by The HLH Team
“Automation is Voldemort: the terrifying force nobody is willing to name.”
-Jerry Michalski
Manufacturers Coming Home:
The idea of offshoring has become a magnet for all the vitriol of those caught at the wrong end of globalization. Since the 90s, North American companies have been lured overseas, most famously to China, to take advantage of lower labour rates.
Manufacturers didn’t move offshore because they wanted to. They were driven there by competitors’ increasing competitiveness. The trend has fueled a generation of workers’ rage and, some would argue, a new era of political populism. But the tide has turned back to North America. As China prospers, labour costs rise. Land to set up factories becomes scarce. Long supply lines, increasing domestic backlash, and the need for overseas oversight becomes tedious.
In 2014, the US saw a net increase of 10,000 reshored jobs. It’s been climbing quickly since. Canada has lagged behind, largely because we had less offshoring to begin with, but our pace is quickening, too.
What companies are leading the reshoring charge with their manufacturers? (as of March, 2017)
Walmart: 4,838 North American jobs
Ford: 3,200 North American jobs
Boeing: 2,700 North American jobs
General Electric: 2,656 North American jobs
General Motors: 2,345 North American jobs
The Dark Side of Reshoring:
In the 90s, the bulk of the jobs lost to offshoring were in production and assembly; Factory jobs, and lots of them. Many reshoring companies look very different than when they left. The current automation explosion means that traditional factory jobs are rapidly disappearing. Manufacturers are returning seeking high skilled jobs in research, engineering, marketing and management.
Bottom line: companies are often reshoring because they don’t need as many workers, which is what eliminates the offshoring advantage. The jobs they’ll be offering will be fewer and higher skilled.
What Reshoring Means for Your Business:
Reshoring is a symptom of the global jobs earthquake that automation is beginning to unleash. Low skilled jobs, including not only traditional manufacturing but also retail, food industry, service sector, office admin, computer programming, and transportation, are all at risk.
Highly skilled jobs (including the people who design and build the robots fueling automation) will be in high demand and have short supply. Your competition for attracting talented people is about to get intense.
Automation has always cost jobs. Cart and buggy makers found themselves out of luck when Henry Ford came to town. But the shift has never been so rapid, and across so many industries, as what we’re witnessing now. In other words, automation has replaced offshoring as the new killer of lower skilled jobs. If you need highly skilled workers and have been assuming that they will always just “be there,” you may want to examine what incentives you could offer them.
Expect reshoring to accelerate the pace of technology innovation in the domestic arena. Companies are usually returning because advances in automation are eliminating the wage gap. If you’ve been pulling back on R&D due to the economy, you should reconsider. But that’s for another article…
by The HLH Team
“If you think hiring a professional is expensive, wait until you hire an amateur.”
-Anonymous
What Resumes Don’t Show:
You’re hiring. You’ve put the ads out and the resumes are piling up on your desk. The hundred or so applicants have similar education, experience, and they all claim to be the candidate who will “wow” you.
How do you decide? You can compare the courses they’ve taken all you want, but you know there’s an X-factor that their resume simply doesn’t show.
How will they blend with your workplace culture? What will their mood be every morning and will they want to learn something new every night? You’ll probably hire based on their accumulated skills and industry knowledge. Their resume gives you that.
But what attitude will they bring to work everyday? Will they develop habits to continue to mature into their role? Or are they a set of skills that will add nothing to morale and not develop alongside the company?
The 4 Corners of KASH
About the KASH Box
(Credit To Barb McEwen, Master Executive Coach with 20/20 Executive Coaching)
Using KASH is easy. Draw the grid on a full sheet of paper. Plan for a slightly longer interview process, and make point form notes in each corner throughout. It will take time to train our ears to listen for things other than Skills and Knowledge, but as soon as you learn to identify the cues they leave about their Attitude and Habits, you’ll become a more efficient at hiring.
The whole person arrives at work everyday, not just their skills and knowledge. KASH is a tool for evaluating candidates, and employees, beyond their resumes. There are 4 components:
- Knowledge: Everything the person knows from a lifetime of accumulated learning. It’s one of the first things we look at, but tells us absolutely nothing about how that person will perform.
- Skills: How well they perform specific tasks. As employers, we tend to hire based on who fulfills the highest number of necessary skills.
