Human resource management on the farm

Author: | Date: 23 Mar 2015

Take home messages

  • There is no separate talent market for family farms, and therefore, family farms are competing with everyone else for providing employee satisfaction.
  • Employee satisfaction is the main driver for people of all ages and industries in staying in their roles.
  • Human resource management is generally weaved into standard business practice rather than being a separate work practice or role within a business.

Introduction

One of the misconceptions or comments we often hear from production or farming based businesses when we discuss recruitment or salary benchmarking is that, if you are a farmer or in farm production when recruiting and retaining staff it is “different to agribusiness or corporate”. Or that there are different rules or factors that affect corporates and “we are not a corporate”.

The reality is that unless you have an enormous extended family that you can exclusively recruit from within, if you run a family farm or a partnership, then you are competing for talent with corporates, as well as family farms. You are also competing for talent from other sectors within agribusiness such as retail distribution (e.g. Landmark, Elders, etc.) and supply companies (fertiliser and seed companies, etc.). And of course you are also competing with non agri sectors such as mining. There is no separate talent market for family farms. Therefore we believe it is fair to assume that if you are competing in the same talent market as everyone else, you are also competing with everyone else for employee satisfaction. Regardless of the employer business structure, employee satisfaction is the main driver for people of all ages and industries in staying in their roles.

The other misconception is that human resource management (HRM) is a separate work practice or role within a business. Sometimes it can be, but most small businesses and even large businesses generally weave HRM into their standard business practices. It is a way of doing business, rather than a function of the business.

HRM functions within a business are usually broken down into key areas such as strategy (future workforce requirements), compensation (salaries and benefits), safety, liability, training and development and compliance. When making business decisions across your farming business, I am confident that strategy, cost, safety, liability, further opportunities and compliance are all factors you would consider when deciding to buy/or sell assets such as livestock or grain, or invest in machinery or more land. So perhaps when you look at people, the way to look at them is as a balance sheet item rather than a cash flow item.

So before you purchase an asset, I am sure you all do your research and get the best understanding of the market as possible, before making a decision and people (potential employees) should not be any different. The following information sets the scene as to what is happening in the talent market.

Labour market commentary

When looking at the talent market, it is as important to understand what is happening specifically in your sector, as well as what is happening around your sector.

Data from the 2014 Rimfire Resources Agribusiness HR Review shows that only 27.1% of salary increases were greater than 3%. This means, for the first time since 2011 that the majority of salary increases did not exceed CPI. Actual base salary changes recorded within the Rimfire Resources Agribusiness Salary Review have also shown increases below CPI. Analysing all base salaries within the database showed that salaries increased by 2.36% from 30 June 2013 to 30 June 2014 (10576 individual records).

Table 1 illustrates the little variation in base salary increases across agribusiness roles when broken down by job function. In stark contrast to the figures published in 2013, forestry roles have shown the lowest increase (1.87% in 2014 down from 12.79% in 2013). The highest increases were seen in technical roles which recorded as at 2.38%, were still lower than CPI.

Table 1. 2014 base salary increases across agribusiness roles.
Average changes across all Commodity roles 2.36%
Average changes across all Finance admin roles 2.36%
Average changes across all Forestry roles 1.87%
Average changes across all IT roles 1.94%
Average changes across all Logistics roles 2.33%
Average changes across all Management roles 2.10%
Average changes across all Manufacturing roles 2.10%
Average changes across all Marketing roles 2.41%
Average changes across all Primary production roles 2.03%
Average changes across all Sales roles 2.36%
Average changes across all Technical roles 2.38%
Average changes across all Roles 2.36%

Budgeted salary increases reported with the 2014 Agribusiness HR Review indicate that the majority of salary increases within the next 12 months will remain under 3%. Of those providing an increase within the 2014/15 financial year, 64.6% have indicated that the increase will be 5% or less. Less participating organisations have paid a bonus to some or all of their staff in 2014 than in previous years. 27.1% did not provide a bonus at all, in contrast to 19.51% in 2013 and 9.84% in 2012. An emerging trend in workforce size is showing an increasing number of organisations indicating their workforce size will remain stagnant and a decreasing number indicating their workforce size will increase

Key findings from the Rimfire Resources Agribusiness HR Review

(107 agribusinesses nationally completed the survey – released August 2014)

Salaries

  • 79.4% of participating organisations reported that salaries had increased in the last 12 months, which is down slightly from 81.7% in 2013.
  • 58.9 % of participating organisations reported actual salary increases within the last 12 months were between 2 – 4%.
  • 80.7% of participating organisations predicted that salary increases within their organisation would be between 2.1 – 4%.
  • 13.1% of participating organisations indicated that employees would not be receiving an increase; the highest number since 2005.

