Article

11.07.2016

Flexible remuneration: do’s and don’ts

Increasingly, employers are having to learn how to take the individual wishes of their eclectic workforce into account. This requires customisation. But how easy is it to manage this flexibility in practice?

Time for a remarkable statistic. The average Belgian worker only changes employer three times in their career. This means Belgians have one of the lowest employment mobility rates in Europe. In fact, 30% of Belgians over the age of fifty have never changed jobs. The figures are even lower for government institutions: labour mobility is at a level of just 1%. If you think young workers are more mobile, you will be surprised. Research conducted by VUB sociologist Mark Elchardus has shown that young employees are not the job hoppers people often consider them to be. Young people are happy to work for the same company for ten or twenty years. However, they must be given incentives, much more so than the baby boomers. No simple matter…

Image

A competitive salary and attractive employee benefits are no longer sufficient, says Ester Van Eupen of Accenture:

"Companies must have a good image, state-of-the-art technology and interesting career paths to offer their employees. It's all about culture, opportunities, work-life balance, an attractive physical work environment and belonging. These perks strongly influence productivity and staff retention.

As to young people, they want first and foremost to be challenged. Simply carrying out a job is not enough for them. Young people seek meaning and personal development. Companies must therefore profile themselves as an attractive employer that can respond flexibly to its employee's needs. This is the only way to retain employees, because the widely held belief that young people do not commit long-term, is simply incorrect. The government and healthcare sector score well in terms of fulfilment. This is really important for many employees." 

Customisation

The call for a highly individual approach did not appear out of the blue. When seeking a job, young people behave like consumers. This is not surprising, as today's customers have become used to customisation. Every product or service can be customised, and this tendency can also be seen in the workplace. Male or female, young or old, Belgian or non-Belgian – different employees have different concerns, cultural standards and core values. Customisation is increasingly becoming the norm.

Win-win

Employers must therefore provide variation, for instance by making internal mobility easier. Leen van Damme, remuneration expert at SD Worx, believes this makes sense:

"People don't always want or have to climb up the corporate ladder. First and foremost, they are interested in developing a broad range of skills. Good internal mobility is always a win-win situation. Employees are given the opportunity to grow and change. Employers also benefit from this, because your employees stay motivated and are more versatile."

One size does not fit all

Whether your work is interesting and varied or not – at some point it is about the money. Leen Van Damme is in favour of flexible remuneration, an issue many companies are struggling with:

"In most sectors salary scales are still all about age and seniority. Each employee in the same category is entitled to the same benefits. But today, "one size fits all" no longer cuts it. People want individual choices, and flexible remuneration gives employees this option. Compare it with a store where employees can shop around. Employees are allocated a budget for fringe benefits. They can use this for extra leave days, for example, or more cash, a smaller company car and a bicycle, or a larger car, etc. They may choose once a year, and employers can modify the fringe benefits they offer.

Can this change be brought about in the public sector? Why not? The City of Ghent was one of our first customers. Although the options may be more limited, government organisations can take the lead when it comes to flexible remuneration. Giving people the option to take more leave, for example, also provides leverage for keeping people in employment for a longer period of time.”

Prefab

Flexible remuneration offers many advantages. It increases staff satisfaction and retention. Employees who are considering moving to a different organisation always weigh up the pros and cons. They will think carefully before giving up the perks of their job. Offering them something they won't find elsewhere increases their loyalty. Koen Dewettinck of Vlerick Business School warns about the potential pitfalls:

"Organisations must be able to keep the administration processes manageable. I don't think it's advisable to give people too many choices, as this makes them indecisive. Develop a few prefab packages from which people can choose. Remember that becoming more flexible requires more work, and that HR departments are increasingly expected to be more efficient.”

Article

11.07.2016

Outsourcing in the public sector: no mean feat

An increasing number of companies are relying on external providers. Although the public sector can also benefit from this development, there are several obstacles in the way.

