Maximilien Larivière
Advisor | ing. jr, M. Ing. | Tax

You don’t have to look for the fourth major industrial revolution, it’s already here in most manufacturing and service organizations. But what about labour management in the work place?

The 4.0 shift to integrated and connected solutions is vital to ensure business productivity, efficiency and, ultimately, survival over the coming years.

New technologies can help us improve practices, such as managing absences, replacements and schedules using connected tools available in today’s market place.

Interview with Francis Villiard, Customer Experience Manager and Co-founder of Merinio, a company specializing in employee management technologies and solutions.

What types of solutions can you implement for your clients?

We offer a cloud-based employee management software that helps deal with fluctuations in staffing needs. Our system can be used to manage availability, competencies, schedules, vacation, time and attendance more quickly while ensuring compliance with the terms of collective agreements.

The system takes mobility into consideration and is tailored for today’s situations. Employees have the choice of receiving information on shifts by a residential or mobile phone, text message, email or a notification using a mobile app. Additionally, employees play an active role in the process because they interact with requests via the software and become accountable.

Raymond Chabot Grant Thornton - image

What tools are available to implement these solutions?

We ascertained that organizations had diverse labour management concerns. Customization requests for each implementation can increase the costs of the software quite quickly and become a problem.

When developing the system, the founders ensured that the tool would be highly versatile. To facilitate the integration of new employees in the organization, a single programming language was used to develop the user interface and program the algorithms and server interface.

Industry 4.0 is an increasing consideration in business decisions and management prefers direct communication between their organization’s operating software. We wanted to be able to connect our solution with other software on the market. We therefore developed an API communication tool between our user interface and servers for fast and flexible communication with other software.

How does your software differ from other products on the market?

Our schedule and replacement management platform reacts in real time and uses a patent-pending multimodal communication algorithm. While many human resource management systems focus on planning, we opted to focus on the operational aspect.

We realized that resources spent an astronomical amount of time making calls to fill shifts and find replacements. We therefore offer the possibility of communicating with an unlimited number of employees immediately to offer shifts. Employees receive an automated call or text message (based on their preference) with a work opportunity and can respond in real time.

In order to reduce the time spent performing manual tasks to a minimum, we offer our customers the option of adapting the software to their internal decision rules. Most players in our industry only offer customizing options through a series of static modules; we adapt our modules for each company, to maximize their time savings.

What are the potential gains to be achieved from implementing your staff management solutions?

  • Lower administrative costs. Our solutions can help significantly reduce labour and replacement management time (an average of 75 hours per week per 100 employees). This frees up time to undertake added-value projects and tasks.
  • Optimized labour costs. We estimate that a company can achieve savings of 3%-5% through faster communication and the ability to fill work shifts quickly.
  • Greater transparency. By centralizing information, shifts can be assigned more fairly, which helps to eliminate claims and grievances due to replacement errors.
  • Business intelligence. We can generate a wide range of reports to answer a multitude of questions.

How do your solutions integrate with your customers’ 4.0 strategies?

  • The automatization underlying industry 4.0 goes much further than automating machinery. It plays a key role in simplifying staff management for today and in the future (data, decision rules, adjustments and optimization).
  • It’s therefore necessary to centralize data relating to staff management to automate these management processes.
  • The ability to share data between the software and operational tools in the organization—ERP, Human Capital Management (HCM), Production Monitoring—leads to improved overall human resource management.
  • Similarly, connecting employees to their work schedule makes real time operational monitoring possible.

What are your main technological challenges?

On the one hand, human interaction with the software in real time is essential. Users must have a good understanding of the interface and we have to ensure that everything works instantly.

On the other hand, because it is possible to call in responses to a work offer, we have to optimize management of simultaneous calls. The replacement call must take place very quickly.

Because our software can be used by businesses in a variety of industries, we want to make it customizable to meet our customers’ specific needs.

Lastly, we want to offer the possibility of getting a long-term vision of resource assignments through an automated scheduling tool. This objective comprises several challenges since it needs to adapt to various schedule management situations. To offer the optimal, flexible solution, we will need to analyze certain machine learning and artificial intelligence concept.

