wonderful place to put your contact and of course my email address I'm always welcome to hear from people through that as well Hey Darren, great discussion Thanks for your time and interest today We may, we will set up a further discussion to talk

[00:26:21] some more in depth about that engaging with employees in the sense of sharing profits etc. Thanks so much for your time today Thanks for the opportunity Michael I really appreciate it So that is all for today's episode of Small Business Banta I continue to be inspired bringing you

[00:26:50] small business experts and other small business owners to hear their stories If you want to listen to any past episode jump on to your podcast platform of choice and search Small Business Banta There you will find a diverse and fascinating collection of small business owners and experts

[00:27:09] openly discussing and sharing their experiences For any of the links, resources or information we've talked about on the show today or to contact me please head over to SmallBusinessBanta.com or you can find us on Facebook and Instagram And it would be great to have you tune in

[00:27:28] the same time next week for another episode of Small Business Banta