New Report Shows Talent Retention, Digital Transformation and ESG Top-of-mind for Canadian Midmarket

BDO Canada Midmarket Outlook Report provides snapshot of unique challenges and priorities for companies often overlooked in business research

TORONTO, Oct. 27, 2021 /CNW/ - While the COVID-19 pandemic has put significant pressure on Canadian businesses, midmarket decision-makers are pushing forward to rethink their approach and operations, according to new research by BDO Canada. The Midmarket Outlook Report 2021 provides a snapshot of the unique challenges and priorities facing these businesses, including talent attraction and retention, digital transformation, supply chain and ESG, at a critical time as the COVID-19 pandemic presses on.

The Canadian midmarket is comprised of a rich spectrum of organizations, spanning industries and geographies. The report compares the opinions of small (under $25 million in revenue), medium ($25 to $100 million in revenue) and large (over $100 million in revenue) enterprises in the midmarket. The data showed that medium enterprises – often not captured in business research – acted as a bridge, both as a model of growth for small enterprises aspiring to accelerate, and as businesses with an eye on the priorities of larger enterprises.

"There's no question the midmarket punches well above its weight in the Canadian economy," says Daphna Smuckler, Managing Partner, Assurance & Accounting, BDO Canada. "This research demonstrates their resilience and vision, especially during challenging times like what we've experienced over the past 18-plus months, while casting a much-needed light on their particular experiences and priorities."

Half of medium enterprises struggle with attracting new talent

Canadian businesses of all sizes and across industry sectors are experiencing recruitment and retention challenges, a trend that is expected to cascade into 2022. According to the report, 50 per cent of medium enterprises identified 'attracting new talent' as the biggest challenge for their company and expect that to continue. With this top-of-mind, and after more than 18 months of living through a pandemic, business leaders of all sizes (52% of medium enterprises compared to 41% of small and 55% of large enterprises) are aiming to place the mental health of their employees at the forefront of key workforce priorities in the year ahead.

Interestingly, while it is identified as a top priority, 43 per cent of medium enterprises indicated supporting the mental health and wellness of employees is also a top workforce challenge (compared to 34% for small and 26% of large enterprises) and they are most likely to find challenges with managing remote workers (29% of medium enterprises compared to 19% of both small and large enterprises).

Businesses appear divided when it comes to preferences around work locations; some are keen to prioritize bringing employees back to a physical office, while others prefer to increase remote work options. According to the research, just over one-third of medium enterprises (35%) want all employees to return to the office as soon as possible, compared to just below one-third (29%) seek increased remote work options for employees.

Although there is a division as to whether organizations return to office, expand remote working or opt to pursue a hybrid approach, the need to put employee health and wellbeing front-and-centre cannot be ignored.

The truth about ESG: There is work to be done

With the best of intentions, medium enterprises say they are making ESG a priority, but data shows there is still work to be done. Almost three-quarters (71%) of respondents agree that their organization is doing a good job addressing environmental sustainability issues, and two-thirds (67%) of their management and board consider environmental sustainability to be a priority. Although these companies are making ESG a key focus, the data shows they could be doing more. Almost one-in-seven companies have yet to implement any steps to support environmental sustainability. Governance items rank particularly low, including creating a senior position accountable for driving ESG goals (20%), implementing an ESG framework (18%), and requiring suppliers and/or partners to meet environmental sustainability criteria (16%).

Doubling down on digital transformation

The pandemic has impacted the midmarket in a myriad of ways and digital transformation efforts were not spared. Fifty-four per cent of respondents indicated plans were impacted to some or a significant degree. This isn't holding them back, though. The research shows that medium enterprises plan to commit more resources to their transformation efforts over the next year (64%). What's more, this figure rises to 77 per cent for companies that have either developed and implemented, or have completed, a digital transformation project. Comparatively, large enterprises (54%) plan to increase their spending to support digital transformations over the next 12 months and 59 per cent of small enterprises are going to decrease or won't make any changes in their spending.

The numbers point to another reason businesses are doubling down on digital transformation: they are seeing results. When asked whether they saw the return on investment they had expected from their digital transformation projects, more than two-thirds (67%) of medium enterprises indicated they had. For those who have aligned their transformation plans to business objectives, three-quarters (75%) saw a return on investment, compared to zero for those who hadn't aligned and 44 per cent for those who were neutral on the subject.

At a time when privacy breaches and cyberattacks are on the rise, more employees are working remotely than ever before, and the importance of a positive and seamless customer experience has never been more important, medium-sized enterprises within the midmarket have recognized digital transformation needs to be a top priority in order to remain competitive and profitable.

Supply chain priorities zero in on customers

The COVID-19 pandemic continues to impact many aspects of supply chain management, but businesses of all sizes have their customers on their mind. When asked to rank their priorities for supply chain improvement, customer service was the top focus for medium enterprises, along with their smaller and larger counterparts. Additional leading priorities include their customer order cycle time and total delivered cost.

"BDO Canada is uniquely positioned to address these pain points and priorities with our clients. Our role is to assist in identifying our clients' specific needs and to develop and implement plans that will drive real results where they are needed most," said Smuckler.

Methodology

This research is based on an online survey of nearly 1100 business leaders and was conducted from July 8 to July 19, 2021, by BDO Canada and Leger Marketing, an independent marketing research firm. Survey participants represented three sizes of enterprise: small – less than $25 million, medium - $25 to $100 million, large - over $100 million. The margin of error is 3 per cent with a confidence level of 95 per cent.

About BDO

BDO is a leading provider of professional services to clients of all sizes in virtually all business sectors. Our teams deliver a comprehensive range of assurance, accounting, tax, and advisory services, complemented by emerging technology savvy and deep industry knowledge gained from nearly 100 years of being connected to local communities.

After years of national and international growth, our global BDO network positions us to provide seamless and consistent cross-border services to clients with global needs. With over 88,000 people working out of more than 1,500 offices in over 167 countries, the network generates worldwide revenue approaching $10 billion.

SOURCE BDO Canada

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