Raymond Chabot Grant Thornton - image

Are environments with complex decision rules, such as a unionized environment, a challenge for you?

No, on the contrary, by automating processes, the rules of collective agreements are the basis for guiding and clarifying decision making. Regardless of the complexity of decision rules or collective agreements, we take the time to analyze them to transform them into decision rules for the software. There are no longer grounds for replacement-related grievances.

However, it goes without saying that it’s possible to do much more in an environment with no predetermined rules. For example, we can offer the possibility of calling the most efficient employee, the one closest to site or the one with the lowest costs.

Is this technological advance accessible to organizations that are not as technologically advanced?

Whatever its level of technological innovation, a company with a high number of employees can benefit from automating its management processes. With our solution, all types of businesses can gather and use data efficiently.

Automation can be gradual and as extensive as the entity chooses. It’s possible to leave control in the hands of the manager and provide support step by step as technology advances.

Since the software’s decision rules are based on processes in place, the transition to an automated solution is easier for the user and does not require extensive familiarity with technology. Our system is built to adapt to each user while providing comparable performance.

What are the next development steps for your technology? What do you see in the longer term?

First, we want to optimize API to connect with other software available on the market. Specifically, we want to create vertical integrations to connect with placement agency software and make it easier to hire and replace staff.

At the same time, we want to automate and optimize the creation of work schedules. We also want to improve business intelligence for forecasting staffing needs through customizable reports and management scorecards.

Additionally, we are currently holding discussions with various stakeholders, both in government and business to develop a labour-sharing module. This would make it possible for organizations in the same region to share employees with transferable skills to address the current labour shortage.

We want to further develop machine learning and artificial intelligence to better support human resource management decisions.

23 Oct 2018  |  Written by :

Maximilien Larivière is an advisor at Raymond Chabot Grant Thornton. He is your expert in taxation...

See the profile

Next article

Renée-Jeanne Belzile
Senior Manager | Tax

The future of maple syrup production looks sweet. During a business transfer, financing is a crucial step which can often be accomplished via a liquidation.

Quebec proudly produces more than 100 million pounds of maple syrup each year, dominating the world production totalling 160 million pounds. This market has been evolving positively and the growth perspectives for coming years are very attractive. It’s no surprise that prosperous maple syrup businesses with state-of-the-art equipment are now highly coveted by buyers from here and abroad.

Solution for successful maple syrup business transfers

At the financing step, our experts have often used a well-planned liquidation as the solution for a successful maple syrup business transfer that takes both parties’ needs into consideration.

Sellers want to get the best price possible and deduct the maximum capital gain allowed, but they also want to retain control over the collection of their inventories held by the Fédération des producteurs acéricoles du Québec.

It’s not to the sellers’ advantage for the company to transfer inventories to them before the sale because they would be receiving a large amount at one time that could be taxed by up to 43.84%! From a tax point of view, sellers want to increase the share sale price for the current year’s inventories, but also for those of previous years, which will not be paid by the Fédération des producteurs acéricoles for several years to come. The share sale price would then be higher, and the same would apply for the capital gain deduction applicable.

As for buyers, they don’t want to finance sellers by giving them an amount equivalent to the amounts due by the Fédération, when they themselves will not receive these amounts for a long time to come. They also don’t want to continue managing transfers to the seller for years as they receive them while handling variances and additional fees, not to mention the associated litigation risks.

Inventories are therefore left with the company when the seller sells shares, but they will be given to the seller as payment for the company’s share sale price after the shares are sold. The seller will then receive the instalments directly from the Fédération.

To maximize the seller’s net after-tax cash and simplify the transition, sellers are allowed to collect, tax-free, a portion of the sale price corresponding to their inventories, up to a maximum of $1,000,000, i.e. the maximum capital gains deduction permitted. The same process may apply to other assets used in the business that the seller would like to keep.

Simplified administrative changes

The employer file and tax files with the governments and the Fédération des producteurs acéricoles du Québec belong to the company. All that’s needed is to simply change the manager’s name. Follow-ups are therefore easy since the files and identification numbers remain the same.

