- Meeting The Challenge Of Change
- The Business Of Blockchain
- The March Of Technology
- The New Heart Of Global Trade
and best wishes for a successful 2023
European economies rank markedly above the global average in the cost of taxes on employment for businesses, shows a new study of 23 countries by UHY, the international accounting and consulting network. Across Europe, the average cost of employing a worker earning $30,000 per year is now $6,202 (20.7% of salary), 13%% more than the global average of $5,468 per year – 18.2% of salary. This includes costs such as social security, unemployment insurance and mandatory pension contributions.
As more countries face rising economic stress triggered by inflation and increasing interest rates, governments are likely to come under more pressure to cut these costs. The lower the costs of employing workers, the less likely businesses are to need to make layoffs if their economies enter recession.
Subarna Banerjee, Chairman of UHY International, says that some significant economies levy employment taxes far below the global average, including New Zealand (4% of salary) and the Republic of Ireland (11.1% of salary – see table below).
Banerjee says that more governments could consider reducing the employment tax burden to help protect both businesses and workers as more economies threaten to slide into recession in the coming months.
Says Subarna Banerjee: “As businesses around the world face growing cost burdens, more governments could consider using the levers they have available to help them. Reducing taxes on employment would be a pretty direct way of incentivising businesses not to make redundancies.”
“Many economies have enjoyed near-record levels of employment in recent years, but that is expected to change. Keeping as many people as possible in work should be a key target for policy-makers in the coming months. A rise in unemployment will only exacerbate the issues many countries are facing due to consumer spending dropping sharply.”
Ireland, New Zealand among lowest employment tax economies
Both New Zealand and the Republic of Ireland are amongst the economies with the lowest burden of employment taxes in UHY’s study of 23 countries worldwide. Ireland ranks 17th overall, while New Zealand is 22nd.
Employers in New Zealand pay just $1,209 per year in taxes on employment for a worker earning $30,000. This includes the national KiwiSaver pension fund (3% of salary) and the contribution to the Accident Compensation Corporation (1% of salary). Employees have even lower costs, paying just a mandatory 1.39% of salary on top of income tax.
Employers in Ireland pay just $3,315 per year in employment taxes for a worker earning $30,000, through the country’s Pay Related Social Insurance (PRSI). The rate of PRSI is reduced even further to 8.8% if the worker earns less than $481 per week.
Grant Brownlee, Director at UHY Haines Norton, UHY’s member firm in New Zealand, comments: “With the New Zealand economy slowing unexpectedly in the last few months, it’s important that businesses aren’t burdened by employment taxes. Our unemployment rate is among the lowest in the world and it’s important that businesses aren’t forced to make redundancies should we enter a recession. For businesses, laying off staff can be a last resort if taxes stay low.”
UHY’s study also shows that France has the highest rate of employment taxes for businesses employing higher earners. A French business paying an employee $300,000 per year must pay employment taxes of $121,014 (40.3% of salary). This is more than three times the global average of $39,508 (13.2% of salary) and 2.9 times the European average of $44,159 (14.7% of salary).
UHY’s study assessed the annual government-levied taxes to businesses of employing workers on salaries of $30,000 and $300,000 during the 2022 tax year across 23 countries worldwide. The full study is available below.
Notes for Editors
UHY global press contact:
Leigh Lyons on +44 20 7767 2624
Email: L.Lyons@uhy.com – www.uhy.com
Nick Mattison or Richard Crossan
Mattison Public Relations
+44 20 7645 3631
+44 74 4637 5555
DOING THINGS DIFFERENTLY TO DO THEM BETTER
By Rhys Madoc, CEO, UHY International
According to the World Economic Forum1, innovation is ‘the process of turning new ideas into value, in the form of products, services, business models, and other new ways of doing things’. Digital education specialists Wiley2 define it as ‘applied creativity that achieves business value’.
I like these definitions because they are relatable – we are all in business to create value. Innovation flourishes in times of adversity, like the common wisdom – ‘necessity is the mother of invention.’ The pandemic saw plenty of it in our profession, as firms and clients redesigned processes and adopted new technologies to enable better offsite working. Some businesses reimagined entire cultural practices to accommodate the ‘new normal’.
But we do not innovate just because we have to. Often innovation provides a competitive advantage. It may enable a business to be first to market with a new product or service.
