90-Day-Trial a motivator for SMEs looking to employ

MEDIA RELEASE 24 November 2010

90-Day-Trial a motivator for SMEs looking to employ more staff

KPMG Mood of the Market survey reveals SMEs are expecting to employ more staff, but employees still nervous about job security

• Confidence rising for small and medium sized enterprises/businesses (SMEs)
• SMEs expect to retain or raise employment levels in the year ahead
• SMEs expect profits to increase in the year ahead

Small to medium sized companies are expecting to employ more staff in the year ahead, according to a KPMG NZ Survey released today.

The KPMG Mood of the Market Survey shows that SME payrolls have managed through the recession on absolute minimum numbers, but are looking to reinvest in people.

Mark Kippenberger, KPMG’s Head of Business Advisory Services says,” Anecdotally, conversations we’ve had with our SME clients indicate that the 90-day trial for new employees has removed a perceived barrier to take on more staff. Most new staff members joining the SME business retain their jobs.”

He says that the 90-day-trial was unlikely to affect employees that are genuinely interested in performing and contributing to growing business revenue.

“Employers may be reluctant to let further staff go after recently experiencing one of New Zealand’s tightest labour markets leading into the Global Financial Crisis. Websites, such as Trade Me and SEEK are also now experiencing a pick-up in job advertisements which illustrates more companies are now looking to rehire and the skills shortage could resurface as a result.

“The survey results suggest that the widening of the 90-day-employment options to all businesses will see more job openings in the SME sector.”

While 60 per cent of SMEs surveyed expect profits to increase in the year ahead, the survey shows that on the back of the recession staff morale appears to remain an issue.

“Not replacing staff who leave their business coupled with redundancies through the Global Financial Crisis may have left individuals feeling overworked, under resourced and not well placed to take on new work demands as businesses pick up and gear up for new sales opportunities,” says Mark.

He says that to improve staff morale it is important for employers to communicate regularly to their staff members, reassure them, inform them around business performance and provide them a forum to express any concerns.

The survey also showed that 74 per cent (67 per cent in 2009) of SMEs prepare and communicate a formal business plan with over half preparing and adjusting a business plan monthly.

An interesting point in this year’s survey was that while just over 60 per cent had not considered the impact of the Emissions Trading Scheme on their business, almost the same percentage of companies believed that sustainability will drive profitable change within their business in the next 5 years.

The KPMG survey was conducted between 14 and 22 October 2010 and reflects the responses of 223 KPMG clients from the Auckland, Wellington, Tauranga, Hamilton and Christchurch regions.

Of the 223 respondents, about 20 per cent of companies had a turnover of less than $500,000; nearly 40 percent had a turnover of between $500,000 up to $5 million; about 10 per cent had a turnover of between $5 and $10 million; nearly 3 percent had a turnover of between $ 10 and $ 15 million; and nearly 30 percent had a turn over $ 15 million.

ENDS

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