An aging (and retiring) workforce, a weak U.S. economy, a strong loonie and globalization are some of the biggest challenges facing businesses today, according to a web poll of 122 Canadian CEOs and leaders of small and medium-sized businesses conducted by COMPAS Inc.
Canadian business leaders are convinced that the U.S. economy is slowing, but are split on how serious a problem that will become or how it will ultimately impact the Canadian economy. When asked how serious a problem the slowing U.S. economy will turn out to be, 62% of respondents said it will be “somewhat” of a problem while 34% said it will become a “very” large problem. Only 3% of respondents predicted it would “not really” be a problem at all. “The U.S. may be in recession, but elsewhere in the world — especially India and China — life is good and people want more,” wrote one respondent. “Canada is fortunate in having vast reserves of resources…we should build the population that can take advantage of all these opportunities.”
There was also disagreement about what impact the U.S. economic downturn will have on the Canadian economy, with 56% of respondents predicting it will be “substantial” and the other 44% forecasting only a “modest” impact. None of those polled thought the Canadian economy would emerge completely unscathed. But the slowing U.S. economy is not the biggest problem facing Canadian businesses, the poll reveals. When it comes to export-oriented firms, 48% of respondents listed the rising value of the Canadian dollar as the No. 1 challenge; only 21% of respondents cited the U.S. recession. For companies that serve the domestic Canadian market, the U.S. recession was named as the biggest problem by only 18% of those polled; just 7% cited the rising loonie as their biggest woe. Globalization was the biggest challenge named by 26% of the business leaders, while 48% said industry-specific challenges were their biggest problems. “The high dollar has left Canada very vulnerable to a steep recession,” warned one respondent.
One of the biggest problems facing businesses in the long term will be how to replace the growing number of workers who are reaching retirement age. A whopping 71% of business leaders said that replacing aging skilled technical workers is the most pressing challenge. Another 54% said it is replacing senior managers. “Skills shortages will be the single most pressing business problem of the next three decades,” wrote one respondent. “Businesses will close because they cannot find enough skilled people.…Shortages are widespread and acute and there is no one ‘magic bullet’ solution.”
There is also widespread agreement on where to look for these new workers, the poll reveals. Hiring immigrants and recruiting abroad were not seen as significant solutions, according to the poll, which asked respondents to rank solutions to the looming workforce shortage on a scale of one (not a solution) to seven (a significant solution). Investing in more in-house training and recruiting students from post-secondary institutions or apprenticeship programs received mean scores of 5.8 and 5.7, respectively. Hiring immigrants or recruiting workers abroad garnered scores of just 4.8 and 4.3, respectively.
As workers reach retirement age, family-run companies may experience more difficulties than businesses run by professional management, respondents predicted. When asked whether family or non-family businesses experience more difficult succession problems, 59% of those polled said family businesses have a more challenging time picking a new leader.
The business leaders still believe that family businesses play an essential role inthe economy, with 70% strongly agreeing with the statement: “Families will always be essential for creating startup enterprises.” However, when those small startups become successful and grow into large corporations, respondents were evenly divided on whether it is better for the family to retain control or turn management over to professionals outside of the family.