Keep in-house or outsource? That is the question for today's HR executives. A growing number of companies are refocusing on their core activities, a strategic exercise that began some time ago. An economy on the mend and the shortage on the job market, however, are accelerating this trend. Ester Van Eupen, Senior Manager with Accenture Strategy – Talent and Organization:

"It used to be a case of hiring external staff for transactional or operational activities; take for example call centres. Today, outsourcing is much more a means of increasing an organisation's flexibility, for instance by adding a flexible "shell" of external staff to its fixed core of internal employees. This shell consists of external staff with specific skills or knowledge. Often these are highly skilled professionals who are a very scarce commodity on the job market. The main advantage is that the organisation no longer has to go through expensive and time-consuming recruitment procedures. Not only does it save time and money, it also means having to invest less in training: you simply pick the skills from the market."

Cost savings

The government is also increasingly placing its faith in outsourcing. Kristien Van den Bon, Business Development Manager for the Government at SD Worx, explains why:

"Governments have to make savings. There are three ways of achieving this. Option one: scaling-up. An example is the imminent mergers between municipalities, cities and public centres for social welfare (OCMW). Option two: more standardisation and digitisation. Option three: scale back to core activities only and outsource everything else. This enables organisations to guarantee more professionalism and a higher level of efficiency, thereby saving them time and money. The outsourcing trend will undoubtedly continue. The public sector is no exception."

Inflexible tender procedures

In practice, outsourcing is anything but straightforward. Tender procedures, which are often complex, can be a spanner in the works. Kristien Van den Bon calls for a more pragmatic approach:

"Public tenders are not just a burden in terms of time and money for the government authority organising the process; the companies responding to the tender have to use their time and resources too. Many companies don't like the process as it results in a lot of paperwork and the outcome is very uncertain. People also focus on the cost price far too often. At this juncture, it is sensible to remind oneself that the cheapest solution is not necessarily the most worthwhile in the long term.

Government authorities should concentrate more on the total cost of ownership, an approach that maps out the direct and indirect costs of products or systems. It really is the tip of the iceberg; the hidden costs of inefficient products or services put a major squeeze on the organisation's investment in the long term. The inflexible structure of tenders often makes it difficult to make the right choice. Instead, organisations quickly become bogged down by the legal complexity of the procedural requirements. Quality is something that is difficult to express in figures from contracting procedures."

Article

11.07.2016

Flexible working: quite a challenge for the public sector

Although teleworking has become commonplace, it is not always received positively. A rigid, hierarchical attitude is often to blame. It is therefore not surprising that newer and more flexible ways of working, like co-sourcing, are met with great resistance, despite the many benefits.

Teleworking has been on everyone's lips for decades, but the real breakthrough has only been made recently. In many companies, teleworking has not got off to a good start. Jan Laurijssen of SD Worx says the reason is straightforward: employers have to learn to let go.

"With teleworking, your employees are partly in charge of the process. Not all companies are ready for this. The problem is that companies introduce teleworking for the wrong reason. They move to a smaller office with flexible workspaces, simply to save costs. Employees have the option to work from home and that, basically, is the end of the story."

Charisma

Kristien Van den Bon, Business Development Manager for the Government at SD Worx, believes working from home must be actively endorsed at the executive level:

"Executive managers must take the initiative, otherwise it remains largely a theoretical exercise. The FPS Social Security organisation was a pioneer in teleworking. At the time, manager Frank Van Massenhove put a lot of effort into getting this off the ground. This type of project can only succeed if it is headed by a charismatic leader who personifies the change and takes responsibility for the process. Cost-cutting alone is not sufficient as a prerequisite for change; you have to believe in it. Without top-down support, teleworking is doomed to fail.

Incidentally, the "New World of Work" involves much more than teleworking. It is also about flexibility in terms of working hours and place of work, whether that is at home, at a satellite branch or elsewhere. Virtual teams, organising work in autonomous teams, target management, etc. are also aspects of this new way of working. These all have a positive effect on employee engagement – not insignificant when you consider we will all have to work for longer."

