There is increasing talk of diversity and inclusion (DI) policies in the workplace. But what impact do these policies have on your organization and how do you go about integrating them?

Diversity and inclusion management in business is defined as the attraction and management of practices that promote the inclusion of women, Aboriginal peoples, different cultural communities, people with disabilities, LGBTQ+ community, experienced workers and people from disadvantaged backgrounds. However, these practices are still not understood by many companies today. Progress toward greater diversity and inclusion, particularly gender parity in senior management, has moved more slowly over the past decade than it should (ref. Women in Business 2021). And while there is greater participation, higher levels of education, and comparable qualifications in 2021, diversity groups are still underrepresented in business and have higher rates of unemployment. Career paths are more difficult and there is still underrepresentation in various functions within organizations (Saba, T. 2019).

Unfortunately, the pandemic has amplified this phenomenon because the cultural and gender diversity in sectors that are doing the best (technology, manufacturing, mining and metals, construction) and those that are in the basic service sector (health, food retail, pharmacy) is mostly homogeneous. Conversely, the forced stoppages in the restaurant, tourism and accommodation sectors, or constraints of telecommuting and school and daycare closures have had a greater impact on women and minorities. As a result, Quebec now has a majority of women and minorities among its unemployed. A diversity and inclusion policy in the workplace is therefore necessary for the survival of companies, not to mention all the other benefits that come with it.

The benefits of integrating a DI policy

According to a study of diversity in the workplace (OECD, 2018, 2020), the reasons for companies to embrace diversity are reportedly to enrich their human capital (67%), stimulate creativity and innovation (46%), address ethical considerations (43%), address labour and skill shortages (37%), and meet legal obligations (37%).

The impact of greater gender diversity within a company is even greater than we might think. Diversity of ideas is linked to better decision-making, better risk management and better financial performance of companies. (Isidro and Sobral; 2015) According to Christine Regimbal, Partner and Head of Diversity and Inclusion at Raymond Chabot Grant Thornton, “There are numerous benefits to a diversified and inclusive corporate culture, starting with a greater potential for innovation and an increased sense of belonging.”

While there may be a strong and genuine intention to make your organization diverse and inclusive, just talking about it or writing it into a policy does not make it a practice. And like any new policy or process, it’s best to start with a realistic plan and clear goals and then define the practices to be implemented.

Diversity and inclusion management best practices

We suggest an eight-step approach based on best practices to help you prepare for the implementation of a DI management initiative in your organization.

Step 1 – Management’s commitment

The first step is to ensure that the organization’s leaders are committed to diversity and inclusion. Ideally, members of management will draft the policy and identify initiatives. A practice leader will then be appointed to ensure implementation and dissemination of key information to all groups within the company.

Step 2 – Set up a committee

The next step is to set up a DI advisory committee or management committee in the organization.

Step 3 – Budget and monitoring

You will need to allocate a specific budget to manage and implement your DI practises. You should identify and implement monitoring and performance indicators related to the DI program, for example: number of women managers/total number of managers; number of visible minority managers/total number of managers; and so on.

Step 4 – Training

There are DI courses available for different levels of managers and employees. Various topics are covered, such as unconscious bias, intuitive practices and reflexes, ingrained preconceptions, employee evaluations, etc.

Step 5 –Programs

You will then need to integrate various programs that promote diversity and inclusion, such as a career management or leadership program.

Step 6 – Procedure review and adjustment

Over time, your organization developed numerous human resource management policies and procedures that will need to be reviewed and adjusted to reflect the new DI management approach.

Step 7 – Mentoring and networking

To create a sense of belonging and attraction that will generate a feeling of social security in your workplace, encourage your teams through diversity mentoring and networking.

Step 8 – Internal survey

Lastly, an internal survey is a good way to determine whether your various approaches are successful and ascertain the change in practices, observe adaptations to standards and procedures and gather employee feedback.

To complement this process, foster relationships with vendors who advocate DI management practices in the workplace.