- Attitude: How will they approach their tasks? Will they inspire others or drag them down? This is the hidden second half of Skills. The most important of the 4 Corners, Attitude is also the hardest to quantify from a resume.
- Habits: What does this person do repeatedly and overtime, and will he or she build habits in order to excel at their role. The previous 3 Corners represent a person at a moment in time. Habits is how we gauge how that person will develop over time.
Here’s an example. The job you’re hiring for requires expert level use of Microsoft Excel. The resumes in front of you will show you who has deep Knowledge of Excel and Microsoft Office and who has taken the courses to develop the Skills that your company needs.
What the resume doesn’t tell you, is if they will perform their skills grumbling and gossiping, or if they will jump into it, mentoring others along the way. Skillset is the first step, but Attitude determines the application.
Excel is constantly changing. Will they change with it? Will they develop Habits to be constantly learning and adapting to new software. If you want to switch programs, will they fight tooth and nail or will they adapt with the company?
Why KASH?:
Hiring the wrong person is a massive waste of time and talent. Even if we don’t quantify the loss of morale and enthusiasm a failed hire brings, the average training costs of replacing someone are sobering:
- 16% of annual salary to replace a high turnover, low paying job
20% of annual salary for mid-range positions
- A whopping 213% of annual salary for highly educated positions. For example, to replace a CEO making upwards of 100K, expect to pay about $213,000 once all the bills are in.
In an ultra-competitive economy, picking the right person is vital. An hour spent brainstorming a KASH box can save your thousands, or tens of thousands, in wasted time and energy.
by The HLH Team
“Most people don’t understand the process. They get frustrated by it. Don’t Be. Focus”
― David Sikhosana
What processes have you gone through today? You brushed your teeth, put on your shoes, drove to work and checked your email. We go from one process to the other, often on autopilot, to get through our days. What would an everyday process look like if you wrote it out? Pick up toothbrush > Add toothpaste to brush > Apply water to toothpaste > Brush teeth in small circular motions, and so on. You’d be articulating brushing your teeth as a workflow.
Laying out a workflow gives you the chance to analyze and improve. Would it be more efficient to put water on your brush before the toothpaste? You’ll never know if you can’t visualize it. It’s a bit strange to think of finding efficiencies in toothbrushing, but what about in the office? What about in a routine filing process you repeat 20 times a day? Saving a minute could there could net real savings.
You don’t need specialized training or fancy software to get started. You need paper or a whiteboard (bigger the better) and a lack of interruptions so you can do something completely different: focus on one task.
How to Build It:
Don’t rush this. The magic of mapping happens when you get granulart with the details. That’s when micro-level wastes start to emerge. Whiteboards are ideal because you’ll be erasing a lot. You’re visualizing the life-cycle of a process. Start with a simple one and work up from there.
Here are the basic symbols we will use as an example:
Connector Line: connects 2 steps and shows the direction of the process
Terminal: This is a “start” and “stop.” There may be several in a process; they happen whenever the flow stops.
Activity: The basic “work” block, indicating a step in the process.
Decision: When a decision must be made.
Delay: When the process comes to a halt but doesn’t stop completely. Think “yield” sign.
Storage: Something is stored for a period of time. Try to indicate how long.
Transport: When something needs to be moved. Indicate the origin, destination, and travel time if possible.
Example:
One of the 8 Wastes (https://hlhcpa.com/the-deadly-wastes) can hide in any one of these types of steps, but they like to linger in the latter 3 the most.
Process Mapping as Money-Saving Tool:
Once you have the basic idea, bring in other stakeholders, whether it’s appropriate staff, suppliers, or even customers for their feedback. Walk out the process literally if that helps to visualize it.
Study the visualization and look for opportunities to find efficiencies. Are things being stored in a far-away location? How long do files sit on desks before decisions are made? How often does the process either stop or yield, and can this be avoided given the amount of energy it takes to build forward momentum again?
by The HLH Team
Income Splitting & Video Games:
Remember the arcade-style racing games from the 80s? Games like “Pole Position”, where you had to keep your car going as fast as possible without crossing the red and white shoulders and skidding onto the grass.
That’s income splitting. The car is your family’s tax burden, and the shoulders are you and your partner’s tax brackets. When one partner makes more money than the other, the tax brackets are different. Your goal is to keep your car as centered as possible.