False sense of control

Many employers are hesitant about introducing teleworking for fear of losing control. Jan Laurijssen dispenses with that assumption:

"Let's be honest: you are giving up a false sense of control. Take for example a conventional office with employees working at their computers. Bosses see that their employees are working, or at least they think they are. How do you know those people are really being productive? In fact, it's been shown that teleworkers respond very quickly to e-mails from line management. They are keen to prove they are hard at work. Consequently, people work more efficiently at home than at work. The boss thinks he's no longer in control, but rest assured: people are quite capable of self-management."

Article

01.02.2016

Factoring: A success story

Factoring is on the rise: last year this market reached a total turnover of 61.2 billion euros, resulting in an impressive growth of as much as 10.5%. BNP Paribas Fortis' market share rose slightly from 38.4% to 38.6%.

Ignace De Keyser, Sales & Marketing Director at BNP Paribas Fortis Factor, explains the increasing success of factoring.

How is the Belgian factoring market developing? Do you see any marked trends?

‘The growth figures speak for themselves: factoring is clearly becoming more important. Factoring used to be more of a support mechanism, but today it is a mainstream solution easily competing with banking solutions. This obviously has to do with the liquidity crisis and the successive measures.

Factoring is not entirely comparable with a banking solution, of course. Factoring offers companies more than just flexible financing. The factoring range also includes credit management and hedging, although these services have receded into the background somewhat in recent years. Factoring owes much of its popularity to the financing aspect.

The lingering economic uncertainty, the search for new markets and the realisation that 'too big to fail' is really an illusion are forcing companies to protect their low margins. More and more entrepreneurs are adding this element to their factoring solution.

Credit management outsourcing is also on the rise again. Many larger companies had already professionalised this area, but are now outsourcing all non-core business as much as they can.

BNP Paribas Fortis Factor has always held this service close to its heart. Our customers can therefore rely on a specialised team that guarantees continuous follow-up both here and abroad.’

What are the reasons for this change of attitude?

‘There are two main reasons for it. First and foremost, our services and operating methods have changed radically in the last few years. That is largely due to the development of new communication technology. Some years ago, all communication was still by mail or fax, bills had to be processed and entered in the system manually, and reporting was also done manually. In brief, it was a time-consuming process with more potential for mistakes.

Nowadays the vast majority of our customers transfer all their data electronically, directly from their accounting program. As a result, the entire process – from the customer drawing up bills to receipt of the funds – takes two days at most, depending on the quality of the file sent to us. And there is much less risk of mistakes. Thanks to these innovations, factoring is now much quicker and more straightforward than before, which has also meant a reduction in the cost for our customers.

Secondly, there has been a major change in the target group and the use of factoring. In the past, banks suggested factoring to customers that had become too risky to finance using conventional loans. In other words, it was a last-ditch form of short-term funding that provided the bank with much greater protection in the event of the customer going bankrupt. Consequently, some companies were more or less forced to use factoring and were not overly pleased with it. Add to that the administrative switch and it's easy to see why factoring got a bad reputation. The most oft quoted argument against factoring was fear of what customers would think.

The turnaround came some years ago with the introduction of the new Basel II standards, whereby banks were required to maintain a capital buffer to cover their risky activities. The buffer for factoring was significantly lower than for conventional loans, making factoring a more attractive option for banks. As a result, they started to offer factoring to customers with a good credit rating, who in turn began to see its potential.

On the back of these two changes, an increasing number of companies are using factoring to boost their working capital, and for a longer period. Twenty years ago a customer would be with us for an average of two to three years, but that has since doubled.’

Will Basel III intensify this trend?

‘There can be no two ways about it. Basel III has made banks subject to even stricter capital requirements, which can only make factoring a more attractive option. What is more, the new standards focus much more on liquidity. In this connection, the operational relationship between the bank and the customer plays an important role: if a company entrusts its cash flows to a bank, it can regard the risk of loss of liquidity as low and maintain a lower liquidity buffer. In this respect, too, factoring hits the mark.’