Efforts must be continued and measured for more than five years in order to properly implement this new organizational culture and to see the results of these changes.

Adapt current policies to support DI management

Since a business is a self-contained system, it is important to review all management practices, especially internal human resource management policies. Many of the policies implemented in companies do not necessarily contribute to better DI management. Some of these should be given greater attention.

Recruiting policy

For example, review gender neutral job postings, consider postings on targeted networks and anonymous CV recruiting, use employee photos showing diversity in promotional campaigns or on the corporate website.

New employee onboarding and training

For example, include diverse members in corporate presentations and training for new employees, promote the development of inclusive practices among current employees.

Succession and career management policy or practices

For example, ensure that unconscious stereotype biases are avoided in performance management practices, potential assessments, identification of management succession candidates and identification of critical jobs and profiles sought for their staffing.

Work/personal life reconciliation policy and cultural holidays

For example, ensure multicultural representation in the company’s practices, without generating favoritism and by respecting internal equity and organizational integrity.

We now encourage you to take a step back and look at the makeup of your executive committee and board of directors. Ask yourself how you could optimize their membership and promote diversity? Never underestimate the strength of a multicultural, multi-gender and multi-generational team, both in the search for solutions and its impact on the organization’s performance.

Take it one step at a time, and don’t hesitate to consult our experts to integrate a structured approach to promote diversity management within your entity.

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We are on the edge of a progressive recovery. A clear vision of your activities is needed and can be achieved by analyzing your profitability threshold.

In order to survive and regain momentum, you must review your corporate strategy and support your decisions with adequate data. To do this, it is essential that you analyze your profitability threshold and calculate the accounting “break-even” point.

Profitability threshold and break-even point: What are they?

The profitability threshold is the minimum amount of sales to be achieved during a targeted period to reach a balanced budget (break-even point). It enables you to determine whether a product or service is profitable, which is crucial information for supporting managers’ strategic decisions.

The accounting break-even point is a complementary indicator to the profitability threshold. It explains the relationship between cost, production volume and returns. It can be expanded to show how changes in the ratio of fixed to variable costs, such as raw material prices and revenues, affect a company’s profitability.

These two ratios are critical because they allow you to determine when your company breaks even, i.e., when it becomes profitable.

Know your profitability threshold to avoid flying blind

Analyzing the profitability threshold, but especially the accounting break-even point, allows company managers to establish different action plans based on key ratios. For example, they can use this data to set financial objectives and improve the profitability of a product or service.

In addition to being an essential management indicator, analyzing the break-even point helps determine when the company should start generating profits. Managing your business without these indicators is like running your business blind!

The importance of forecasts

Most companies have had to shut down or significantly reduce their operations in recent months. If they haven’t already done so, they will soon gradually start up again, and now, they have to deal with several completely new elements. During this gradual recovery, it will be difficult to know your actual sales. It is therefore important to make forecasts in advance that will allow you to restart or continue with realistic data.

Your sales, as well as the various fixed and variable costs, will have a direct impact on your profitability threshold and, consequently, on your accounting break-even point. Therefore, as soon as you determine these forecasts, you will be able to assess your project’s viability. If the forecasted data is not promising, you will be able to adjust your strategy accordingly, for example, by increasing your hourly rate or focussing on a more profitable part of your activities.

“Last year + 2%” no longer applies!

As you can see, there are many elements involved in calculating the break-even point. The many upheavals experienced throughout the supply chains means that companies’ forecast calculations are probably based on data that is no longer accurate. The benchmarks and reflexes must be revised. For a successful recovery, it is essential that you conduct a thorough analysis of the following.

1. Sales

There have been, and will continue to be, major changes in operations. Some entities have seen their business volume explode due to online sales but others, unfortunately, have seen a decline.

