Tag Archives | employees

5 Ways to Reduce Costs When Hiring

Hiring is one of the many costs that are often overlooked in a company. Whether a company notices or not, hiring costs can be high. Unfortunately, there is no way to completely avoid them because you need people to run your business. However, there are some things you can do to minimize these costs without affecting the candidate quality.

5 Ways to Reduce Costs When Hiring

Here are 5 ways to reduce costs when hiring.

Screen Candidates

Start from the beginning of the hiring process and screen the candidates. The more ways you funnel out your candidates, the less unnecessary time you will spend on unqualified ones. Start by sorting the resumes between the immediate throw-aways and the potential candidates. Then, call those candidates that you want to learn more about. You can screen candidates in various methods including the following:

  • Having a very clear and detailed job posting that specifically asks for qualified workers and waves off unqualified ones
  • Preparing proper interview questions that can notify right away whether the candidate is suited for the position or not (location, certifications, personality, reason for leaving previous job)

The screening call should only take you a few minutes for each candidate. In addition, you should be able to quickly identify who you want to interview and who you do not want to see again.

Going through this process will provide you with a short list of quality applicants, thus saving your company time and money.

You can also provide an assessment test that puts the candidate in an actual job situation.

Don’t want to screen candidates? Let us to the work for you! Short|LYST completes the hiring process up until the actual hiring of the candidate. Learn more about Short|LYST here.

Utilize Job Boards

Whether you have a job board on your website or have an account with a job board like Indeed, utilize those job boards. If you do not get a lot of traffic to your website or have a huge email list, then use a board like Indeed or Monster.com. However, if your website is already optimized, then use it!

Social Media

In addition, social media is at the palm of your hand. Various recruiters are now using social media to find candidates, whether it is through Facebook’s new job posting feature or LinkedIn’s job board.  Not only can you use these platforms to post and promote company announcements, but you can also use them to communicate directly with potential candidates.

Ask Employees to Refer Qualified Candidates

Instead of wasting so much time collecting various applicants from different sources, ask some of your trusted employees if they know anyone that could be suitable for the open position. In fact in a 2015 SilkRoad study, employee referrals produced more hires than any other source studied. Referred candidates are usually of higher quality and are more likely to feel connected to company culture once hired.

Use Short|LYST

The last way to reduce costs when hiring is to use Short|LYST. What is Short|LYST? This platform is revolutionizing the hiring process. First, the candidates apply to one company (The Strategic CFO). We take care of the entire hiring process up until making the decision to hire. Then employers search Short|LYST for their perfect candidate. These candidates have been screened interviewed, vetted, and recommended for hire. Learn more about Short|LYST here.

Reduce Costs When Hiring

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What is a Staffing Agency?

See also:
Recruiting vs Staffing
What the Current Hiring Process Costs
When You Know It’s the Right Hire

What is a Staffing Agency?

A staffing agency is an entity that has employees that can be hired out for temporary or long term work. A staffing agency is also referred to as an employment agency. It provides temporary workers. Some agencies are industry focused or specialized. For example, The Strategic CFO’s staffing line focuses on accounting and financial positions.

Staffing agencies are different from placement agencies or retained search services. Placement agencies collect a fee to recruit a full-time employee. Those employees belong to the client company – not the agency.

How Do Staffing Agencies Work?

Staffing agencies conduct both the hiring and firing of employees. They also pay for the employment taxes, Medicare, Social Security, etc. The client company specifies the amount of temporary workers needed and the hourly rate. Frequently, the agency specifies the hourly rate for each worker, but it is negotiable.

Why Hire a Staffing Agency

One would hire a staffing agency if they need employees now and they want to offset employment costs (benefits, employment taxes, etc.). There is either a time constraint or a resource contract. Some of the benefits include getting a number of employees quickly and knowing that they are qualified for the position.

Oftentimes, agencies have run credit reports, criminal background checks, and drug tests on those employees so the client never has to worry.

Difference Between Hiring and Working For a Staffing Agency

Whether you are seeking to work for an agency or hiring an agency, there are several things that you need to know.

Working for a Staffing Agency

When you work for an agency, you can expect to work with companies for anywhere from a couple of months to a couple of years. You are technically an employee of the agent and working with the client. However during your time at a client’s office, you act as a regular employee of the company. In some cases, companies will hire the employee from the staffing agency. This is a great opportunity for those employees as they get exposed to different industries and company cultures. Temporary work also allows you for you choose your own schedule. Only want to work a couple days a week? Or have the summer off? Some agencies will work around their staff.

The Strategic CFO’s staffing line brings each staffer in every quarter to review their work and to further their financial leadership skills. If an bookkeeper wants to become a staff accountant, then there is opportunity to get the training needed to make that leap.