However, there are barriers. Typically, these include: lack of money, lack of cultural buy-in, rigid adherence to the way we have always done things, aversion to risk, fear of lack of control. Perhaps predictably, all of these are amplified in times of crisis. So what can we do to overcome them?
Innovation relates to people, products and processes. Research published in the Harvard Business Review3 found that innovative organisations exhibit common behaviours:
- They always assume there is a better way to do things
- They focus on deeply understanding customers’ stated and unstated needs and aspirations
- They collaborate across and beyond the organisation
- They recognise that success requires experimentation, rapid iteration and frequent failure
- They empower people to take considered risks, voice dissenting opinions and seek needed resources.
Some of these characteristics are familiar to many of us. The UHY network, for example, places collaboration and working together for the benefit of clients at the heart of its culture across the world. Our member firms’ passionate focus on client needs is a key driver of success for our business.
But what about some of the other things on the list? Does your company behave in these ways? Have you adapted to adversity and emerged stronger, or enabled competitive new products and services by taking risks?
In the short term I believe there are a few organisational imperatives to support successful innovation:
SHAKE UP YOUR PROCESS
It is worth remembering that before Henry Ford came up with the idea, nobody had thought of a moving assembly line (or, if they had, they never told anyone). The innovation is believed to have reduced the time taken on each vehicle from 12 hours to 90 minutes. Ford did not invent the automobile as he is often credited with doing; he simply thought of a better way to make it.
EMBRACE NEW TECHNOLOGY
New technology can be terrifying, especially if what you have always done is working okay, so why change? Nobody wants to think of machines replacing humans. But in our profession for example, data analytics, artificial intelligence and machine learning can do all the painstaking number crunching, which gives us more time to add value to clients with advice and insight. ‘Working okay’ is no longer enough.
REVIEW YOUR SKILLSETS
Recruiting someone into your business with different experience or background is one way of embracing innovation, bringing a completely different perspective to a set of challenges. While this can be daunting for you and your staff, it can be a great way to energise a culture that might otherwise become set in its ways.
People can be most innovative given the opportunity. Fostering innovative thinking is good leadership. Acknowledging new ideas and perspectives is key, as is creating a culture of listening and ensuring colleagues feel free to challenge the status quo. The old-fashioned ‘suggestion box’ can be more useful than you think!
1World Economic Forum, Global issue: Innovation
2Wiley, The Art and Practice of Leading Sustainable Innovation in Your Organization
3Harvard Business Review, Breaking Down the Barriers to Innovation
Homeworker photo by Surface on Unsplash
Model T Ford: iStock.com/TennesseePhotographer
Idea Wall: Photo by FORTYTWO on Unsplash
By Rhys Madoc, CEO, UHY International
If there is one thing we have learned over the last few years it is the value of embracing change. Nobody could have predicted the global disruptions but it is true to say that those whose businesses have survived, or even prospered, have been those who have been better at dealing with change.
There have been dramatic changes not just in the workplace and in ways of working, but also in the adoption of technology: how we work with clients in the cloud, manage teams remotely and use AI-based data analytics software for improving efficiency and accuracy.
Rather than accept change, or rush headlong into it, many of us have had change thrust upon us. As a result, some businesses have pivoted entirely, organisational models have adapted and we have seen long-term thinking change drastically. The idea of the Great Resignation (the observed mass exodus of workers after/during the pandemic) tells us a lot about how we might need to approach work from now on.
But what does embracing change really mean? It is about looking for opportunities and advantages, but it also means being optimistic if a perceived change does not at first look like one for the better. For us at UHY it also means being open to innovation and not necessarily accepting ‘business as normal’.
But it is not always easy. Research published in the Harvard Business Review* asserts: “A root cause of resistance to change is that employees identify with and care for their organisations. People fear that after the change, the organisation will no longer be the organisation they value and identify with.”
Of course, change for some people is easier than for others. For those who find it more challenging, it is sometimes the case that being an employee of an established business means not having to deal with the disruptions and pivots usually associated, for example, with startups and entrepreneurial businesses. Some people thrive in an organisation with set processes and procedures, and so do their managers.
However, when change is inevitable, how can you embrace it and encourage your employees to also do so without fear?
One way is to create a culture of dialogue and continuous improvement. Staff and management feedback is essential. By seeking input from your employees, by showing that you are open to their ideas, and by demonstrating a willingness to embrace new things, you can encourage your people to do the same. Similarly, by setting expectations of continuous improvement, incremental change becomes the norm.
