All articles in Volume 12 Issue 16

Getting the most out of social media

BRR quote 20 AugDespite so much evidence about the value of digital and social media, many top executives and directors are still missing in action, says CEO of The Social Executive, author and social media strategist Dionne Kasian-Lew.

She says research shows that while 30 per cent of executives had signed up for social media platforms like LinkedIn, many were not actively utilising them.

“This is akin to going to a business networking lunch and standing in the corner,” she says.

“Australia’s business leaders already have the strategic business and relationship skills they need to master social media. They just need to bring those online.”

Kasian-Lew provides the following tips to help business leaders get the most out of social media:

LinkedIn

  • Focus on creating a compelling LinkedIn profile that highlights your skills and sets you apart. Ensure searchable terms like “board director” are in your bio.
  • Use the LinkedIn publishing platform to publish original content to a highly relevant audience. This is where leaders “hang out”.
  • If you do not have the time to write original content, you can also show thought leadership through the content that you curate and share. Also comment on others’ content to become known as someone with something to say.
  • Join a thought leadership or non-executive director (NED) group on LinkedIn as this allows you to reach out to strangers with whom you have ideas in common and extend your real-life networks.

Twitter

  • In the search function of Twitter enter #corpgov to see the content that other NEDs around the world are sharing.
  • Connect and share relevant content with NEDs around the world by adding the #corpgov hashtag.
  • Create a list of influential people within Twitter by using the advanced search function and then use this list to read content, share thoughts and build relationships you can bring into real life.

SlideShare

  • The social network for slides allows you to share rich content like videos, photos, research and your own narrative with people around the world at any time of the day or night.
  • It goes beyond 140 characters, but takes the LinkedIn publishing platform further because of the format. You can also embed SlideShare on the front page of your LinkedIn profile.

Google Plus

  • Look at how communities like Plus Your Business on Google+ bring communities together online. This creates breadth of connections globally while Google Local helps you find people in your local area.
  • Claim your Google Authorship through Google+, which identifies your content and makes it visible in search. 


Corporate bond market in for a boost

New legislation is expected to be passed in the Senate next week aimed at making it easier for companies to issue corporate bonds, thus expanding their potential sources of debt financing.

The Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2014 has already been passed by the House of Representatives where it enjoyed bi-partisan support. And, Treasury is believed to be consulting with the market on the regulations it has developed for the changes.

The legislation also lays foundations that will enable retail investors to trade corporate bonds issued to the wholesale market on the Australian Securities Exchange (ASX) in the same way as they have been able to trade government bonds on the ASX since May last year.

According to Andrew Lind, a partner in law firm Gadens’ Sydney office, the Bill’s key measures are as follows:

A streamlined disclosure regime: This enables the issuing of simple corporate bonds to retail investors by way of a two-part prospectus (consisting of a base prospectus and an offer-specific prospectus) instead of a full prospectus. Its content requirements for the two-part prospectus are to be specified by regulations and the Australian Securities and Investments Commission (ASIC) will have the power to make a determination to prevent a company from relying on the streamlined disclosure regime.

Directors’ liability: Directors will have liability for any misstatement in, or omission from, the disclosure document only where they are involved in the misstatement or omission from the disclosure document. The Bill also contains due diligence defences to criminal liability relating to false or misleading statements.

However, to be considered as “simple corporate bonds”, the debt securities must satisfy certain conditions, says Lind.

FIIG Securities CEO Mark Paton MAICD says despite the easing of the requirements and director liability, directors should not forget that retail investors need more protection than other investors, not less. “The level of disclosure should therefore be no less whether there is a lighter touch prospectus or not,” he says

Paton adds that unrated and unlisted companies have already been able to access the corporate bond market for the past two years, by issuing a corporate bond into the wholesale market under an information memorandum.

Over time, more developments are expected to bolster Australia’s domestic listed corporate bond market which remains underdeveloped when compared to those internationally. According to the World Economic Forum, Australia had the third highest number of listed companies per head of population in 2009 (behind Canada and Hong Kong), but its ranking for local issues of corporate bonds relative to GDP was 28th in 2011.


Securing the talent for growth

Many organisations lack adequate leadership pipelines, face widespread skill shortages and are struggling to groom and grow the talent needed to fill leadership positions with people who have the skills needed to turn strategy into action, a new study by Right Management Manpower Group as found.

Its report also notes that it is becoming clear that talent management is no longer the purview of just the human resources (HR) department. “There is growing consensus that having the right talent in place at the right time is the responsibility of everyone in top management,” it states.

The study, detailed in a report entitled Talent Management: Accelerating Business Performance ─ Global Trends, Challenges and Priorities, surveyed 2,221 senior leaders and HR professionals from 13 countries and 24 industries.

It found that the top talent management challenges for organisations are:

  • Shortage of talent at all levels.
  • Less than optimal employee engagement.
  • Too few high-potential leaders in the organisation.
  • Loss of top talent to other organisations.
  • Lagging productivity.

In light of the findings, Rosemarie Dentesano AAICD, regional leader and talent management principal for Right Management, says boards need to stop and consider how important human capital is to them in being able to deliver on shareholder value and execute their business strategy.

“Today, most organisations have invested in finance and technical systems, but they need to pay the same attention to human capital as they pay to other capital assets, such as financial and IT systems.”

The report notes that many organisations reduced investment in employee development as they dealt with fiscal challenges in the aftermath of the global financial crisis.

“It resulted in many organisations stripping layers out of their business and a lot of people wearing two hats,” says Dentesano. “There is a significant gap in many organisations between senior leaders and more junior levels because that mid-level bench strength is not as robust.”

