Smaller firms outspend big business sector on per employee training: study

 
The most comprehensive and rigorous study ever undertaken on workplace training in Canada’s smaller businesses, has revealed this sector invests more than its big business counterparts on total training costs per employee.

The study was undertaken by the Canadian Federation of Independent Business (CFIB) and conducted nationally among its members.

What’s unique about CFIB’s report, says Dan Kelly, CFIB’s senior vice-president of legislative affairs, is that it didn’t just focus on formal (professionally delivered) training – as most research does – it looked at informal training or on-the-job training which is the predominant mode in smaller firms.

Among its most revealing findings, the study found that a small business owner spends an average of $2,700 annually per employee on all forms of training, and for new ones with no experience the cost rises to $5,400. Kelly said that while informal training represents nearly three-quarters of the average training expense, small- and medium-sized enterprises (SMEs) have also dramatically increased their use of formal training. He explained this adds up to a nation-wide annual investment of $18 billion on employee training in small and medium-sized enterprises SMEs.

Kelly further pointed out that due to the challenge of measuring informal, on-the-job training, governments and other institutions have, for too long, not supported or even recognized the massive contribution smaller firms make in training this country’s workforce.

Despite the soft economy, Kelly noted that Canada’s demographics dictate that the shortage of skills and labour will continue to be a growing problem in the years ahead. CFIB’s recommendations therefore focus on ways government can assist, such as with training incentives.

CFIB’s vice-president of national affairs, Corinne Pohlmann, said that rather than examining an expansion to Employment Insurance (EI) benefits which can hurt a firm’s ability to find staff, government should consider helping SMEs by making it easier to hire and train new employees.

“As the report reveals that the smallest firms hire those with no experience at twice the rate of larger businesses, an EI hiring or training incentive would be welcome news to Canada’s entrepreneurs,” Pohlmann added.

The study also revealed that SMEs often do not get to reap the benefits of their training investments for long as, in the smallest of firms, 20 per cent of employees leave the business in an average year. This separation rate is double that of larger businesses.

“Once they’ve got some training and experience under their belts, workers at SMEs are often poached by more sizeable employers,” Kelly said.