Hiring a Staffing Agency

When you hire an employment agency, you need to choose the right agency. Are you looking for positions that anyone can do or are you seeking for a more specialized trade? There are staffing agencies that supply manufacturing workers, domestic workers, and/or professional employees.

It is important the client company is communicating often with the agency to get the most out of the relationship. If a particular employee doesn’t fit, then the agency needs to know in order to replace that employee. Agencies have access to a variety of staff and make it their goal to pair the right employee with the client company.


Looking to hire a staffing agency to fill your accounting department needs? The Strategic CFO has recruited the best talent to serve your staffing needs. Interested? Click here to learn more about how we can serve you best.


Staffing Agency

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Corporate Zombies: Combat the Rise of Unengaged Employees

Recently, we have seen a new term emerging regarding the type of employees some companies have: corporate zombies. Why should you as a financial leader care about the type of employees your company has? It all lies in your income statement. One of the largest (if not the largest) expense item is your human capital. If some of your employees are corporate zombies, that cannot be good for the financial future of your company and we’ll explain below.

What are Corporate Zombies?

So what are corporate zombies? Let’s break it down by starting with the word zombie. Zombies are depicted by popular culture to be reanimated corpses with a focused hunger for flesh (namely brains). But you put these zombies in a corporate setting, you find that they are hyper-focused on reaching a title or level within the company. They are speedy and efficient. But like general zombies, corporate zombies neglect to look left or right for any other solution to a problem. They lack creativity and instead, corporate zombies have an unquenchable hunger for power and influence. These employees neglect to innovate, go out of their way to serve customers, or solve problems. And they are rising up…

corporate zombiesWhy are Corporate Zombies rising up?

Corporate zombies are rising up for three potential reasons. They are:

  1. Unengaged in their current work
  2. Laser-focused on reaching management level
  3. No interests outside of work because they spend all their time in the office

In addition, we are seeing that corporate zombies in recruiting are hiring the same type of person. This person is on the fast track to management, are unengaged with doing the job that they currently have, and are spending all their time at work. While it may seem good to have those that want to be promoted and will work for that promotion, you must address whether they are putting in the work for the job they were hired to do. The army of corporate zombies are rising up as those in charge of hiring are adding more and more of the same type of person into their company.

Is your company overwhelmed by corporate zombies? If so, it’s time to start revamping how your company hires. Click here to download our free 5 Guiding Principles for Recruiting a Star-Quality Team whitepaper.

Why are Corporate Zombies destroying companies?

The 2AM emails, rolling into the office late, staying late, accommodating everyone, and living for the gold stars. When you add all these factors up, you will see an unproductive, uncreative, and exhausted employee that are wasting your time and money. Not good. These employees are destroying your company before your eyes, and they need to be stopped.

Unengaged Employees

According to the most recent Gallup poll on employee engagement, 67% of employees in companies located in the United States are unengaged. Most of the time, you will not be able to walk into a company and see this. But after spending a little with employees in different departments, there will be a couple things that stick out to you. People are watching the clock, trying to prove how much work they are doing (and completely disregard the quality of the work completed), and are sucking up to their superiors. While they may be engaged with their position, they are not engaged with the work needing to be done.

In addition, these unengaged employees are looking to step up into a more superior management position. But another interesting thing to note is that not everyone should be a manager. Gallup also reports that “only 10% of human beings are naturally wired to be great managers — and some others, while not naturally gifted, are teachable. But companies choose candidates with the right talent for the job only 18% of the time.” By putting employees that may “work hard” but do not produce quality work into management roles, leaders will continue this cycle of building a zombie-like company.

Reduced Productivity

If you told an eight-year-old to clear the dinner table and put things in the dishwasher, you may find that although the task will get done but it may be done not correctly. Employees in your company do each task and move onto the next so quickly that there is no check of the work done. Down the line, those or other employees will have to redo those tasks – wasting the company’s money. Their hyper-focused attention on reaching the end goal skips over the full scope of a project.

Although millennials are most often blamed for this, all employees that leave late, stay up late, and are on the clock essentially 24/7 are destroying their own productivity. 24/7 work creates exhaustion, tension between the employer and employee, decreased productivity, and reduced loyalty. An employee starts out exhausted. They think that to get to the next level, they need to be on the clock always. Then if they don’t see progress on getting that promotion, they begin to resent the company. That resentment quickly morphs into decreased productivity. If more work doesn’t move the needle, then they start producing less work. Eventually, they leave the firm. Everyone knows this: employee turnover is a killer for companies.

