Overall Small Business Medium Business Large Business Oil and Gas Professional Services

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2 Purpose of this Report This report is a regular tool for HR professionals in Alberta. Good labour market information can help human resources practitioners make better decisions in giving human resources advice to their stakeholders. Alberta companies are facing a significant labour and skills shortage. Earlier in the year, the Alberta government estimated that the province could be facing a shortage of 96,000 workers by As a recent IRPP report published by Don Drummond 1, the former chair of the 2009 federalprovincial-territorial Advisory Panel on Labour Market Information, noted that better information helps employers, and governments make better decisions. The HRIA commissioned this second report as part of a regular series to help fill that labour information void for its members and to discover industry benchmarks that can help human resources professionals make better talent management decisions. Hiring Confidence Index The HRIA has created a measure of how Albertan employers feel about hiring over the next six months. The index emphasizes how confident HR professionals are that they can hire the right people to fill open positions, it also incorporates views on growth in the number of positions Overall Small Business Medium Business Large Business Oil and Gas Professional Services First 6 months Next 6 months Overall, there has been a slight increase in the Hiring Confidence Index in the early part of The biggest increase was among medium businesses (+0.8) while small businesses (-1.3) and oil and gas (-1.0) saw a drop. Large business was the only category left unchanged leaving it far behind oil and gas. Alberta s small businesses have softened their expectations for the next 6 months while the outlook for oil and gas looks promising. Large businesses outside the oil and gas sector saw no change in their hiring outlook maintaining a significant gap with the oil and gas 1 See Wanted: Good Canadian Labour Market Information, by Don Drummond, published June 11, 2014.

3 sector. Large employers outside of oil and gas are facing strong competition for talent with total compensation playing a significant role in this disparity. The scores have a maximum value of 100 and a minimum value of 0. Scores of more than 50 means HR professionals are more confident about hiring than worried. Current Trends The hiring trend continues through the first half of More than three times as many companies reported a net increase in as ones who reporting a net decrease. There is actually a slight increase since the last report. About a third of companies reported employment was stable. Companies with between 100 and 499 and those in the oil and gas sector were the most likely to have experienced growth. 4 Percentage of Companies Reporting net increase in employment 5 53% 4 Across all but one company sizes more people were hired than left in the last six months. Companies with between 1,000 and 9,999 saw net employment remain virtually flat over the first half of Results within categories based on numbers of in order to make the results relevant. Number of Employees Median number 1 to to to 999 1,000 to 9,999 Left employment in last six months Joined employment in last six months Over 10, nd Half 2013 Overall Medium Business Oil and Gas Over the last six months left for a variety of reasons, with the most common being resignation for a better opportunity, resignation for personal reasons, and termination without cause. Resignation and termination without cause have both become more common compared to the second half of last year. While at the same time resignation for a better opportunity has become significantly less common. What sort of employee is leaving for what different reasons? In the early part of 2014, resigning for a better opportunity was the most common reason for departure. The only exception is Executives who were most likely to leave because of retirement. Administrative staff are almost as likely to resign for personal reasons as to leave for better

4 opportunities. It is probable that many workers took the holiday break to an opportunity to change employers and start the year fresh. Most Common Reasons for Leaving 43% 2 2 2nd Half st Half 2014 Resignation for a better opportunity Resignation for personal reasons Termination for cause Retirement Termination without cause Category of Employee Executives Managers Professionals (i.e. engineers, accountants, HR) Technical Staff (i.e. designers, technicians) Tradesperson or Journeypersons Administrative or support staff Most Common Reason to Leave Retirement Resign to pursue better opportunity Resign to pursue better opportunity Resign to pursue better opportunity Resign to pursue better opportunity Resign to pursue better opportunity Finding replacements with the equivalent experience and qualifications is difficult. Confidence in finding replacements is low and has not changed significantly since late A third of respondents are worried they will not be able to replace departing workers with workers having the same experience and qualifications. Companies with more than 10,000 are more than twice as likely to be very worried they will not find replacements with the equivalent experience. Alberta employers continue to experience difficulties in finding the right people to fill their vacancies. Almost three in five firms have not seen their business impacted by resignations and loss to retirement in the last year. Compared to last year more firms are saying they have not hit revenue targets due to resignations and retirements. Confidence in replacing workers with equivalent experience and qualifications 2 12% 31% Very confident they will have equivalent experience and qualifications Moderately confident they will have equivalent experience and qualifications Neither confident nor worried 2 Moderately worried they will not have equivalent experience and qualifications Very worried they will not have equivalent experience and qualifications

