the power of being understood - enterprise ireland · 2017. 2. 22. · approach has four basic...
TRANSCRIPT
THE POWER
OF BEING
UNDERSTOOD
AUDIT | TAX | CONSULTING
FINANCE FOR GROWTH
Planning for Growth – February 2017
Dublin
Agenda
• Introductions
• Potential methodology for strategy creation
• Strategic considerations re sales, operations and IT
• The client experience
• Your people strategy
• Case study exercise
• Funding your strategy
INTRODUCTIONS
Emma Cadden, Director, RSM Ireland
RSM
5
120COUNTRIES3,384
PARTNERS763OFFICES
38,353PEOPLE
FEES
$4.6bn
RSM Ireland
• Top 10 accounting practice
• Employ over 120 professionals
• Member of RSM International
• Offices in Dublin and Midlands
• Multi-disciplinary
– Audit and Advisory
– Corporate Finance
– Management Consulting – technology, HR, change
– Corporate Recovery
– Taxation
• Work closely with Enterprise Ireland across various programmes
POTENTIAL METHODOLOGY FOR
STRATEGY CREATION
Strategic planning context
• Economic environment within sector or markets
• At outset planning informed by some key questions including:
− Who are our stakeholders and what are their needs?
− What outcomes address these needs?
− What changes can we achieve?
− How do we deliver outcomes in the most efficient/ effective way?
− How do we unlock efficiencies in product delivery costs?
− How do we adopt and embed continuous improvement?
− How can we innovate given budget pressures?
− Do we need to react to regulatory change?
Potential approach to strategy creation
• Build strategy around number of pillars
• Customised to business
• Pillars act as enablers to achieve strategic goals
• Informed by mission, vision and values and guiding principles re ethics,
standards etc.
• Pillars impacted by internal and external factors
Potential approach to strategy creation (cont.)
Potential approach to strategy creation (cont.)
A successful strategic planning project will feature five key elements:
Understand the Context (economic and political) and Stakeholder Need
Building a Vision, Mission and Strategy
Test and Challenge
Develop Implementation
Plans
Report Monitor and Learn
Potential approach to strategy creation (cont.)
Approach has four basic phases:
• Analysis or assessment: an understanding of the current internal and
external environments is developed
• Strategy formulation: high level strategy is developed and a basic
organisation level strategic plan is documented
• Strategy execution: where the high level plan is translated into more
operational planning and tactical action items
• Evaluation or sustainment phase: on-going refinement and evaluation
of performance, culture, communications, data reporting and other
strategic management issues.
Potential approach to strategy creation (cont.)
Dynamic, iterative process
Vision
Mission
Analysis
Formulation
Execution
Evaluation
Potential approach to strategy creation (cont.)
Who is involved?
• Key directors
• Representative management
• Possibly selected staff below these levels
• Multi-disciplinary
• Representatives of different sites/divisions
• Third parties (by invitation)
• Facilitator?
The role of project management
To deliver a strategic planning project on time and to a quality
standard requires robust project management:
EVERY RSM FIRM,
WHEREVER THEY ARE IN THE
WORLD, SHARES THE SAME
HIGH STANDARD OF QUALITY
STRATEGIC CONSIDERATIONS – SALES,
OPERATIONS AND ITTerry McAdam, Partner, RSM Ireland
The top line challenge
• Without a strategy to sell profitable services or products to customers
who will pay on time, planning can cease
• Our top line strategy: what one sells to whom and at what price point
impacts all aspects of the business including your:
− Operational delivery model – facilities, locations, processes and
systems
− Risk management environment
− Compliance obligations
− Team – shape, scale and skill mix
− Funding model.
Strategic sales considerations
• Products/services which mature, under threat, facing retirement
• Potential new product/service development opportunities
• Markets which mature, under threat, possible exit of markets – physical
and virtual
• Potential new markets for entry
• Customers who mature or at risk
• Development of new customer relations
• Potential for alliances, joint-ventures, acquisitions
• Repositioning – manufacturer to fabless or distribution
• Supporting marketing initiatives and campaigns which reflect decisions
reached.
