Terms and conditions of employment – creating your culture
Management Unleashed Article 6
Terms and conditions of employment – creating your culture
This article was first published in Business Times on 16 March 2019
By John Bittleston
“All wages, bonus payments and prerequisites given to an employee as payment for work done are published in every office building, every factory and every warehouse.” I put this at the top of the Terms and Conditions for my company, Cerebos Pacific Ltd, because it is an important statement about the business.
You may say that nobody does it. My answer – good reason to be different. Others may worry about lack of privacy. I explain to them that there is no privacy left anyway and transparency has a benefit that outweighs privacy. You may lose the odd employee. If so, you are avoiding taking someone who would not fit in with your open culture. You benefit from that.
What do terms and conditions to do with the culture of a business?
My one-word answer is ‘Everything’. The Terms and Conditions – provided they are written as a human document and not a robotic threat – set the tone of the relationship. But don’t write rubbish in them. If you have a Mission and / or a Purpose, make sure they mean something and are not just ‘apple pie, motherhood’ statements.
Those who have Prenuptial Agreements say how relieved they are that the critical, ‘survival’ things of life like children, money and home are covered in the event of a break up. Now they have it out of the way they can settle down to having a happy marriage. 50% of them do just that. But it is only 50%. What percentage of your employees will be with you in ten years’ time? In today’s world, not many. Those that stay knew, accepted, adopted and contributed to a culture they approve.
Remembering the basics
When I was building Cerebos Pacific Ltd I had a two-sided notice on my desk. The side that faced the person sitting opposite me said:
All employees of Cerebos Pacific Ltd are entitled to a view about any aspect of the business. I welcome your views. If they are useable and good, we will adopt them and I will give you the credit for them. If they are not realistic or practical, I will explain why and will thank you and be grateful to you. Your thoughts are always worthwhile.
The side that faced me said:
Every minute you spend with this person is valuable to them and to the business. Let them feel wanted, respected, nurtured and glad to be part of Cerebos Pacific Ltd.
Silly, perhaps, to have to restate the culture like that but as you know, people forget the basics of life. Some of them like to go weekly to be reminded of them. In a busy life you glance at the things on your desk. Making one of them a reminder of how to behave is no bad thing.
A lot has been written about culture, much of it rubbish. We all come from a culture, usually created for us by our home, school and favourite relations. There are other influences, too. The friends we make early in life, for whatever reason, will form our culture. The entertainment we watch, the games we play, the books we read, the discussions we have, all add to the culture we display. It doesn’t stop when we leave education. Our work and home also influence culture.
As we get older, we contribute more to the culture. Some of our ideas will be set early on. If we are fortunate to have good parents, teachers, mentors we will grow up with strong values, perhaps bordering on the inflexible. If our childhood was disturbed, we will likely find the first half of our lives are needed to establish who we are and to coming to terms with ourselves. There is a moment in everyone’s life when the balance between being influenced by a culture shifts to influencing the culture. It is the moment we mature and everyone should look out for it.
The biggest influence on the culture of a business is the boss. S/he decides what is the purpose of the business, what it is for. They will also decide the terms and conditions of employment. I will not go into the normal terms and conditions of employment, they can be found on the internet or from any good Executive Search firm. Once again, the tone of them must be human not legal and they must be practical and fair. One of the worst aspects of some existing terms and conditions of employment as well as of other transactions is that they are totally one-sided, something you only discover when you come to analyse the small print after disaster strikes.
But here are some suggestions of Terms & Conditions that help to create an open welcoming culture:
• Bosses should be paid well, but not absurdly, as many bosses are today. This is a phase that will soon pass. While it lasts it is disgraceful, a rape of resources that belong to employees and shareholders. Brutal bosses are bad employers.
• As much as 50% of employee’s earnings should be performance-based bonus. That bonus should be on top of a good wage, commensurate with the market. I paid 15% over market rates and then a bonus that could up to double an employee’s earnings. I made part of that bonus as stock options and introduced the concept of ‘Delayed-Encashment stock options’. ‘Delayed-encashment stock options’ are something we should explore more than we have. They are an enforced savings plan. The idea is that options granted today cannot be cashed before seven years from now except in the case of a takeover / buyout of the business or death of the holder.
• There should be regular informal chats about performance, instead of an annual formal, and usually misleading, appraisal. Terms and conditions should be reviewed at one of these chats, once a year. The purpose of this is to update any anomalies, to remind both sides what the contract is about and to ensure that both parties have an option to query it – but only to amend it with the other’s agreement.
• The Terms and Conditions must reflect the mentoring and coaching role the company will play for the employee and the role they will expect the employee to play as mentor and coach to others. The increasingly academic-based qualifications, often not well suited to business or organisation management, require all employees to have a mentor / coach.
Get this right and your business will flourish as never before.
For the related video article, please click here