Middle managers, however, are the bridge and communication gatekeepers in an organisation, responsible for connecting the goals and strategies of top level leaders to work practices and everyday tasks of front line staff and transmitting messages up and down the workforce ladder.

Still, one of the survey’s finding was that 78 per cent of Australian organisations did not characterise their mid-level bench strength as robust.

“A layer has been removed and there is an incredible stretch in roles and also, some organisations see an investment in employee development as being a discretionary spend,” says Dentesano.

“Companies understand that competing in the human age – when the ability to thrive is dependent on an organisation’s ability to unleash human potential – requires rethinking approaches to identifying and developing the talent in their organisations,” notes the report. And, many organisations appear poised to respond to challenges.

Around the globe, when asked as part of the survey what new talent management initiatives organisations will undertake in the next year, leadership development was identified as the primary focus of talent management investments with 46 per cent of organisations globally planning to invest. Organisations also plan to develop targeted skills critical to the organisation (39 per cent) and investment in the assessment of skills throughout the organisation (33 per cent).

As a start, Dentesano suggests Australian boards ask the following questions about their organisations’ human capital: 

  • Are our people important in delivering our strategy?
  • Do we have good leadership?
  • Are we investing in ensuring that people understand what their roles as leaders are?
  • Are we giving our people the skills capability to execute their roles?
  • What is the employee experience and level of engagement at our organisation?

On whether the HR director should have a seat at the board, Dentesano says: “That depends on the structure of the board. Your CEO could adequately represent many functions of the business. It’s about the board having the conversation and the HR director needs to be able to inform that strategic conversation.”


Financial reporting hurdle ahead for many NFPs

An accounting expert warns that a wide range of not-for-profit (NFP) organisations – such as schools, churches and charities – are about to be caught up in a little-known accounting standard change which could put them at risk of breaching the Corporations Act 2001. In fact, she believes it could affect nearly every school in Australia – private or public – that prepares financial statements.

Kimberley Carney, national technical senior manager at chartered accounting and advisory firm William Buck, says because the changes will become mandatory in less than six months, NFPs should already be preparing for the revised requirements. But she has found that many NFPs have not yet even considered the changes.

Carney explains that last year, the Australian Accounting Standards Board introduced a new accounting standard (AASB 10) which changes the way businesses and NFPs determine control over associated entities.

She says consolidated reporting rules changed for businesses in 2013 and will now become mandatory on 31 December 2014 for NFPs.

"However, our research shows that most NFPs are either unaware of the new standard or they have assumed that there will be no changes to their financial statements," she says.

"There are also those entities that are aware of the changes, but have indicated that they will choose to prepare special purpose financial statements in order to avoid the extra work involved in consolidating. This highlights a significant flaw in the existing financial reporting framework.

"Under AASB 10, any NFP that directs the activities or use of funds of another entity is now judged to have control. If preparing general purpose financial statements they must therefore consolidate. If they are preparing a special purpose financial statement, consolidation is optional."

Carney adds: "Most schools have a building fund or foundation where money is held for special projects. In the past, these funds would not have been consolidated in their financial reports but as – in its simplest form – the school can direct the use of these funds, school councils need to be aware of their new reporting obligations.

"Lots of religious organisations will also be impacted. Often they have relationships with entities which provide education programs within the church or which are devoted to fundraising. They wouldn't have previously thought these needed to be included in a consolidated report. However, if they direct the activities of these entities, they will now need to be included."

However, Carney notes: “Our experience shows that many NFPs, have not yet considered the changes much less performed a reassessment of their consolidation conclusions. These entities may be caught out by the changes as the time commitment required for gathering the necessary additional information to perform the retrospective restatement may be greater than expected."


ASIC clarifies retail/wholesale test for SMSF trustees

The Australian Securities and Investments Commission (ASIC) has ended ongoing legal uncertainty by clarifying how it will apply the wholesale investor test to self-managed superannuation funds (SMSFs).

To be treated as wholesale clients, SMSF trustees must now have net assets of at least $2.5 million (compared to a higher $10 million net asset test in the past), or income of $250,000 a year for the past two financial years, or be making an investment worth a minimum $500,000.

The distinction is important because wholesale clients have access to a wider range of investments, but they do not enjoy all of the consumer protections that apply to retail clients. Under the new Future of Financial Advice (FOFA) legislation, only retail SMSF clients are required to be given a financial services guide, a statement of advice or a product disclosure statement. Also, the FOFA obligations concerning best interest obligations, the charging of ongoing fees and prohibitions concerning conflicted remuneration apply only in relation to retail clients.

The regulator observes: “Given the importance of the retail client consumer protections, ASIC will take regulatory action where financial service providers miscategorise their clients and, for example, treat investors as wholesale clients based on net assets of $2.5 million without a certificate from a qualified accountant.”

SMSF Professionals’ Association of Australia (SPAA) CEO and managing director, Andrea Slattery FAICD, believes that the new tests are more appropriate for SMSF trustees seeking to be treated as wholesale clients.

“SPAA strongly believed that the requirement that an SMSF had to hold $10 million of net assets was an incorrect interpretation when the advice was relevant to an investment being made by an SMSF trustee.”

Although SPAA fully endorses the ASIC clarification, the organisation believes there is still uncertainty about how the $2.5 million asset test applies to SMSF trustees.

“ASIC’s statement says that the threshold applies ‘if the trustee has net assets of at least $2.5 million’. We need clarification from ASIC whether this means only assets in the SMSF, the member’s balance in the SMSF, and also includes the trustees’ personal assets outside superannuation,” says Slattery.

“The interpretation of this issue is fundamental to how the wholesale investor test functions, not only to trustees but to the accountants that issue certificates stating that an investor meets the wholesale investor test thresholds.”

Guidance for investors on managing their super is available on ASIC’s MoneySmart website.      


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