Tag Archives: Municipalities

Living Wage Policies in the Supply Chain: It’s Not a Zero-Sum Game

Living Wage Policies in the Supply Chain: It’s Not a Zero-Sum Game

by Larry Berglund, SCMP, MBA, FSCMA

Presentations Plus Training & Consulting Inc.

“If we pay contractors who work for our municipality a living wage, it will cost the taxpayers more money.” This is an urban myth.

What is a living wage?

According to the Canadian Living Wage Framework (CLWF), the hourly living wage rate is based on the cost at which a household can meet its expenses once government transfers have been added and government deductions from wages and taxes have been deducted.

A living wage is defined using several criteria including:

  • A healthy family of two adults and two children
  • One child in full-time daycare; one in before- and after-school care
  • The hours worked between the two parents is 35–40 hours per week
  • One parent taking evening courses to improve their employment opportunities
  • Groceries
  • Rent
  • Transit passes

A living wage excludes:

  • Credit card, loan, or other debt obligations
  • Retirement savings
  • Owning a home
  • Saving for the children’s future education
  • Cost of elder care

AND excludes:

  • Any costs “beyond the minimal required for recreational, entertainment or holidays”
  • Any costs “beyond the minimal for emergency or hard times”

Canadian municipalities that have introduced the living wage policy having varying rates according to the cost of living in the various locales.

Table 1

Sample Living Wage Rates by Province and Capital City – per CLWF 2017 

Province

General Minimum Hourly Wage

Hourly Living Wage by Capital City

Alberta

$13.60

$17.36

BC

$11.85

$20.01

Manitoba

$11.00

$14.07

Ontario

$11.40

$18.52

Nova Scotia

$10.85

$19.17

 

There are approximately 65 Living Wage Communities in Canada – and growing. There are hundreds of private sector employers which participate in living wage programs. Why?

It makes good business sense to do so. It’s argued that raising any wage rate increases production costs and the price of selling those goods must therefore increase and your competitors will eat your lunch: higher wages lead to layoffs. But the research shows otherwise. UBC economics professor David Green says that while the latter may apply to teenagers working part time, once you get over the 20-year old age limit employment isn’t really affected. The higher wages contribute to employee job satisfaction and provide those workers with greater economic stability. Every employer faces an affordability factor; however, higher wages do support staff attraction and retention. This leads to lowering the costs associated with hiring and training.

Families receiving a living wage stay within their communities and support local products and services through the redistribution of revenues. These individuals also see an improvement in their self-esteem and in general health – less sick time and medical visits – which in turn saves social costs. Living wage earners, while still considered as lower-income earners, spend more of their increase on essential needs when they receive a higher wage. All the evidence shows that minimum wages, certainly in urban areas, do not meet the cost of living.

Innovation within a living wage business philosophy also considers access to professional development courses, access to in-training staff, or no-cost services for community partners. These ideas can be quantified into a living wage calculation.

Living wage organizations:

The City of New Westminster was the first city to implement a living wage policy for its contractors. In 2011, the city enacted an ordinance for all its contractors to be paid a living wage rate. The living wage criteria is a part of their competitive bid process and is closely monitored for compliance. Living wage rates are adjusted where a contractor is paying some form of economic benefits to its employees. Living wage rates are adjusted annually.

Vancity credit union reviewed its contracts with approximately 1200 contractors across 45 industry sectors. They targeted strategic annual contracts over $250,000 and contracts that typically involved lower wage earners where contracts had lower annual spending thresholds. The latter included personnel agencies, janitorial services, catering, and security services. The financial cost to the bottom line for Vancity to implement its living wage policy was about 1% of its budget. Vancity is one of Canada’s largest living wage employers.

City of Vancouver

In 2017, the City of Vancouver implemented its Living Wage policy aimed at contracts $250,000 per year for ongoing service requirements. The minimum number of hours for these contracts is 120 hours per year per contract. Social enterprises are exempt from their living wage policy.

Living wage criticisms:

Living wage programs are not without their detractors. It is relatively easy to assess the difference in out-of-pocket costs between free market hourly rates, minimum wage, and living wage rates. It appears that the taxpayers – or members of a financial cooperative, for example – are absorbing the difference and do not enjoy a corresponding benefit.

