Finding Talent Remains a Top Issue for Private Capital
Finding strong talent has always been a challenge for business owners, but the pandemic-driven lifestyle changes, aging demographics and intensifying competition amid the economic rebound are making attracting and retaining the best employees even more difficult.
Companies, particularly smaller organizations with fewer resources, are being forced to come up with new ways to lure talent as the recovering job market heightens Canada’s labour scarcity.
A recent Business Development Bank of Canada (BDC) report shows 55% of entrepreneurs surveyed are struggling to find staff – with many entrepreneurs unable to fill jobs for three or four months – and more than a quarter having difficulty retaining workers. Nearly two-thirds (64%) report that labour shortages are limiting their growth, while nearly half (44%) have delayed or are unable to deliver orders to clients and a third (32%) say their business has become less competitive.
The BDC report says the longstanding labour force issues were amplified by the pandemic “destabilizing an already-precarious situation” and warns the situation could worsen as economic activity returns to pre-pandemic levels.
The growth in funding of startup companies to fuel expansion has also driven demand for employees, heating up competition for top talent. According to the latest CVCA data, VC investment hit record levels for the first nine months of 2021, or $11.8B, well above the annual VC investment of $6.2B for 2019.
More later-stage Canadian companies doing well and a growing number of U.S. companies are looking to Canada for talent, says Daneal Charney, executive in residence at the MaRS Discovery District who works with scaling companies through a program called Momentum.
“We’re seeing later-stage companies getting serious funding, more on parity with the U.S. and what that means is they have more money to hire,” she says.
The supply is also constrained amid the “Great Resignation,” where more workers are leaving the workforce and taking their time getting back in and being more selective about where they want to work.
“People are more selective now,” she says. “It’s also more socially acceptable now to take time off – with a focus on radical self-care” amid the pandemic.
Charney says Canadian businesses need to accept the “new normal” and develop ways to differentiate themselves from their peers to pull in the best employees. The incentives will include more than higher, competitive wages, but also many of the perks like flexible working hours and other benefits that are now commonplace.
“Companies need to get serious about the things employees were asking for pre-pandemic, like remote flexibility, right to disconnect… and make them permanent,” she says.
Businesses will also need to be more mindful of their place in society, or face employee activism that has been playing out at big tech companies like Facebook and Netflix.
“Employers are really trying to listen more to employees,” Charney says, who predicts leading organizations will be coming up with “a new deal for employees” that treats them with the same reverence as they do their customers.
Diversity and inclusion are also critical considerations for companies looking to attract and retain talent, says Jennifer Hirshfeld, who co-leads the Financial Officer Practice in Canada at Spencer Stuart, a global leadership advisory and executive search firm.
Her company, which helps companies build out their senior leadership teams, says diversity is top-of-mind for boards and investors.
“It’s about getting more diversity of thought around the leadership table,” Hirshfeld says, adding that the competition for those varied voices is also intensifying. “It’s challenging because those pockets of the market are very much in demand.”
She encourages companies to consider thinking outside the box, including step-up candidates, (i.e. those who are highly capable but have not yet held the role) such as senior vice-president or vice-president of finance leaders who report to chief financial officers.
“This kind of thinking will help bring diversity into a business,” she says.
Hirshfeld says companies also need to be attuned to what employees are looking for in a new position.
“Candidates have more choice than ever,” she says. “As search professionals, we need to stay close to candidates; we need to understand their motivations and what really matters to them. So, we can successfully recruit the best leaders for our clients,” she says, noting that it’s common for candidates to have multiple offers at once.
Charney of MaRS believes employers also need to figure out their “superpowers” – what differentiates them from their competitors that convince candidates to choose their organizations.
It goes beyond being flexible with where a person works and building a company brand that stands for something, whether it’s a social movement like #BlackLivesMatter, workers’ rights, or being aggressive in your sustainability practices.
“What practices are you going to put in place that will be truly differentiated,” from your peers, Charney says. “
Startups that really have a strong point of view and use that point of view to say, this is, this is who we are, unapologetically, can use that to attract and retain the best talent that aligns with those principles,” she says. “Employers who really define and are able to answer the question, ‘Why should I work for you,’ beyond compensation are best-positioned to win the talent war.”