One-Stop HR Information Centre

The outbreak of H1N1 nationally and globally, and the increase of death toll has created worries among the people. Respective parties in response to this, have done the necessary prevention measurements such as having educational and awareness programs broadcast on TV / radio / newspaper or other media, encouraging people to wear masks at public area, and to wash hands more frequently. Some companies and schools even provide masks and sanitiser. The Government also provides the most efficient treatment to the suspended infected or infected group, by ensuring sufficient number of medical practitioner and medicine.

However, if unfortunately, despite the above prevention measurements, the staff / their dependents are still infected by H1N1, what should the Company does?

If the staff is infected by H1N1, and being hospitalised, no doubt he / she will be on medical leave. Even if the staff is not hospitalised due to whatsoever reason, but being granted medical leave by the medical practitioner, he / she will still be considered on medical leave.

How about if the staff’s family member is infected by H1N1, but the staff is not required to be self-quarantined based on the doctor’s jurisdiction? There might be risk to the Company and other staffs if the said staff is allowed to report to work as usual. If he / she is asked not to report to work for a period of time as determined by the Company, by deducting his annual leave entitlement, is it fair to him / her? In this case, the Company can consider to grant the staff compassionate leave or unrecorded leave of 3 days. By granting such leave to the staff, it would, firstly, shows sympathy of the Company to the staff, and secondly, as a step of self-quarantine for the staff whom family member is infected, at the same time to minimise the risk to the Company. Of course, the terms of granting this leave need to be spelt out by the Company in order to minimise abuse, for example, definition of family member, whether they stay under one roof, etc.

In Malaysia, there was no proven case of Swine Flu up-to-date, however, the Malaysian employers shall be alert and be prepared to ensure the workplace health. Below are some steps that could consider to be taken:

1. Mail or put up notices on basic information about Swine Flu and make all employees aware of any precautionary steps.
2. Ensure cleanliness, especially washroom and office common areas.
3. Sufficient supply of masks to all employees, when necessary.
4. For employees who are travelling, send them for flu jab and the cost to be borne by the company.
5. Advise the employees to stay at home if they are sick.

In the past economic crisis, and even in the recent one, many organisations reacted to the challenges by reducing overhead expenses as the primary course of action. Yet, from the past experiences, a number of organisations could not sustain performance. This proven that reducing costs alone may be insufficient if companies intend to move beyond survival towards producing sustainable results.

On top of reducing overhead cost, the following are some ways that business leaders can make the best of the economic downturn to produce sustainable business results:

1. Cut off Loss-Making Business Activities

An economic downturn reveals which business units are profitable through a full economic cycle. Maintaining non-economically viable activities drains resources from the profitable ones, thereby diminishing potential to produce results. A financial downturn is a good time to assess the business model itself and revise the business plan.

2. Invest in People Motivation

Best practice organisations invest in the motivation of employees during difficult times. It has in fact been shown that motivation increases capability, especially the creativity required in solving complex business problems in times of crisis.

3. Build Long-Term Relationships with Customers

Customers’ needs are often neglected when companies turn inward and focus on conserving cost and other internal matters. Superior performing organisations, however, understand that customers require information, guidance and options. The relationships built with customers in this manner during an economic downturn are extremely valuable in sustaining business.

After all, the key issue is the attitude of leadership, whether the business leaders want to just simply brave through the economic crisis, or to make the best of the current economic situation by taking advantage of the opportunities inherent in every economic downturn.

source: ICC

Unsecured Stock — Unsecured loan stock is a source of long-term finance. It tends to be more costly than secured stocks as it carries higher risks.

Medium-term Source — Generally for more than one year, for example, bank loan (especially overdraft facilities). They are usually related to the purchase of current assets and fixed assets, The loan tenure extends for as long as 5-10 years. However, overdrafts regardless the previously agreed limits, take the chance of being called in a short notice and are therefore regarded as current liabilities. Besides, there is always a risk of over-ridding pressure from Treasury (through Central Bank Malaysia) that could emphasize the latest credit squeeze.

Mortgage — Normally raised on brick-and mortar assets, that the fixed annual interest (even without capital repayment) would pose some burden in difficult years. There may also be hire-purchase facilities for buying fixed assets, sale and lease-back opportunities, and equipment leasing.

Short-term Source — A temporary finance to tide or provide the buffer to level-out fluctuations in the working capital. Commercial banks would be the first supplier of short-term capital. A bank overdraft facility with daily interest of a percentage plus the bank’s base lending rate os a more versatile form of short-term capital.

Loans — The amount depends on:

- The organisation’s profit record;

- The collateral or security offered;

- The cash flow ability to repay the loan with interest within the date(s) agreed upon;

- The purpose for which the loan is required.

Trade-Bills (bills of exchange) — With regard to imports and exports. Normally self-liquidating over 30 days to 180 days. Hassle-free and are short-term borrowing from commercial banks or similar source.

Creditors — A short-term fund from suppliers and vendors. The credit terms provided depend on:

- An organisation’s financial policy;

- The relative size of the organisation involved;

- The importance of reciprocation;

- Established reputation;

- Any silimilar factors that subconciously or conciously need to be considered.

Cash Capital from Buyers

Capital — According to The American Heritage Dictionary, 2nd Edition 1985, capital means "wealth in the from of money or property owned, used, or accumulated in businesses by an individual, partnership or corporation. The remaining assets of a business after all liabilities have been deducted; net worth. The funds contributed to a business by the owners or shareholders.

Fundflow / Cashflow — The cashflow concept reflects changes in the sources and uses of funds employed in an organisation, by looking at what those funds are required for, and from where they could be sourced.

Capital is a "liability" — Fund raised are shown as liabilities in the balance sheet. The uses of funds are reflected as assets. Shared capital is considered as a liability too since the money would have to be repaid to the shareholders or investors by the company.

Permanent / Long-term Capital are issued from 2 main forms:

- Ordinary (equity) shares, with voting rights and the expectation of a fair rate of return. The shareholders assume the risks but share the rewards. They are really the owners of the business. They exercise control through a board of directors appointed from among their number.

- Preference Shares, with a prior claim to dividend. After ascertaining the total annual profit earned, the preference shareholders, if any, are paid their fixed dividends. What remains of that total becomes the property of the ordinary shareholders. Part of it is distributed to them as dividends and the rest ploughed back into the business to help further growth and the making of future profits.

Public Capital Market — A company secretary is concerned with the legal and administrative intricacies of dealing with the registration of new capital issues. New capital issues are undertaken using an issuing house, offer fo sale and private placing by brokers, tenders, rights issues or bonus issues. The board and management look at the advantages of going public and the status of having a stock exchange quotation. It is also a more permanent and relatively cheaper source of funds than perhaps outright borrowings from a financial institution.

Ordinary Share Capital and Total Capital — The ratio between these two capital is defined as "gearing". High gearing infers that the ordinary shareholders constitute only a small proportion of total capital. This represents a speculative investment for those shareholders. The reasons are:

- In bad year, preference shares and other long-term capital would absorb the profits through their fixed interest claim;

- while in a really good year, the balance of profit available to be shared among a relatively small number of ordinary shareholders could be considerably large.