“At the Board, we are focused on the three Ts that represent key prosperity factors for the Toronto region – trade, transportation and talent,” says Board of Trade President and CEO Jan De Silva. “Our ability to attract and retain the best and brightest from around the world is critically important to our future success.”
To understand the impact of talent on our global appeal, we need to know what role our human capital plays in building Toronto as a world-class city region. We need to know how the Toronto region is performing in attracting and retaining the best and the brightest. And we need to know what factors to promote and what factors to mitigate in these efforts.
Odgers Berndtson is one of Canada’s largest executive search firms, connecting talent with jobs and jobs with talent. A global alliance, Odgers has talent advisory practices around the world. Jason Peetsma is Managing Director of Odgers’ executive interim management practice in Canada. With a bench of 6,000 interim executives in every function and industry, Peetsma is well-positioned to see trends and gaps in the region.
Peetsma says that, on the surface, the Toronto region has all the right assets to appeal to international executives and to keep homegrown talent in the region. However, he warns that we need to look deeper. Digging into proprietary data from the past five years, Peetsma sees trends and gaps for talent recruitment in the changing landscape of work, much of it caused by disruption and demographics. “We’ve found that we’re filling the most positions in the Toronto region in professional services, the scientific field, technology, digital media, and financial services, including insurance and real estate. That’s where we’ve seen the growth,” says Peetsma.
Much of that observation seems to fit Toronto’s historic image as the epicentre of corporate Canada. Nearly 50 per cent of the country’s top 500 enterprises have head offices in Toronto, while Bay Street’s financial district is the second largest North American financial hub after New York City. But the region’s revived science and tech sectors are increasingly reflective of several talent trends.
Since the global tech bubble burst in 2000, the Information, Communication and Technology (ICT) sector has been rebuilding in Canada. Its growth has been propelled by a thriving combination of human capital, well-funded university programs, public-private partnerships and international investment. Added to this is a supportive immigration stance and compelling quality of life that amplifies the continuing movement of talent. The “old” tech sector, once exemplified by powerhouse employers like Nortel and BlackBerry, has given rise to incubators, accelerators, venture capitalists and emergent start-ups. Today, more of these are locating in the Toronto region. A recent Accenture Insight report notes that the demise and diminishment of the old large tech companies led to a redistribution of their talent, “as many former leaders and employees join rising tech companies or establish startups capitalizing on the knowledge and experience of the available talent pool.”
That talent has been productive. Accenture reports that the tech sector is now outperforming the rest of Canada’s economy. They cite the Toronto Stock Exchange’s technology and innovation sectors, which have grown faster than any other on the exchange since 2013. The TSX and TSXV list over 420 companies in the technology and innovation sectors, including technology, clean tech and life sciences companies. Further, they report that 75 new technology and innovation companies have gone public since the beginning of 2014. That number includes 19 new international technology and innovation companies, more than in any other sector.
Talent without borders
The international component is significant. Much of the ICT sector is mobile, using its own technology and communications innovations to enable the cross-border movement of their goods, services, investments and people. New or established, where these businesses choose to invest can have a strong impact on a region and its workforce. In the Toronto region, China-based Huawei Technologies and California-based Cisco, present two examples of the benefits of this approach.
Huawei is one of the world’s largest telecommunications companies, operating in 170 countries around the world. The Chinese multinational has announced a series of significant investments, funding research, educational programs and job creation opportunities since coming to Canada in 2008. In 2014, Huawei committed to invest another $210 million in Ontario, bringing the total to more than $500 million in Canada over the next five years. Scott Bradley, Vice President, Corporate and Government Affairs for Huawei in Canada notes it will be a doubling of Huawei’s R&D capabilities in this country.
Bradley says it’s a huge vote of confidence in local talent and capabilities and part of a purposeful strategy to build a strong Canadian operation. “What we’ve found in the province of Ontario is there’s a very, very strong ICT ecosystem. Whether opening our facility in Ottawa or expanding research operations in Markham or Waterloo, or working very closely with Ontario universities, all of that has helped to reinforce the strength of the talent that exists, not only in telecommunications but in advanced communications.”
Huawei’s research investments are primarily focused on advanced initiatives for 5G communications networks and related technologies, including photonics, data security and integrity, and the Internet of Things. “When you have success in a region or location, what that does is send a strong message back to headquarters [in China] about the strength of the team, the strength of the talent and the strength of the ecosystem. Success breeds success,” Bradley says.
Huawei stands out as a Chinese success story in the Toronto region, yet Bradley cautions there’s still much work to do in terms of building Huawei’s brand and reputation. He wants Huawei’s Canadian operations to serve as a model to attract further global technology investment to the region. It’s a long term play.
