To recruit and engage the best talent, you need a strategy that goes beyond simply posting job offers.
Are your Human Resources (HR) teams ready to meet the challenges of a changing workplace?
In the past, the role of Human Resources teams was largely confined to hiring procedures and all transactional aspects of the employee lifecycle. No longer.
Today, these experts must embrace a much broader vision of the organization’s needs, and find ways of adapting employees’ working conditions to these new standards.
Increase HR’s role in your recruitment strategy
To recruit, develop and retain a skilled workforce in today’s critical labour shortage, you must set up a strategic plan and make sure you support it with HR programs, projects and processes.
This plan must take into account all these new challenges, including inflation (and the rising cost of wages), changes in work-life balance, new organizational methods, and the extensive integration of information technology and artificial intelligence into workers’ lives.
Transform your HR team to adapt to new needs
Your Human Resources team has a strategic role to play in supporting your organization in all aspects of recruitment and retention, including employee integration, a corporate culture that fosters well-being, and occupational health and safety.
Yet, HR teams are often predominantly made up of support staff. This makes it crucial to transform the HR function.
Tackle your HR transformation in five areas
To implement all the components supporting the transformation of roles, you must assess five key areas.
1- Repositioning of the HR partner’s role
The HR team of experts must play a central role in both strategic development and day-to-day operations.
First and foremost, you have to identify which of your organization’s strategic activities would benefit from the input of an HR business partner: you may do this through interviews, surveys, performance indicators, and so on.
So, how can your organization benefit from the support of more strategic players? The Ulrich model identifies and categorizes HR employees’ activities into four main roles:
- The Administrative Expert, who ensures that HR activities, such as payroll and staffing, are thoroughly and efficiently implemented;
- The Employee Champion, who aims to raise employee engagement in the business and handles matters such as union and management relations, performance assessments, and the management of health and safety files;
- The Change Agent, who helps employees and management embrace organizational change;
- The Strategic Partner, who aligns with the organizational vision and makes it a reality by implementing HR best practices.
2- Review of the HR function’s structure
Once you’ve identified the activities that are most valued and useful to your organization, and those that need to be optimized, you need to think about the structure that will support the necessary changes. For example:
- Do positions meet the organization’s business needs?
- Are there enough positions to meet current demands and issues?
- How can the HR function be professionalized to enable HR to fulfill its role to the utmost?
3- Review of HR business process automation
Once you’ve assessed the above factors, you should determine how to limit your HR staff’s administrative tasks to enable them to focus on more strategic, value-added tasks.
Simplifying processes (steps, number of actors, clarity) and automating them (with tools, software, etc.) will greatly benefit your analysis. Also, to prevent conflicts, it’s essential to clarify everyone’s roles and responsibilities.
4- Managers’ ownership of HR strategies
The HR function is one of the most cross-cutting in any organization. Everyone is affected by HR management because everyone, without exception, is an employee.
Middle managers are the key to ensuring that the organization’s HR programs and management philosophy are practised on a daily basis. They must therefore be properly trained, equipped and supported to assume their role in a way that is fully consistent with organizational objectives.
5- Enhanced employee experience
It is possible to assess your employees’ satisfaction with various HR management aspects directly related to the above points. Do employees feel a sense of belonging within their team? Do they have confidence in the organization and their manager? How do they feel about the work climate?
To help you put the right team together, it may be a good idea for your business to call on the services of an external expert who can guide you through the various stages of your journey. Using the high-performance organization model, as well as surveys, team interviews and focus groups, this expert will provide you with a precise context-specific diagnosis and improvements that will lead to building and implementing a strategic action plan.
This article was written in collaboration with Martine Haines, Director, Management Consulting, at Raymond Chabot Grant Thornton.
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Some businesses face industry-specific challenges that must be factored into their daily management.
Virtually all industries face similar risks, including labour shortages and rising interest rates. However, other factors can also potentially harm businesses—with consequences that are more serious and more prevalent in some industries.