Leading by example and having a positive response to change at management level, whether technological or in terms of process, is also likely to foster a more open-minded approach across the rest of the workforce.
In order to help people cope with change, it is useful to understand how they might react to it. For example, some people will respond quickly while others may respond well but with a longer transition time. Understanding this and adapting your expectations and processes will make embracing change easier. Addressing reactions and dealing with them diplomatically and sensibly will help, so strong employee-employer relationships are important.
The UHY network has an ambitious, collaborative and innovative culture. We are open to embracing new methods of working when they yield positive outcomes and the same applies to more ‘traditional’ models. It is an approach to change that I hope has served our member firms and their clients well. While nobody would say that the events of the last few years have been anything but difficult, the transformations they have enabled for many of us have been phenomenal and this is something we should all embrace.
*Harvard business review research: To Get People to Embrace Change, Emphasise What Will Stay the Same
Image acknowledgements: Microsoft 365 subscriber content
By Rhys Madoc, CEO, UHY International
The changing nature of work, fuelled by advancing technology, globalisation and worldwide lockdowns, means that good project management is more important than ever. As the number of business teams working remotely increases, the ways in which we engage workers and develop our processes are crucial. But what is project management, beyond ‘getting something done’?
In my view, project management is based on using particular tools and skills to deliver an end result, whether this is a building, an IT process, a response to a tender, a business expansion or an audit. Each needs a plan and each plan has milestones, or key stages, that need managing. Project management differs from routine operational management because there is always a goal and a conclusion.
Project management is too often seen as an ‘extra’, yet it is fundamental to business success. Indeed, good project management – or lack of it – usually defines success or failure. A wide skillset, effective leadership techniques and a collaborative mindset are essential.
FROM AGILE TO CRITICAL PATHS
Project management goes beyond simply making a list and getting everything done. There is a wide range of tried and tested project management methodologies. Some are more suited to specific industries than others, so it is important to identify the right one for your needs, and to match the techniques to the scale of your challenge. Here are a few that provide a lot of food for thought.
Agile project management is an approach defined as iterative (rather than linear) because it has a more flexible approach to breaking down projects and processes into small sections, or iterations. Various techniques are utilised within the Agile approach, to meet specific challenges. For example, Scrum is an Agile technique, where a small team led by a Scrum master works to remove obstacles to business projects or activity. Work is undertaken in short bursts – or sprints – with the team meeting daily to discuss tasks and iron out any problems. Typical business users of Scrum include the financial sector, product development, construction, consulting, marketing and disrupters (for example, Airbnb, and Uber).
PRINCE2 AND SIX SIGMA
A traditional heavyweight in the project management arena, Projects in Controlled Environments – PRINCE – is a process-based technique where project performance is subject to continual checks, with more resources committed as the project progresses. Another well-known tool is the data driven and procedure-based Six Sigma framework. This is largely focused on customer needs and is widely used across different industries. As Six Sigma works to streamline and sustain business processes, it is popular in manufacturing and financial services.
CRITICAL PATH ANALYSIS
The Critical Path Analysis (CPA) method is based on mapping all possible paths to a solution, the tasks needed to complete each, and where these are dependent on other activities. This helps determine the shortest possible completion time for a project and which tasks can be delayed without impacting the outcome. CPA has a broad application sector-wise, from aerospace to professional services to software development.
THE RIGHT APPROACH FOR YOU
Not all project management techniques will work for every organisation. How we approach projects must be determined by things like objectives, budget, company culture and stakeholder attitude.
In our global professional services industry, the need to work across borders or collaborate with colleagues in different time zones is also a major consideration. I am always reassured to see how effectively UHY member firms, for example, collaborate wherever they are in the world. Working Together for the benefit of clients is one of the four pillars of our network strategy – and good project management is often key to this.
I believe that project-based ways of progressing wide-ranging business developments are unlikely to change anytime soon. As working environments continue to evolve, budgets become leaner and timescales squeezed, the demand for good project management skills will only increase, and may prove the difference between success and failure.
Project board – Jason Goodman on Unsplash
Project notes – iStock.com/akinbostanci
Collaboration – UHY International
We are saddened by the passing of Her Majesty Queen Elizabeth II. Our thoughts and condolences are with the Royal Family.
