By Claudine Kapel
You can’t go far these days without encountering some news about skill shortages and their implications for Canadian business.
For example, a new report from CIBC World Markets notes “an analysis of Canada’s job market shows there is a growing divide between have and have not occupations.”
Organizations seeking to implement effective strategies for addressing skill shortages need to first understand what types of skill shortages they could be facing. It’s important to separate the facts from the hype when defining a path forward.
To pinpoint where labour shortages are being experienced, CIBC looked for occupations experiencing both rapidly rising wages and low or falling unemployment rates.
Applying these criteria, CIBC identified 25 occupations where demand for talent is outstripping supply. “By far, the largest skill shortage was found in health-related occupations, the mining industry, advanced manufacturing and business services.”
CIBC notes these occupations combined account for 21 per cent of total Canadian employment. It adds the average unemployment rate of this pool of occupations is just over one per cent, and the wages for this group are now rising by an average annual rate of 3.9 per cent – “more than double the rate seen in the economy as a whole.”
Applying the same type of analysis, CIBC also found 20 occupations characterized by higher or rising unemployment rates and decelerating wage growth that show consistent signs of labour surplus. “Traditional occupations like butchers, bakers, tailors, labourers in manufacturing, office managers and clerks are showing signs of labour surplus.”
CIBC notes that these occupations account for 16 per cent of total unemployment, “while their real wage growth was nil over the past year.”
The Conference Board of Canada agrees that Canadian organizations are grappling with skill shortages.
In its Compensation Planning Outlook 2013, the Conference Board reports 69 per cent of organizations are reporting difficulty in recruiting and/or retaining particular skills. But it also notes concerns over skill shortages are not new. “Although the order varies slightly from year to year, the top five specializations in highest demand (engineering, specialist information technology, skilled trades, management, and accounting and finance) have not changed since the Conference Board began collecting the information more than a decade ago.”
The Conference Board adds more than half of the organizations surveyed “have adopted specific strategies or compensation mechanisms to attract or retain individuals who are considered essential to their business.”
Some of the most common compensation strategies for attracting and retaining employees included:
- Adjustments to base pay.
- Signing bonuses.
- Retention bonuses.
- Referral bonuses.
- Milestone or project bonuses.
- Enhanced relocation support.
While having a strategy for attracting and retaining hot skills is important, it is equally important to consider critical talent within the context of a broader strategy for engaging employees and driving performance.
It would be naïve to disregard market pressures and the reality that some skill sets are in high demand and short supply. So programs and guidelines aimed at helping organizations to attract and retain such talent make good business sense.
But at the same time, organizations need to be mindful of their entire workforce to ensure everyone is encouraged to paddle in the same direction. Overemphasizing or focusing exclusively on particular types of talent to the exclusion of the rest can create a corrosive culture of winners and losers that can undermine organizational performance.
That doesn’t mean everyone needs to be paid the same. Compensation tools can be effective levers in supporting the attraction and retention of talent. But consideration needs to be given to the employment proposition overall, to ensure everyone is inspired to do their part in contributing to the success of the organization as a whole.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.