Collective governance contributes to both diversity and corporate social responsibility (CSR). How can companies implement it correctly?
Modern governance encompasses much more than financial and legal skills. It also requires representation that reflects the diversity of our society and integrating a range of perspectives to enhance the decision-making process and corporate strategy.
As a result, participatory governance and best practices are becoming key levers for companies that wish to focus on their social impact. This transition to a more inclusive and representative form of governance is in response to current social expectations and also a crucial step towards building a sustainable future.
Below are examples of how to apply the principles of social responsibility to corporate practices.
Optimized governance structure
Since companies must adapt to a rapidly-changing business environment and a labour shortage that has hit several sectors, reviewing your governance structure may become an essential step. A growing need for social and environmental responsibility means that you must review your approach.
How does the process work?
The first step involves analyzing the existing governance structures in order to recommend appropriate changes. A personalized governance approach may include:
- A diagnostic;
- Training workshops;
- Ongoing support.
The objective of this exercise is to enhance the company’s Agility, Behaviour, Cooperation and Diligence. As a result, your governance will be more representative and skilled and able to respond to current and future challenges.
Expected results
It’s in a business’s interest to strengthen its ability to make informed decisions that reflect today’s reality.
This approach will lead organizations to different conclusions. In concrete terms, this could involve:
- Appointing new members to the Board of Directors;
- More emphasis on diversity and inclusion;
- Increased awareness of environmental issues.
The process may foster greater involvement by the various stakeholders. This involvement will ensure that governance is collective and also aligned with the aspirations and values of employees, clients and the community.
Profitable diversity
It’s never too early to begin an organizational governance assessment, but many companies decide to set this process in motion due to their business reality. For example:
- A Board of Directors made up of long-standing members has created a closed circle;
- The loss of an influential member of the management team;
- A need for better representation within the organization.
In such cases, the process is essentially the same. The first step involves a comprehensive diagnostic of the organization’s current governance through workshops and consultation sessions that focus on specific diversity needs.
The objective is to ensure the Board reflects the diversity (First Nations and women, for example) of the partners and clients in question and strives for:
- Major changes to the Board of Directors through the creation of new committees;
- Increased representation;
- The implementation of more robust and inclusive governance practices.
In this way, organizations can better respond to the needs of their communities while moving towards sustainable and responsible growth. The impact of such overhauls can allow companies to tackle current challenges while remaining in line with the values and aspirations of the various parties involved.
Family businesses exploring external governance
Family businesses may also need to undertake a governance review process. Where all shareholders are family members, expanding the governance circle and adding an external perspective and complementary skills can be transformative.
Governance analysis and review involves strategic recruitment and redefining the roles and responsibilities of board members in order to better adapt to the new market realities and societal expectations.
The introduction of collective governance can lead to major changes within the organizational culture and the company’s decision-making process. Appointing new external board members will bring new skills and perspectives that will enhance the decision-making process and help the organization to transition to sustainable governance practices.
The goal of this transformation is to bolster the organization’s position on the market while simultaneously improving its brand image as a socially responsible company that can effectively tackle today’s challenges.
A more responsible future
Participatory governance and the adoption of best practices can transform businesses. Such companies can evolve towards more inclusive and agile governance in line with today’s environmental and societal challenges. They strengthen their internal culture, social responsibility and brand image.
Our team is proud to play an active role in supporting businesses as they transition towards a more responsible and sustainable future. Contact us to find out more.
08 May 2024 | Written by :
Éric Dufour is a management consulting expert at Raymond Chabot Grant Thornton.
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In order to be competitive in your industry, your company must ensure that its remuneration reflects pay equity. While this is the law, it can also be an asset.
This process can generate several benefits for your organization. While compliance with the Pay Equity Act is a legal requirement, it also gives you the opportunity to add significant value to your global compensation practices. Several parameters set out in the Act can be used to build or enhance your salary structure and adapt it to your business’s needs.
It should be mentioned that the objective of this Act, which was adopted in 1996, is to eliminate wage gaps between predominantly female and predominantly male job classes of equal value in the same organization. For example, while the tasks of a welder and administrative assistant are different, their roles may be of equal value.
When should pay equity be implemented?