David Heather is Vice President, Human Resources at Cisco Canada. He recounts how, 30 years ago in California’s Bay Area, Cisco was launched in answer to a question: How can we connect computers and deliver a high-productivity outcome with a lot more innovation and collaboration? Fast-forward to today, says Heather, and the technology has changed, the portfolio has broadened, but the mission remains the same: to innovate, bring people together and drive productivity.
Cisco first opened a small sales office in Canada in 1992 and has grown exponentially since then. Today, Cisco has 1,800 employees in Canada, about 800 of whom are in research and development (R&D) — primarily at their facility in Kanata. Six hundreds are in front lines sales, and a few hundred more are in professional services consultancy and support. Heather says Cisco has made considerable material investment in the Canadian economy, notably through R&D operations. He says it’s good value to the company: “We know there’s a very rich and deep talent pool in Ontario and in Toronto.”
“We recognize that we’re an American company operating in Canada, but we want to be part of the fabric, to benefit the country and communities we operate in,” says Heather. The most recent benefit comes to the region in the form of a $100 million investment in new headquarters and an Innovation Centre in downtown Toronto. Heather sees it as absolutely an investment in and recognition of Toronto talent. Heather points out that the new Cisco headquarters will house five generations of employees within the office, embracing the whole range of skills, age, gender and diversity of thought available in Toronto.
Like Huawei’s focus on investments that stimulate talent, research and innovation, Cisco has created a new multiuse Innovation Centre within the new office complex. “We wanted our employees, our customers and our stakeholders to benefit from a facility that gives us an opportunity to showcase our technology to our existing and future customers.”
Cisco is also opening its Innovation Centre to entrepreneurs of all sizes and has built some limited partnerships with customers and universities to make use of the innovation lab. Heather acknowledges it’s a calculated business investment. “It absolutely benefits Cisco, that’s one of the reasons we did it, but it has a wider impact on Toronto, the region, Ontario and Canada. It gives an opportunity for all parts of businesses to work on best-in-class technology, to see how it works in the real world…to realize innovation and drive value,” something Heather fervently believes is essential to successful economies now and in the future.
One of the reasons Huawei and Cisco invest in partnerships and university programs is to break down barriers in the ICT ecosystem. One of the gaps still needing to be bridged is in promoting STEM-related education in high schools and across university courses, notably to school-age girls. It’s an issue Cisco’s David Heather says he would personally like to see addressed. “For the future talent pool, technology is only going to play a bigger role in all facets of life, and STEM-related subjects are so important. I would love to see all people with equal access to pursue those subjects, and that’s an opportunity for all cities, including Toronto.”
Building for the future
Breaking through education barriers is also critical for the skilled trades that execute the infrastructure required for building world-leading innovation sectors in a world-class metropolis, particularly transit. But challenges loom in this space, as well. “With historic levels of funding now available to tackle our region’s critical transit deficit, our biggest barrier is now talent,” says Ms. De Silva. “Our members tell us we have insufficient numbers of trades, as well as engineers and financial professionals to deliver our projects.”
Joseph Mancinelli is the International Vice President of LiUNA, the Labourers’ International Union of North America, the largest construction association in the country. He says LiUNA has been laser-focused on the issue of talent for over a decade, and with good reason. Ten years ago, a federal government study suggested Ontario would lose a large number of their most productive workers within the next decade due to retirement and other attrition. The study prompted LiUNA—with 60,000 members at the time — to plan for enhanced training and expansion of its member base. The plan has paid off, with LiUNA now representing 90,000 workers in Ontario.
Mancinelli credits their focus on specific education and training, citing the 14 training centres they operate, six of which are within the Greater Toronto-Hamilton Area (GTHA). They are structured to be trusteed between management and labour to understand first-hand where the work demands are. “If they need form setters, asphalt workers, bridge builders, that’s what we train in,” says Mancinelli. He highlights that this training for current requirements — education for where and when the job needs are projected to be — is the difference between skilled trades education and post-secondary education for general knowledge. “If I could make a comparison… with the post-secondary institutions, whether it is the universities or the colleges, they have curriculum for everything, so you have people taking all sorts of courses but not necessarily the courses [for jobs] that are in demand,” says Mancinelli.