2. Fixed costs

Fixed costs are the recurring expenses that you have to pay, regardless of the company’s level of activity, such as depreciation, rent, administrative costs, various fees, salaries. This amount normally remains constant, regardless of your turnover. However, it is now important to take into account the subsidies offered by the government and other assistance measures from which you can benefit (exemption from/decrease in rent, agreement with banks for capital debt, non-payment of interest, etc.).

3. Variable costs

Variable costs, also called operating expenses, depend on the company’s activity and include, for example, supplies and transportation costs. Input prices are currently changing, this will have a direct impact on the contribution margin (sales – variable costs) and on the profitability threshold (fixed costs/contribution margin rate).

To ensure that you take into account all the variables needed to calculate the break-even point and analyze your company’s profitability, don’t hesitate to call on your trained professional accountant to assist you.

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The International Accounting Standards Board (IASB) has issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). The amendments require an entity to recognize deferred tax on certain transactions (e.g., leases and decommissioning liabilities) that give rise to equal amounts of taxable and deductible temporary differences on initial recognition.

In May 2021, the IASB issued narrow scope changes to IAS 12 Income Taxes (the amendments) to specify how entities should account for deferred tax on transactions such as leases and decommissioning obligations.

In specific circumstances, entities are exempt from recognizing deferred tax when they recognize assets or liabilities for the first time. This is referred to as the initial recognition exemption. There had been some diversity in practice as to whether the initial recognition exemption applied to transactions such as leases and decommissioning obligations. These are transactions where entities initially recognize both an asset and a liability.

The amendments clarify that the initial recognition exemption set out in IAS 12 does not apply and that entities are required to recognize deferred tax on these transactions. The aim of the amendments is to reduce diversity in the reporting of deferred tax on leases and decommissioning obligations.

The amendments are effective for annual reporting periods beginning on or after January 1, 2023, with early application permitted.

Our thoughts

We are supportive of the IASB addressing this issue as it has become more prevalent since IFRS 16 Leases became effective for annual reporting periods beginning on or after January 1, 2019. We believe the amendments will reduce the diversity in practice that is currently being seen on accounting for income taxes related to leases and decommissioning obligations.

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Working from home offers many advantages, but it also raises some questions. For example, does it prevent or promote presenteeism?

Presenteeism is when someone is present at work, but not being productive. This lack of productivity can be due to any number of reasons, such as illness, personal problems or simply a lack of motivation.

Does teleworking reduce or increase presenteeism? There’s no black and white answer. This issue has been studied numerous times over the years, and the results vary. That said, most studies have found that the benefits of remote work arrangements outweigh the disadvantages, provided that certain conditions are met.

Currently, it’s hard to know what trends are attributable to telework, and which ones are due to the pandemic. Ideally, we’d be able to measure the effects of telework in optimal conditions, like when people are allowed to go into the office again and life gets back to normal. This would allow us to assess the differences between full-time and part-time telework. But some findings have already emerged from new studies and the sudden mass shift to working from home over the past several months.

1. Factors that boost performance

Time efficiencies

Some people are capitalizing on their lack of travel time to get more work done. If those extra minutes are spent getting organized or completing tasks, workers tend to feel calmer and are more able to focus on their professional responsibilities. Avoiding the stress of rush-hour traffic is also beneficial.

Flexible schedules

Working from home gives employees a little more flexibility in their schedules. For some, this translates into lower stress levels as the extra wiggle room helps them juggle responsibilities or fit activities into their day. They can also choose to work during hours when they’re naturally more productive.

Fewer interruptions

Many workers say they find it easier to concentrate at home, as there are fewer interruptions than in a busy workplace. However, this isn’t the case for those who have kids or lack a quiet work space in their home. The pandemic has forced these individuals to simply to the best they can.

Independence

While some workers need close supervision or regular feedback to do their jobs, many others become more creative and effective when they have the latitude to organize their time and choose their work methods on their own. These individuals feel less stressed and more proactive when they see that their manager and employer are confident in their abilities.

