Leadership through challenging times
As all leaders can attest to, no leadership role is smooth sailing. There will inevitably be the occasional storm coming over the horizon, with different challenges you need to respond to.
Sometimes these challenges will be unprecedented, such as the impact of the coronavirus pandemic while others may not be of this scale. As every situation is different, there is often no one ‘best’ way to respond.
What has become clear is that in times of crisis, strong leadership is vital. Given the economic and societal uncertainty surrounding the coronavirus outbreak, robust leadership of teams and companies during this period is especially crucial.
While there is no magic formula, here are a few ways you can hone your leadership skills and be the strong, capable leader your team needs during times of uncertainty.
Be flexible and adapt
If we have learned anything from the coronavirus pandemic, it’s that life as we know it can change at any moment. Businesses have temporarily shut up shop or moved online, while others have permanently closed their doors. Teams are communicating virtually rather than face-to-face, people are unable to travel and many schools have moved to remote learning. Your daily routine has changed, perhaps substantially so.
Stephen Hawking once said, “Intelligence is the ability to adapt to change”. A strong leader is intelligent and resilient, adapting their plans as needed. First and foremost, educate yourself. This includes information on the situation at large, your business’s position and the implications the situation may have on your team and or business. Seek out advice where needed to make informed decisions.
Be flexible and adaptive with your decision making, appreciate your existing plans and strategy may need to change or, you might need a completely new plan. Consider the changing needs of the market and your clients as you adapt existing plans or develop new frameworks.
Tune out the noise
It’s hard not to be distracted by the endless stream of news and opinions, especially during a time of crisis.
However, it’s important to focus your attention on what is important to you and your business. How can you support your team and create a resilient business? Working on a plan for your business will help you feel more in control of the future and focused on what you can do during this time. Set clear expectations for your team and objectives to assist them to navigate the uncertainty with a degree of clarity.
Empower your team
Equally, this is an unsettling period for your team who may be dealing with added stress. Perhaps working from home is not ideal for them as they have children who are remote learning, or they are worried about an unwell or vulnerable loved one.
Communication is the key to maintaining team cohesion and morale. Through times of change and uncertainty, communication is even more important to ensure an understanding of what is happening at both an organisational and individual level and to manage expectations. Whether it’s through regular check-ins to see how people are doing or collaborating on ideas for the future, you can empower your team to feel positive about the business, despite the challenges ahead.
Don’t forget to look after yourself as well. Think of the adage of putting on your own oxygen mask first in order to help others and take care of yourself first.
Not only can our mental health be impacted by uncertainty, so too can our physical health. With the coronavirus pandemic resulting in self-isolated living for many, your incidental exercise is likely to have drastically reduced. You might not be working out as much either, and you could be well acquainted with the fridge and pantry. Ensuring you are still keeping fit and eating healthy (at least most of the time) is important to keeping you feeling on top of your game.
A strong leader faces challenges head-on and knows when to reach out for help as well. Don’t be too proud to seek help, whether that’s for your mental or physical health or general guidance should you need it.
Turbulent times can make good leaders great. As you rise to the challenge, provide a calm and composed direction into the future.
Time to reassess your financial priorities?
At a time of uncertainty about the economy, not to mention unexpected social isolation, people are rethinking their personal and financial priorities.
Whether you are spending less by necessity or because you are living more simply at home, this could be a good time to reassess your spending and review your household budget.
Our spending habits have changed
Even though we are spending less in lockdown overall, we have also changed what we spend our money on. We are spending more on groceries, food delivery, streaming services, alcohol, pet care and (home) office supplies. But a lot less on gyms, travel, cafes and restaurants.
What’s more, many of us are discovering we can happily do without many of the treats we used to think were essential. So, if we can avoid slipping back into our old spending habits, we could be in a much better financial position when the pandemic has passed.
By doing some legwork to find the best deals on offer, it may be possible to reduce your outgoings on essentials such as utilities, groceries, petrol, general insurance and housing. However, the big savings usually come from eliminating – or at least limiting – non-essential goods and services.
Eating and drinking
One spending behaviour that has shifted significantly during lockdown is dining out. A 2019 survey revealed Australians spent $2,704 a year on dining out, on average, and $1,612 on alcohol. We are now cooking at home a lot more and we seem to be enjoying it, with households now baking their own bread and embracing the slow cooker.
Once we are able to go back to eating out and visiting pubs and bars, we can fatten our wallets by reducing the number of times we eat out, inviting friends over for a coffee, beer or meal rather than meeting them at a café, pub or restaurant.
When it comes to cooking at home, where you purchase your food can have a big impact on your grocery bill. CHOICE found shopping at Aldi can be up to 50 per cent cheaper than other supermarkets.
