Temporary Foreign Worker Program Can Be Costlier for Small, Independent Business

The Canadian temporary foreign workers’ program was recently in the news again.

As you may recall, the Conservative government moved to make changes earlier this year in hopes of reducing the avalanche of applications and temporary workers in Canada. But as Carol Goar pointed out in an article in the Toronto Star, the numbers accepted into Canada between January to June 2013 actually increased by 5%, when compared to the same period in 2012.

While some of these arrivals may include those applications submitted prior to the change but fulfilled this calendar year or represent an outlier in a transitional period, Dan Kelly, President and CEO of the Canadian Federation of Independent Business continues to lobby against tighter regulations, as they may negatively impact his membership base.

Mr. Kelly offers sober thought for those SMBs operating within the western provinces’ robust economy. Faced with low unemployment and open positions unfilled for a myriad of reasons, wages have been driven higher by the oil and gas industry, and the businesses servicing them. In being forced to pay at times exorbitant wages to attract Canadians to low and high skill jobs in our western provinces, the labour component of a company’s balance sheet challenges the bottom line of any business, let alone small and independent business.

Temporary foreign workers, and the previous allowance for a 15% discount on wages, helped fill these available jobs, while propping up profits.

In my role as a business adviser, I help small and medium independent businesses primarily in Ontario improve their top and bottom line. I have observed most owners spending their day putting out fires, with little to no time available nor financial experience to plan and improve business operations, sales, direction, and hence, profits.

This short term focus in turn impacts their hiring decisions, wage scale and ability to train or retain staff, and bears a direct cost to the business most owners don’t capture nor measure when making decisions.

I would counsel business owners to spend a portion of their week working towards more medium and long-term planning and implementation. Those may seem like scary terms in small business speak, for big business or people who have time, or so I have been told, but time spent putting out fires might be mitigated if business owners spend even two hours up front considering cost-reduction, revenue-generating exercises, such as the following:

Operational efficiencies:

  • thin-client or zero-client computers vs purchased or leased computers and services contracts.
  • revised purchasing terms with a consolidated vendor base, improving cash flow.
  • review and amend inventory mix to improve working capital. Hidden inventory costs deplete resources.
  • establish formal process to sell old or excess inventory, freeing up space and cash.
  • audit and analyze cash flow, sales, inventory, returns.

Sales:

  • is your pricing model optimized? Can you enhance and communicate product or service differentiation to allow for a price increase?
  • can you improve go-to-market strategy? Are you reaching the right customers? The right industry? What is the cost of servicing your current customer base? What is your cost of customer acquisition, and is it optimized?
  • Introduce a formal promotional calendar mechanism. Track success of each promotion run, capturing incremental price/product (service) revenues, seasonality factors, and failures.
  • referral programs for employees, end-users or direct customers
  • strategic alliances with other key business partners.

Human Capital:

  • develop a mentoring program, linking new hires and junior staff with senior staff, and offer rewards for individuals or teams that suggest and implement measurable cost-savings or sales generation. Create competition for “best” idea and reward with annual prize.
  • establish and communicate performance objectives for each staff member and offer bonus program for goals reached and surpassed.
  • weekly Monday hour long meeting with all staff (or representative from each department), with sharing of successes, failures, issues. Collaborate on projects and on-going issues. Establish priorities for week, month etc.
  • semi-annual review with all staff of overall business and financial performance creates stakeholder connection for all employees, improving loyalty and retention.

These are just a few of the countless steps small business can take to improve their bottom line, many more of which will be discussed in my upcoming ebook, to be released in 2014. Notice I have not mentioned any marketing efforts, which might skew the discussion as an ask for spending, which this is not.

I’m sure some of you are sceptical or may complain that there simply aren’t enough hours in the day to spend on anything other than capturing, filling and shipping orders in a timely manner for product-oriented business or scheduling, delivering and completing contracted services.

My advice rests on the following premise and applies to any small business owner in any country: by enacting these profit-enhancing steps, you are changing your business culture and may succeed in raising the discussion with your (new) customer, strategic partner, (prospective) employee, vendor or investor above that of low(est) cost or price provider. Anyone is capable of coming along and pulling that floor out from beneath you, and because a response is required, it inevitably leads to a race to the bottom. It’s a zero sum game. Lowest price is not a bankable nor sustainable business strategy model.

Why not work, in small and large steps noted above, in improving your financial performance, and investing those newly gained dollars in a loyal, engaged and motivated staff that grows with you. Invest in them by paying fair wages and they will invest in you.

Replacing staff every two years through the temporary workers program is the type of costly and short-term thinking that undermines a business’ potential for success and growth. For some business owners, it’s a short-term requisite, or an asolute need due to true shortage of high skillset, but the longer-term approach should strive for sustainable, profitable growth delivered by a staff committed to your small business.

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Published by

Caroline Kalaydjian

In 2005, I left the corporate arena to assist small and medium sized businesses capture their vast potential. I encouraged owners and managers to incorporate agility, creativity, productivity and efficiency throughout their business operations. Today, I marry my concerns for ethical business, politics, socio-economics, youth advocacy, poverty, social justice, and geopolitics with my first love, that of writing. Both as a freelance business storyteller, on Business Architect, and in everyday analysis on this site, I hope to shed light on the converging threads that bind society to the every-day impact of decisions made in the public and private realms.

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