Arguably from a total cost of ownership perspective, it may be more difficult to measure the social benefits between these three wage rates. Putting a cost to building a strong community is as difficult as placing a price tag on improved performance, better employee morale, improved customer service, improved health rates, increased self-esteem, reduced rates of absenteeism, increased staff retention rates, or increased support for local goods and services.

Bottom line – building a healthy and wealthy community is being done by private and public sector organizations through the living wage programs across Canada.

Thanks to Maya Maute, SCMP, Director, Procurement & Contract Management, Vancity credit union for her contributions to this article.

Larry has been in the supply chain management field as an author, manager, business trainer, academia, and consultant for many years. Larry has worked in both the private and public sectors. Recently he has been co-facilitating NECI eSeminars, classroom sessions, and online modules. His new book, Good Planets are Hard to Buy is now available on Amazon.com

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case. For any particular legal problem, seek advice directly from your lawyer or in-house counsel. All dates, contact information and website addresses were current at the time of original publication

National Education Consulting Inc.

Phone: (250) 370-0041     Toll Free: (888) 990-7267

[email protected]

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A Verbal Contract Is Not Worth the Paper It Is Printed On

A Verbal Contract Is Not Worth the Paper It Is Printed On

NECI clients will be familiar with this mantra, used in many of our courses and online offerings. Although it can take additional time to document agreements properly and incorporate legal assistance where necessary, such documentation can provide invaluable evidence and head off time-consuming and relationship-damaging disputes.

Several recent cases out of BC highlight the critical importance of ensuring that contracts are expressed in writing and signed by all parties. All too often we see “handshake deals” that fall apart, create unexpected cost overruns and, occasionally, wind up in court. Here are two examples:

Peter Walry Construction Ltd. v Canadian Adventure Company Holdings Ltd., 2017 BCSC 67 concerned construction work done by the plaintiff on the defendant’s backcountry ski resort in 2013. The defendant did not pay the plaintiff for any of its work. The plaintiff sued for its unpaid invoices in the amount of $40,320.00, plus interest and costs. The defendant denied the claim and counterclaimed, alleging the plaintiff’s work was deficient and caused the defendant considerable damage and loss.

At trial, the court had to wade through evidence of an oral contract, along with several emails and other written pieces of correspondence corroborating portions of the alleged oral contract. After an eight day trial, the plaintiff Peter Walry Construction Ltd. received a judgement in the amount of $40,000 plus interest and costs.

In Willms v MacDonald Builders (Celtic Homes) Ltd., 2016 BCSC 1910, the construction contract between the parties consisted of a “written estimate” in the range of $50,000 to $80,000, along with oral representations and email correspondence. After the work was finished, a dispute arose as to whether the contract was a cost-plus or a fixed price contract. The parties also disagreed over the precise terms of the contract. Approximately $40,000 was paid, but there were allegations of deficiencies, and the owner initiated a counterclaim for between $40,000 and $60,000.

After a seven day trial, the BC Supreme Court concluded that the owner’s claim for $53,000 was valid and the contractor was still owed $40,000. This resulted in a net damages award to the owner of approximately $13,000.

As these cases illustrate, leaving the critical terms of your contracts to be sorted out by the judiciary is risky business indeed. Although in both these cases the court was able to reach a decision, the costs of these lengthy trials far exceeded any damages awarded. Don’t become a litigation statistic – ensure your contracts and other critical communications are well documented, acknowledged and executed by all parties, and amended in writing as necessary as the work unfolds.

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case. For any particular legal problem, seek advice directly from your lawyer or in-house counsel. All dates, contact information and website addresses were current at the time of original publication.

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Labour Relation Trends and Grievances

June 27, 2017 – 1:00 to 2:00 p.m. EDT

While the norm for collective agreements has been around fiscal restraint especially in the public sector, the increasing impact on technology have made for intense negotiations for manufacturing sectors.

We will cover recent trends in negotiations as well as new technology that is available for managing grievances. Companies need visibility into past and present grievances so that they can apply consistent corrective measures. Technology will reduce time and improve compliance and accountability that helps organizations manage cost effectively the grievance process and outcomes.

