Human Capital Challenges in Canada

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In a decade, the Canadian labour market is expected to experience a
serious shortage of up to one million workers.

This is caused by a combination of factors, including retiring baby
boomers and a shortage of skilled graduates. The most severe reductions
will be among skilled and experienced trade professionals, technical
workers and mid-managerial positions.

But how extensive is the labour shortage in Canada?

Ian Cullwick, the national leader of Deloitte's Human Capital
practice, says that certain industries are at risk. "The predicted
shortage is a talent shortage, rather than a labour shortage - it
will affect selective industries and certain workforce segments within
those industries," he says. "It will only be specific skilled
positions that will see shortages."

The hardest hit will be oil and gas, utilities, government and some
related subsectors. How are organizations set to manage the upcoming
talent shortage?

The changing oil and gas landscape: creating skills deficiencies
The Canadian oil and gas industry, centred in Alberta, is traditionally
a large employer of technical and skilled trades. A substantial number
of oil and gas employees - many with the technical and operational
skills required for the future of the industry - are eligible to
retire in the next five years, and there are an insignificant number of
skilled people to succeed them in the Canadian industry. "Today there
are not enough people physically to do the developmental work in this
industry," says Dick Cooper, the Energy & Resources practice leader.

The industry as a whole is in transition. Conventional oil extraction
is in decline, and is now giving way to heavy oil extraction techniques
such as strip mining and in situ extraction. The Alberta oil sands will
eventually produce most of the country's oil, and the anticipated
boom will bring a huge demand for specific skills within the
engineering and construction segment: pipe fitters, carpenters,
welders, and design and construction engineers. Other skills shortages
are in project management, project engineering, some skilled trades,
and in geoscience. A shortage of heavy equipment operators and
engineers from all disciplines is anticipated as the oil sands projects
come into operation.

Some of the challenges the Oil & Gas industry faces are succession
planning for retiring workers, managing an aging workforce, and
sourcing new talent to meet the growing needs. "The oil and gas
industry must partner with post-secondary institutions across Canada
- not just Alberta - to focus on these skills deficiencies,"
Cooper says. However, the warning bells are just starting to be heard.
"The industry as a whole is not adequately prepared for the skills
shortages associated with these areas," he says.

Middle managers will be hard to find for the utilities sector
The power and utilities industry in Canada has a longer history than
oil and gas, and traditionally provides steady long-term work for
engineers and other skilled workers. Jason Winkler, a Human Capital
partner, explains that for utilities, the issue is a "bi-level
distribution" of the existing workforce caused by retirement and lack
of mid-managers who got laid off in the 1980s. The rising pool of
managerial talent does not exist as it once did. "We estimate that
the utilities sector in Canada will have about 50 to 58 percent of its
workforce eligible for retirement in the next two to five years,"
says Winkler. Retirement is encouraged because many utility companies
have generous benefit packages.

But Winkler believes that Canadian utilities are better prepared than
the oil and gas industry to address staffing issues. In its 2004 annual
report, the Canadian Electrical Association announced it is examining
several key human capital issues facing the industry. The association
created an industry committee to examine workforce planning and
succession strategies.

While Western Canada has a tight overall talent pool, the Power &
Utilities industry has started to bridge the gap by increasing new
hires. "Most of our utility partners have done a good job in the past
five years working with technical schools to promote career options,"
says Winkler. However, as with the other industries, mid-managers and
future executives will be hard to find.

Retirement on the horizon for many government workers
The Conference Board of Canada estimates that as a result of current
retirement trends, governments at all levels could lose up to 44
percent of their workers by 2010. Andy Peck, a Human Capital
consultant, suggests the government must act quickly to ease the impact
of expected public sector retirement to avoid a possible disruption in
services. Two prominent concerns are pension funds payouts and the
transfer of knowledge from older departing workers.

The public sector has a unique dynamic because it is populated by baby
boomers who had profitable working lives and good pensions. With these
incentives vanishing, the public sector must find new motivators to
entice workers. Some new incentives are in the planning stages. In
2005, Deloitte started working on a compensation strategy for the
Ontario public sector to assist recruitment guidelines over the next 10
years. Also, federal and provincial jurisdictions are now seeking an
aggressive employment branding strategy to assist their human resource
departments with policies to attract younger workers.

Employers must get creative to find and keep skilled workers
Where will the talent come from? Dick Cooper believes that Canada may
have to turn to skilled global workers, even if it is difficult to
integrate them into a specialized workforce. Cullwick believes help
will come from companies and their ongoing alliances with community
colleges, universities and professional associations.

What can companies do to retain the skilled workers that they attract
in a competitive labour market? A Deloitte Research report, "It's
2008: Do you know where your talent is?" suggests that superior
compensation is insufficient as a retention tool. Companies need to
implement integrated strategies for giving today's skilled workers
what they want: development for their current and future careers,
deployment into challenging work, and a sense of connection to their
peers and the organization.

Info Source:
http://www.deloitte.com/dtt/article/0,1002,sid%253D30480%2526cid%253D104784,00.html