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How to attract and retain workers in a seller's market


Retiring Baby Boomers and the competition for skilled workers of any age mean employers need to use new strategies to transfer institutional knowledge and maintain a thriving workforce.

Construction companies in New England have an increasing number of projects to keep them busy, but face a shortage of skilled workers who can take on the work. As a result, a lot of new development is on hold. And it’s not just New England. By 2020, it is estimated there will be a global shortfall of 85 million high-skilled workers.

A national survey released by The Associated General Contractors of America reveals that this is a larger problem, as two-thirds of contractors are having a hard time finding qualified workers to keep up with construction demand. And while firms are changing their workplace policies to increase pay and efficiency, it is still difficult to find enough people with the right skills to fill critical roles. Add to that the number of Baby Boomers leaving the workplace—and taking their institutional knowledge with them—and you have a situation that can directly affect how, and if, a company grows and succeeds.

Attracting and retaining a new generation of talented and skilled workers continues to be a struggle for companies across the country, not just in construction. Millennials—soon to be more than half of all workers—are a new breed; they tend to stay in jobs for approximately three years, making long-term knowledge transfer to them a challenge. At the same time, a large portion of Baby Boomers are looking to retire or reduce their workload.

How do you attract and maintain an effective workforce as the workers themselves come and go?

Business owners and executives have options and can do a better job of both holding onto aging professionals, and hiring younger ones. There are a lot of stereotypes describing millennials (and baby boomers for that matter). Look beyond them. Consider some of the ways to address finding and keeping the skills and knowledge your workforce needs:

  • Focus on shared knowledge across the organization (your business leaders can do a knowledge and skills inventory); make knowledge sharing easy with cloud software tools and accessible technology; understand that “transferring” knowledge to other workers may be seen as a threat to people who have that knowledge.
  • Create and formalize opportunities to transfer knowledge. Make sure that you have a succession plan in place for senior leadership. Will employees looking to retire want to cut back to part-time before they do so? Can they stay with you a bit longer to train and mentor younger team members and share their knowledge? Not only is their knowledge valuable, they may also feel inspired to teach a new generation, and your company can save money in training costs.
  • Rethink processes. What technologies are available to help take some of those duties and automate or streamline them? Making your employees more comfortable shifting to different approaches will encourage buy-in, boost morale, and make cultural change less threatening. 
  • Make your workplace more appealing for current and potential employees: look to industry leaders and larger, bellwether companies to address vacation policy, community service, fringe benefits like lunches, social activities, wellness programs and other incentives. Many have added sabbaticals to reward employees for 10 or more years or service.

Beyond focusing on retention strategies, when is the last time you looked at how, when and where you recruit new employees? Here are some things to consider:

  1. Amp up your recruiting strategies. Think about what you want to offer candidates to walk through the door. Think about how you write your job descriptions, the words you choose, the salary being offered as compared to the role. Think about where you are going to find new employees, what job boards you are using, what your process is for onboarding. Have you tried social media? Find out where the millennials are looking and active online, and meet them there.

    All of these elements are critical in being an attractive workplace, especially if you are seeking younger workers. Millennials and/or Generation Y’ers want to know their work is going to make a difference. They want work/life balance along with perks like a gym membership discount, plenty of days off, and the ability to work remotely when needed. They also want to be mentored and learn. Are you able to provide those things? If not, how do you plan to make your company an enticing place for young people to work?
  2. Think remotely. More employees want to work from home and on their own schedule. It’s not just millennials who want flexibility. It’s becoming an intergenerational issue. Are you set up for your employees to work remotely? According to a TINYPulse survey, “What Leaders Need to Know about Remote Workers,” 91 percent of remote workers say they are more productive when working out of the office. 
  1. Cultivate diversity. Encouraging difference and recognizing diversity doesn’t just mean hiring workers with different ethnic backgrounds (though that will certainly help in creating a high-performing and culturally enhanced work environment). It means making room for a variety of different work styles and preferences, and being more flexible. For example, if you have a 59-year-old manager who loves her job, but wants to work a compressed work week or go part-time, will you be able to accommodate her? Often changing an individual’s work configuration can re-energize their commitment to the job. Or, if a millennial was about to say yes to your job offer but wanted to work remotely one day a week, would you be able to accommodate her? Your ability to be flexible and nimble is important.
  1. Hire outside your scope. It’s time to look beyond the approaches you typically take and widen your net. You can do this in many ways, but here are two to help you get started:
  • Look to social media to find qualified candidates. Did you know that the use of social media for recruitment has grown 54 percent in the past five years? According to a recent Society for Human Resource Management study, 84 percent of organizations are now recruiting on social platforms. On the flip side, 79 percent of job seekers use social channels in their job search, according to Glassdoor, with one in five applying for a job they learned about through social. New mobile applications are making finding qualified candidates easiereven those who are passive in their job search. Twitter has become an important tool for many hiring managers, as well as LinkedIn, Glassdoor, and other tools. Start experimenting.
  • Don’t overlook hidden populations. According to the Maine’s Labor Shortage report, new immigrants and their children are expected to account for 83 percent of the growth in the U.S. workforce from 2000 to 2050. Many immigrants come with degrees in technology, engineering, science and math. Many have business experience. Don’t let cultural differences be the reason why you don’t hire someone. Be creative and get your staffing needs met.