5 60% 5 Impact of resignations and retirement in the last year 50% 40% 30% 20% 20% 1 13% 13% 0% No Impact No Impact We have not been able to grow as fast as planned We have not been able to take on certain projects We have had to delay projects for clients We have not been able to take on certain projects We have not hit revenue targets We have had to delay projects for clients We have not been able to grow as fast as planned We have not hit revenue targets Like in the second half of 2013 HR professionals have been active in reducing turnover and resignations. 7 of companies have taken action to reduce voluntary resignations in the last year. The top three actions taken were better on-boarding (41%), flexible work arrangements (33%) and more team building events (32%). The actions taken have not changed significantly from the end of Improving the on-boarding of new is a straight forward method of improving retention and ensuring an effective transition into a workplace. HR professionals are trying different methods of keeping staff with a mix of different options being available. Better on-boarding Flexible work arrangements More team building events Higher wages Better benefits Flexible work location More vacation Offer partial retirement options Signing bonuses Stock options Outsourced functions Living allowances Job sharing Replaced supervisors with high turnover rates Reduce travel requirements Other None 3% 13% % 32% 41% 1st Half of nd Half of 2013

6 The 6 Month Outlook Half of companies (4) expect their total number of to increase over the next six months. This is an increase from 4 in the second half of Only expect to lose over the next six months. The Oil and Gas sector expects to see the biggest gains (5) compared to only 33% in government and public administration. Expected change in employment in the next six months 2nd Half Overall % Small Business 30% 23% 3 3% 2% Medium Business Large Business 20% 20% 3 1 Oil and Gas 3 2 Professional Services 32% 23% 2 2% Govt and Public Admin % Increase by more than Increase by less than Stay the same Decrease by less than Decrease by more than Have no idea Over the next six months companies expect resignation for a better opportunity to be the biggest reason why they will lose staff. This has not changed from last year. This is consistent with the positive hiring expectations that exist across the market. With unemployment at 4. in May and overall employment up 3.2% year over year, Alberta s economy continues its positive expansion allowing workers a greater amount of flexibility in the occupations they pursue and the specific employers they choose to work for. Overall, professionals, tradespeople, journeypersons and administrative staff are most commonly expected to have 31% Expected reason for losing staff in the next six months the highest turnover in the next six months. In the oil and gas and professional services sectors the expectation is for the most turnover among professionals. There is very low expectation of turnover among executives and to a lesser extent among managers Termination without cause Retirement Termination with cause Resignation for personal reasons Resignation for a better opportunity Other

7 Expected departures by occupation in next six months 2nd Half % 1 12% 21% 2 Overall 2% 23% 21% 21% 1 Small Business 2% 1 13% 33% 1 Medium Business 1% 23% 2 Large Business 3 1 Oil and Gas 3% 3 30% 1 Professional Services 2% 43% % Govt and Public Admin 2 2% 2 23% Executives Managers Professionals (i.e. engnrs, accnts, HR) Technical staff (i.e. designers, techs) Tradespersons & Journeypersons Administrative & support staff Other Temporary Layoffs Companies were asked about the practice of temporary layoffs, whereby are laid off, but brought back on when business picks up again. This allows firms to retain a skilled and experienced workforce when cash flow issues arise and short term talent management decisions must be made. About one in six firms engaged in temporary layoffs in the last six months, but this number increases with firm size. It is also a more common practice in the oil and gas industry. Overall Small Business Medium Business Large Business Oil and Gas Professional Services Govt and Public Admin Engaged in Temporary Layoffs in the last six months 82% 8 20% % 73% 13% 8 8 Yes No Don't know 2% 2% 2% 3% The goal of temporary layoffs is for the staff to return to work before long, and in most cases that happens. 5 of staff return to work in less than three months, but one in ten of these temporary

