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Business Under the Weather

Q: As VP, HR of a company with 100 employees, I am experiencing difficulties following the recent retirement of our founding President and CEO, a well respected entrepreneur within the business community, who passed the leadership “baton” to his two less experienced sons. An “executive team” was created prior to his departure to facilitate the transition. This team of five has only two officers who are not family members, the VP of Finance & Admin and myself. In recent months, half of our sales team has left to join the competition. We also lost some major clients. Our employees are worried about their future with the firm. We see that our organization is in trouble and have problems communicating this to our new president. What needs to be done and how do we approach this with the new leaders?

We have all heard about businesses that have expanded and owners, seeking a balance between work and family, entrusting the operational and financial management of the venture to others, including family members. In today’s economic climate, it is essential that the executive team and managers understand the warning signals of trouble and that the new senior officers and their advisors become instrumental in building internal resources that are strong enough to withstand economic change. These resources also ensure that their lenders will not abandon them at a time when the need for their support is paramount.

Philip H. Gennis,
Vice President,
Recovery &
Grant Thornton
These “early warning signs” are applicable across the business spectrum and should be analyzed periodically as key indicators of the health of the business. Your VP, Finance would be familiar with other major financial indicators.

As an HR professional, you would be best to watch for the following: lack of useful & timely financial information, lack of budgeting, unrealistic annual projections with cash-flow forecasting, high concentration of sales to small number of customers, increase in competition, little (if any) delegation of authority, family members with conflicting interests, lack of a clear business plan and turnover of key personnel.

These are merely a few of the items that represent the key indicators of an enterprise in distress. We do not suggest that when any or all of the above conditions are detected that the end is near (although, in some cases, it may very well be). Rather, we list these as measures for use in analyzing the performance of those managing their business.

Discussion with the new president and executive requires advance research and reporting, not merely making a comment at the executive table. As directors and managers, we have all felt the frustration of endlessly debating business plans, financial planning and marketing. Without proper documentation, a mere expression of concern regarding the future of the company will not produce the desired outcome or an action plan. It is crucial for HR professionals to be able to understand corporate risk management as well as financial reporting and performance to be able to communicate with business leaders if they wish to keep their positions at the senior management table.

Once you have done your research and can produce the evidence, you are in a position to approach the principals. You can also consider the option of engaging an external consultant to examine the financial status and other areas to report back to senior management. If the organization’s new leaders lack the depth of knowledge and years of experience to truly understand the issues, they may more readily listen to the advice from outside financial experts.

As key players, you need not feel alone in scenarios such as the above. There are thousands of organizations experiencing the same problems and there are professionals who can assist. If these situations are tackled early, much can be done to save the organization and also build more solid relationships with the firm’s new leaders.

Philip H. Gennis, LL.B., CIRP, Vice-President, Recovery & Reorganization, Grant Thornton Limited, may be reached at (416) 366 – 0100 or at Website: www.grantthornton.ca

Vacation Pay and Time Entitlements

Q: My employer has operations across Manitoba, Alberta and British Columbia. Are annual vacation time and vacation pay entitlements the same across these provinces?

A: While entitlements do vary by province, vacation pay/time entitlements in these three provinces are quite similar.

In Manitoba, Alberta and British Columbia an employee is entitled to a minimum of two weeks vacation time after 12 months of employment, and a minimum of three weeks vacation time after 5 years of employment.

Cindy Ziobrowski
Meyers Norris
Penny, Vancouver
In Manitoba, Alberta and British Columbia, the vacation pay entitlement is at least 4% of all wages (please see definitions below by province) paid to an employee in the preceding year. This is for the first four years in which an employee is eligible to take vacation. After completing their fifth year of employment, the vacation pay entitlement is at least 6% of all wages for the 5th and following years of employment.

Definition of Wages:
In Manitoba wages are all regular wages (hours paid as commission, salary, hourly, bonuses tied to productivity and any other wage paid as compensation for the regular hours of work) and any general holiday pay. Overtime wages (unless time banked and taken at a later date), wages in lieu of notice and the previous year’s vacation wages are not included.

In Alberta, wages are all regular wages (salary, hourly pay, vacation pay paid in the previous year, commissions and other incentive pay) and pay for time-off granted in place of overtime worked.

In British Columbia total wages include salaries, commissions or money paid for work, and money payable as an incentive that relates to hours of work, production of efficiency.

Cindy Ziobrowski, RPR is Senior Advisor, Human Capital for Meyers Norris Penny in Vancouver.


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