Our workforce is changing and it’s time to take a long hard look at how to best adapt. Embrace the future and the people who will help you get there. There is a lot of opportunity to make positive changes in management, employees, and business models. There will be challenges. There will be victories. There will be questions and yes, some growing pains. Just remember, you’re not alone. 

Early-stage startups must often contemplate the most practical way to raise capital for their business. If traditional debt and equity methods are not available, different avenues to raising capital must be considered. Here are four alternatives to traditional debt and equity transactions:

Simple Agreement for Future Equity (SAFE)

A SAFE provides rights to an investor for future equity in a company without determining a specific price per share at the time of the initial investment (date of agreement), nor does it provide for interest or a maturity date. A SAFE investor receives future equity shares when a priced round or investment event occurs (e.g., a Series A preferred stock financing round), typically at a discounted rate. SAFEs are intended to provide a simpler mechanism for startups to seek initial funding.

Convertible note

A convertible note is a hybrid security containing components of both debt and equity. The loan can be converted into either a predetermined or a variable number of equity shares at a later date, usually upon the occurrence of an event such as a financing round or liquidity event. In some cases, these are complex agreements that require more involvement from legal counsel.

Keep It Simple Security (KISS)

A KISS can be structured as either a debt or equity agreement. An investor provides funding to the company in exchange for the right to convert the instrument to equity upon a future event when an equity round is raised and preferred shares are issued. Like a SAFE, KISS agreements delay the need for a valuation and can minimize legal expenses. Unlike SAFEs, KISS notes do provide for an interest rate and a maturity date. KISS securities frequently include a Most Favored Nation clause, which provides that should a better deal be provided to new investors at a later date, they would need to revise the terms of the KISS investments to match the new preferable terms. These are sometimes seen in SAFEs and convertible notes as well. A KISS is generally viewed as more investor-friendly because of the protections it provides.

Redeemable preferred stock

A type of preferred stock that allows the issuer (the company) to buy back (call) the stock at a certain share price and retire it. The call feature can be beneficial for the company, as it can eliminate equity if it becomes too expensive. Aside from the redemption feature, it sometimes contains common provisions of preferred stock such as fixed dividends to the holder ahead of payments to holders of common stock. Another version of this, mandatorily redeemable preferred stock, includes a put feature that allows the investor to request the funds back at a specific date including a return. Depending on the provisions in the contract, mandatorily redeemable preferred stock may be classified as debt on a company’s balance sheet.

This is not an all-inclusive list. There are other non-traditional methods of financing, including, but not limited to, peer-to-peer lending, crowdfunding, and government grants. Selecting the appropriate methods of raising capital for your business involves the consideration of numerous factors. Current macroeconomic trends, the company’s industry, and long-term strategic objectives are examples of factors you may want to consider.

If you have questions about raising capital and the related business, accounting, and tax implications, please contact our professionals. We can also provide guidance on other alternatives to raising capital.

Raising capital for startups: Four alternative methods to consider

There is a growing interest in the business world for companies to reduce their Greenhouse Gas Emissions (GHG), particularly as Environmental Social Governance (ESG) initiatives become more commonplace. Many organizations have come to realize that their shareholders or other stakeholders are interested in knowing the extent of the organization’s social or environmental impacts. One step some organizations are taking to contribute to social and environmental responsibility is to reduce their carbon emissions—either through directly changing their business practices, purchasing carbon offsets, or both.

What can companies do to reduce their carbon footprint?

There are several ways that businesses can reduce their overall environmental impact. Companies often begin this journey by understanding what their carbon footprint is, which is the amount of emissions related to an organization’s direct and indirect activities. Generally, these emissions are measured in tons (for example, driving 2,500 miles generates a ton of carbon dioxide.) Since this process is voluntary, a company can consider measuring their footprint based upon a scope:

  • Scope 1 relates to what the organization directly emits, such as through exhaust in automobiles used for business purposes.
  • Scope 2 relates to carbon emissions specifically from energy production needed for the organization’s use, such as the electricity used to power their office.
  • Scope 3 includes all other indirect carbon emissions, including all the participants in the supply chain of a product the company sells.

