You built your SME with your sweat of your brow and plan to pass the torch in the next three to five years. Some key employees could become the ideal buyers to ensure your enterprise’s sustainability.

In some regions of Quebec and in several activity sectors, the work force shortage is a major issue that requires SMEs to be quite agile. In this respect, an effective and timely succession plan is a very useful tool to retain the best talent within the organization.

Some of your best-performing employees could therefore be involved in the eventual transaction, becoming future shareholders. To this end, communication between the transferor and potential buyers must be clearly established. The current business owners must indicate their intentions. If they want to leave the organization in five years, they need to be up front about it. Nowadays, business succession is no longer just a family matter.

Therefore, have the courage to discuss the issue directly with those you think could eventually take over internally. Three steps make it easier to complete this transition project.

A– Identify key employees

Have the employees you’re considering established a career plan? Do they have the requisite entrepreneurial skills? What are their professional goals? These discussions set the stage for the next steps. For example, you could give targeted employees a few management assignments in advance to gauge their interest and see if they have the right job profile.

These additional responsibilities assigned over time can also facilitate the transfer of authority. The financial capacity of the buyers to obtain the required financing should also be considered. They can then benefit from a gradual integration into the shareholding structure. At the same time, the buyers will increase their participation in the organization.

B– Get help

Entrepreneurs obviously can’t do everything alone. People who transfer ownership of a company they’ve been running for 25 years sometimes think they can navigate the transfer maze on their own. Beware of this wishful thinking. The support of a specialist can make all the difference in the development of a succession plan. Using an external resource ensures that you have a fresh perspective on the situation. And what could be better than to be able to count on leading-edge expertise to leave nothing to chance?

Lastly, remember that a business transfer is not something you can improvise. By relying on a specialized team, you can anticipate potential problems and gradually transfer the required knowledge. Transferors should not disappear overnight following the conclusion of the transaction.

C– Ensure a smooth transition

Over time, potential buyers will put their own stamp on the business. The transferor and buyer should expect an overlap during the transition process. It is not uncommon to see the buyer get involved during the first year following the transfer and even to hold the position of board chair. This type of transfer doesn’t just take place at the time of the visit to the notary’s office: rather, it is spread over a period of time.

You have to trust the leaders you choose to carry out the process. They may have different methods, but you have to accept these differences. For their part, buyers must understand that it is a part of yourself that you’re leaving in their hands.

Get employees involved and ensure their loyalty

If you plan to withdraw from the business, state your intention early enough to allow for the development of a proper succession plan.

By letting it be known that there are opportunities for advancement as a result of your eventual departure, you give key employees a chance to demonstrate their interest and skills and, perhaps, invest their energy in ensuring the sustainability of “their” SME. That way, you can be sure that you can count on your best collaborators in the coming years.

Next article

Eric Dufour
Vice-President, Partner | FCPA, FCA | Management consulting

How can you win the race for the best talent in the context of globalization and workforce shortages?

Today’s business world is facing one of the greatest periods of transformation since the first industrial revolution.

Globalization, the fourth industrial revolution and labour issues are shaking up markets and ambitions.

What skills will tomorrow’s leaders need? How can you make sure your organization is able to compete in the battle for talent and clients?

Prosperous businesses and tomorrow’s leaders will have to call on a number of key factors, including:

  • A revised human resource management model;
  • Innovation;
  • Openness to inclusive and diversified teams;
  • Succession planning to ensure permanency.

A revised human resource management model

Don’t misunderstand: traditional talent management still counts. However, it’s essential to integrate new processes to retain talent and increase appeal.

Consider the workforce issue as an opportunity to transform your practices.

There are several significant levers, such as the employer brand, competency development, global compensation strategy and recruiting strategies that can support the implementation of talent attraction and loyalty processes to enhance efficiency and performance.

Here are some questions to ask yourself:

  1. Do you have an attractive global compensation strategy that aligns with your ambitions and your market’s situation?
  2. Is your employer brand solid enough to support staff loyalty and new talent attraction issues?
  3. Do your managers have the requisite skills to manage human resources and appropriately fulfill their role in a transformation context?
  4. Does your organizational structure contribute to moving your organization and resources forward or does it hamper progress?
  5. Should you consider new recruiting strategies, such as international recruiting?
  6. Do you have the right tools to improve the employee and candidate experience as well as your new talent onboarding and integration practises?
  7. Is your work climate conducive to achieving your organizational goals and those of your talent in their quest for happiness at work?