We are also tending to do a larger shop less frequently. Meal planning and doing a shopping list is one way of avoiding the spontaneous purchases that lead to food wastage. Given that the average Australian household throws away $3,500 worth of food each year these are worthwhile changes that will help our hip pockets on an ongoing basis.
Another big shift that has come from the lockdowns has been in the way we exercise. When the walls closed in, we took to our bike paths and parks and went for a walk or run.
So maybe it’s worth rethinking the expensive gym membership and keeping up our Corona exercise plans – particularly if you’re one of the 1.5 million Australians who have a gym membership but rarely use it.
Prior to the crisis, heading off on holiday usually meant jumping on a plane. Back in 2018, 6.3 million Australians were holidaying overseas and spending an average of $4,750 per person – or $19,000 for a family of four. Of course, it’s unlikely you’ll be engaging in any international travel for a while. But after borders reopen, you may wish to holiday in Australia anyway.
Not only is holidaying locally likely to be less expensive, but it could also mean your dollars flow into one of the tourism-dependent regions which have been so badly hit by last summer’s bushfires and now the Coronavirus shutdown.
Thinking to the future
During difficult times such as these, a sound budget based on your financial priorities will help you continue to work towards your long-term goals.
Depending on your financial situation you may even wish to go against the trend and look for ways to get your money working for you. This could include making personal contributions to your superannuation after the recent market falls, or investing outside super, to capture the upswing when the market bounces back, as it always does.
If you would like to set some new financial priorities and discuss your situation, give us a call.
New tax shortcut for employees working from home
With many people now working from home because of COVID-19, some of the expenses your employer normally covers – such as electricity, heating and cooling – are coming out of your pocket instead.
Some employers provide a daily allowance to help with these additional costs, but if not it’s important to claim your extra expenses at tax time.
To simplify things, the ATO has announced shortcut rules if you find yourself working from your kitchen table or sofa for the first time.
New shortcut rules
Under these temporary measures, if you are working from home due to COVID-19 you can claim a simplified tax deduction of 80 cents per work hour for your running expenses.
Your running expenses include things like lighting; heating and cooling; cleaning; and office supplies like printer paper and stationery. The shortcut rate also covers the cost of your internet, phone and computer equipment.
The decline in value (or depreciation) of the furniture and fittings you use in your home office is covered too.
Items such as tea, coffee and toilet paper, can’t be claimed. Neither can expenses such as rent, mortgage interest, property insurance, rates and land tax.
Substantiating your claim
Before you get too excited, you are only entitled to a deduction for expenses related to earning income. You must have actually spent the money and not been reimbursed.
Fortunately, the shortcut method only requires you to keep a record of the number of hours you worked from home as evidence of your claim. This can be in the form of a timesheet, or an Outlook calendar or diary entry.
If you are audited by the ATO, it’s likely you’ll also be asked for supporting evidence from your employer.
The shortcut arrangements are in place for running expenses incurred from 1 March to 30 June 2020. The ATO intends to review the arrangement for the next financial year as the COVID-19 situation progresses.
Eligibility for the shortcut rules
The simplified rules are only available to employees working from home. If you are a sole trader or run a small business from home, you must use the normal business deduction rules. The shortcut rules allow multiple people living in the same house to claim the new 80 cents rate, so both members of a couple can claim a deduction at tax time. You’re not required to have a dedicated work area, which is a requirement under the normal rules.
If you normally work from home a few days a week, you need to keep two sets of records – one covering the period from 1 July 2019 to 29 February 2020 and a second one covering the period from 1 March to 30 June 2020 if you decide to use the shortcut method.
Current rules for working from home
Although the simplicity of the shortcut method is attractive for claiming your running costs, you can choose to use the pre-existing rules if you prefer.
Currently, there are two ways to calculate your running expenses: claiming a fixed rate of 52 cents per work hour or calculating your actual expenses.
Under the fixed rate method, you claim 52 cents an hour for your running expenses. You then work out separately your costs for phone and internet usage, computer consumables and stationery, and the depreciation on your computer. To claim, you need to keep records of actual hours worked, or a four-week diary to show your usual working pattern.
Dedicated home offices
If you have a dedicated work area at home, you can choose to calculate your actual running expenses. These costs (plus depreciation on your equipment, furniture and furnishings over $300) need to be apportioned into personal and work-related amounts.
For your phone and internet expenses, you can claim up to $50 with limited documentation, or calculate your actual expenses and apportion them.
Before opting for the new shortcut, it’s worth having a chat, as the best method depends on your individual situation. Although there is less administration with the shortcut, it may not provide you with the biggest tax deduction.
Call us to discuss how working from home will affect your tax preparations this financial year.