Let’s keep this in Alberta and say that Spouse A makes $300,000 a year while Spouse B makes $50,000. In 2017, Spouse A’s personal taxes will be approximately $107,500 while Spouse B’s taxes will be approximately $8,000, bringing the family’s tax burden to $115,500. If, however, you shrink the income gap so you’re both making $175,000, your overall tax bill will be approximately $106,000. Same overall family income, but a $9,500 reduction in your family’s tax burden.
But how to keep the car in the centre of the road? The Liberal government has axed the 2014 “Family Tax Cut”, a benefit where families with wide income disparities could move up to $50,000 between them. Intrepid splitters, however, aren’t easily swayed.
No matter the government of the day, where there’s a creative will there’s always a way. Your first step is to talk to a tax planning professional who you trust. Here are the demystified basics of an option to ask about, so that you can be active in the conversation.
Discretionary Shares 101:
If you own your own company, or if you’re willing to set one up (it pays for itself quickly), than you can take advantage of Alberta legislation on discretionary shares.
Here’s how it works. You’re the business owner, and probably hold most of the common, voting shares. If your spouse owns some, too, then when you declare dividends you need to assign to them to the ratio of the Partners’ shares (ex. $60,000/$40,000 for a 60%/40% split).
This isn’t overly helpful if you want to declare dividends in order to income split your profits to your partner. If your lawyer set up your business without a discussion of discretionary shares, then it’s almost certainly structured on common shares and will need to adjust.
Discretionary shares allow you to split dividends at your “discretion.” Each shareholder gets a different class of share (A, B, C, etc), so you can give $0 to A, $80,000 to B, and $20,000 to C. Why? To keep your race car in the middle of the road.
Adult family members can buy discretionary shares at the outset for a buck each. As their incomes change, the amount you issue as dividends changes to level out the tax brackets.
Children:
The kids can be involved too… sort of. You can’t make your toddler Vice President and pay her a hundred grand a year. CRA has a “kiddie tax” for those cases, and it’s at the highest possible marginal tax rate (48% in Alberta).
However, you can set your kids up with discretionary shares, and simply wait to give them dividends until the year they turn 18. Issue them in-trust shares with an eye to them benefitting from income splitting later.
If you’re hitting your money-making stride and the kids are going to post-secondary, “dividend sprinkling” some profits to them will put low-tax money in their pocket for textbooks, tuition, etc, while it lowers your family’s overall tax burden.
Bottom line for all this is to talk to your accountant. We’ve given you the basics, but a professional needs to set it up.
by The HLH Team
“You don’t ever want a crisis to go to waste; it’s an opportunity to do important things that you would otherwise avoid.”
Rahm Emanuel (White House Chief of Staff, 2008-2010)
The Definition of Crisis:
The Piper alpha oil-drilling platform exploded in July, 1988. 166 people lost their lives. One of the survivors, Andy Mochan, lived by leaping 15 stories into the frigid North Sea. In his words, “it was either fry or jump, so I jumped.” Andy found himself in an unthinkable position, one leading to imminent disaster if he didn’t take action, but with no clear path to success.
His ordeal has been adapted into the burning platform metaphor, (Burning Platform Article) which focuses on the agonizing decisions businesses need to make when confronted with an imminent crisis. The key feature of a crisis is that, when it happens, you can’t ignore it. You must change your behaviour and take action. That’s often the source of panic. The qualities of a burning-platform crisis are:
-There is a real and immediate danger that you can’t ignore.
-There are a limited number of difficult choices.
-The choices are irreversible.
-All choices have a high chance of failure.
Knowing when a Crisis is Coming:
Your business is going to have a crisis. Hopefully it’s not today, maybe not this year, but it will. If I were talking over beer I’d ask you to read my lips: “you are not immune.” To paraphrase Norman Vincent Peale, when God gives you an opportunity he wraps it in a problem. A savvy business person can turn impending doom into imminent profit if he knows how to roll with the punches.
If you look for the right signs, you’ll usually be able to tell when a crisis is closing in:
-Stay aware of the hard realities of your industry. Some business people think that their business has the ability to resist market turmoil. They’re usually wrong.
-Crises do damage by initiating a downward spiral of knee-jerk decisions. The more contingencies you plan for ahead of time, the better chance you’ll break the spiral.
