Adviser Alert – January 2019

The Grant Thornton International IFRS team has published the 2018 edition of Navigating the changes to International Financial Reporting Standards: A briefing for Chief Financial Officers.

This publication has been designed to provide chief financial officers high-level awareness of the recent changes that will affect companies’ financial reporting in the future.

This publication covers both new standards and interpretations that have already been issued, and new amendments made to existing ones, giving brief descriptions of each.

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There may be a storm brewing in some of the world’s largest economies as businesses come to terms with a skilled worker shortage.

Technology and mobility are two options for businesses struggling to find talent.

In Canada, the US, UK, Japan and many other established economies, there is a deepening crisis in labour shortage. Businesses are increasingly struggling to attract the talent required to grow. According to Grant Thornton’s International Business Report, 40% of business leaders around the world cited a lack of skilled workers as a growth constraint.

In the US, skills concerns saw an 8pp increase to their highest level ever at 38%. In China, concerns also rose 8pp, to 38%. And in Germany, there was a leap of 25pp to 74% in Q2 2018.

In many markets there isn’t a lot of excess capacity in the workplace. Economies are approaching full employment, so we’re starting to see skills gaps reappear as well as the emergence of new ones. Worldwide unemployment has fallen to 5.2%, the lowest level seen in almost 40 years, owing to factors such as lower wages and the gig economy (according to Financial Times).

While the global skills gap is expected to worsen, it’s already having an impact on businesses. Some are unable to grow because they cannot increase the volume of skills they need to expand capacity to produce more goods or services.

Several factors are driving this trend, including an ageing population and declining work-age populations in some countries. Meanwhile, rapidly advancing technology is putting businesses under increasing pressure to acquire the advanced digital skills required to support developments such as artificial intelligence (AI), automation and blockchain technology.

“It’s not just tech-specific roles; the ability to write and understand code is going to be more important in other disciplines as we already see in finance. I don’t think there is a single industry right now that doesn’t need more talent,” says Eric Nguyen, senior manager of Raymond Chabot Grant Thornton’s AI practice in Canada. “In Montreal alone, we see a huge demand for AI, and there is a lot of talent missing for engineering, software development and data science.”

Can technology narrow the skills gap?

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Ironically, technology is both a cause and – at least partially – a solution to the skills gap. The high demand for tech skills is a symptom of what technology can do for businesses. As the demand for skills rises so does investment in innovation and new business solutions.

In Germany, for example, expectations for tech investment have increased by 5pp to 49%.

Michel Besner is general manager at Catallaxy, a subsidiary of Raymond Chabot Grant Thornton, providing blockchain solutions and support for businesses. He says: “Where technology optimises processes by simplifying tasks, demand for some types of jobs disappears.”

Other technologies such as Robotic process automation (RPA) and machine learning are also enabling automation and scale opportunities that have not necessarily been there before.

Technology is limiting the impact of skills shortages across most business functions including finance, accounting, marketing and in the manufacturing and logistics sectors. The additional benefit is that while automation and technology remove some of the more basic tasks, existing employees have more capacity to add value in areas where machines can’t.

Automating decision-making processes reduces workloads

“AI is helping businesses now with the skills gap through automation of decision-making and helping human interactions with machines in daily operations,” says Eric Nguyen.

He recently worked with a company’s purchasing function whose team of 20 analysts make hundreds of decisions daily to determine the company’s correct inventory levels.

“With the integration of technology and AI they were able to predict the optimal level inventory for each of their products. They automated the decision-making for which supplier to call, which product, and how much to buy. This automation reduced the workload of the team, and they were able to work on other more complex tasks like looking for new products.”

Reacting to future technology quickly is key to anticipating skills needs

However, for organisations considering digital processes as a response to issues such as skills shortages, the speed of deployment and return on investment is key.

Emmanuelle Muller-Schrapp, finance and IT transformation partner at Grant Thornton France says: “The big challenge is to identify sustainable solutions that quickly add value at the right cost.”

While businesses can deploy technology to fill and support specific roles needed today, over the long-term they need an approach that is fully adaptable to emerging technology and its impact on skills.

Mark O’Sullivan, partner at Grant Thornton UK, says businesses should embrace technological advances. “We always say to people who are considering any digital project to try to ignore the scars of the past and to understand that the rules have changed around what a technology project looks like these days and it can be done much more quickly and cost-effectively.

Michel Besner agrees. “Senior managers need to be more sensitive to changes in technology, some ignore the early signals, and when they react it’s too late.” He adds: “Companies also need to work more closely with universities and help them understand what skills need developing, so graduates enter business with the right skill sets.”

Sourcing new international talent

Many businesses are increasingly turning to international workers where much-needed skills are hard to come by locally.

