Management Talent in Canadian Manufacturing

CaptureManagementTalentThe decline of Canada’s manufacturing sector—evidenced by significant decreases in sector employment and share of overall economic activity—has been attributed to the high value of the Canadian dollar, a lack of business investment, and a host of other firm- and jurisdictional-level challenges. With respect to hiring, retention, and skills development, a number of commentators have highlighted the existence of a “skills gap” regarding middle-skill positions and skilled trades. Despite this focus on the vital role of human capital in shaping the future of Canada’s manufacturing sector, little attention has been focused on the role of management talent in the growth and competitiveness of Canadian manufacturing firms.

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This project is a first step towards addressing this knowledge gap. In doing so, it asks if—and to what extent—a management skills gap exists among Canada’s population of small- and medium-size manufacturing firms. In addition, through a three-part analysis based on survey, interview, and comparative research, the study provides early insights into the specific management challenges faced by Canadian manufacturers and highlights potential implications for firm performance.

Through their interview and survey responses, executives in Canada’s manufacturing small- and medium-sized enterprises (SMEs) clearly expressed that—in their view—a management talent gap exists. Fully 75% of firms surveyed noted significant challenges related to the recruitment of executive- and management-level talent.

Moreover, when pressed to gauge the impact of this talent gap, executives pointed to significant consequences for firm productivity, innovation, and growth. Among survey respondents, 53% of firms indicated that gaps in executive and managerial competencies have led or would lead to decreased innovation. Similarly, 44% noted that such gaps would lead to a lack of sales growth, and 35% pointed to a generalized reduction in firm productivity. According to respondents, particular management competencies are perceived as difficult to acquire for manufacturing SMEs. When asked to identify specific management competencies that are in short supply within
the labour market, executives highlighted three areas of particular concern: 1) general leadership and people management; 2) new technologies; and 3) executive-level sales and marketing. The following report explores these challenges in greater detail, highlighting managerial and executive talent issues alongside other key barriers to growth described by interview and survey respondents.

Still, while Canada’s SME manufacturers face a series of ongoing challenges, interviews with leaders across the country also provide reason for optimism about the future of the manufacturing sector. Interviewees cited four broad areas as key to driving sales and revenue growth in an increasingly competitive environment: 1) adapting to new competitive realities by embracing lean manufacturing and innovation; 2) focusing on product and market diversification; 3) investing in training and development; and 4) prioritizing marketing and branding as essential elements of training and corporate strategy. Across all of these areas, management talent emerges as one of
the necessary elements of success.

Indeed, for a company to thrive in an increasingly competitive twenty-first-century global innovation economy, it must be able to recruit and retain managers that can adapt to new realities, identify opportunities, and invest where necessary to propel future growth.

The results of this research also highlight three core areas for policy attention. First, management training and development initiatives are necessary to support SME manufacturers unable to properly fund and operationalize necessary professional development programs on their own. Second, sales and marketing skills must be prioritized across the sector through training and development, as well as targeted programs that assist SMEs by mitigating internal gaps in sales and marketing capacity. Third, more robust linkages should be forged between traditional manufacturers and business accelerators and incubators or similar support organizations. Accessing mentorship and expertise with respect to sales, new technologies, and new management processes—in addition to networking alongside various types of talent—is a necessary part of contemporary manufacturing competitiveness.

This project, its insights, and the subsequent policy recommendations are far from exhaustive. However, together they present a first attempt at better understanding the management talent issue within Canada’s SME manufacturing sector.

This Management Talent in Manufacturing project is generously supported by Industry Canada, Manufacturing and Life Sciences Division.