| || ||Daniel Munro |
Principal Research Associate
Industry and Business Strategy
Canada faces a peculiar reality. On the one hand, Canada’s education performance is very strong, earning an “A” grade in the Conference Board’s Report Card on Education and Skills. In fact, Canadians are among the most highly educated people in the world, with 57 per cent holding a post-secondary credential.1 But the innovation performance of Canadian businesses is weak and has been for decades. Our Report Card on Innovation gives Canada a “D” and ranks it 13th of 16 peer countries. How is it that Canada has one of the most highly educated, skilled, and creative workforces in the world, but continues to lag on innovation?
Overeducated or Underutilized?
A forthcoming Conference Board report on skills mismatches in Ontario, Sizing Up the Skills Gap, presents evidence of mismatches between the skills graduates have and those that employers require. In some cases, graduates have insufficient skills while in other cases, they actually have more education and skills than their jobs require. In fact, according to the OECD, there is a uniquely Canadian “paradox” in that, among OECD countries, “Canada has the highest percentage of tertiary-educated workers who earned less than half of the national median employment income.”2
In 2006, nearly 18 per cent of university-educated and 23 per cent of college-educated Canadians aged 25 to 64 earned less than half the national median employment income.3
All of this suggests that anecdotes about baristas with bachelor’s degrees contain much truth.
From this, some conclude that many Canadians are over-educated or have obtained degrees in subjects which have little market value. Is it possible, however, that the problem has less to do with skills supply and as much or more to do with businesses failing to use the skills of their well-educated employees to drive innovation and growth?
Innovation and Human Capital
Consider a finding from a forthcoming report on managing innovation from the Conference Board’s Centre for Business Innovation. Firms with strong innovation track records tend to select innovation opportunities that are aligned with their existing expertise and resources. A key problem, however, is that many firms may underestimate their internal strengths—particularly the skills, knowledge, and creativity of their employees. When they consider innovation opportunities, their assessments of existing capacity may be focused on the occupational mix of the business rather than the skills and capacities of the actual people who are employed in those jobs.
Yet, organizations that view human capital through an occupational, rather than an employee, lens will unnecessarily (perhaps unknowingly) limit the range of possible innovation opportunities they can pursue. They neglect the possibility, for example, that among their baristas is a well-educated, highly skilled graphic designer who could redesign signs, menus, and other visual elements to attract a more sophisticated and affluent clientele. Or the possibility that among their engineers is someone with education and experience in business strategy who could help the organization analyze its opportunities and overall direction.
So What Can Firms Do?
Although firms have certain skills needs to perform core operations, innovation requires employees with skills to exceed and disrupt the routine. To identify and harness the unrecognized and underutilized skills, attitudes, and behaviours of employees to drive innovation, there are some simple steps that organizations can take:
- Create an employee skills inventory. Examine employees’ resumes and collect input through internal surveys and conversations to create comprehensive profiles of employees’ education, experience, and skills—including specific skills and expertise that do not obviously align with current occupational requirements and general innovation and commercialization skills that can help drive and manage business performance. The Conference Board’s Innovation Skills Profile 2.0 and General Innovation Skills Aptitude Test 2.0 can help.4
- Assess whether there is underutilized capacity. Examine the profiles for patterns and trends that indicate areas where the organization has underutilized strengths and latent potential.
- Incorporate the results into innovation opportunity scans and assessments. Is there a critical mass of skills and experience in certain areas that could support the generation and implementation of new or improved products, services, or processes with market potential?
- Empower highly skilled and motivated employees to contribute to innovation. Identify employees with underutilized skills to contribute ideas for innovation and empower a select number to further develop and potentially implement their ideas.
- Hire for innovation, not just the occupation. Hiring to meet present skills needs is necessary, but insufficient. Firms should hire people who can perform and transform—that is, people who can fulfill necessary tasks but also contribute to innovation.
By taking these steps, firms will not only position themselves for better innovation performance, but also improve employee engagement and satisfaction. By paying as much attention to what more employees can and want to contribute through their skills and education, as to what their current jobs require, firms increase the odds that they will be creative, industry leaders rather than innovation laggards.