Strategic operational considerations
• Assessment of capacity (and options) given likely demand for products
and product/service mix
• Capex requirement with regard to new plant, automation and facilities –
physical foot print
• Investment needed in personnel with required specialist
skills/experience
• Changes in operational processes to support effective and efficient
product and service delivery (Lean?)
• Requirement for processes to support risk management, ensure
compliance with all regulations and laws and consistently high levels of
quality
• Development of lean but robust supply and distribution networks.
Strategic IT considerations
• What data must be captured? What data is also desirable to retain? Impact of new data legislation?
• What information can be gleaned from the data to assist decision-makers or those charged with compliance? Do you have or need Business Intelligence?
• Are new systems required due to new processes/activities requiring support, changes in scale or end of life issues?
• Do you need to own your infrastructure, applications or communication links?
• Are managed services an option?
• How resilient are your business–critical systems? Have you a Disaster Recovery plan in place? Have you a Business Continuity Plan?
• Is your product and customer data secure? Do you need cyber insurance? Should you commission penetration testing?
THE CLIENT EXPERIENCE
YOUR PEOPLE STRATEGY
Terry McAdam
Harnessing our greatest resource
• To achieve any of the potential strategic goals discussed including:
− new market entry
− new product development
− marketing initiatives
− continuous improvement
− IT transformation
• The business must engage its people in a meaningful way.
HR strategy – an introduction
• Strategy bridges the chasm between vision and tactics
− strategy defines how the enterprise will occupy a unique place in the
market to achieve sustained business success
• Strategy is about making hard choices
− deciding what to do and what not to do
• Strategy is about doing the right things, not doing things right
− strive for performance but make trade-offs.
Why have a HR strategy?
• Helps your leadership consider and make tough choices
• Helps you identify the best opportunities
• Avoids potholes - provides a clear organisational identity
• Keeps your professional team moving in the same direction
• Everyone knows the general direction in which to progress. When no
one knows what the business is striving to accomplish, they have no
idea of what to work towards
• Reduces risk of giving in to pressure from individuals.
Why the need to align people with strategy?
• It provides leadership and direction to your staff
• It helps deliver an effective strategy, properly executed
• It allows you consider solutions across all areas. Foster a team
approach
• It manages interdependencies between units. Avoids a silo approach
• Maximise your resources. Engenders accountable culture throughout
organisation
• Measurement of our progress on ‘real time’ basis
• Harness our people’s minds to arrive at solutions via troubleshooting
• Assess our Management Team’s skill/experience mix – have we the
right people in place to meet our challenges
• Provides a structure to people by which they can deliver outcomes
Why the need to align people with strategy? (cont.)
• Information systems – have we the right information to make informed
choices
• Identify early warning signs – are goals being attained?
• Control labour and talent costs.
Put simply…
High performing organisations:
• Know where they are going
• Ensure their people have what it takes
• Develop and enable their people
• Help their people stay on track
Strategic alignment
Key Differentiator
(Focus on People)
Ensure your people have what it takes – HR supports
• Skills and competencies analysis for
achieving future goals and
objectives
• Job descriptions
• Sourcing the talent (grow or buy),
and how to create and maintain a
high-performance culture
• Positioning your people
• Employment law compliance.
Develop and enable your people - HR activities
• Skills analysis
• Training needs
− skills, knowledge, behavioural gaps
• Succession planning – both in terms of leadership and key positions
• HR capabilities and operational excellence
− policies and procedures
− performance management
− tools, processes and infrastructure
− systems to support.
Help your people stay on track - appropriate metrics
Balanced scorecard
• Headcount
• Recruitment
• Learning and development
• Performance management
• Succession planning
HR as an investment: Value-ADDing activities
• Align your people to your strategy. They need to understand your
business and buy into your strategy
• Design your HR processes and supports to enable your people
• Deliver your services through performance management and
appropriate people activities
Line Managers must assume the on-going responsibility. Not outsource
people issues to HR.
Successful HR strategy
Maximises performance from employees by ensuring employees:
• Have something (skills, competencies, abilities)
• Feel something (commitment, engagement, motivation where the good
stay).
• Do something (their behaviour and attitude - productive and profitable,
focussed on the customer).
