Canada’s small and medium-sized enterprises say they’re facing a skills gap. So, why aren’t they investing in talent? 

Malika Asthana

Author headshotSkills don’t last forever, but many of our current models for skills development assume they do. As the need for skills changes alongside rapid technological advancements and demographic shifts, employers will need to consider how to keep their employees’ skills fresh – and our learning systems must adapt as well. This is particularly true when it comes to small and medium-sized enterprises (SMEs) that support millions of jobs. But can they do it?

To better understand the dynamics facing SMEs to support employees in lifelong learning, D2L commissioned Innovative Research Group to conduct two surveys of employers and employees. Focused on SMEs with 20 to 499 employees, this new research provides a snapshot of the current state of lifelong learning in small and medium-sized businesses in both the United States and Canada and reveals concerning gaps for employers and policymakers alike to address.

What’s happening with SMEs

D2L research shows that Canadian SMEs are facing a worrisome situation as they look at their future talent needs compared with their current talent realities. Only 21% of decision-makers at Canadian SMEs report feeling very confident that they will have the skills and talent they need to grow their organizations over the next three years, compared with 47% of those in the US who say the same. Most are concerned with recruiting and retaining skilled talent, with a sizable percentage of decision makers indicating this as the most important human resources challenge they face, ahead of concerns around compensation, adaptation to technology or workplace diversity.

These findings, explored in more depth in D2L’s latest whitepaper, Enabling Upskilling at Scale: Adapting to Meet the Needs of the Working Learner, echo other recent survey results about a noticeable skills shortage. For instance, eight in 10 (81%) of Canadian executives polled by CERIC in late 2021 said finding skilled workers is difficult – and more than half of them attributed that challenge to finding people with the right skillset.

D2L’s research findings reinforce that there is a fundamental misalignment between what SME employers need (that is, skilled employees) and what they get with their current training and development strategies.

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The disconnect

With smaller budgets, many SMEs struggle to create and deliver robust, broad training programs in-house. An alternative is to offer supports for their employees to take off-the-job training, but upskilling is not happening on the scale it needs to be.

Only 34% of SMEs in both Canada and the US provide financial support or time off for training delivered by external providers. Among the employers that offer it, Canadian SME training budgets are notably smaller compared to their US counterparts. Canadian SMEs are also less likely to hire internally for new positions. When they were asked to pinpoint the biggest barriers preventing them from investing further, SME decision makers said that internal training or on-the-job learning was sufficient.

“… there is a fundamental misalignment between what SME employers need (that is, skilled employees) and what they get with their current training and development strategies.”

On the other side of this equation are employees, who broadly said they are eager to keep learning. D2L’s research found that 72% of employees are interested in professional development outside of work. They said they see these opportunities primarily as means to build skills, rather than as a way to increase their salary or to qualify for a job promotion. But access clearly remains a problem. Over half of Canadian employees of SMEs surveyed said they hadn’t taken on any professional development over the past 12 months. The biggest barrier – reported by 43% of Canadian employees – was the financial cost of training.

Employers need options to help their employees upskill and grow. Employees want to continue their professional development and learn new things. Cost is a barrier for both. What options does this leave SMEs for facilitating professional development that is both an employer and employee need?

The opportunity

Continued upskilling for employees, which helps enable better recruitment and retention in SMEs, is a shared responsibility between employers, government and higher-education institutions in North America.

Employers must first recognize the problem at hand and urgently consider how they will invest in skills development for their workforce. With the speed of technological change, employers can’t reasonably predict all the skills they will need years in advance. That’s why they need to build processes that will support continuous upskilling and create pipelines of talent for jobs that may not exist. Providing financial support and time off for employees is an essential first-order investment for companies of all sizes. Technology can be used to provide quick and easy access to learning that aligns with their company or industry needs, leveraging higher education and industry associations to provide training.

Career development practitioners can also play a key role by serving as intermediaries between students or jobseekers and employers. Those liaising with employers can advocate for the development of career management supports for employees, as well as partner with businesses to provide resources or training for staff career development. Career practitioners working in post-secondary can also encourage employers to engage with students by offering value-added opportunities such as career education programming.

For their part, higher-education institutions must re-think how they define a learner to better serve working adults in need of high-quality skills training on flexible and more personalized schedules and timelines. They must think beyond credit hours and imagine new programs and partnerships with employers, associations and unions to help make continuous upskilling more accessible.

Clearly, there is also a role for government, which must reconsider its funding offerings for SMEs to increase general awareness and eligibility for training and skills development. Government must also uplift the voices of SMEs in consultations and consider taxable incentives to encourage employers to invest in training funds. Finally, government can also play a critical unifying role, bringing stakeholders together and helping shape a shared vision for workforce development that ensures nobody gets left behind.

Malika Asthana is the Manager for Strategy and Public Affairs for D2L. Asthana leads the development of strategic thought leadership, policy submissions and proposals to support, expand and improve learning opportunities for all students in Canada. She is passionate about making connections across disciplines and enjoys research at the intersection of policy spaces – from education and employment, to skills and economic development.