If you have not already heard, productivity is one of the most serious challenges facing Canadian business in the next decade. What we mean by productivity is the value generated by each hour of work. Economists calculate productivity and the details are complex. What is compelling is that Canada’s productivity[1] is 17th out of the 19 countries in the Organization for Economic Co-operation and Development. Also our gains in productivity are slower and the gap is continuing to increase.

(For more details check out the Conference Board of Canada.)

Many elements go into productivity but they can be categorized into three main areas: access to finance or capital; technology deployment and innovation; and the skills and abilities of the workforce that is utilizing the capital and the technology. This is where HR comes in. We should let the financiers and the politicians work on bringing investment to our country and creating incentives for innovation. What we need to work on is developing world class skill sets so that when the money is used it generates a return over and above what can be achieved elsewhere.

This work is fundamentally important because if we do not increase our levels of productivity we will slowly erode the standard of living we enjoy. As productivity stagnates or declines the rate of taxation required to pay for government services increases, and so the disposable income of each individual reduces and the domestic economy stutters because the rate of consumption is faltering . . . and so the cycle goes on. We will all be working longer and harder to stay in the same place, while feeling less well off. That’s not a future that is exciting or inspiring.

What I am really talking about here is learning, the importance of learning and how in fact learning is at the heart of the continued success of the Canadian economy. And yet, what we hear and see is a constant flow of information on how to do learning cheaper and cheaper. What we see the instant money gets tight is a reduction in one of the budgets that, spent wisely, will help you to find your way out of the challenge.

Here is another way to look at things. Any organization that owns a fleet of vehicles will spend money on maintenance. They will look for cost effective ways to maintain their vehicles but they will not sacrifice quality for cost. Everyone knows that at a certain point if you spend too little to maintain a vehicle it will cost you more in the long run. If we are prepared to do this for objects, why are we not prepared to do this for people? Often the reason given for not spending on training is that there is no proof that learning leads to a return. This is not true. While it may be hard to identify a direct return for each dollar spent we can clearly see in the productivity numbers that an under-investment in learning has a long-term negative effect. In business it can be just as important to spend money to minimize risks as it is to spend money to generate returns.

Ready to go and work on increasing your budget for learning? A good start point is one per cent of the organizations’ salary bill. This is a figure that will stop you falling behind. When we hear so much about the need for innovation, change, new strategies and new ways of doing things as the solution to our economic position I would advocate a two per cent number as the best way for all of us to do our part in closing the productivity gap.