Properly thought out HR strategies also work for SMEs
Comparison of informal HR strategies and their results in SMEs –
Cornell University
For SMEs state of the art HR strategy delivers:
low capital intensity, high growth, and high product differentiation.
Building your HR strategy
• Analyse your industry/sector
• Understand your value chain
• Recognise your key processes
• Identify your key people
• Tailor your HR strategy.
CASE STUDY EXERCISE
Gordon Wilson, Senior Manager, RSM Ireland
Case study – 123 Systems
Please take ten minutes to read the case study provided
Case study – 123 Systems (cont.)
In your groups, for twenty minutes, consider the key strategic options open
to the business as it seeks to maximise its potential?
• A Tables Operational strategy
• B Tables Growth strategy
• C Tables People strategy
Case study – 123 Systems (cont.)
Group feedback
FUNDING YOUR STRATEGY
Emma Cadden
Translating your strategic goals into a financial model
Strategy
Financial Modelling
Funding Gap
Funding Options
Test
Translating your strategic goals into a financial model
• Once chosen strategy has been identified and incorporated into your
financial model, able to identify your funding gap
• Funding gaps can arise from the following strategies:
− working capital requirements in excess of profitability
− investments/sales and marketing initiatives require funds
− acquisition strategies
• Scenario planning essential to test robustness of financial model
• Modelling helps assess strategy and underlying assumptions.
The funding requirement
• Upon completion and testing of your financial model the funding requirement emerges
• Considerations:
− available options
− cost of funds
− debt versus equity
• May be necessary to undertake further modelling to assess impact of funding options on the financial model
• Chosen strategic option + chosen funding strategy = final strategy for the business.
The funding journey
Financing Your Business
• According to a recent survey for AIB, “Equity Finance for SMEs” carried
out by Ipsos MRBI 2016:
The funding journey
Stages of development of the business will impact the funding options
Traditional banking
• According to the European Commission’s “SMEs: the road to finance
2016”
- Bank loans and credit lines remain the most relevant for SMEs;
- SMEs are reporting fewer loan requests being turned down going from
15% rejection rate in 2009 to 7% in 2016.
• Encouraging a move from over reliance on debt towards better balance
between debt and equity.
• Most significant concern for SMEs re move from traditional banking to
equity finance is loss of control (Ref Equity Finance for SMEs, Ipsos MRBI, 2016)
Venture capital and funds
• Venture capitalists invest with management in ambitious, fast-growing companies with the potential to develop into significant businesses
• Venture capitalists operating in the Irish market today include: Frontline Ventures, Kernel Capital, Delta Partners and Enterprise Equity
• The ISIF has made investment commitments of €437m to Private Equity
• Provide equity, credit and restructuring/recovery investment for Irish SMEs and mid-sized corporates from its portfolio.
• The Government, through EI, made €175m available in Seed & Venture Capital Scheme.
• Private equity.
Other sources of finance
• Enterprise Ireland (EI) responsible for supporting the development
of manufacturing and internationally traded services companies
• Provides funding across all stages of a firm’s lifecycle from initial
ideas to large companies expanding operations
• EI Seed Capital Funds €124m under management
AIB Seed Capital Fund (€53m) & AIB Start-up Accelerator Fund
(€22m)
BoI Early Stage Equity Fund (€32m) and Start-up & Emerging
Sectors Equity Fund (€17m)
• Mezzanine finance
Other sources of finance
• The Employment and Investment Incentive (EII)
• Davy EII Tax Relief Fund – raised €12.3m in December 2015 and actively seeking suitable SMEs for investment
• Peer to peer
Crowd funding – Linked Finance, Fund It, Seed Ups.
Credebt Exchange
• Invoice discounting – pillar banks and other providers such as Bibby Financial Services Ireland (BFSI)
• City/ County Enterprise Boards (CEBs) – can support businesses employing up to 10 people.
Collaboration. Understanding. Ideas and insight.
QUESTIONS
In April
• Implementing your strategy
• Monitoring and reporting progress.
Contact details
T: 01 4965388
Terry McAdam
Partner
T: 01 4965388
Emma Cadden
Director
THANK YOU FOR
YOUR TIME AND
ATTENTION