Through in-depth reflection and expert advice from human resource management experts, you will be able to optimize your practices and take a closer look at the key moments that have the greatest impact on your employees’ engagement.

Technological innovation for the benefit of business

Would labour force issues be an opportunity to rethink your organizational structure, or even your business model, by calling on the benefits of automation and technology?

Eliminating a number of more basic tasks paves the way for employees to provide added value in areas machines are not able to.

The road to the digital transformation and achieving your ambitions will, however, require that you adapt your talent management approach:

  • Rethinking jobs, including digital transformation functions and skills;
  • Transforming career management, with continuous support;
  • Ensuring transformational leadership that fosters behavioural and cultural changes through engagement and inspiration;
  • Providing for the multiplication of skills and custom training;
  • Performing organizations are those that are agile and open to technological change.
Raymond Chabot Grant Thornton - image

While organizations can use digital transformation to increase productivity, support specific functions and limit the impact of labour force issues, it is the balance between technological innovation, engagement and the required skills that will need to be a priority for your organization.

Openness to inclusive and diversified teams

Openness to inclusive and diversified teams also means seeking out new talent internationally. Moreover, a growing number of organizations are opting for turnkey employee recruiting and mobility solutions in order to meet the challenges of the specialized workforce.

Canada is appealing to foreign workers. Quebec businesses, for example, are recruiting qualified employees, not only from French-speaking countries, but also from Asia, Latin American and Eastern Europe.

These workers’ mobility is an effective way to support production and business activities. Opening up to teams integrating workers from various backgrounds contributes significantly to the enrichment of an entrepreneurial culture and a culture of innovation.

Raymond Chabot Grant Thornton - image

International recruiting requires the use of customized solutions and support by qualified experts should be considered at all stages of the process. The key steps include:

  • Understanding the international hiring process;
  • Defining recruiting strategies based on your organization’s situation;
  • Selecting candidates based on their skills and the current temporary immigration program eligibility criteria;
  • Carrying out the legal steps (temporary work permits, status extension, validation of the candidate’s eligibility and representations by authorized experts with government bodies);
  • Applying for permanent residency, leading to Canadian citizenship;
  • Developing an onboarding and integration action plan.

In the context of globalization that is creating new challenges and a multitude of opportunities, recruiting specialized talent from outside the country and temporary immigration are options that must be considered.

In fact, young people are looking for modern, diversified organizations that make the effort to renew themselves and that promote values such as equality and openness.

Sharing experiences, cultural exchange and evolution in an open environment are all vectors for improved productivity and better overall job satisfaction.

Succession planning to ensure permanency

A business transfer involves more than just the accounting aspects. Today, business transfers are recognized more as a human issue. In fact, a Raymond Chabot Grant Thornton study reveals that 76% of respondents consider aspects other than finances and taxes to be important.

Which is good, because a Canadian survey revealed, for its part, that only 33% of businesses survive the transition from the first generation to the second and only 10% from the second to the third.

In short, a business transfer is not easy and takes time. It should be planned at least five years in advance, whether it’s a family business transfer or a sale to an unrelated third party.

Why? In order to have the time to “prepare” the organization and its stakeholders for this often gradual change of custody, but also, to enable it to have access to certain financial and tax advantages that it would have to forego without adequate preparation.

A business transfer also requires adequate support.

Using a team of neutral experts will guide you towards success by providing you with the right information on:

  • The organization’s strengths and weaknesses;
  • The potential alignment of the transferor’s and transferee’s profile and intentions;
  • The transfer potential (advantages and disadvantages) in relation to human resources, management, finance and taxation, as well as succession planning.