Regardless of their industry, all businesses under provincial or federal jurisdiction with 10 or more employees are subject to the Act and must conduct a pay equity audit every five years. The date on which companies must comply with the Act varies and it depends on their respective anniversary date. While pay audits are conducted every five years, pay equity must be respected on an ongoing basis.
Employers cannot avoid this obligation. If an organization fails to take action, whether intentionally or not, they may face one or more of the following consequences:
- Be found guilty of an offence by the CNESST and liable to a heavy fine;
- Be subject to a compliance investigation by the CNESST;
- Receive an official complaint from an employee and be required to pay retroactive salary adjustments;
- Have their company name publicly posted on the CNESST “list of non-compliant employers” section.
How can companies achieve pay equity?
As an employer, how can you correctly assess each job category? You must take into account a range of parameters which requires assessing both internal and external factors.
You must estimate the relative value of your jobs and use a scoring system based on the following four objective factors:
- Qualifications required (education, experience, bilingualism, coordination and manual dexterity, etc.);
- Job responsibilities (autonomy, communication, supervision, accountability, etc.);
- Effort required (mental and physical effort);
- Working conditions (physical and psychological environment).
A questionnaire based on these criteria and adapted to your company’s specific needs can be created to determine the value of each role. Similar positions in the same class are grouped together and a salary scale is proposed.
Naturally, your external market must also be analyzed to ensure that your salaries and conditions are competitive. There are several public sources available, but targeted studies can also be carried out by compensation professionals.
How can pay equity benefit your company?
By assigning each role a salary equivalent to its fair value, you will ensure that your global salary structure is fair while also complying with the Pay Equity Act.
This process has many benefits:
- Complying with legal obligations, maintaining your company’s reputation and avoiding any potential headaches;
- Motivating your workers through equitable compensation, which can lead to increased productivity across your organization;
- Creating a feeling of justice and equity among employees in similar roles, thereby creating a healthy working environment;
- Attracting and retaining talent (companies that respect equity principles are often viewed as employers of choice);
- Boosting your company’s image as a socially responsible employer.
The Pay Equity Act gives you the opportunity to adjust your company’s salary scales and ensure they are equitable and reflect your industry. Don’t hesitate to contact our team of experts who can guide you throughout the process.
06 May 2024 | Written by :
Philippe Marceau is a Human resources expert at Raymond Chabot Grant Thornton.
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The Grant Thornton International IFRS team has published a summary of the new standard IFRS 18 Introducing IFRS 18 – The IASB’s new presentation and disclosure standard.
The objective of the Standard is to improve how information is communicated in an entity’s financial statements, particularly in the statement of profit or loss and in notes to the financial statements.
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Deputy Prime Minister and Minister of Finance Chrystia Freeland presented Canada’s federal budget (Budget 2024) on April 16, 2024. Titled Fairness For Every Generation, Budget 2024 is centered around three pillars aimed at supporting the middle class:
Housing
Budget 2024 announces numerous measures aimed at building more homes and making it easier for Canadians to rent or own a home. Canada’s Housing Plan outlines how the federal government intends to tackle the country’s housing crisis, including calling on other levels of government and homebuilders to roll up their sleeves to help achieve the goal of building 3.87 million homes by 2031. It also proposes more tax incentives to save for a down payment and the option to include rental payment history in their credit scores.
Affordability
As cost-of-living challenges continue to strain Canadians’ pockets, Budget 2024 proposes measures to enhance the country’s social safety net, like the launch of a national pharmacare plan, enhancements to the Canada Pension Plan, and the creation of a youth mental health fund. Budget 2024 also aims to take action on rising food prices through the introduction of a national school food program.
Economic growth
Growing Canada’s economy is a focus in Budget 2024, which proposes measures aimed at increasing investment, enhancing productivity, and encouraging innovation. It invests in Canada’s tech sector to build capacity in artificial intelligence (AI) for computing capabilities and technological infrastructure. Budget 2024 also continues to support the green economy by delivering key components of the government’s $160 billion investment in clean growth measures announced since 2015. Additionally, it introduces the Canadian Entrepreneurs’ Incentive to support Canadian entrepreneurs who sell all or part of their company.
To learn more about the budget, read the Grant Thornton website.