Response Not Initiative

Have you noticed that your company is more responsive than proactive? After a customer, vendor, or employee brings up a complaint, your company then begins to find a solution. But there is no initiative to find a solution beforehand. It can be frustrating when you hear the same complaints repeatedly. You start to question whether there is something that can be done to prevent these situations from arising. Sound like your company? Corporate zombies may have overrun your company.

The best companies in the world attempt to predict potential issues in advance and work to find a solution to those issues before they become a problem. They think about how they could improve the current product or service. They don’t just move onto the next project because they finished the previous. This lack of initiative in companies is destroying any chances of gaining real value.

How to Combat Corporate Zombies

A general does not go into battle without a game plan, so why would you? To take down the army of corporate zombies that have been building up for years, you need a firm strategy to combat them. Some of the strategy needs to include changing the culture of your company and taking control over the hiring process. You cannot allow that army of zombies to continue to build.

Build a team that defies the norm. Click here to download our free 5 Guiding Principles for Recruiting a Star-Quality Team whitepaper and start combatting those corporate zombies.

corporate zombiesThink Critically

The best way to combat those cash-sucking employees is to encourage critical thinking. Try not to just settle for the easiest and quickest solution. Instead, create teams to provide the best solution for your company and for your customers. If you do not encourage and demand that your employees think beyond what they have been taught to do, the cycle of producing the same type of person will continue. Hire each person for a very specific purpose. As one of your largest expense items, it is your role as a financial leader to cultivate the best employees.

Challenge your management to do better instead of letting them do their jobs like they have been for years. Corporate zombies do not like to be attacked. Defy the norm and think critically about how you can go against the grain.

corporate zombiesTransform Your Culture – Reengagement

If you are a company full of the same type of employees, step up and reengage the management with the reality of what is going on. The culture of the company needs to shift before it inevitably falls. Create a culture of accountability by implementing teams, improving leadership philosophies, and building on the strengths of individual employees. Harvard Business School Professor of Leadership, Leslie Perlow, describes transformation of company culture this way: “If you try to do things differently, you will find it incredibly valuable. It’s rallying together to recognize that if we continue to work in this way, it’s undermining our productivity, our sustainability, our creativity.” (Entrepreneur)

Address quality in your company. Create quality controls in your company to push your employees to do better than they did yesterday. Your company, customers, and shareholders will be thankful that you did that (and your competitors will be cursing you).

Take Control of Recruiting

As the financial leader of your company (CFO, CEO, controller, entrepreneur, etc.), take control of your recruiting. If you are looking to be successful and grow substantially, you must have the right employees. They must challenge you like you challenge them. Although it may feel nice to have a yes-man, a yes-man is only looking to get your job or to get on your level. A star-quality team requires different people to contribute to the overall success. Start assessing your current team and transform your hiring process by learning what it takes to have a star-quality team. Download our free 5 Guiding Principles for Recruiting a Star-Quality Team to stop the rise up of corporate zombies in your company.

corporate zombies

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How Businesses Can Prepare for Natural Disasters

How businesses can prepare for natural disaster

How businesses can prepare for natural disasters in the future and how to best react to them is something financial leaders and business leaders often neglect to address until after the fact. Hurricane Harvey made landfall almost two weeks ago on the Gulf Coast of Texas and Louisiana, impacting some 50 counties. It dumped an estimated 16.5 trillion gallons of water which is approximately 10 trillion more gallons than Hurricane Katrina. Entire cities have been wiped out. While the rain may have stopped, mandatory evacuations are still taking place as rivers are cresting, dams are not holding the water, and reservoirs are being released.

Because of this severe natural disaster, business has been severely disrupted. In addition, many businesses will continue to be under water for an uncertain amount of time. Some have projected that it will take up to a decade to completely rebuild from the destruction Hurricane Harvey caused. How could business owners and financial leaders have been better prepared for this natural disaster? How can they better prepare for future natural disasters? Whether it’s another hurricane, wild fire, tornado, earthquake, etc., it is important to know how your location, government assistance and external factors impacts your business. To learn what is going to impact you the most, click here to download the External Analysis whitepaper.

What We Learned From Hurricane Harvey

Flooding, loss of power, displacement, wind damage, and death have plagued the coast of Texas and Louisiana these past two weeks, and that doesn’t include the emotional toll the storm has had on many. Although we cannot change Mother Nature’s course, we can set up our businesses for success by preparing for those natural disasters that you are more prone to getting. As we discuss this topic, it is important to keep in mind that this list is not fully inclusive of everything we learned from Hurricane Harvey. We are still learning. As entrepreneurs, business owners, CFOs, and financial leaders, we should be taking note of what is happening, what works, what preparation paid off, and more.