Regardless of the scope used, a company will generally set a goal of reducing their overall carbon footprint by a certain amount. They may choose to address this goal through a number of methods, such as switching to renewable energy or implementing other energy-reduction strategies. This is a great first step; however, most companies realize that gains in energy efficiencies can bring a company only so far toward their goal. It is generally at this point that companies consider using carbon offsets as a tool toward achieving their goal of reducing GHG.

What is a carbon offset?

A carbon offset, also called a carbon credit, is created when one company removes a unit of carbon from their business activity and is deemed to have generated an offset. Once certified, that offset can then be purchased by another company as a means of reducing its own carbon footprint. The carbon offset market is huge, and growing rapidly. In 2020, the market was estimated at approximately $2 billion, and it is expected to grow to $50B or much more by 2050.

Carbon offsets operate in a voluntary marketplace. While there are some exchanges available for purchasing offsets, most companies purchase credits through organizations that facilitate the certification of projects and determine the number of carbon credits produced. Common projects that generate offsets include reforestation, the capture and destruction of greenhouse gases, and renewable energy projects.

As expected with a rapidly emerging practice of using carbon offsets, the market is far from perfect. There are even reports that some carbon offsets may be worthless and actually contribute to increases in GHG. Given the complexities, it is important that the buyer conduct their own research in order to have an overall understanding of how the market works

Accounting for the purchase of carbon offsets: Two options

Once a company has set a goal for reducing their carbon footprint, has researched the carbon offset market, and purchased offsets to help meet their goal, then what? How are carbon credits accounted for on the company’s financial statements?

Regulating agencies are beginning to issue some guidance around carbon offsets, including:

  • The SEC has proposed rules to enhance and standardize climate-related disclosures for investors for public traded companies.
  • FASB recently added a project to its technical agenda to improve the recognition, measurement, presentation, and disclosure requirements for participants in compliance and voluntary programs that result in the creation of environmental credits and for the nongovernmental creators of environmental credits.

However, when it comes to accounting for offset credits, there is very little official guidance on how a company should account for the accumulation of carbon offsets and their use.

For companies acquiring carbon offsets, the accounting choices, at this point, boil down to either the purchase of an intangible asset or the purchase of inventory.

Carbon offsets as intangible assets

Per the ASC 350-30-20 glossary definition, intangible assets are "assets (not including financial assets) that lack physical substance." (The term intangible assets is used to refer to intangible assets other than goodwill.)”

The carbon credit does not have a physical form but could be treated as an asset. Therefore, it meets the definition of an intangible. For accounting record keeping, the acquisition of these would be at fair value, which in most cases would be the cost or price paid by the company. Since carbon offsets generally have an indefinite life, as intangible assets, they would not be subject to amortization in the event that the credit was held and not used for more than one operating cycle. Once the offset is claimed by the company, it is “decertified,” meaning it is removed from the registry and therefore no longer certified as an offset credit. At this point, the company would write off the value of this intangible asset and recognize an expense.

Carbon offsets as inventory

Alternatively, a company could consider the acquisition of carbon offsets as inventory.

Per US GAAP, inventory is defined as "the aggregate of those items of tangible personal property that have any of the following characteristics:

  • Held for sale in the ordinary course of business
  • In process of production for such a sale
  • To be currently consumed in the production of goods or services to be available for sale."

While carbon offsets are not tangible personal property, they are tradable and could be held for sale in the event that the company wanted to speculate on trading these carbon credits rather than use them.

As inventory, their costs may be determined under any one of several assumptions as to the flow of cost factors, such as First-In-First-Out (FIFO), average, and Last-In-First-Out (LIFO). The major objective in selecting a method should be to choose the one which, under the circumstances, most clearly reflects periodic income.

If considered inventory, the cost would be subject to neither impairment nor amortization. As inventory, however, there would be a lower of cost or net realizable value consideration at each reporting deadline. Once de-certified and therefore used, the company would report a reduction of inventory and a debit to expense.

Once the company selects its accounting method as either intangibles or inventory, it should use the same method when retiring or selling off the carbon offset credit.

How to choose a method for accounting for carbon offsets

In the absence of specific accounting rules, the accounting policy used by a company will generally come down to the specific facts and circumstances of the arrangements giving rise to these carbon offset credits and how the company plans to utilize the carbon offset credits.

Through thoughtful financial statement disclosures, a company can keep the readers of their financial statements informed of their practice and how those practices impact its overall financial statements.

In conclusion, carbon offsets offer companies a way to meet their ESG goals by purchasing credits from other companies that are reducing their carbon emissions. These steps can help a company claim social and environmental responsibility. But, on the accounting side, the rules are vague. BerryDunn’s Commercial Team has extensive experience working with clients who have purchased carbon offsets and can advise you on the best approach for your business. Contact our team to schedule a conversation.

Accounting for carbon offsets: What to do when the rules are vague