Labor management is a critical aspect for any organization. Many companies have unions to ensure that Labor policies are fair and consistent for all employees. In unionized work environments, an employee can raise grievances in case any policies have been violated. An organization can have hundreds of grievances in a year. All grievances require investigations and arbitrations meetings which are recorded on paper and cause a traceability headache. Technology is available now enabling employees to create grievance and complaints. Managers & unions can follow through grievance steps and record the outcomes of complaints. Supervisors can create disciplinary actions, maintain employee records.

See More & Register Now!

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Governments Making a Difference: Social Impact Investing

From simply involving disadvantaged populations to help with aspects of service and program delivery to the public, to the complex, interrelated obligations of Social Impact Bonds, the concept of social impact investing is gaining considerable traction in Canada and globally. In this article, we will focus on the latter, often referred to as “SIBs.”

What Are Social Impact Bonds?

Usually a three-way agreement among government, private investors, and service providers, SIBs strive to provide a stable source of non-government funding so that (typically) not-for-profit agencies are able to deliver programs designed to help create a positive social impact. With financial return to the investors based on achievement of clear and measurable social outcomes over a specified period of time, SIBs and other forms of social financing drive specific results that are beneficial to society as a whole, without the traditional reliance on government funding.

Illustration: Sweet Dreams – New Home for Single Mothers

Objective: Sweet Dreams is a supported-living home for at-risk single mothers in Saskatoon. When single mothers receive housing and other support, they are more attached to their children and less likely to have them go into care. This in turn reduces the costs to government of ongoing support for the children, and ultimately strengthens the fabric of society.     

Under the program, at-risk mothers are provided with affordable housing and support while they complete their education, secure employment, or participate in pre-employment activities such as life skills training and parenting classes. The ultimate goal is to help these families transition back into the community, and the specific measurement is the number of families leaving the supported accommodation and staying together for more than six months without re-entering care. 

Funding Model: Under the Social Impact Bond agreement between the government of Saskatchewan, Conexus Credit Union, Wally and Colleen Mah, and EGADZ (the service provider for Saskatoon’s Downtown Youth Centre), the service provider receives $1 million from the private investors to achieve the specific social outcome set by the government – in this case, to keep children out of foster care. 

Outcome Measurement: Critical to the success of SIBs, return on investment to the investors hinges on the achievement of specific and measureable social impact results to be achieved by the service provider over a specific period of time. In the case of Sweet Dreams, the success of the social outcome will be measured by an independent assessor at the end of the second, fourth and fifth years of the agreement.       

This latter aspect of these arrangements is the trickiest, due to the causality issue. Governments across the country and around the world still struggle to measure social outcomes in a precise and defensible manner. And even if the social outcome is achieved, to what degree is that attributable to the program delivered by the SIB agency, and to what degree is it due to outside factors? If the outcome is not achieved within the specified period of time, then the government doesn’t pay out the return to investors. This, in itself, is a major shift for government, given the political overlay.

It is critical to have the right planning, the right parties, and the right expertise when contemplating complex arrangements such as SIBs. Deloitte LLP was the financial advisor on the Sweet Dreams agreement. 

SIBs in Other Jurisdictions

It is still early days for SIBs in Canada, although they have been implemented in other jurisdictions such as the UK with varying degrees of success for many years. A quick Google search will uncover different SIBs, such as agreements designed to reduce the reoffending rates of short-sentence offenders, reduce the number of young people entering Pupil Referral Units in the UK, and many more related to returning children from government care to their families, or preventing government placement altogether.

Some ­­­­Differences between Alternative Service Delivery (ASD) and Social Impact Investing

  • ASD tends to result in contracts with a single provider, while SIBs tend to fund a portfolio of interventions.
  • With ASD, the service providers may have trouble accessing working capital and startup funding. With SIBs, the service-provider costs are covered by investors up front.
  • With ASD, the government usually only pays for success, while the risk and associated costs of unsuccessful interventions are typically borne by the service provider. With SIBs, the risk is borne by the third-party investors.
  • The ASD contract typically sets a threshold for success, and payment is either made or not made depending on whether the threshold is reached. SIBs generally involve outcome payments that are proportionate to the success.