Expect and Prepare for the Worst Case Scenario

As a business in Houston, we couldn’t help but see that a lot of businesses did not prepare for the worst case scenario. With all the computer models looking like spaghetti, many did not take the worst case scenario seriously until it became our reality. Regardless of how you approach business decisions, we cannot emphasize enough to prepare for the worst case scenario. Fifty-one inches of rain in a matter of days will cause severe damage anywhere. Infrastructure damage, flooding, and interruptions of supply chains have all been a part of our business world over the past two weeks. Even if your office is on the 32nd floor, you are not exempt from being impacted; loss of power, flooding in the parking garages, and access to the building will be interrupted.

Some of the largest oil and gas companies this past week have not been able to enter their office buildings because of flooding and convoys taking thousands to shelter. Grocery stores have had issues restocking their inventory. Gas stations across Texas have seen shortages, not because of a lack of gas, but because it cannot get there. Restaurants must go to their suppliers to collect food because their vendors will not come to them. One of the busiest airports in America has cancelled all flights. The fourth largest city in the United States has essentially stopped to focus on rebuilding homes, businesses, and lives.

How Businesses Can Prepare for Natural Disasters

All Natural Disasters Have a Worst Case Scenario

It does not matter if this was technically the worst case scenario or not; many of you and your employees in the impacted areas have been flooded, displaced, and are starting to make your slow recovery back to normal. Although our thoughts at The Strategic CFO are focused on those impacted by Hurricane Harvey, other natural disasters have occurred during the same period. Unfortunately, we cannot predict when they are going to impact us.

The first step in how businesses can prepare for natural disasters is to complete an external analysis on their business. Why? Because you need to assess what is going to impact you before you make preparations. You would not prepare for a hurricane if you were in Idaho.

If you’re ready to prepare your company for natural disasters, click here to download your free External Analysis whitepaper to start the preparation process.

How Businesses Can Prepare for Natural Disasters

Like we said before, we cannot ever fully prepare for a natural disaster because these events have a mind of their own. First, create an external analysis of your company to assess what natural events you will most likely encounter. Then create a natural disaster plan that includes a temporary location, communication plan and a way to protect any unrecoverable assets. Lastly, create a recovery plan.

Remember, keep it simple stupid. Make the plan simple so that each member of your team can remember it.

How Businesses Can Prepare for Natural DisastersIdentify Responsibilities

Just like the CFO manages the finances and the COO manages operations, each person in your company has responsibilities of their own. Identify those responsibilities in the event of a crisis. Some of the responsibilities required in the event of a natural disaster include and are not limited to:

Write It Down

The most important part of having a plan is writing it down. Even if the plan needs to be changed later, this foundation will give you a good place to start. Include evacuation routes out of the office, hiding places (in case of tornados), emergency numbers, contractor vendors for recovery, and everyone’s updated contact information.

Secure Your Assets

There are two types of assets in a disaster – recoverable and non-recoverable. For those non-recoverable assets like systems, servers, software, or documentation, consider uploading it all onto a secure cloud. By doing this, you and your team will be able to access everything needed remotely. For the recoverable assets like furniture or your building, discuss the structural integrity of your building or furniture placement for quick protection/evacuation.

Securing your assets also includes having a temporary location if your current location is out of commission after a disaster.

Communication Plan With Employees

Communicate, communicate, communicate! Your employees are most likely your largest expense so make sure to protect them. Often when a disaster strikes, companies have their employees check in with the company to update them on their situation. Have someone responsible to accounting for every person.

Communication Plan With Clients

Update your clients on what is happening with your business. When are you resuming business again? When is their product/service is going to be delivered? How does this disaster impact them? Answer all their questions as best you can. Most businesses tend to struggle getting back to a normal schedule. Simply update your clients on what is going on and why.

Create Recovery Plan

When recovering from a natural disaster, look at your national or state emergency response organization. In the case of the United States, continue to look at FEMA’s site for updates on issues regarding water usage, access points, road closures, flights, permits, helps, donations, etc.

In summary, prepare for the worst case scenario and hope for the best. Start the recovery process slow and communicate the reasons for this ramp up. Download the External Analysis to prepare your business for any natural disaster.

How Businesses Can Prepare for Natural Disasters

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How Businesses Can Prepare for Natural Disasters

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Laying Off Employees | Who stays in the lifeboat?

laying off employeesLet’s go back to 1912… The RMS Titanic set out on her first (and only) voyage from Great Britain to New York City on April 10, 1912. The plans were drawn. The lines were cast.  Some of the wealthiest people in the world were aboard. The well-oiled machine was pumping the turbines below, pressing forth to America. Everyone wanted to be apart of this enormous ship. Nothing could jeopardize something as perfect and indomitable as the Titanic.