Bonus

  • 27.1% of participating organisations did not pay a bonus to employees.
  • 28.2% of those who did pay a bonus, provided a bonus of 6-8% of base salary.
  • 29.9% of participating organisations indicated that they are in a position to offer a ‘Sign On’ bonus.

Employee attrition

  • 70.2% of organisations reported an attrition rate of less than 10%.
  • Only 41.1% of organisations expect to increase the size of their workforce within the next 12 months.
  • Succession planning is driving the recruitment of graduates.

Benefits and employee engagement

  • 42.1% of organisations have paid parental leave.
  • Flexible start and finish times is the most commonly offered flexible staffing arrangement.
  • 77.6% of participating organisations provide relocation assistance at least some of the time.

Recruitment

  • For the second consecutive year, referrals are the number one rated source of candidates, with specialist recruitment services second.
  • Technical positions remain the hardest to recruit for.
  • 43% of participating organisations have recruited international candidates.

Market data update – Februray 2015

Production management roles

There are three production management roles within the Agribusiness Salary Review: Farm Manager – Regional, Farm Manager and Farm Manager – Assistant.

In the last four years from Q3 2010 until Q3 2014 average base salaries for all positions have increased (Figure 1). The most senior position, Farm Manager Regional has experienced the most conservative growth, increasing steadily at an average rate of 2.02% per annum. The most significant change occurred within the Farm Manager position where average base salary increased by 27.19% over the same four year period. The greatest increase occurred between Q3 2012 and Q3 2013 when average bases salaries for the role increased by 14.85%. Noticeable base salary increases have also occurred in the Farm Manager Assistant role within this four year time frame. Again the 12 months between Q3 2012 and Q3 2013 showed a substantial average base salary increase of 10.66%.

Figure 1. Production manager base salaries 2010 – 2014.

Figure 1. Production manager base salaries 2010 – 2014.

Despite the increasing average base salaries, data from the Rural Jobs Index does not indicate an increase in the number of jobs advertised. As can be seen in Figure 2 the total number of internet production management job advertisements was trending downwards from Q1 2011 until Q3 2014

Figure 2. Production management total internet advertisements 2010 – 2014.

Figure 2. Production management total internet advertisements 2010 – 2014.

Retail distribution

The Rural Jobs Index highlights that during 2012 there was a considerable spike in the number of internet job advertisements within the retail distribution sector with 159 job advertisements in the Q3 of 2012. As can be seen in Figure 3 the number of internet job advertisements within this sector has since dropped (57 roles in Q3 2013 and 52 roles in Q3 2014), but remains significantly higher than pre 2012 figures (28 roles in Q3 2011).

Figure 3. Distribution of total internet advertisements within the retail distribution sector 2010-2014.

Figure 3. Distribution of total internet advertisements within the retail distribution sector 2010-2014.

The increased demand for employees within this sector is reflected in the Agribusiness Salary Review data. When looking at three roles predominately held within the retail distributions sector: Branch Manager – Retail/Wholesale, Merchandise Manager and Merchandise Salesperson, significant average base salary increases can be seen within all three roles from Q1 2012 until Q1 2013 (Table 2 and Figure 4).

Table 2. Average salary base increase within the retail distributions sector, 2012-2013.

Position Average Salary Base increase Q1 2012 - Q1 2013
Branch Manager - Retail/Wholesale 9.55%
Merchandise Manager 4.13%
Merchandise Salesperson 8.41%

Interestingly, while the number of internet job advertisements within the retail distribution sector decreased in 2014, average base salaries within the Agribusiness Salary Review increased again for both the Branch Manager – Retail/Wholesale position and the Merchandise Manager position (Table 3).

Table 3. Average salary base increase, 2014-2015.

Position Average Salary Base increase Q1 2014 - Q1 2015
Branch Manger Branch Manager - Retail/Wholesale 14.60%
Merchandise Manager 4.44%
Merchandise Salesperson 0.12%

Figure 4. Average salary base increase within the retail distributions sector, 2010-2014.