Construction
Manufacturing
Retail business
Tourism and food service
Construction
Increased input costs
Nowadays, your planning should reflect the fluctuating prices of raw materials. A months-long project may incur a steep rise in costs as it progresses. When signing contracts, be sure to include a clause that allows you to adjust your rates to reflect cost changes.
Supply chain uncertainties
You also need to guard against delays caused by a lack of raw materials or distribution problems, since penalties can affect the profitability of each of your projects. It’s very important to record all your activities, including dates, suppliers, cost changes and any problems you’ve encountered.
Transportation
Materials transportation is another segment of your business that you should factor into your calculations. Your business could be affected by rising fuel costs and other increases driven by inflation or border issues.
Rapid rise in demand
While falling demand for your services can obviously be detrimental to your business, so can demand that rises too quickly. You need to approach this carefully. If your order backlog is growing and you don’t have the resources to deliver, you could well lose your business.
Project accounting
Analyzing your costs and expenses by project can be crucial to optimizing your operations and boosting your profitability. It will give you a clearer picture of your most and least profitable projects. Better knowledge of your data will enable you to make wiser choices and focus your efforts and resources on the type of offerings that work best for your organization.
Senior debt
You need to take a step-by-step approach to paying off your debts. If you’ve not paid your main suppliers for a long time, you risk losing or tarnishing your relationship with them. What’s more, a supplier could claim payment directly from your clients, thereby preventing you from receiving money you are owed.
What’s more, a continuing rise in some senior debt (such as taxes owed to the government) is a sign of serious difficulties that you should heed if you want to turn things around.
Manufacturing
Supply difficulties and input costs
Difficult access to raw materials and delays caused by labour shortages can affect your ability to deliver promised products.
What’s more, if you’re not careful, the fluctuating costs of materials could cause cash flow issues and eat into your profit margins.
You need to take these factors into account when setting your prices and drafting contracts that allow you to adjust prices when needed and avoid penalties for delays.
Transportation
Materials transportation, fluctuating fuel costs and changing border standards are just a few variable factors. You should guard against them by implementing measures that will give you a degree of flexibility when difficulties occur.
Supplier and customer diversity
Being overly dependent on a single supplier may spell trouble in the near future. Consider lessening this dependence by building relationships with other partners or by switching to local suppliers, for instance. It may also be worth expanding your customer base if that is relevant and profitable for your business.
Productivity analysis
A manager’s involvement and experience can make all the difference to a business’s profitability. How well do you know each facet of your organization’s productivity? For example, are you aware of what causes delays? Are you up to speed with what’s going on in your business?
Automation
Automating various activities in your business is necessary to remain competitive in your market. But it’s also a well-known solution to labour shortages. Is such a technology transition being planned or implemented in your organization? It could help you mitigate some difficulties.
Undercapitalization
As an entrepreneur, you should make sure you have access to sufficient funds before continuing your activities, changing your ways of doing things, or planning a new project or expansion.
Inventory management
Effective inventory management can be a major factor in any business. Make sure you carefully assess this aspect of your business. Whereas insufficient inventory can be detrimental to your business, excess inventory can also lead to a significant cash flow shortfall.
Retail business
Online sales
Retail was one of the industries hardest hit by the pandemic. In addition to facing labour shortages and higher tariffs, businesses are having to adapt to a rapidly changing market.
Online sales almost doubled between 2016 and 2021—a trend that’s here to stay. Businesses that have yet to do so will have to invest in an online store. If they are relying on an external supplier, it’s essential that they track results to guide their initiatives and maximize their site’s reach.
You must know all of your online sales details. This, for example, would allow you to make monthly comparisons of sales and costs by product type, including shipping and returns, as well as handling and transportation costs.
Accounts payable
You must have precise knowledge of your types of payables. It’s also vital to cultivate good relationships with your suppliers.
Procurement and inventory management
Continuously track your inventory, by category, to efficiently manage your inventory and reduce your warehousing costs. It’s important to receive your orders at the right time of the season.
Transportation
Transportation uncertainties may become an issue that justifies shifting your approach. For instance, you could rely more on local production rather than importing.