Like any successful business, the Titanic relied on its business plans and well-run operations. But what happens when your company hits an unseen iceberg, tearing your business apart?

The “Situation”

Here’s the situation you’re faced with… The iceberg takes your ship out, forcing you as a leader to make radical decisions.

There’s only so much room in the lifeboats.  Your conscience says to put the women and children in the boats, but who will be strong enough to row?  There’s no easy solution.  In the end, someone is going to be left to brave the icy waters.

Let’s put this scenario in business terms.  You’ve hit an economic iceberg and you’re now forced to make the difficult decision of who you want in the lifeboat with you.  This snap judgement will impact either a few, or possibly thousands of livelihoods, depending upon the severity of the crisis and the size of your company.

Making The Decision

Ylaying off employeesour human capital, or employees, are one of the biggest expense items on your financial statements.  Hence companies often struggle with whether they should employ a large pool of people or downsize their company to the bare minimum.

Ivey Business Journal concluded that “downsizing [a company’s employees] has been a pervasive managerial practice for the past three decades.” As a result of downsizing, “layoffs cause firms to lose institutional knowledge about how to get things done, disrupt work relationships and patterns, and increase burdens on those who remain” (Harvard Business Journal). Workplace diversity is one of the many things that are impacted from laying off employees.

Business owners have a fiduciary responsibility to take care of the people in their company. There is nothing worse than letting people go. Is it Becky or John? Lisa or Lauren? Brent or Jackson? Especially for entrepreneurial companies, they are like part of your family.

It’s important to realize that you have to live to fight another day in the harsh waters. Even though it’s tough, the decision needs to be made to prevent your entire team from going under.

laying off employeesTide Rises & Falls

The tide in the oil and gas industry has fallen and is dragging along the ocean floor for an uncertain amount of time. Other industries are doing really well. The economy is constantly rising and falling which often results in layoffs during the low times.

Cisco Systems just recently announced that they had made the decision to lay-off 5,500 employees in their global enterprise. But when you realize that those 5,500 are only 7% of Cisco’s total workforce, it doesn’t seem like a lot – unless you were one of the employees let go.  Microsoft, Lloyds Bank, Intel, Avon and countless other companies have joined the ranks with Cisco in layoffs within the past 9 months.

Layoffs are something that you can expect, just like the tide rising and falling. Make the decision, knowing that everything will balance out.

Weather the Downturns

Start planning for your recovery in the downturns so that you can flourish after the storm passes by. Persevering through those hard decisions like laying off employees will pay off in the long-term.

Pull Yourself Back Into the Tide

Start by evaluating your employees. Use your key performance metrics that you use to measure employee success to determine your employees rankings. It’s not wise to just lay off the top 5% salaries because you’re concerned about cash. Pulling yourself back into the tide requires strength and grit and sheer determination. Make your evaluations based upon performance and skills, rather than compensation.

Who gets in the lifeboat?

Your company has taken a massive hit and the ship is going down.  Who do you want in the lifeboat to help you rebuild? We created three specific metrics that can make the analysis process of who stays and who goes a bit easier.

1.  Someone Who Increases Revenue

Find those employees that are holding themselves accountable as income producers. These employees will be thinking of new, creative ways to improve the sales process, increase revenue, drive new sales. Any position (accountant, supply chain manager, sales executive) needs to be mindful of what is coming into the funnel. If you can, find those entrepreneurial employees. They’ll be equipped with spark and energy to find a way in a dead end to help turn things around.

2.  Someone Who Cuts Costs

Stereotypically, accountants cut costs and only cut costs. But take a look at the bigger picture! Is there someone creating green initiatives that are increasing government funding? Are marketing managers converting from door hangers and mail-outs to digital marketing? Find someone who cuts costs anywhere. Those are the people (like those that increase revenue) that will find a way to make things happen.

3.  Someone Who Adds Value

Finally, you want someone on your lifeboat that can add value. While many can come in and increase revenue or cut costs, it takes a talented person to be able to add value to the company. Think of the bottom line.

Especially relevant in entrepreneurial companies, it is vital to add value. Bankers, investors, and employees will look to you as the owner or financial leader to add value to the company in a life-and-death situation.  You want someone in the lifeboat with you who makes that easier.

(Are you looking for someone that increases revenue, cuts costs, and adds value? Check out our free guide here to learn how to recruit a star-quality team.)

How to Avoid the Iceberg

Instead of consistently laying off employees during economically stressful times, there are 5 things that you need to key in on.

1.  Steer Your Ship

As a leader, financial or otherwise, it is imperative that you look at where you’re going. If you are staring down at your feet, then odds are you will crash. Look up and lead your company forward. Take note of anything changing immediately.