So what makes factoring such an attractive option for companies?

‘A financially sound company can benefit by outsourcing the administration of its accounts receivable to us. While we monitor the receivables, the customer can focus entirely on business. And in the vast majority of cases, we are able to collect amounts due 25% more quickly than the customer. Thanks to our experience – we know all of the most commonly used excuses – and reputation, we can encourage debtors to honour their payment terms. After all, no-one wants a financial partner to think that they are an unreliable payer.

More importantly still, factoring is a more flexible form of funding than conventional bank loans. That is because funding develops in line with turnover: if turnover increases, the company issues more invoices, and funding rises too. Factoring is therefore a very attractive option for developing companies.

The "off-balance-sheet" aspect of factoring is another deciding factor. This not only improves the company’s balance ratios, but also has a positive impact on the cost and availability of the company's other credit facilities.’

Is this typically a product used to cope with a crisis?

‘No, definitely not. Factoring is especially popular when economic conditions are volatile, which means periods of crisis and of growth. In such circumstances, it is essential for companies to be able to convert their receivables to cash quickly. This is less important when the economy is stable or less volatile.

That is why the factoring market expanded so considerably in 2009-10, when the financial and economic crisis was at its worst. Because debtors were taking longer to pay, many companies had to contend with cash-flow problems. Quicker collection of bills can go a long way towards reducing that pressure. That is particularly so if you combine quicker collection with a package that includes cover against the non-payment risk and debtor default.

However, factoring is also an attractive option when the economy is improving. If companies receive more orders and turnover increases, there can be cash-flow problems because their working capital need is higher. So factoring is a highly flexible means of funding the working capital requirement based on increasing receivables.

It is not therefore a product just for times of crisis; it can be beneficial for any company. And the best way to prove the effect of factoring is simply to try it out.’

Article

01.08.2016

The challenges facing the Belgian transport sector

In this article, we take a closer look at the transport and logistics sector in our country. How has it been doing over the past few years? What trends are likely to take shape? And what is the future of the Belgian transport industry?

Before we start our analysis, it is important to point out that the Belgian transport sector forms part of a broader European and global transport system. That is both a curse and a blessing. Today, past European decisions are still a major determining factor when it comes to the 'health' of the Belgian transport industry. The free movement of goods and persons, a European priority since the early 90s, not only brought with it opportunities, but also immediately became one of the greatest threats to Western European carriers. And that is just one of the challenges the sector faces.

'To give an example, there's the rise of the internet and mobile telephony, which have digitalised the economy. That had consequences for working methods in transport and logistics, but the advent of e-commerce has also had an impact on demand for transportation. On the other hand, a sort of 'global village' has been created. In a way, distance no longer matters, and the exponential growth of container transport is a direct result of that,' says Jean-Marie Becker.

As CEO of MMM Business Media, he has been following the transport and logistics sector in Belgium and abroad for over 30 years. He is also regarded by the Belgian transport industry as someone with a real understanding of the sector.

Consequences for logistics and transport

The aforementioned trends have certainly not been without consequences. National importers and warehouses have been replaced by EDCs and RDCs – European and regional distribution centres – which service several countries at once.

'Moreover, internationally active companies decided to concentrate their production units in Europe, and preferred to seek new opportunities where higher profits awaited them. Here I'm talking about the BRICS and PECO countries. That of course has resulted in a reorganisation of the logistics landscape,' says Jean-Marie Becker.

The reason behind Belgium's continuing key role in this new economic landscape is its geographical location. In addition, our ports still have a decisive part to play, as shipping companies only allow their ships to stop over in a small number of ports for profit-related reasons. Antwerp and Zeebrugge, but also Rotterdam, do particularly well, and as a result our country has been able to get its hands on a piece of the transport and logistics pie.