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case. For any particular legal problem, seek advice directly from your lawyer or in-house counsel. All dates, contact information and website addresses were current at the time of original publication.

National Education Consulting Inc.

Phone: (250) 370-0041     Toll Free: (888) 990-7267

[email protected]

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The Critical Importance of Performance-Based Contracting

By:

Maureen Sullivan, LLB, CTP

NECI President,

Legal Editor & Publisher

Facing today’s economic and political pressures to demonstrate how they are doing more with less, procurement professionals can find themselves pushed into giving short shrift to procurement planning. In a rush to get the RFx out the door and move on to the next drafting process, it can be tempting to give only cursory attention to the performance contract itself, and to lose sight of the main reason you are going to the market in the first place – to drive competitive tension and demonstrate transparency.       

As we continually remind our learners, you will never have more leverage than you do before the competitive process starts, so take advantage of that by including clear, measurable performance requirements in the draft contract that is typically attached to or included with the procurement document. Not only will this help respondents provide their most accurate and competitive pricing – because they know exactly what is expected of them, and how it will be measured – but it will also be immensely helpful for keeping the contract deliverables on track and demonstrating that you have achieved value for money.             

Most procurement professionals have had to deal with user dissatisfaction, delayed or deficient performance and reporting, and cost overruns (with the attendant political fallout). Only when stepping in to try and remedy such deficiencies does it become clear that the governing contract has no measurable, clearly defined performance expectations. A client recently advised that, when she stepped in to resolve a tense dispute over the performance of a landscaping contractor, the only reference in the contract to performance that she could find was a statement that “the lawns must look magnificent.” No wonder there was a dispute!             

As procurement professionals should know, vague assurances about “high-quality goods” and “professional service delivery” don’t carry any weight in actually resolving a contract dispute. In fact, such statements work against the buying organization, under the principle of contra proferentum, in that ambiguity in a contract will be interpreted against the party that drafted it.              

If you take the time to develop very precise, clearly defined performance standards and other contract requirements, you will avoid ambiguity that can lead to misunderstanding. Just as importantly, your contract managers will have the tools they need to work through the inevitable hiccups in performance, and, ultimately, to demonstrate that the organization realized its operational goals through the procurement and the resulting contract.             

Clearly defined service levels or other key performance indicators can also be used as a powerful motivator for the contractor, by linking their measurement (good or bad) directly to the contractor’s ability to obtain more work – both for this contract and for future opportunities with your organization. Attaining specified performance levels can be tied, for example, to automatic extension or renewal rights, or adjusted volumes for the contractor, and can even feed into its ability to remain on your Standing Offer Agreements (SOAs), Master Services Agreements (MSAs) or other prequalified contractor list.             

We have all heard the adage that “what gets measured gets managed.” We encourage you to take that to heart when drafting your next RFx and resulting contract, by spending adequate time setting up very clear, specific, and measurable performance expectations. The time, energy and credibility that this can save – both from deterring unqualified or incapable respondents, and in giving contract managers the tools they need to enforce the contract – will truly pay off tenfold for your organization.

National Education Consulting Inc.

Phone: (250) 370-0041     Toll Free: (888) 990-7267

[email protected]

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Seminar – A Sustainability Business Case Your CFO Will Love

ISSP Alberta Chapter Presents: A Business Case Your CFO Will Love Seminar

Leader: Bob Willard, Sustainability Advantage May 29th 2:30-4:30pm at Innovate Calgary

We are making progress on pressing sustainability issues, but not enough progress, fast enough.  Too many sustainability initiatives are failing.  Why?  Because they lack senior executive (CEO and CFO) support.  Why?  Because executives don’t always understand that sustainability initiatives are good for the company, as well as for the environment and society. We need to support sustainability proposals with a more rigorous cost-benefit analysis that shows an attractive payback period and return on investment. 

This seminar is designed for professionals working to accelerate sustainability in industry, government and corporations.   Bob Willard’s new, free, open-source, fill-in-the-blanks Sustainability ROI Workbook enables a business case for sustainability proposals that CFOs will love.