FINDING AND KEEPING THE RIGHT PEOPLE – TWO SIDES OF THE SAME COIN
By Rhys Madoc, CEO, UHY International
Recruitment and retention are always an eternal balancing act for businesses, but there is strong evidence that employment markets in many parts of the world are in a greater state of flux than usual for a variety of reasons. Business leaders’ own observations were reinforced by a recent interview in TIME with LinkedIn CEO Ryan Roslansky, in which he defines what is happening in the employment market as a ‘great reshuffle’, led by Gen Z and Millennials.
LinkedIn profiles show that over the last year, the number of people changing their job is up by more than 50%. While there is likely to have been some reduction in the total workforce, Roslansky’s data suggests the real issue is that people are on the move – and employers had better be prepared, because businesses in all sectors are struggling to recruit the talent they need to thrive in the post-lockdown landscape.
Accountancy is not immune to these fluctuations. UHY’s member firms have reported that recruiting excellent and qualified employees was already becoming more challenging before Covid. The so-called ‘great resignation’ – a re-evaluation of values and life goals triggered by the pandemic – has only accelerated the trend.
One result is that, across the profession, some firms risk having to turn work away because they do not have the necessary resources. Others are having to achieve more with less and are streamlining workflows to mitigate the challenges of a talent shortage.
WORKING HARDER FOR EVERY HIRE
But it is not enough on its own. A productive recruitment funnel remains essential for firms looking to grow. Members of UHY’s global network of accountants are still finding excellent people, but having to work harder for every hire.
Engaging with schools and colleges helps firms to make an early impression.
A starting point for many lies in refining their graduate recruitment programmes. Attracting the next generation of accountancy talent is crucial, and doing so requires a well-defined development roadmap with clear milestones, regular feedback and comprehensive support.
It also benefits from a presence on campus. Some UHY firms are expanding the number of universities they target, and nurturing relationships with academics who can recommend the best and brightest students. They are creating new and innovative ways for students to spend time in UHY offices, through short introductory programmes and longer internships.
Another innovation lies in exploring new areas of recruitment beyond the usual talent pool of university graduates. One of our member firms for example has developed a five-year programme aimed at school leavers that offers support for candidates throughout their post-school academic and professional studies.
FOCUS ON RECRUITMENT
These measures are bearing fruit, but firms also need to hire candidates for more senior roles. Many competitors are doing the same thing and the pressure on salaries means recruitment costs are rising as a result.
Focus is required, and a dedicated in-house recruiter, or a partner with responsibility for recruitment, can help. A number of our member firms successfully use staff referral programmes, where current employees earn bonuses for introducing new hires. Marketing and social media teams should contribute to recruitment campaigns: LinkedIn can be a highly effective channel in this regard.
But above all, I strongly believe that professional firms need to align themselves with what recruits are looking for in an accountancy career. That is changing. A new generation of professionals want clear pathways to progression alongside lifelong learning opportunities.
They also want to work for firms that care about the things they care about, which might include organisations that have fully committed to their environment, social and governance (ESG) reporting as part of a transparent approach to their corporate social responsibility obligations.
To this end, your culture and vision are important. Having environmental or social credentials is one way to attract candidates that care about sustainability, diversity and inclusivity. Increasingly, talented people want to work for companies that share their belief that business can be a force for environmental and social good.
KEEPING THE TALENT YOU ALREADY HAVE
The wisdom of this approach is that it not only helps firms attract good candidates, it helps them keep the talent they already have. What brought them to you should also help to keep them with you – in this way recruitment and retention are two sides of the same coin. A fresh, progressive culture should be part of it, alongside comprehensive training and development resources.
Mentoring is an excellent way to support staff, and employees should have access to the right technology for their roles, to increase efficiency and reduce repetitive manual tasks. A modern well-equipped, welcoming and inspiring office environment is important.
A good retention strategy will mean different things to different people, but its foundation is the same. Business managers should start measuring staff satisfaction rates, if they do not already. Use internal surveys to take regular snapshots of the mood of your employees. Ask for their views and – where possible – act on their feedback.
It is important that you do. Recruitment is unlikely to get easier in the short term, perhaps for far longer. But look after the staff you already have and they will become the best ambassadors for your business.
Image acknowledgements: Microsoft 365 subscriber content
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