2.  Act Early

Acting as soon as you start see anything changing will prevent or minimize the chances of having a lifeboat situation.

Start by unlocking cash in your business. This is the easiest way to get some breathing room so you don’t need to start handing out pink slips.

3.  Cut Deep & Wide

Cut costs quickly and everywhere. There are several ways to dig deep and wide to prevent a lifeboat situation:

  1. Ask your employees to take a vacation.
  2. Cut back pay for a period of time with the understanding that previous pay will return once the crisis has passed.
  3. Reduce benefits.
  4. Offer part-time work instead of full-time work.
  5. Stop hiring.
  6. Communicate.

The last point is key, you must communicate.   Most employees will be willing to work with you if your expectations are reasonable and clearly communicated.  After all, they have a vested interest in the company remaining afloat as well.

4.  Have Enough Life Boats

Trees don’t grow to the sky and downturns don’t last forever.  Once you get back on dry land, make a plan for how to avoid the next iceberg, or at least minimize its impact.

What do wars and hurricanes have in common?  Once they’re over, smart people start planning for the next one.

5.  Start With A Star-Quality Team

Hiring is an important task. But so often, people take the approach of hiring fast and firing fast.  It’s no surprise that the #2 reason why businesses fail is because of employee turnover. Rather than trying to decide who to save, focus on hiring the right people in the first place so you don’t have to kick anyone out of the boat.

Interested in learning how to build a team you can’t live without?  Check out our free whitepaper 5 Guiding Principles for Recruiting a Star-Quality Team by clicking here.

Lead Magnet - 5 Guiding Principles for Recruiting a Star-Quality Team

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Brexit: Why should you care?

Britain’s exit from the EU, commonly nicknamed Brexit, is one of the most discussed issues over the past week; particularly when it comes to the financial implications of Brexit and how it impacts business.

financial implications of brexitFor the first time in its existence, the European Union (EU) has lost a country from its (previously) 28-country politico-economic union.  News reports have been answering the most Googled questions: What does Brexit mean? What is the EU? Should Great Britain leave the EU?

Truth is, there are dozens of financial implications that businesses are going to have to contend with, regardless of whether they are based in the US or other countries. With Britain as the 5th largest economy in the world, it is bound to have a direct impact on the United States. The US currently has the largest economy in the world. Because it can be slightly overwhelming to understand what Brexit means for business (with the term “Brexit” returning over 213 million Google search results and counting), we’ve narrowed it down to 4 macro issues.

  1. Labor
  2. Stock
  3. Trade
  4. Regulation & Innovation

We’ve chosen to examine these issues because, regardless of whether you’re a domestic firm or a multi-national corporation, they could have either a direct or indirect impact on your company.

Labor

It’s a no-brainer that you need people (labor) to run a business. With labor, comes skill. In a recent article, The Guardian analyzed what the financial implications of Brexit are and, more specifically, how the talent pool is anticipated to shrink in the coming months or even years. The United Kingdom (UK) is experiencing a skill gap in many professional positions, such as IT. GB has failed to produce skilled workers or laborers internally. Many of the roles that require these types of skill are held by immigrants from other countries in the EU. The Guardian quoted Bhuwan Kaushik, CEO of Spectromax (an IT-based company), saying:

“The impact of the Brexit will be sizeable and long term. There’s a huge IT skills gap in the UK. It’s going to take a number of years to close it. Leaving the EU at a time when the UK is in need of skills will be a huge blow to UK businesses, let alone the commercial opportunities that may be lost and could consequently stunt UK startup growth.”

So why does this matter?

Because labor matters regardless of what industry you’re in and what type of labor you require (skilled or unskilled labor). Even if you’re an American company who does not do business with other countries, it’s time to start digging a little deeper. Research the origins of your suppliers and their suppliers. Find out where your customers and their customers are located. You will likely find that somewhere in your supply chain there is someone who will be affected by Brexit and the effects will make their way to you.

Like I always say, pick your head up and take a good look at the world around you.  Just like the bullwhip analogy in a supply chain, one small ripple in the whip can cause huge results.

financial implications of brexit

Woodford Investment Management’s Report on Brexit

Immigration

With Europe experiencing the worst refugee crisis since World War II, this splintering of the EU is going to shock their already frail economy. In addition, they will continue to grow unemployment rates (The Independent). The Treaty of Lisbon (originally created in 2007) created stronger immigration policies to regulate those immigrating from “third countries” or in other words, countries outside GB. This treaty also set the procedures for countries who decide to leave the EU.