AURAY Sourcing, a subsidiary of Raymond Chabot Grant Thornton, was set up to provide a turnkey solution to support Canadian businesses in their recruiting and employee mobility needs, thereby addressing their specialised labour shortage.

Pierre Lapointe, AURAY Sourcing’s Vice-President, says: “The economy is going at full speed right now, and to fuel that speed, we need to have growing production and therefore more workers.”

Raymond Chabot Grant Thornton - image

Canada is currently attractive to overseas workers. Businesses in Quebec, for example, are sourcing skills notably from French speaking countries as well from countries in Asia, Latin America and eastern Europe and see worker mobility as a valuable means of sustainable production and commercial activities.

However, recruiting in a different country is not without its challenges. Michael Monahan, assistant managing principal of human capital services, Grant Thornton US says: “If you’re working out how to recruit, retain and motivate people across the globe, the challenge of doing it when physically removed from the culture and country is even more immense.”

A strategic approach to recruiting international workers can limit delays

Using a worldwide network of recruiters, AURAY Sourcing focuses on the skills that are most needed locally and are therefore those whose visa applications have the best chance of being approved. But it is a lengthy procedure, and although there is a fast track for some skills, it can take up to eight months for a company that is unfamiliar with the process of recruiting overseas.

Growing businesses are looking for an end-to-end solution that manages recruitment and relocation, all the way through to integration. “This is a key component of recruiting international workers. Integration is essential because you want workers to stay,” says Pierre Lapointe.

Traditional talent management still matters

While new solutions can be sought to meet demand, learning and development programmes remain critical to skills strategies, particularly as employees recognise the need for life-long learning and keeping their skills relevant.

Keely Woodley, head of human capital at Grant Thornton UK, agrees that education is key. “Providing training for people entering the workforce, as well as for those already there, will help close the skills gap at the medium to high level – and these are the types of jobs that really drive an economy forward.”

People, processes and technology are the three areas that drive an organisation. If you align the decisions that are made around technology to your strategy, you’ll make better business decisions. Harnessing technology to develop your skills strategy, to educate existing employees and to find new sources of talent, will together help to address the skills deficit.

For more information about how to develop your skills strategy, please contact our experts.

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Nancy Doucet
Manager | CRHA | Management consulting

The extensive reform of the Act respecting Labour Standards adopted on June 12, 2018 requires that employers adopt a policy on preventing psychological harassment and addressing complaints.

The measure is effective as of January 1, 2019, however, 50% of employees say that, to their knowledge, their organization does not have such a policy. What about your organization?

What is a harassment policy?

According to the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST), the purpose of a corporate policy is to:

  • Communicate the employer’s commitment to prevent and stop psychological harassment;
  • Mobilize management and all employees of the organization around the objectives set.

Effective January 1, 2019, employers must adopt and make available to their employees a psychological harassment prevention and complaint processing policy that includes a section on behaviour that is expressed in the form of verbal comments, actions or gestures of a sexual nature.

Employers who fail to meet these obligations could be liable for all psychological or sexual harassment in their organization. It is therefore crucial that the right tools be implemented as quickly as possible.

How will a complaint be addressed?

The policy must set out how a potential complaint will be addressed and this must be given a prominent place in the policy. The process for making and investigating a complaint must be defined so that employees and managers know what to do when harassing behaviour is reported.

The policy must clearly set out the steps, person in charge of handling the complaint, mediation possibilities, preventive measures, etc. Employers should indicate that the process for reporting such behaviour is not designed to hamper reporting it.

Remember, while it is important to adopt a policy, it is just as important to:

  • Adequately inform all parties of the policy’s provisions;
  • Train managers regarding their role;
  • Make all employees aware of the importance of having a workplace that is free from all forms of harassment.

Our experts can support you in the process to develop a policy that meets the CNESST’s requirements, train your managers and communicate appropriate information to the employees.

When it comes to harassment, prevention is essential.

20 Dec 2018  |  Written by :

Nancy Doucet is expert in management consulting at Raymond Chabot Grant Thornton. Contact her today!

See the profile

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The last quarter has been a quiet one for the International Accounting Standards Board (IASB), with just two amendments issued on the Definition of Material and the Definition of a Business.

We therefore consider some topical issues in this final edition of our newsletter for 2018. These include regulators’ views on IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, reverse factoring, and issues related to the discontinuance of LIBOR and other inter-bank offer rates.

Further on in the newsletter, you will find IFRS-related news at Grant Thornton and a general round-up of financial reporting developments. We finish with a summary of the implementation dates of newer standards that are not yet mandatory, and a list of IASB publications that are out for comment

IFRS Newsletter is your quarterly update on all things relating to International Financial Reporting Standards (IFRS). We’ll bring you up to speed on topical issues, provide comment and points of view and give you a summary of any significant developments.

Download the newsletter.

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