Every business and transfer situation is unique and requires tailored planning to obtain optimal results. We can structure a sales transaction that will enable both the seller and buyer to attain their objectives. Contact our team of experts who can help you plan the transfer of your maple syrup business.

19 Oct 2018  |  Written by :

Renée-Jeanne Belzile is a tax expert at Raymond Chabot Grant Thornton. Contact her today!

See the profile

Next article

Julien Lapensée-Lafond
Director | CPA, CGA | Assurance

More often than not, a business’s value is calculated using a general, strictly mathematical rule of thumb, but it’s not that simple.

For example, some people think all you have to do is multiply income by three, four or five. If you stop there, you could be in for trouble. Chances are high the buyer pays too much or the seller does not get a fair value for the shares or assets sold. Moreover, there is a significant tax risk in the context of a business transfer between related parties.

A business’s value and risk level

Consider for example, two barber shops located on the same street. They generate the same profit and have the same yield. So why should one of them be worth more than the other?

The primary reason is the individual risk of the two businesses. In fact, it is a business’s risk level that determines the multiple used to calculate its value as a going concern. For a risk of 20%, a multiple of 5 is used to calculate earnings (1 divided by 20%).

Even if it is only to be well prepared for a business purchase or acquisition, it’s important to qualify, justify and document the business risk appropriately. This will have a significant impact on the value of your company.

Identifying the risk level

For an entrepreneur, knowing the risk level and how to reduce it can significantly increase the business’s value. This does not even involve increasing sales!

There are numerous risk factors. The main ones include:

• location;
• reputation;
• presence of successors and key employees;
• degree of dependence on certain customers and suppliers.

There are over a hundred risk factors to consider, some of which are industry specific.

Whether you’re a seller or a buyer, assessing business risk is a key component in calculating the business’s value.

If you’ve ever watched Dragon’s Den, you’ve probably noticed that the Dragons ask a lot of questions. They’re trying to assess the business risk and find an appropriate multiple based on a number of qualitative factors.

Avoiding valuation errors

Calculating a business’s risk premium is the most difficult step that requires specialized expertise. If you don’t have a Dragon’s financial skills, consider calling on a professional with business valuation expertise.

And if you hear someone use a general rule like “My business is worth three times income” or “it’s worth $X per customer”, don’t hesitate to pass on this article!

19 Oct 2018  |  Written by :

Julien Lapensée-Lafond is an assurance expert at Raymond Chabot Grant Thornton. Contact him!!

See the profile

Next article

Jean-François Fortin
Senior Manager | CPA, CA | Assurance

Are you thinking about expanding your dairy farm to increase profits? Be aware that healthy growth does not necessarily mean the size of the herd.

A dairy herd that produces 20 litres of milk per day could prove more profitable than a herd that produces 30 litres. How can this be?

The prolific cow enigma

Farm A (Prolific Cow), has a 40-kilo milk quota and a herd that produces an average of 19 litres per day, generating net income of $2,867 per kilo.

Farm B (Generous Cow), with 160 kilos and an average of 32 litres per day only generated $651 per kilo.

What’s the key to the enigma?

A key factor is balancing costs incurred and the resulting production. There are three indicators:

• Labour costs;
• Feed costs;
• Veterinary costs.

In Farm A’s case, these three amounts total $2,000 per kilo, whereas in Farm B’s case, they are over $3,600 per kilo.

In both cases, the other expense items, interest and maintenance costs, are almost equivalent.

Naturally, a large efficient farm operation can generate significant earnings, but only if the three parameters are properly controlled.

Growth vs. profitability

If you’re considering growing your business, remember that growth at any cost is not necessarily a good idea. It’s important to undertake an in-depth reflection and ask the right questions before making a major investment.

A farm producer must be an excellent manager and a skilled technician to maximize profitability. Additionally, you should set your priorities:

• Will sales go up and at what cost?
• Will this reduce certain necessary expenses?
• How will this impact my quality of life?

This analysis is an essential prerequisite. Our experienced team can support you in conducting the evaluation and help you strike the right balance.

18 Oct 2018  |  Written by :

Jean-François is an assurance expert at Raymond Chabot Grant Thornton. Contact him today!

See the profile