Now that GB has voted to leave the EU, they will start to transition into a third country position. This can result in immigration policies being enacted by the British Parliament. Travel between GB and EU may not be as easy as once before.

Stock

With any political action that causes major uncertainty and doubt in the market, it’s reasonable to expect that investors are going to react. Most investors are willing to take calculated risks, but when the final vote for Brexit tallies at 51.9% Leave vs. 48.1% Stay, the market becomes a scary place.

The day after voting day on Brexit, the pound fell to the lowest value in 3 decades. Oil dropped on Friday as well. Almost a week later, the stock market is only slightly bouncing back.

With the financial implications of Brexit panning out, London’s title as a global financial hub is being threatened as many investment banks are considering moving their headquarters to Frankfurt or Paris. This will not only impact GB’s stock market, but increase unemployment. The Financial Times has already reported that some of the major US banks (JPMorgan Chase, Goldman Sachs, and Morgan Stanley) are moving their operations to other financial hubs within the EU.

We expect Foreign Direct Investment (FDI) to decrease as the GB renegotiates its relationship with the EU. Assuming that Britain comes out with favorable terms, we expect FDI to rebound and recover the loss during this time period.

(During these uncertain times, it’s critical that the CEO has a wingman. Download our How to be a Wingman Guide to learn how to be a trusted advisor your company needs.)

Trade

Out of the many financial implications of Brexit, trade is most likely going to be the most important macro issue addressed.

Let’s talk a little about tariffs on imports and exports. If you have a facility in the EU and need something from GB, then you’ll now have to accommodate tariffs within your selling price. EU tariffs on exports were cut about 50% since the 1990s. Great Britain is in a good position at this time with exports.

Manufacturing

Going back to our conversation about labor, take a look at the manufacturing connections between GB and the EU. This division may result in higher manufacturing costs not only to cover new export/import tariffs, but costlier labor in GB as well.

Caterpillar, a heavy machinery company, owns a manufacturing facility in GB that employees over 9,000 employees. GB was a strategic location for them to optimize GB’s free trade relationship to the rest of the EU and their close proximity to customers in Europe, Africa, and Asia. What once was a competitive advantage is now in question. The Independent illustrates that this decision to approve Brexit has a ripple effect that will impact companies across the world.

Capital Economics contracted Woodford Investment Management to research the possible impacts that this separation of Britain from the EU would cause. They found that 63% of Great Britain’s exports are tied with EU members. While this most likely will not turn into anything more than an increase of tariffs, GB has 2 years under the Treaty of Lisbon to negotiate their withdrawal agreement. This is similar to a divorce followed by custody agreements.

Regulation & Innovation

There are no strong theories of how regulations might change. But it is important to be aware of changing regulations, especially when it comes to manufacturing facilities, imports, and exports. Expect security to strengthen in GB. As a result, it may result in new taxes or security measures to compensate.

Great Britain, as the 5th largest economy in the world, is not in a position where all of its innovation and brain power has disappeared with their split from the EU. GB may come to a stage where they will partner with the US and other countries to create a pool of innovation and ideas.

What impact does Brexit have on you? 

As everything unfolds within the next two years, look at your projections. Understand that if you have any international connections, you may be facing financial implications.  Be sure to adjust them as needed while keeping an eye on the economy.  Now more than ever, solid future planning can be the difference between weathering the storm or getting swept away.

Just like during any period of uncertainty, it’s important to recognize the opportunities presented.  Take stock of your operations. See if there are things you can do to strengthen your business while everyone else is chasing their tails.  The uncertainty caused by Brexit is similar to that we discussed in the Trump Effect Part 1 and Part 2 and many of the same strategies can be employed to deal with or take advantage of it.

Conclusion: Financial Implications of Brexit

By addressing these 4 macro issues, you’ll be better prepared to reduce the impact of the unpredictability of big events. Some of these big events include presidential elections and the 5th largest economy leaving the only fully economically-integrated union in the world.

In any event, try to narrow possible areas of influence down to 4-5; then start drawing out all the consequences.  This will not only leave you feeling more prepared for the battle. But it will also reduce the stress the people in your company may be feeling.

After being in the financial sector for over 25 years, I’ve learned that stuff happens in the world and we always find a way to move on. Times are tricky and the future is murky, but fortunately, it’s not the end of the world. As the financial leader, it should be your priority to guide your company during this process of analyzing how economic decisions like Brexit will impact your business.  Acting in this way, you become your company’s wingman.

It’s vital for you as the financial leader to be the trusted advisor your company needs. If you’re uncertain about where to start, I’d like to offer you a free white paper on How to be a Wingman.

