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Skills Imbalance? It’s Not A Labour Market Problem

A View from the Chamber of Commerce

A recent report by the Ontario Chamber of Commerce attempts to shed some light on Ontario’s labour supply-demand mismatch.

While the report does not provide a breakdown of the 733 surveyed OCC members, we can assume that the majority were small business (SME). This assumption holds with the report’s contention that SMEs account for 98% of total business. The report provides a summary of recommendations with a focus on policy changes. These changes may move the barometer on addressing the skills development and training needs for employers. However, such changes do not address a more latent challenge faced by most SMEs – the value they place on Human Resource (HR) expertise as part of a strategy for developing requisite competencies and skills internally versus a default focus on recruitment.

The Bigger Picture

The report indicates the need for greater leverage of a firm’s human capital asset through investment in skills development/training. Managing this asset is typically led by the HR function – or an employee with HR expertise. Such expertise is applied to attracting, engaging and retaining talent (i.e. human capital assets). There is a substantial body of research which confirms that skills development opportunities is a key metric for assessing success across these three HR objectives.

However, most SME owners/management do not place a high value on HR expertise. In most cases, their awareness of key HR issues tends to come through interaction with the Legal or Accounting professions in response to varied HR crises (e.g. compliance risk, terminations). Most will likely not have a dedicated HR resource. There are some valid reasons for not having internal HR expertise (e.g. payroll costs, organization size); there are none for excluding it from business planning efforts.

I would guess that if the same survey had polled participants on the size of their learning and development budget as a percentage of their overall HR budget, the percentage allocation would be minimal.

Take A Customized Approach

Beyond its political advocacy role on this skills imbalance dialogue, local Chambers should focus more efforts on educating their members on the value of HR expertise as part of their business planning cycle. This is no small task. However, beyond entry roles, it’s a more robust approach for building the types of skills/competencies noted in the report (e.g. organization awareness) that SME’s need in order to succeed in the longer term.  Creating an internal learning culture and skills development programs that are customized to SME business needs is more daunting than a focus on recruitment as the primary solution to the skills imbalance debate. However, as the saying goes… reward is proportionate to effort.

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