Register Here: $50.00 Non-Members/$25.00 Members ISSP Members may also use this session to support ongoing credential maintenance.

Become an ISSP Alberta Chapter Member and get discounted access to local educational events, professional development and certification, as well as access to free webinars delivered by Sustainability Professionals world-wide! Learn more about the International Society for Sustainability Professionals (ISSP) and the ISSP Alberta Chapter!

Join our Linked In Group and follow us on Facebook for more local networking opportunities.

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Understanding the Impact of the New Trade Agreements

This ‘hot topic’ eSeminar was scheduled as a result of a Poll we conducted that indicated 66% of those who responded were not prepared for the new Trade Agreements that go into effective July 1, 2017.

eSeminar: Understanding the Impact of the New Trade Agreements

June 20, 2017  10:00 a.m. – 11:30 PST  /  1:00 p.m. – 2:30 EST

Implementation of the CFTA and CETA trade agreements on July 1st will greatly reduce barriers to trade and expand opportunities for Canadian companies.  The Canadian market will become more open and transparent as businesses compete across the country and from Europe.  With these new opportunities, of course, comes a layer of complexities that can negatively impact your procurement process if you are not prepared.  

Join us for our eSeminar that will explore the more significant features of the new agreements for both provincial and sub-provincial entities.  Increased transparency obligations, including the requirement for a bid challenge/complaint process at the procuring entity level, will affect not just policy and practices, but will likely lead to a whole new body of tribunal and case law further defining procurement fairness obligations.  Join us on June 20th so that you can identify an action plan for helping your organization meet these important new obligations.  

Learning Objectives:                

  • Review the key provisions that will require a change of practice
  • Explore new bid challenge review procedures under both agreements
  • Discuss strategies for ensuring compliance and avoiding escalation of disputes

Register:

https://www.regonline.com/registration/checkin.aspx?EventId=1997515

Cost: $97 Per person or $479 for the EPIC Pass for team participation

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3 Key Steps to Engaging “Intrapreneurial” Employees

Growing Public Sector Innovation 

Lunch’n Learn Webinar

Date: Wednesday, May 17, 2017    Time: 12pm – 1pm (EST) 

Today more than ever, organizations need to be prepared for the future and to develop strategies and appropriate responses to address disruptive change. The failure to recognize the need for change and to make effective change will ultimately undermine the positive relationships with; employees, customers, taxpayers, and stakeholders, especially in times of tightening budgets, and impending retirements of long-term employees.

Never has it been more critical for the public sector to foster a corporate culture that supports “Employee Creativity and Innovation”. 

In this webinar our special guest speaker, Shona Welsh will take you through the highlights of her latest research on the “innovation deficit” in Canada and she’s also going to provide you with 3 key steps you can immediately embrace to harness “intrapraneurialsim” in your organization.  

For more information and to Register – click here

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Champions of Lean Six Sigma

DATE: Wednesday, May 24, 2017 (1-Day Workshop)

LOCATION: Town of Oakville

Making service improvements has typically been viewed, as the way of introducing “higher costs and ultimately an increase in taxes”. Government Services are constantly under tremendous scrutiny with a focus on traditional cost-cutting measures such as; downsizing, delaying the implementation/timing of a project, cutting actual key components of the service, etc…

At OMLI we are working closely with various governments and their agencies by shifting the focus on the “customer” with guaranteed process efficiencies and financial rewards!

  “6 REASONS FOR CHANGE”

  1. You have been doing the same thing over and over without any significant improvement – “same old results”.
  2. Improving services at the same or lower costs, means getting a NEW PLAYBOOK!
  3. If your objective is to find new capacity within your employees, then you need to direct energy to important services and ELIMINATE the things that DON’T ADD VALUE.
  4. Shifting your focus on your customer and eliminating the non-value added activities and business processes does NOT mean reducing quality customer service.
  5. Re-energizing your organization to get employees excited about what they do will ignite endless possibilities.
  6. Taking the time to examine the actual work performed will provide valuable insight into proper planning for the future.   

Register Here

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