Wednesday, August 10, 2016

OLYMPICS, GOOD OR BAD?

Properly hosting an Olympics Games can be a real boom for the host country, province and cities. That said, the “how” and the “why” are critically important.

Many people are surprised to learn the real benefit is not in the 16 days. The actual competitions shine the world’s spotlight on the host community, but the real benefit is in the process, the profile, the future and the legacy. Understanding what can be achieved and setting out a path to get there is imperative. It is about leading and a legacy of attention. The “home run” happens in the future, after the “Games”.

Those who forget these basics and champion events that cost too much create controversy and fail their communities.

Frank King eloquently said almost 30 years ago, “When enough people believe, the dream comes true”. He was speaking to the qualities of enthusiasm and engagement - which are eventually the roots of  any successes.

All international events should be pursued on a similar basis. Is the community prepared to dream and be the best that it can be? What are its aspirations; and how they can be achieved by taking on this international  opportunity?

In Calgary, this is now the subject of important study and analysis. It is the next step, and it is not easy work. It must be viewed from many perspectives - the City, the Province, and the Country. But those will not matter if is does not first satisfy the aspiration of sport and culture, as those are the foundation of an Olympic Games. And the analysis must not forget about the needs of the Canadian Olympic Committee and finally, the IOC and international sporting federations. Thankfully, the IOC has recently made changes around expectations and processes. What might not previously been a compelling case, now might be possible.

I’m exited the City of Calgary is prepared to look at the merits of a bid and further, that they have committed resources adequate for the analysis to insure it meets its needs. Our “next” generation is ready to take up the challenge and I hope they are given the chance to show the work the greatness of our people and the majesty of our little corner of the world

The real opportunities will follow this step, its work and study. Our Osborne team has the experience to help businesses explore and then implement plans that can be beneficial to the eventual organizing committee. Exciting times ahead!


Russ Tynan (click to see Russ’ profile)
Principal


Russ Tynan has worked in significant roles on two Olympic Winter Games (1988 & 2010) and provided counsel to two other Olympics (199 and 1994) and another international sporting event held in Canada (1994).


Wednesday, July 6, 2016

LEISURE TRAVELLERS DRIVING THE TOURISM BUS

In my January newsletter article “2016 Outlook – Hospitality and Tourism”, I forecasted this year to be another economically challenging one for the tourism sector, even with a few favorable conditions existing in the market. A weak Canadian dollar will incent Canadians to travel their own country more and will motivate the American traveler – our number one international travel market - and other foreign visitors to make Canada their 2016 destination. Also, with lower fuel prices lower travel costs will provide travelers some relief at the pump for the important “rubber tire” market. However, my prediction of 2016 duplicating the poor results of 2015 was based on an expected drop off in business travel due to the Oil and Gas economy.

This forecast was not a difficult one to make and I certainly wasn’t the only person projecting this type of year; and so I am not suggesting I am this generation’s Nostradamus or that I will be spending more time looking into my crystal ball. However, I do believe that with the Calgary Stampede upon us, and as we enter the third quarter of the year – tourism’s highest revenue quarter – it might be healthy to look at our vital signs and see how we are doing!

Alberta GDP growth projections in the first quarter of 2016 were all negative by four leading institutions: ATB Financial -0.5%; Scotiabank -1.9%; RBC -1.6%; and the Conference Board of Canada -1.1%. The Canadian Tourism Research Institute forecasted in 2016 growth of Overnight Pleasure Travel by Canadians of 1.6% on top of the 0.7% growth estimate in 2015. Business Overnight Travel by Canadians was projected to rise 1.8% over 2015 but that is based on an estimate of a 6.3% drop in 2015 performance to 2014. USA Overnight Travel and Overseas Overnight Travel were forecast to rise 3.8% and 4.1% respectively. Combined, Total Overnight Travel visits were estimated to increase by only 0.3% in 2015 and 1.9% in 2016, with these small growth projections being driven by leisure travelers.

In January 2015 and February 2015 the West Texas Intermediate price per barrel in US dollars was $47 and $51 respectively. In January 2016 and February 2016 the same measure was $32 and $30 per barrel – an average of 36% drop from the previous year in these two months. In January 2015 and February 2015 the RevPAR (Revenue Per Available Room) in Alberta was $75 and $86 respectively. In January 2016 and February 2016 the RevPAR was $55 and $63 – an average decrease of 27% in revenue per room for these two months. There is a direct correlation in hotel performance related to the Oil and Gas sector performance, and while leisure tourism growth helps to offset business travel decreases, it cannot match the high yield of business travel for hotels.