'A prime example of this is that Antwerp is actually the largest French port if you look at the amount of traffic heading for France,' Jean-Marie Becker stresses. ‘A country such as Belgium must continue to reap the benefits of its excellent geographical position, which acts as a weapon in the fight against the threats looming over the world of transport.’

Adaptability is crucial

In the changing landscape of the transport sector, hauliers must try and keep their heads above water. But how? By making their strengths a specialisation, or by keeping up with developments in the economy and transforming themselves from a haulier into a logistics provider, a 3PL or even a 4PL company.

The terms 3PL and 4PL have come increasingly into fashion in logistics over the past few years. 3PL stands for 'third party logistics', and 4PL of course stands for 'fourth party logistics'. But before we look at the difference between them, lets go back to basics: specialisation in 1PL, pure transportation. A specialisation that is becoming more and more difficult as time goes on. This is a result of, among other things, increasing competition from companies in the former Eastern Bloc countries (or branches of Belgian companies that are based there).

Focusing on particular niches may provide a solution, but many carriers have opted to expand their activities further, providing warehousing services to their customers on top of transportation services (2PL).

'It is a way of bringing added value to your role as a haulier that allows you to distinguish yourself from pure carriers. But if you are really looking for added value, then it's 3PL companies you want, as they also provide logistics alongside haulage and warehousing. By also offering logistics services, these companies gain more control over the supply chain of their customers, and strengthen their position at the negotiating table,' explains Jean-Marie Becker.

However, 3PL companies ultimately remain contractors, as the shipping company for which they work continues to call the shots when it comes to strategy. A 3PL company thus focuses on activities at operational and tactical level in order to squeeze as much profit as possible out of its own assets (trucks and warehouses).

A bridge too far?

The next step in this trend is the arrival of 4PL companies. These companies become real chain managers. That also means that they often do not use their own equipment, but still seek to provide the best solution for their customer's supply chain. A 4PL company will then call upon partners to implement the solutions it comes up with, and therefore often turns to 3PL companies, which take care of transportation, storage, value-added logistics, planning and even supply management. For most Belgian companies, however, this far-reaching development is a bridge too far: they mostly tend towards 3PL specialisation.

'I believe that the future lies with family-run 3PL firms, along the lines of Dachser, Kuehne + Nagel and Galliker,' admits Jean-Marie Becker.

According to him, the future is more likely to lie with them than with large groups in the hands of equity funds. That is because these funds buy and sell companies when this is of most financial benefit, and are therefore a much less reliable partner for shipping companies and production companies.

Niches: a starting point

Regardless of the changes that transport companies have undergone in recent years, the quest for market niches remains a must. No matter how big or small the company.

'There are plenty of examples of companies who have successfully focused their activities on a particular market. A fine example of this is the relatively small company Esser & Lennertz from Bilstain, near Liege, which specialises in wholesale trade in sand and gravel, and has also expanded to become an internationally active construction materials haulage company. However, medium-sized enterprises can also find success on niche markets, like in the case of Havart, which grew from a crane specialist to a logistics service provider for all heavy goods,' says Jean-Marie Becker.

Not just for the small fry

Today, though, even the big players recognise the importance of niche markets. Katoen Natie, for example, is developing no fewer than 17 different business lines, in which it positions itself as a specialist in particular niches.

'That means art, automotive, petrochemicals, port operations, process engineering...the list goes on. But they're not the only ones taking that approach: Jost Group is now looking to 'split' into the divisions Europe & Maghreb, Integrated & Customised Logistics and Air & Sea Freight,' continues Jean-Marie Becker.

Another big name in the Belgian transport sector that has understood very well that versatility and specific niche specialties can go hand in hand is TDL Group, which has simultaneously formed the divisions Fresh Logistics, Building Logistics, Dedicated Logistics, Pharma Logistics and Coldwayexpress, making it both a specialist and a generalist.

Is e-commerce resulting in an overhaul of the sector?