The right technologies

If companies have the right technologies for remote work, they’re already ahead of the game. Technological tools allow for better monitoring and collaboration between teams, even those working remotely. This, in turn, helps projects move forward with input from all team members.

2. Presenteeism risks when working from home

Performance pressure

Some people find that working remotely leads to added pressure. They feel they have to work harder, feel guilty about taking breaks, and are more likely to work when they’re sick. If an employer isn’t attentive to these risks, the situation could lead to unintended consequences. Employees may become less productive, experience greater fatigue and eventually burn out. Pandemic-related concerns only exacerbate this risk.

Disconnect between employees

While this concern is raised less often, the lack of contact between colleagues can drive presenteeism. It’s something employers should be concerned about. When workers find it harder to reach their colleagues and collaborate with them—for example, if they don’t have the right technology to do so—tasks may be completed at a much slower pace.

Lack of stimulation

A person’s personality can affect how they perform in a remote work situation and those who lack initiative may find themselves even less motivated due to the pandemic. Less frequent conversations with colleagues, a lack of supervision, reduced social contact and fewer opportunities to release stress through recreational activities—all this can sap a person’s drive and lead to presenteeism. Employers should keep their eyes and ears open and be attentive to employee wellbeing.

Too many meetings

Attending too many meetings can trigger presenteeism, particularly if the meetings have no clear objective, include too many people or aren’t used to make decisions. Unproductive meetings have become much more common now that people are working from home full-time, often because managers are worried about losing contact with their teams. By the same token, workers may be receiving too many messages to compensate for follow-ups previously done in person.

3. How to minimize the risk of presenteeism

Companies need a telework policy designed to make work-from-home arrangements as successful as possible for their organization. There’s no such thing as zero risk, but by taking into account the different aspects of telework and establishing clear guidelines for working remotely, you’ll be able to reap the benefits of this model while reducing the likelihood of presenteeism.

Show workers you care about their wellbeing

It’s in every employer’s best interest to implement measures that promote employee wellness, independence and development. This involves providing psychological and social support. Your organization only stands to gain by creating a corporate culture that supports wellbeing—and this is truer than ever now that teams are working from home. Preventing stress, loss of motivation and performance pressure can positively impact your business’ overall performance.

Set the tone for active listening and collaboration

It’s important to look out for warning signs and take the time to talk to your employees. When people are off-site, it can be difficult to know when things are turning south. That’s why it’s doubly important to listen attentively to what people say. Ask your employees how they’re doing and how they feel about the team dynamic, without inquiring about their private lives.

You’ll have to adjust your management style to the different personalities and needs of your employees. Some need clear instructions and guidance, while others thrive in a less rigid environment. It’s important to be sensitive to these differences. If employees perceive you as overly controlling and distrustful, you risk creating a tense atmosphere and deflating your employees. That’s the opposite of what you want.

While communication is essential, avoid scheduling too many meetings and requesting reports with strict deadlines. One of the advantages of teleworking is scheduling flexibility. Employees appreciate being able to decide which time of day they’re at their best to carry out their various tasks.

Establish clear terms

Employers should also prepare telework guidelines covering issues such as sick days, reachable hours (to distinguish work hours from off-work hours), report frequency and submission methods, and individual roles and responsibilities.

Modern technologies and training

New technologies are steadily making telework more efficient and reducing its drawbacks. Your company will probably have to invest in equipment upgrades and provide employees with training so that they can use your new tools securely while working from home. Conversely, outdated technology or a lack of training can lead to presenteeism. Don’t forget that your entire workforce needs training, including managers.

Your organization may need assistance from an external expert to successfully transition to remote work. A specialist can help you determine how to get teams working effectively while they’re off site and prepare a game plan that reflects your business needs.

Presenteeism can happen regardless of whether employees are working from the office or at home. But with the right conditions, the risk can be minimized. Remote work isn’t likely to be a passing trend. Most people expect it to persist, even once the pandemic is over. With the right preparations, your business can make the most of this practice.