Another factor we are seeing in 2016 is the ongoing increase in hotel room supply. New hotels, like the Hilton in East Village and Marriott at the airport, on the heels of new hotels opened last year, are increasing significantly the amount of hotel rooms available to travelers at a time when demand is flat or diminished from previous years. This puts tremendous pressure on hoteliers to maintain rates in a very competitive environment. Tourists, whether for leisure or business, are the beneficiaries as room rates drop and hoteliers struggle to keep RevPAR at budgeted levels.

Reports suggest that the mountain resorts are expecting a great summer in hotel occupancy. Hopefully room rates will reflect the high demand offsetting the downturn in business travel the other seven months of the year. Leisure travelers are definitely driving the tourism bus this year in Alberta!


Randy Williams (click to see Randy’s profile)
Head of Practice - Tourism, Hospitality and Destination Management


Other Articles by Randy Williams
Organizations Holding a Leadership Position - What Defines Them?
Leadership - The Holy Grail of Business
What Are the Competitive Challenges for Calgary and Canada's Tourism Sector?
Old Friends Not Visiting as Much; But We Attracted More New Friends
Taking a Trip is More Important Than You May Know

Tuesday, June 7, 2016

HAS BUSINESS CUT OFF ITS NOSE TO SPITE ITS FACE?

The last 18 months have been hard for Albertans, and while the price of oil is on a sluggish rise, we have seen reductions and layoffs in all industries, not just the energy sector, with a slow return to hiring. These cuts will have an impact in a way that has not yet been perceived, with the question being, have we gone too far?

The boom-bust cycle in Alberta is nothing new. As a matter of fact, the Baby Boomers have experienced this before, first in the early 1980s, with several others of varying degrees leading up to the current downturn. By all accounts though, this cycle is different as it is expected to be a structural change for the oil and gas industry that will affect how companies do business going forward. However, did companies consider their people asset requirements for the future in the latest cost cutting initiatives?

When one looks at the labour market demographics, as has been predicted for years, it is clear that the retirement bubble is coming. The recent reductions have seen companies reduce their staff significantly at the middle management and senior individual contributor levels. These employees were being groomed to be the next generation of “thought leaders” and to fill the leadership gap that will be created by the impending retirement bubble. Although we may not know for certain when the retirement bubble will burst, a look at labour market demographics, along with the Liberal government’s campaign promise to reinstate the retirement age of 65 from the current age of 67, it is certain that it is on the horizon.

The perfect storm is brewing; as a result of the latest cuts and potential retirements, I see a significant void that will be exposed once the economy starts to turn around. There will be a lack of talent who can effectively step into leadership and technical expert roles. As a result, attracting and retaining the right people will come at a compensation premium. In addition, the changing expectations of Millennials in the workplace will create a challenge that will require companies to either adapt or be left behind in their bid to attract and retain emerging talent.

What most companies have missed is an earnest review of their people practices and employee value proposition in order to support this new reality. Without a serious and in depth review, the next wave in the war for talent could result in a repeat of past mistakes. When the economy bounces back, and it will, the available talent pool will be underdeveloped, with the competition for this labour pool intense. I would expect there to be higher costs associated with recruitment, training, development and total rewards, with companies, as they have done in the past, looking to outside consultants to fill the gap. However, the competition for key talent (employee, contractor or consultant) could result in staffing cost escalations that may price some projects and companies out of the market.

In my opinion, people are an organization’s greatest asset, and like anything that contributes to a company’s revenue, there should be a strategy (short and long term) in place. Companies can look at their labour spend to understand the cost of these assets but, can they articulate the value received and resulting contribution to the bottom line from their people? Companies need to shift their approach to Human Resources from tactical to strategic; only then can a company say with certainty what is an employee’s ROI. At any point in time, a company should be able to:

  • Track the amount spent on an employee, whether it’s from recruitment, development, training, rewards and incentives, retirement plans, benefits, vacation packages, etc.
  • Know the expected ramp up costs where the employee is adequately trained and contributing, and measure what they are actually achieving with their new hires and promotions.
  • See a positive correlation between investment spent on leadership and training and the company’s bottom line.

So, what can an organization do to prepare for what’s coming?

  • Ask itself what kind of company it wants to be? An employer of choice? And whose choice?
  • Assess company values and culture and determine if it’s the right one for the long term.
  • Reassess, or determine if necessary, the company’s employee value proposition so that it attracts and retains the right types of employees, ones who will help the organization attain its long term objectives.
  • Evaluate the effectiveness of all employee programs and make changes where necessary.

The answers will be different for every organization, but what remains the same is each company needs to ensure they have the right staffing mix, and one that includes people at all levels, including those poised to fill the leadership gap the next time a boom-bust cycle occurs, which, inevitably it will.