Figure 4. Average salary base increase within the retail distributions sector, 2010-2014.

Rural Jobs Index

Rimfire Resources has compiled data for the Rural Jobs Index(RJI) which collects data from advertised agribusiness job vacancies in papers and the internet monthly. Data from the Rural Jobs Index shows that agribusiness newspaper advertisements nationally have consistently fallen by 25% each year over the past three years (Figure 5). This is on the back of consistent falling numbers since 2010. The Rimfire RJI has monitored agribusiness job advertisements both in newspapers (weekly) and online (monthly) since April 2006, providing a real-time pulse on the agribusiness job market.

For the same period, internet advertisements have only fallen slightly and have therefore remained relatively constant over the past three years. Given this dynamic, Rimfire will no longer continue to count the paper advertisements as they have concluded that the data is no longer valid. Given the dramatic reduction in newspaper advertising, Rimfire does not believe, at this point, that newspaper numbers are a true reflection of the current job market and that this decrease is more a reflection of advertising trends.

Figure 5. 2009-2014 newspaper versus internet total job advertisements.

Figure 5. 2009-2014 newspaper versus internet total job advertisements.

In Q4 of 2014 there were 715 internet job advertisements nationally; this represents a 16.95% decrease from the Q4 2013 total advertisement figures and a 27.04% decrease from Q4 2012 figures (Figure 6). The December 2014 job advertisement count showed the greatest drop in numbers compared to other years and months within 2014. There were 30.97% less internet job advertisements within December 2014 than there were in June 2014, which had the next lowest advertisement count.

Figure 6. 2012-2014 Q4 internet job advertisements.

Figure 6. 2012-2014 Q4 internet job advertisements.

When looking at the results on a state by state basis (Figure 7), QLD and NSW are the only states that have experienced declining job advertisements by calendar year over the past four years. NSW has seen a decline each year, from 1149 advertisements in 2011 to 779 advertisements in 2014. The sharpest decline in numbers in NSW came between 2013 and 2014 where job advertisements fell by 22.8%, with the data indicating a firm downward trend. QLD has experienced a longer, steadier decline year on year since 2009 where there were 935 advertisements compared with 427 in 2014. The sharpest decline in numbers in QLD again came between 2013 and 2014, where advertisements fell by 34.7%.

In contrast, South Australia and Western Australia have seen their job advertisements increase annually over the past four years. In 2011, South Australia had 371 advertisements compared to 481 in 2014, and between 2013 and 2014 they rose by 16.7%. Likewise in Western Australia the numbers have risen from 69 in 2011 to 134 in 2014, with the largest jump being 46.6% between 2012 and 2013. Tasmania and Victoria‘s numbers have remained steady over the past four years, with Victoria particularly consistent with an average of 959 internet advertisements annually since 2011. 2014 job advertisements within Victoria accounted for 30.8% of all internet job advertisements.

Figure 7. 2011-2014 internet advertisements by state.

Figure 7. 2011-2014 internet advertisements by state.

By evaluating the advertisements by sector (Figure 8), the internet job advertisements tell a more interesting story. When comparing data over the past five years, most sectors have seen either small declines or increases over the five year period and have remained consistent in annual numbers. Sectors that have increased more dramatically on trend over this time include Retail Distribution (average growth over the past four years of 127.77%), Processing/Food Manufacturing (average growth over the past four years of 35.16%) and Farm Production (Management Roles) (average growth over the past five years of 23.63%). Sectors that have slid dramatically trend wise, include Rural Finance (decline on average of 27.54% over last five years), Crop Protection (decline on average of 12.00% over last five years) and Animal Health/Nutrition (decline on average of 27.54% over last five years).

When reviewing the data from 2013-2014, dairy with 77.78% growth has been the only real advertisement growth sector of note in the last year. Most sectors saw either a slight increase or decrease with falls beyond trend lines occurring in Retail Distribution (-29.27%), Farm Machinery (-46.89%) and Government Roles(-44.06%).

Figure 8. 2009-2014 Internet advertisements by sector.

Figure 8. 2009-2014 Internet advertisements by sector.

Contact details

Nigel Crawley
ncrawley@rimfireresources.com.au