Trade conditions have changed dramatically since the advent of the internet. Small retailers were suddenly in direct competition with global traders. Consumers no longer just purchase goods from the shop on the corner, but also from other (and sometimes distant) countries. This trend is the driving force behind transport and logistics worldwide.

It goes without saying that developments as drastic as e-commerce, for that is the phenomenon described above, lead to the emergence of specialists focused on providing logistics solutions for that phenomenon.

'We are not only seeing logistics providers becoming e-commerce specialists for deliveries coming into Belgium, like in the case of PFS Web, but also companies working in the opposite direction,' notes Jean-Marie Becker.

He is referring in the latter case to Sedis, a company from the west of Wallonia that is a prime example of such a development. This company has effectively responded to the fact that the middle class in China has become more well off and is happy to splash some cash. People love the kinds of products available from Belgium, and Sedis makes sure that everything they order arrives safely at their front door in China. Euroterminal, for its part, saw its revenue almost double in the space of one year thanks to e-commerce.

'In actual fact, anyone can become a 3PL in specific e-commerce sectors, as this is a fledgling sector with an enormous potential for growth,' concludes Jean-Marie Becker.

Dare to believe in cooperation

For many years, cooperation between hauliers was taboo in the sector. All too often, carriers viewed their counterparts as a threat rather than an opportunity. Yet certain forms of cooperation have enormous potential. Especially now the Viapass mileage-based vehicle tax is looming large on the horizon...

Jean-Marie Becker is convinced that the impending introduction of the Belgian mileage-based vehicle tax will encourage more cooperation among Belgian hauliers. 'It's actually astonishing that people didn't start putting their heads together earlier and more often,' he continues.

No-one can go it alone

Becker sees opportunities for cooperation at various levels: between colleagues active in the same sector, but also between companies from the same region. And European networks are trailblazers when it comes to such collaboration. That includes Astre, Big Move, Pallet and others. These networks were born of the realisation that it is not possible for hauliers to master everything to perfection. If you are active at European level in particular, you cannot have an equally strong presence everywhere.

'Colleagues can plug that gap and increase the level of service provided by your company, whilst also improving their own quality level. Cooperation is the key to being able to provide for customers any time, anywhere,' says Jean-Marie Becker.

Sometimes, seeking opportunities for cooperation may go hand in hand with striving to improve quality. RoadSpirit is a prime example of this. This is a Belgian group made up of family firms in the transport and logistics sector who aim to achieve economies of scale in as many areas as possible by pooling their resources.

Mileage-based vehicle tax to affect transport and logistics

The Viapass vehicle tax will not be without consequences for the Belgian transport sector. However, it remains to be seen whether this new tax will have the effect intended by the government. For hauliers, the mileage-based vehicle tax will certainly result in increased costs, some or all of which will have to be passed on to customers.

This will result in rapid changes to the face of the sector.

'At the moment, everyone is busy doing their calculations. How much will the mileage-based vehicle tax cost hauliers? What share of those costs are a result of empty kilometres or kilometres racked up on the way to picking up goods? What share of those costs will it actually be possible to pass on? And they are certainly already thinking about how and when these extra costs will have to be negotiated with clients,' warns Jean-Marie Becker.

Consolidation

Whatever happens: the sector is trying its utmost to arm itself against what is to come, and is therefore on the lookout for solutions to reduce the number of empty kilometres to a minimum. This may be done through collaboration with other carriers, but also through strategic acquisitions.

Absorbing own transport

Another potential consequence of the mileage-based vehicle tax is that many companies who currently transport their own products may no longer regard this as a profitable exercise. And this brings with it an opportunity for professional goods transporters, who can grab the chance to gain extra custom. Extra custom that may help them to compensate for their own empty kilometres.

'And this is not an original idea, by the way. When the transport landscape changed in Switzerland – the first country to introduce a mileage-based vehicle tax – you saw a clear shift from own transport to third-party transport,' stresses Jean-Marie Becker.

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