8 layoffs become permanent. Temporary layoffs can provide an opportunity for a company to reassess its labour pool and make necessary adjustments. It is also risky. Workers facing the prospect of a prolonged period out of work may leave permanently in pursuit of a more favourable work conditions and HR professionals must be careful to weigh the medium to long term downside to using temporary layoffs. Length of time laid off before being typically called back to work Overall 4 23% 12% Oil and Gas 50% 20% Professional Services 50% 33% 1 Govt and Public Admin 1 43% 2 1 Less than one month Three to six months One to three months Six months to a year Filling Vacancies It takes longer to fill a vacancy for a more specialized position like an executive than for a less specific role like administrative staff. Over the last year it has taken more than six months to fill 3 of vacant executive positions. A majority of executive jobs took more than three months to fill. Managerial jobs and positions that require a professional did not take as long to fill with only 1 taking more than six months to be filled. Technical team members were easier to find, with only of positions going vacant for more than six months. Even for skilled workers like journeypersons and tradespersons only of positions took longer than six months to find someone. Compared to the last report, it is taking longer to fill executive and managerial positions, but the same or less time to fill lower paying positions. While there may be a skilled trades shortage in Alberta, it is not impacting most firms. 82% of vacancies for trades or journeypersons are filled within three months. Companies were also asked which positions remain unfilled. The responses varied enormously although the most common were in the managerial (project manager, marketing manager) and technical (QA technician, software developer) classes. Unfilled vacancies if they persist over several months, or even a year, can have a negative impact on strategic business goals as well as other. Employees may have to shoulder

9 an additional workload or take on tasks beyond their immediate areas of responsibility. Prolonged delays in filling vacancies can also result in project deadlines being missed or opening hours being shortened in the retail sector. Executives Less than a month Managers 3 Between a month and three months 4 Between three months and six months Between six months and a year 2 1 More than a year 12% Professionals Technical Staff Tradespersons and Journeypersons Admin Staff 52% 53% 41% 5 2% 2 1% 41% 1% 12% 1% 3% 40%

10 Hiring and Turnover Turnover is expensive for companies. Costs associated with replacing an employee as well as lost productivity can be high. Broadly speaking the cost of processing a turnover increases with the size of the company. Oil and Gas, and Professional Services both pay more than average for turnover. The cost of turnover has decreased from late 2013, though this could partially be accounted for the sample including more responses from the Government and Public Administration which as a sector have lower turnover costs. $17,870 Estimated average total cost of processing an employee turnover $18,400 $18,680 $17,280 $15,270 $13,310 $14,970 $14,250 2nd Half 2013 Overall Small Business Medium Business Large Business Oil and Gas Professional Services Govt & Public Admin Just like the second half of 2013, more than half of respondents reported increasing employee training needs due to turnover. Only 1% claimed a decline in training needs, while the rest (3) say there has been no change. These numbers have not changed significant since the last report.

11 Half of firms (4) used an outside recruiter in the last six months. The highest use was among firms with between 500 and 9,999, while those with over 10,000 were more likely to use internal resources. Fewer firms anticipate using an outside recruiter in the next six months (41%). 100% 90% 80% 70% 60% 50% 40% 30% 20% 0% Use of an outside recruiter to fill vacancies 51% 42% In the LAST six months 5 3 In the NEXT six months No Yes, for less than half of positions Yes, for more than half of positions Retirement As in the last report most companies in Alberta do not have a formal retirement policy. Only a quarter (2) have a formal policy that outlines how retiring are to be treated including a step by step process that ensures both employer and employee understand their responsibilities. As firms get larger they become much more likely to have a formal retirement policy, with 5 of firms with between 1,000 and 9,999 and 70% of firms with over 10,000 having one. Governments are significantly more likely to have formal retirement policies. Have a formal retirement policy Overall 2 6 Small Business 13% 81% Medium Business 23% 70% Large Business 5 3 Oil and Gas 23% 72% Professional services 73% Govt and Public Admin 5 3 Yes No Don't know Unlike retirement policies, nearly half of companies in Alberta (4) have a formal succession planning process. Larger firms are more likely to have a formal succession planning process than smaller ones.

