13 June 2013

The real reason for Canada's lagging productivity?

Deloitte has been tracking the issue of the low productivity of Canadian businesses relative to those in the US for some time now, and this year's report proved to be a genuine eye-opener. On the other hand, the results were not really that surprising to those who know: as The Globe and Mail summarized it, Canadian companies are delusional:

  • 36% of them are chronically underinvesting and not aware of it, while 14% know they are and are comfortable with that choice
  • there is too much inclination to view matters internally, without benchmarking to what is happening externally
  • firm size accounts for only 2% of the Canada-US productivity gap, and sector composition only 6% — the rest is happening within the sector itself
  • all of this is happening despite the huge incentives Canadian tax legislation has in place to encourage capital spending and R&D activity, as well as the relatively cheap cost for improving IT and communications infrastructures
 This is no surprise to those who have had to deal with management on both sides of the border. Perhaps embarrassment is the way to go, to really start things moving...

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