Joel Benjamin (click to see Joel’s profile)
Principal

Wednesday, May 18, 2016

OIM CALGARY WELCOMES JOEL BENJAMIN TO THE TEAM

Osborne Interim Management is pleased to welcome Joel Benjamin (BA, MBA) to the organization as a Principal. 

Joel is a senior human resources leader who brings deep expertise in executive compensation and total rewards planning, design and implementation. Experienced at developing total rewards programs that align and support the organization’s business and people strategies, addressing the changing realities in the marketplace. Joel brings a strong understanding and consideration for the financial impacts, tax implications, proxy reporting requirements and cost management strategies that an organization faces when developing programs. He is a trusted advisor who works effectively from senior executive through to the field-levels and takes great pride in developing and mentoring other HR professionals. He brings with him an outstanding reputation for working with discretion and professionalism. 

Tuesday, May 10, 2016

THE STATE OF AGRICULTURE

Someone recently asked me about the state of agriculture. It’s in good shape relative to others in Alberta, although most consumers pay little attention, and take it for granted. 

Before expanding, I want to point out that farmers, one of the first links in the agri-business value chain, in Alberta and across Western Canada are currently seeding their crops. Osborne Interim Management (OIMTM) wishes them and all the businesses that support them, good weather and conditions for planting and the many tasks to follow, which bring us and our families the healthy food we eat. 

If we narrow agri-business’s definition to “food production”, demand in the agri-business sector is solid, with a growing population and diets demanding more protein. Unfortunately the 30% of production, which gets wasted, is part of the equation. Agri-business goes beyond food production though, and the bio-fuel sector is having challenges with the low price of oil, which impacts biofuel’s price. 

These are exciting times in agri-business and the pace of change continues to accelerate and create opportunities. Competition is healthy at all links of the value chain with consolidation a continuing trend. M&A activity has increased amongst the Life Science players with DOW and Dupont merging, and ChemChina beating out Monsanto for Syngenta. 

How crops are marketed is evolving since the CWB lost its single desk position. Farmers now have marketing opportunities not previously available. Technology has connected them with others along the value chain, and they’re able to make personal and business relationships not previously possible. Who thought a generation ago a farmer could be selling direct to brewers in another country, or running their owner micro malt operation, or even taking their malt barley right to their end consumer via a micro brewing operation. 

Many growers have complimentary businesses in addition to their farming operation, and are constantly looking for new business development opportunities. A family processing operation I called on in 1983 is now a global player in their sector. Companies participating in Alberta’s agri-business sector appreciate its relative stability, compared to the energy sector. 

As opposed to the loss of almost 20,000 jobs in the Alberta energy sector in 2016, demand for farm labour is strong. Although the fluctuation in the price of oil and the Canadian dollar impact both the energy and agri-business sectors, consider some additional “moving parts” those in the food production sector must monitor. 

  • Inputs prices for chemistry have generally flattened, while fertilizer prices have developed new patterns. 
  • Growers employ a range of models to manage equipment costs. 
  • Farm sizes continue to optimize as farmland prices increase. 
  • Weather is a constant factor. In 2013, the creek I live on was part of a major flood incident. Today, the same creek is dry, and there’s a complete fire ban across Alberta, as fires in Northern Alberta continue to burn. In recent weeks markets have reacted to flooding in Argentina and drought persisting in Brazil. 
  • Companies have been created to offer new risk management tools, and agri-business managers are employing different models to manage margins. 
  • On the consumer front, Earl’s decision to employ a marketing tactic effectively cutting out Alberta beef producers is one of the more recent examples of the impact changes in consumer preference can have, often based on perceptions. A plethora of new and ambiguous language including “sustainable, ethical, and humane” is replacing established guidelines based more on reality and science. Fortunately, after significant backlash, Earl’s wants to “fix it and make it right”. 
  • Policies continue to change with governments and examples include the CWB (grain marketing), UPOV (intellectual property rights for breeders), AB Farm Worker WCB, and ALMA (AB Livestock and Meat Agency) being eliminated in Alberta. How ag research is funded will also change. 
  • Technology advances, although international markets can make its adoption difficult. China appears to be warming to GM which many felt they used as a trade barrier, while expert opinions vary on whether growers should use quinclorac herbicide on their canola, and much smaller niche products like Ontario’s ginseng producers are learning a hard lesson from dealing with the same nation on a non-GM front. 

Those in agri-business have much to be optimistic about, and it’s still a “people’s business”, where relationships can have significant impact. Participants should not hesitate to try new approaches if they do their due diligence, assess and manage costs and risks. Trialing concepts using interim or fractional management services such as those offered by OIM, is a great option. Our broad team of industry-proven experts works together to help businesses, whatever their challenge or opportunity is. 

Norm Dreger (click to see Norm’s profile) 
Principal