12 Overall 1 to to to 999 1,000 to 9,999 Over 10,000 Oil and Gas Professional services Govt and Public Admin Have a formal succession planning process % 52% % 4 53% 4 52% 3 6 Yes No Don't know 13% 2% Of those firms that do have a formal succession planning process, more than two thirds (6) say that retirements have not affected their succession planning. Only say retirements have had a great deal of impact on their succession planning and another 2 report it has had a moderate amount. The chances that retirements have impacted succession planning increases with the size of the company. It is not possible to plan to for every eventuality, whether it be an unforeseen illness, a workplace or holiday accident, or early retirements; but succession plans ensure a measure of business continuity and should be relevant to replacing workers beyond just executives. As the baby boomers continue to reduce their workforce participation, employers will be pressed to find new workers to replace them and that process can be greatly streamlined by taking time with HR professionals to plan appropriately. Eligibility for retirement in the last year hovers around 3% of for companies with less than a 1,000 and around 1. for companies with more than 1,000. Median number Eligible for retirement in the last year 1 to to to 999 1,000 to 9,999 Over 10, Partial Retirement Partial-retirement, that is older transitioning to two or three days a week or less so that the company retains their experience and knowledge is practiced at about half the companies surveyed. It is more commonly found in larger companies and in professional service firms.

13 Overall Small Business Medium Business Large Business Oil and Gas Is partial retirement offered? 4 51% % % Professional services 6 33% Govt and Public Admin 43% 5 While half of companies do offer partial retirement, it is not that commonly used. Median number Number of partial retirements in the last six months 1 to to to 999 1,000 to 9,999 Over 10, When an employee transitions to partial retirement different companies deal with their position in different ways. The most common option is to fill the position with a full-time replacement. This option has increased significantly since the end of A significant number also leave the position open pending full retirement. Generally, larger companies are more likely to fill the opening with a full-time replacement right away. Smaller firms are much more likely to leave the position open pending their full retirement. Temporary Foreign Workers (TFWs) How is the open position dealt with? 30% 13% 12% 3 There are over 338,000 international workers in Canada or 1.1% of the Canadian workforce in The TFW program includes several different streams including the low skilled category that has been the source of many media stories and nationwide criticism. Recently, the Canadian government announced significant changes to the way It has been filled by a full-time replacement It has been filled by a part-time replacement It has been left open pending their full retirement It will not be filled again Other TFWs are treated and this will have a significant impact on HR professionals tasked with dealing with the paperwork. Overall, just less than one in five companies (1) used TFWs in the last six months. In broad terms, firms with more were more likely to use TFWs than those with fewer. Another considered using TFWs in the last six months. This is a drop from the second half of 2013, and may reflect some of the controversy around TFWs that erupted in the media in early 2014.

14 Used and considered TFWs 2nd Half % 1 6 Overall 1 70% Small Business 7 Medium Business 20% 12% 6 Large Business 30% 12% 5 Oil and Gas Professional services 21% 71% Govt and Public Admin 9 We used TFWs We considered, but did not use TFWs We did not consider using TFWs Until the recent changes, TFWs had a four year cumulative limit on the length of time they could work in Canada. When that time is up, employers must plan to deal with replacing them. Twothirds of HR professionals surveyed said the most common plan is to obtain permanent residency for the TFWs (6). The Canadian government has tripled opportunities for TFWs to become permanent residents and the Canadian Experience Class as well as provincial nominee programs are significant methods of retaining those workers. Only about one in six says they will replace them with Canadian workers () while far fewer will apply to get new TFWs (). For the second report in a row not a single respondent said they would eliminate the position once the TFW left. Future survey work may show a dampening of interest in the program with the significant changes announced in late June that will increase costs, compliance measures and eligibility. Plan to replace TFWs when maximum time is reached 2nd Half of % 1 Overall 6 13% Small Business Medium Business 6 1 Large Business 5 Apply for replacement TFWs Obtain permanent residency for TFWs and retain them Replace the TFWs with Canadian workers Eliminate the position(s) Looking forward to the next six months less than a quarter of employers () will consider using TFWs. This has shrunk from 2 last year. No doubt the controversy over TFWs in the media is having an impact and the expectation is that future intent to use will further decrease. Bigger firms are generally more likely to use TFWs, but the trend is downwards. As companies face new compliance requirements and further public scrutiny, it will likely cause HR professionals to spend