Inflation
Of course, consumer purchasing power, which is heavily shaped by the economic context, may warrant a change in your business model or approach.
Rent
Rent is a major cost for retail businesses. Maintaining a good relationship with your landlord is crucial. A landlord who is made aware of your reality could prove a valuable partner when negotiating agreements—such as payment deferrals—that will ultimately benefit both parties.
Tourism and food service
International tourism
The upturn in international tourism is good news for some businesses but it can lead to a drop in traffic for organizations that rely more on local customers. It may be wise to review your forecasts.
Input and resource costs
Raw material and resource costs are on the rise. Your business should increase its prices accordingly to maintain a profit margin that keeps it viable.
Accounts payable and senior debt
You must keep a close eye on your accounts payable, and determine their breakdown and priority. How far behind are your account payments and what type are they? Growing senior debt, such as wages, payroll deductions and taxes, is an alarming sign of financial difficulties. You must address the situation urgently to find solutions.
To help you see things more clearly, your business could benefit from the support of an expert in business management and recovery. The sooner you take charge of your difficulties, the greater your chances of successfully tackling these major challenges.
29 Jun 2023 | Written by :
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Intellectual property can be a business’s most important asset. How do you measure its true value?
The value of intellectual property must be analyzed in terms of the future profitability it is likely to generate. Earnings and profits can come from:
- the direct use of intellectual property in the course of the business’s activities;
- the sale of an exclusive or non-exclusive right to use the intellectual property;
- the entry barrier the intellectual property creates for competitors.
What is intellectual property?
Let’s begin by reviewing what is meant by “intellectual property.” According to the World Intellectual Property Organization, the term refers to creations of the mind: inventions; literary and artistic works; designs; and symbols, names and images used in commerce.
These creations of the mind can be divided into two main categories:
- literary and artistic property, including copyright;
- industrial property, including patented and non-patented technologies, trademarks, industrial designs and trade secrets, application and software programming codes, and algorithms.
To be valuable, intellectual property must be:
- identifiable;
- proven to exist;
- proven to have evidence of ownership;
- legally protected;
- transferable;
- capable of generating profitability that is distinctive and can be distinguished from the business’s other assets.
How do you determine the value of intellectual property?
Many factors influence the value of intellectual property. To determine this value, you need to consider not only the profitability generated directly by its use, but also the business model that could maximize future profits from this property.
The following factors affect the value of intellectual property:
- its market size;
- its market recognition;
- its economic benefits to users;
- its useful life (consider the patent date or copyright creation date);
- the entry barriers it creates (the degree to which it reduces competition);
- the added profitability it generates as compared with a generic product or brand;
- its degree of IP protection (e.g., patent strength);
- competitors’ ability to develop similar property without infringing the law;
- current product substitutes.
How do you calculate the value of intellectual property?
Intellectual property is typically valued based on the future profits it can generate for its owner, using two main methods:
- a discounting of future cash flows based on the royalty relief method, that is, by calculating an appropriate royalty percentage on future sales of the intellectual property;
- a discounting of future cash flows based on the excess earnings method, that is, earnings generated exclusively by the intellectual property.
Both methods involve estimating the profits that can be generated exclusively by the intellectual property, and applying a rate of return to those profits based on the likelihood of achieving that profitability (using mainly the valuation factors described above).
When making an acquisition or sale, obtaining financing or simply implementing a marketing strategy, a business’s intellectual property must be estimated at its fair value. Don’t hesitate to contact an advisor to help you through this complex yet crucial analysis.
27 Jun 2023 | Written by :
Patrick Ouimet is a partner at Raymond Chabot Grant Thornton. He is your expert in corporate finance...
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The International Accounting Standards Board (IASB) has amended IAS 7 Cash flow Statements and IFRS 7 Financial Instruments: Disclosures through the increase of disclosure requirements to enhance the transparency of supplier finance arrangements and their effects on an entity’s liabilities, cash flows and exposure to liquidity.
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