HOW TO BE A WINGMAN

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financial implications of brexit

With all the drama caused by Brexit, we wanted to give you something to laugh about! Here are a few of our favorite jokes and memes that have come out of #Brexit.

financial implications of brexit

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Hiring Expectations for Recent Graduates

employer's expectation

It’s the first week of May which means that caps will soon be flying in the air and college graduates will be entering the workforce.  What these new workers may not know is that employers often have an unspoken expectation that graduates arrive job-ready on day one…

Sounds pretty reasonable, right?

But with advances in technology, many “entry-level” positions of the past have been automated.  The result – fewer opportunities for new graduates to get in on the ground floor of an operation and learn the ropes. Instead, today’s graduates are expected to hit the ground solving problems rather than spending time getting their feet wet.

Oftentimes, graduates make academic decisions in order to increase their chances of securing the perfect job. With $1.3 trillion (and growing) in student debt, graduates are faced with the decision of whether or not to incur more debt to comply with increased expectations of employers.

What should be the employer’s expectations of those newly graduated job candidates?

Employer’s Expectations & Employees Expectations

Accenture, a consulting firm, provided research and insights on college graduate expectations of employment in 2015. The results show that employers’ expectations and young people’s assumptions are not line.

College Graduates & Young Adult’s Expectations

An average 69% of college graduates believe that they need more post-graduation education or training to land their dream job. This could include, but is not limited to, earning an MBA, getting further certifications, etc. In addition, 77% of college graduates expect their future employers to provide additional training.

(Are you hiring new college graduates? Download our exclusive 5 guiding principles for building a star-quality team here.)

If you or someone you know is a recent college graduate, it’s imperative that you prepare based upon the employer’s expectations. While roughly 57% of employers provide on-the-job training, graduates should prepare for transitioning into the workforce as well as acclimating to the high standards expected.

(Know someone graduating this May? Pass this tip sheet along to them!)

Employer’s Expectations

Almost half (43%) of employers do not provide on-the-job training. Instead, these employers expect for these graduates to know everything. I suppose it makes sense to expect a 22-year-old who has invested $100,000 (give or take) into their college education to have the knowledge, capabilities, and resources to succeed in a position without any training, right?

My involvement with the Wolff Center for Entrepreneurship as a lecturer has taught me that graduates need training. Some of the students I work with have had numerous internships at prestigious organizations, but they still require on-the-job training (it could even look like a mentorship). But no organization is the same. Each potential employee that you hire has to learn the systems, the culture, and more importantly, how to be successful within your organization.

There are two things that employers can look at: skills and talents.

Skill [skil]: the ability to do something well; expertise

Talent [tal-uh nt]: natural aptitude or skill

I can teach skills, but I can’t teach talent.

Here are a few expectations I have of all employees (including new grads):

There are appropriate expectations for any job, but it’s important to analyze the expectations that you have and the consequences they may create. An employer’s expectations should focus on how to discover the natural talents that a job candidate has than to teach skills and further develop their talents.

Employee Turnover

Employee turnover accounts for the cost of acquiring, maintaining, and firing/resigning an employee. There are also costs in every stage in sustaining an employee within your organization. This includes employees that quit, are let go or retire.

Considering employee’s compensation,  your investment in your human capital, training, hiring, benefits, and so much more, it’s no wonder that the #2 reason why businesses fail is because of employee turnover!

While there is no perfect equation to calculate an organization’s employee turnover,  it can roughly be calculated as the number of employees who have left divided by the total number of employees in that segment (# left in time period/# total employees in segment.) For example, if Company A lost one of its fifteen employees in one year, then its annual turnover would be 6.67% or 1/15.

No matter how you calculate employee turnover, it’s important to keep your expectations of your employees (including your new grad hires) reasonable. If you’re not careful about how to care for your team, then your employee turnover ratio will go through the roof.

Hiring a Star Quality Team

There are many factors that go into running a successful company. Hiring a star quality team is essential to grow your company. For most organizations, people are at the root of the company’s success. Whether you own a mom & pop restaurant, manage a local hardware store, or own an oil & gas equipment manufacturing company, your team is vital to your success.

employer's expectationEven though the price of oil is slowly climbing up after it’s long economic downturn, fewer professional jobs are available during this time; however, the demand for talented candidates remains high. This becomes a cyclical issue that you as the financial leader, CEO or decision maker will have to continually face.

Unfortunately, universities fail to efficiently train students to transition their school-based skills and talents to the workforce. Until universities transition students into employees, hire based on the potential for the employee to grow.

(Are you trying to build a star-quality team? Download our free, exclusive 5 guiding principles for building a star-quality team here.)

employer's expectations

Congrats to any graduates of the Class of 2016! May your job hunting be successful!

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Accenture 2015 College Graduate Employment Research

 

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