15 more time ensuring that workforce planning strategies take into account the greater regulatory hardship that using the TFW program may cause. Turning towards underutilized domestic sources of labour as well as making business process modifications will be necessary for employers in certain sectors of the economy. Consider using TFWs in the next six months 2nd Half % Overall 12% 30% 4 Small Business 2 5 Medium Business 1 33% 4 Large Business % We will definitely consider using TFWs We will probably not use TFWs We will probably consider using TFWs We will definitely not use TFWs Other Trends Respondents were asked what outside trends are impacting their workforce including attraction, retention and HR practices. The most common response was the competition for the best with other firms and industries within Alberta s hot labour market. Respondents were carefully watching for the expected changes to the TFW program and how the Canadian government would handle the issue going forward. Also mentioned is the trend of working longer hours but fewer days, and the rise of compassionate care leave in packages (likely in conjunction with the passage of a private members bill in Alberta on the subject in February of 2014). Methodology This survey was conducted online between May 1 and 22, ,456 members of the HRIA were invited to participate via an . Of these 729 completed enough of the survey for their responses to be useable, a response rate of respondents completed every question, a completion rate of 8.1%, an increase over the previous report. The margin of error of this survey varies depending on the number of completions each question received. The margin of error varies between +/- 3., nineteen times out of twenty and +/- 4., nineteen times out of twenty. The previous report was based on data collected in November and December 2013.

16 Respondent Profile The respondents come from organisations of all sizes from sole-proprietors to multi-national corporations. The median number of in Alberta per company is 185 and the average number of is 1,513. The respondents are fairly evenly distributed by the size of company. The largest number of reported is the government of Alberta with 254,000. Number of Self-employed 21% 1 to to to 999 1,000 to 9,999 2 Over 10,000 Respondents were also distributed across a wide range of sectors. The most common were Oil and Gas; Professional, scientific and technical services; and public administration and government. Distribution by sector Oil and Gas Public Administration and Government Professional, Scientific, and Technical Construction Education Services Healthcare and Social Assistance Finance and Insurance Manufacturing Retail and Wholesale Trade Hospitality and Food Services Transportation and Warehousing Utilities Mining Real Estate, Rental and Leasing Agriculture and Forestry Information and Cultural Industries Arts and Entertainment Other Services 7.1% % % 1.0% % 0.3% 11.2% % 19.2% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% Due to the sample size the only sectors that can be broken out with separate results are Public Administration and Government; Professional, scientific and technical services; and Oil and gas. Respondents were divided between being Certified Human Resource Professionals and other categories. 56.1% of respondents were CHRPs.

17 Further information The Human Resources Institute of Alberta was founded in 1984 and is the governing body for the training, certification and promotion of Alberta s human resources professionals. With over 6,000 members, the HRIA is Alberta s only human resources professional body with 6 chapters across Alberta providing support to members in every major urban centre. For more information contact: Phone: For media inquiries, contact: Temina Lalani-Shariff Director of Communications Phone: For inquiries regarding the survey and analysis, contact: Tom Kmiec Director, Corporate Affairs Phone: For inquiries regarding the methodology and survey tool, contact: Hamish I. Marshall Abindgon Research Phone:

18 This survey was conducted online between May 1 and 22, ,456 members of the HRIA were invited to participate via an . Of these 729 completed enough of the survey for their responses to be useable, a response rate of respondents completed every question, a completion rate of 8.1%, an increase over the previous report. The margin of error of this survey varies depending on the number of completions each question received. The margin of error varies between +/- 3., nineteen times out of twenty and +/- 4., nineteen times out of twenty. The previous report was based on data collected in November and December Abingdon specializes in large membership surveys and economic/public affairs oriented projects. The company s past work has included labour market studies of western Canada evaluating labour shortages and relative pay rates for employers. Based in western Canada, Abingdon boasts past clients such as the Port Metro Vancouver, BHP Billiton, the Calgary Chamber of Commerce, municipalities from British Columbia to Ontario, as well as major media organizations in British Columbia and Alberta. HRIA is the leading professional association for human resources practitioners in Alberta dedicated to strengthening and promoting the HR profession. As Alberta s exclusive granting body for the Certified Human Resources Professional (CHRP) designation, HRIA plays a critical role in establishing professional standards within the industry. The HRIA membership connects over 5,900 HR practitioners, including 3,100 + CHRPs across the province through various professional development, networking, and community initiatives. #410, Avenue SW Calgary, AB T2R 0G f

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