Success has come in increased membership numbers, but challenges in replenishing and attracting workforce talent run deeper. Mancinelli says the biggest obstacle in drawing high school students into the trades is two-fold: parents and high school guidance counselors. He wants parents to know there’s nothing wrong, and a lot right, with their kids going into the construction industry where the pay is good, lots of work is available and a career path could enable business entrepreneurship. He adds that high schools, too, “should understand that there’s a career path [for students], and that they can make good money, and they should also appreciate that not everybody is going to be a doctor or a lawyer.” Mancinelli notes European cities do a better job of promoting trades to high school students, some even having curricula that allow students to start training in trades prior to graduating.
The Board of Trade is doing its part by pulling out the data that can help inform government and private sector planning around talent development. “We are working on a transit talent study to quantify the gap by role,” Ms. De Silva explains. “This data will enable us to take action to provide access to programs that have a job waiting at the end. In the short term, this study could also aid us in targeting immigration to attract the qualified skills we need to get our transit built.”
Immigration is a critical opportunity for Mancinelli, who says we need to start looking at more ways to bring in people and train them in specific areas. “There are people from a number of countries coming into Canada who, from a social and cultural point of view, do not go into the trades…they frown on construction work,” says Mancinelli. He believes Canada needs to appeal to international communities who do embrace trades: Europeans and South and Central Americans who see construction and trades employment as opportunities to earn a good wage in a country with a top quality of life.
Like Mancinelli, David Heather of Cisco agrees that immigration is important to attracting global talent. “Toronto is a tremendously vibrant city. The level of diversity is a huge, huge positive and I think that has to be at the heart of any country’s view on talent. A country with a progressive immigration stance is to be encouraged,” says Heather.
Mancinelli acknowledges that LiUNA represents only one part of the construction sector. He is concerned about the talent shortages and onerous requirements for certification that other trades face here. “We started ahead of the curve to correct this issue of skills shortages, but many of the other trades have not,” he says. “The government has to push the agenda and take the lead on this to make sure other trades are doing what we’re doing.”
Attracting and retaining talent is of course critical for success across all business sectors. When Odgers’ Jason Peetsma looks at the data for the Toronto region, he sees a “huge gap” in competition for talent. “If companies don’t see that the employment brand is one of the strongest assets they have, then they fail to be relevant,” says Peetsma. Thus, Peetsma is seeing a trend where companies of all industries are taking steps to audit, improve and manage their external and internal reputation in order to attract and retain top talent.
Peetsma also notes an interesting trend of “expats” looking to return to Canada to work. “It used to be if you were healthy, ambitious, smart, with few dependents, you’d go somewhere else to make your money; once you’d built your cash or you wanted to build a family, you’d come back to Canada.” Peetsma says the dollar change has caused some to seriously think about returning.
But he cautions that tax rates also affect talent acquisition. While the KPMG 2016 Competitive Alternatives report on business costs ranked Canada in the top three worldwide for most competitive corporate tax rates, Canada’s, Ontario’s and Toronto’s high personal tax rates can send shivers of caution down an executive’s spine. Peetsma says, “the number one thing that turns executives off is the tax structure.” He offers the example of an executive who was paying 22 per cent income tax in New Jersey, but now pays 54 per cent in Toronto. It can kill a deal.
Peetsma says he often speaks to executive candidates who prefer not to become an employee in Canada, but will accept a role on an interim basis, something he says is now also a trend. He notes more executives have been building careers and creating a “portfolio lifestyle,” one that offers them flexibility to make their home base elsewhere. These leaders are increasingly doing interim executive stints in Toronto without moving to the city core.
Peetsma notes the next most common complaint is about transportation challenges, which commonly steal up to ten extra hours a week from an executive’s family life. Top candidates have a world of choices, so transportation is a critical quality of life factor. Overall, the discussion reinforces Peetsma’s core findings: “the primary reasons why anyone will pick opportunities relates to three things: finance; family; and freedom; if you create a city that is geared towards only one of those, you may lose out on the other two.” Peetsma acknowledges it’s a hard combination, but says that if the Toronto region wants to appeal to talent as world-class, it needs to deliver all three factors with excellence.
Representatives of international and local business sectors emphasize that the Toronto community does a good job of accentuating the positives of the region, but there is still more to do to meet competitive challenges of a world-class metro. Talent plays a pivotal role. Perhaps Peetsma’s observations also apply well to the Toronto region. “If you don’t attract the talent you need, you don’t have the resources you need. If you don’t have the resources you need, you can’t be competitive anymore.” The same can be said of growing a competitive Toronto. If the region has all the right resources on the surface, it can be competitive and reach world-class status. But it must dig deeper to be watchful of the trends, fill the gaps, and keep cultivating its growth to stay there.
From: Summer OnBoard 2016
By: Elizabeth Hamilton
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