-Get out of your office and don’t just rely on official updates to know what’s happening. Start conversations in the lunchroom and make your employees comfortable telling you things
If you’re evaluating your businesses’ success by revenue or even gross margin, you need other metrics. Keep your finger on 3 pulses at all times:
- 1. Your profit margin trend. The number at the bottom is the one that counts. Create a trends chart for this period compared to a few previous periods. If the trend slopes down, find out why.
- 2. Listen to industry experts. Consume podcasts, blogs, and whitepapers on the state of your industry. Ask the right questions over the Friday afternoon pint. Don’t be blindsided.
- 3. Listen to your customers. Are they happy with your products and, more importantly, your business trajectory? Do you conduct a Net Promoter Score survey at least annually? If you don’t or if you haven’t heard of it, start this year. Find your customers’ normal level of satisfaction so you know if it changes.
A Crisis is just an Opportunity that has to happen Now:
Kung-Fu is the art of turning an opponent’s fierce momentum against him. A burning platform crisis will hit your business like a roundhouse kick. If you lock your knees and absorb the momentum, it will crush you. If you anticipate and maneuver, you can land back on your feet ready to hit back.
If you don’t see it coming, you’re probably in trouble. If you do see it coming, what you do is about perspective. You can be afraid of the kick, hide and start updating your resume, or you can see it as a golden opportunity to take the risks you might otherwise never take.
Comfort makes us complacent. Let an impending crisis make you hungry to innovate. Change more than products. Use the momentum of the crisis to drive a sustained, cultural change. Be the first one out of the trenches leading this charge.
Pressure makes us creative. Explore avenues of innovation that you were nervous of before. Do your homework and be prepared to take a risk.
Make changes that are going to matter to your customer.
Set fire to the platform before anyone else can. Control the direction of the flames and stay ahead of the crisis.
Keep your finger on the 3 pulses. Plan contingencies. Anticipate the kick and what your next move will be. Turn the crisis into an opportunity, and you’ll be the one left standing.
(original sources: https://hbr.org/2012/12/how-to-anticipate-a-burning-platform
http://innovateonpurpose.blogspot.ca/2013/09/innovations-burning-platform.html)
by The HLH Team
“I decided that my job was to listen aggressively.”
-Michael Abrashoff
Lessons from the US Navy’s Best Ship:
When he took command of the Navy’s worst ship, Captain Michael Abrashoff knew he had a monumental challenge. But by the end of his command he’d turned the USS Benfold into the best run ship in the navy. He did it with aggressive listening.
Your business relationships hinge upon listening. We communicate in 3 ways. Our words, the literal meaning, make up 7% of our message. Our tone of voice accounts for 38%, and our body language makes up 55%. Most of the message isn’t verbal.
You can listen 2 ways. Passive listening, when you’re hearing the words but thinking about something else, tunes you out to everything but the verbal 7%. It’s doesn’t engage you, and you don’t learn anything from it.
Aggressive listening is treating every exchange like the most important one you’ll ever have. It’s focusing on all the ways that person is communicating with you and learning the most you can. It has the opportunity to turn hum-drum encounters into empowering lessons that you can build on.
Top 5 Ways to be an Aggressive Listener:
We’re not born good listeners. It’s a skill that we need to work at and refine. But if we make the effort to listen aggressively, we’ll have the opportunity to make every interactions we make more meaningful. Here are some tips:
- Talk less, listen more. You already know what your opinions are; you’re not going to learn anything from repeating them. Listen closely to what is said, and you’ll be more likely to hear what isn’t said (and that’s the good stuff).
- Don’t interrupt. Instead of waiting for the other person to take a breath so you can jump in, wait out the silences. They’ll eventually keep speaking and go into more detail, and you’ll learn more than you otherwise would have.
- Block out distractions. Put your phone away, minimize your screen, and listen. Think more about what they’re saying than what you want to say, and you’ll better understand his or her position.
- Talk face-to-face. If your email is longer than a paragraph, walk to their desk or, if you’re not close to them, call or video conference them. Emails omit tone, which makes them fairly useless to communicate anything other than simple facts.
Choose your Conversations. It’s hard to listen aggressively when conversations catch you off-guard or in the middle of another task. Try to plan the conversation so you can think of key questions you need answered before-hand and make the most of your time.