The benefits of a succession plan

In the context of the workforce issue, with a well thought-out transfer plan, you can benefit from the following advantages:

  • Anticipating potential problems;
  • Ensuring a gradual knowledge and skills transfer;
  • Anticipating competency development, where necessary;
  • Providing professional development, promotion, etc. opportunities for the current team, based on needs created by the seller’s departure and the buyer’s new roles and responsibilities;
  • Increasing the current team’s commitment;
  • Fostering a sense of security for all involved (workers, management team, financial partners, suppliers and customers);
  • Reflecting on the organization’s positioning and strategic directions to have a clear vision to communicate to all employees (a powerful workforce attraction, engagement and retention tool).

The ball’s in your court, it’s your turn!

27 Sep 2019  |  Written by :

Éric Dufour is a vice-president at Raymond Chabot Grant Thornton. He is your expert in management...

See the profile

Next article

In our continued effort to offer you relevant and useful tools, we are pleased, at Raymond Chabot Grant Thornton, to publish a French version of IFRS Example Consolidated Financial Statements 2019, a publication by the Grant Thornton International IFRS team entitled États financiers consolidés types conformes aux IFRS – 2019 (hereinafter the “Example consolidated financial statements’’).

The Example consolidated financial statements have been updated to reflect changes in IFRS that are effective for the year ending December 31, 2019. These include the adoption of IFRS 16 Leases, which become effective for accounting periods beginning on or after January 1, 2019. No account has been taken of any new developments published after April 30, 2019.

Download the document below.

Next article

Jean-François Boudreault
Partner | Human resources consulting

How can you recruit and retain qualified staff to maintain your business’s growth? You need to be prepared to face this major issue.

The shortage of qualified workers affects most industries and is a sizeable obstacle for business leaders.

According to the Canadian Federation of Independent Business, there are currently over 117,000 job vacancies to be filled in Quebec.

It is therefore imperative for managers to surround themselves with human resource experts to attract new talent, retain their employees and thus maintain their company’s growth.

First of all, as a company, you must position yourself as an appealing employer: organizations must stand out from the competition and be attractive to candidates by presenting strong values and an organizational culture that has a positive influence on the employee happiness index.

You then have to project that image into the community. The more positively you are talked about, the more attention you will get from candidates. The employer brand is therefore the first aspect on which executives must focus to attract new talent, since in a context of labour shortage, job seekers have a wide array of choices.

Recruiting: attracting the best talent

Before calling on a head hunter, you have to ask yourself whether you’re satisfied with your organization’s human resources positioning. Do you think you’re “alluring” enough to attract the best talent and pursue your ambitions?

The business environment is being disrupted by numerous changes, including new technologies, digital transformation or globalization, it is important to take advantage of these innovations and use them as a lever to improve your organization’s image.

Capitalize on opportunities to promote yourself: be active on social networks, share your successes, your activities in the field or the causes you support. Sell yourself! In this day and age, employees should be perceived as customers!

Maintain a strong connection with your current employees

With a strong employer brand, not only will you attract new resources, you’ll retain your current employees.

Here are the main aspects you should pay attention to in order to maintain your image:

  • The organization’s culture and values;
  • The work environment, it should be enjoyable and motivating;
  • Challenges and advancement opportunities;
  • The overall compensation offering (financial and non-financial benefits);
  • Working conditions (flexible schedules, teleworking possibilities, etc.);
  • Support (training, mentoring, co-development);
  • The management team’s quality and leadership;
  • Work tools;
  • The organization’s social commitment.

To be a great employer, you must also have a well-structured skills development and succession planning program. The ideal candidate for a key position may already be in your ranks.

Most employees want opportunities to progress. Target the resources that you think are the best fit for a promotion to strategic positions, and then give them all the necessary guidance to develop. Be flexible in your selection criteria and act quickly in choosing your candidates.

Your employees (past and present) are the best ambassadors to promote your employer brand. You have to take care to maintain an excellent relationship with them. An exit interview with departing employees can also help you identify areas for improvement within your organization.

Nevertheless, finding the rare gem is not an easy task. We suggest that you call on specialists such as the ones in our firm, who offer complete services in this field. We can help you position yourself as a particularly interesting employer and find candidates who will fit perfectly into your organization.

24 Sep 2019  |  Written by :

Jean-François Boudreault is a partner at Raymond Chabot Grant Thornton. He is your expert in human...

See the profile