The Future of Work and Learning Brief
Issue #53 | June 2025

This edition of the Brief was written by Jeff Griffiths for ScaleUP Drivers, a report created to bridge the gap between evidence and practice, giving business leaders, ecosystem builders and policy makers access to the insights, benchmarks and strategies shaping Canada’s scale-up economy. Scaling is hard. This report is designed to help.

Scaling-up starts with people

The business climate in Canada has altered considerably from where it was a few months ago, with upheavals to the global economy wrought by the tariff and trade policies of the new U.S. administration creating massive uncertainty and volatility. For small businesses attempting to scale, there are three main challenges: financial capital, technology and human capital – the people. With enough financial capital, the technology issues can generally be resolved, but more money doesn’t necessarily solve human capital challenges.

Data Snapshot

Smaller businesses are especially vulnerable. HR firm Robert Half reports that finding and retaining talent is a key concern for almost nine in 10 small businesses in Canada.[1] The Canadian Chamber of Commerce Business Data Lab Q1-2025 report also found that finding and retaining talent remains a concern for businesses.[2] A small company attempting to scale during volatile times can ill-afford to fail at “finding the right people.”

To add to the problem, traditional approaches to finding skilled talent are increasingly ineffective. Traditional proxies like experience and academic credentials are proving less and less reliable.

On a scale from 0 (completely useless) to 1 (perfect) in terms of predicting job success – CVs are less than 0.2.[3] A meta-analysis of other studies released in 2019 found very weak correlation between experience in similar roles and future job success.[4]

Businesses know this – that’s why they typically allow three months of probation for new hires to make sure they’ve found the right person for the role.

Getting it wrong is expensive. According to the U.S. Small Business Administration, the minimum cost of a bad hire is 30 per cent of that employee’s annual pay[5] – and some estimates place it much, much higher. Add this to the fact that the cost of recruiting is higher per capita for smaller businesses (due to economies of scale) and getting it wrong can quickly kill a business trying to scale.

Challenges

That may be why a lot of smaller organizations keep people they should probably let go – replacing them is a hassle and there’s a low probability of finding a better employee using the traditional recruiting processes. The way many smaller businesses attempt to scale on the people side is analogous to a metal fabrication shop putting up a sign that says “Steel Wanted” or a restaurant advertising “Ingredients Wanted.”

That sounds ridiculous – because it is. These businesses are very clear about the supplies they need to produce their products and provide very detailed specifications for those supplies. They may have testing procedures on received raw materials to ensure they meet those specs and reject any shipments that don’t.

One of the reasons for poor hiring – particularly for SMEs – is that a majority of firms are very unsophisticated in their approaches to acquiring the human capital they need to be successful.

Strengths

For those companies that are effective at scaling up, some form of competency-based hiring is often in place. One approach to competency-based hiring showing promise for groups of smaller employers is the U.S. Chamber of Commerce Foundation’s Talent Pipeline Management[6] approach. This allows collectives of employers to clearly define the competencies they require in common as well as the number of individuals required, and then determine what pathways (education programs, etc.) are capable of producing the human talent they need. TPM projects are underway in over 40 U.S. states and a pilot is being set up in Alberta. It has proven to be an effective way for smaller employers to influence the “talent supply chain” to get the skills they need.

Employers who clearly identify the skills and competencies they require based on what they need people to be able to do are far more successful in scaling and also at drawing from a broader talent pool than they may currently be using. This not only helps them staff up with the right people – evidence suggests that it also results in a much more diverse talent pool[7] within their organization, which in turn leads to more innovation, resiliency and overall performance.[8] [9]

Testing for competencies during recruiting means fewer bad hires, but many companies dismiss this as too costly. The reality is that with a bit of creativity, simple and inexpensive tests can be developed to determine if the required competencies are there – think of a chef having a prospective cook make an omelette or chop vegetables. Competency testing can be simple, quick and inexpensive.

Small businesses attempting to grow face numerous challenges: financial, technical and human. The human challenge is the most difficult to solve – but doing so is the key to effectively scaling the organization.

[1] https://canadiansme.ca/how-small-businesses-can-overcome-hiring-challenges-and-retain-top-talent-in-a-competitive-market/

[2] https://businessdatalab.ca/wp-content/uploads/2025/03/2025_Q1_BIQ_EN_Final_PG_March-18.pdf

[3] https://www.equalture.com/blog/stop-hiring-based-on-a-cv/

[4] https://onlinelibrary.wiley.com/doi/10.1111/peps.12335

[5] https://www.apollotechnical.com/cost-of-a-bad-hire/

[6] https://www.uschamberfoundation.org/solutions/workforce-development-and-training/talent-pipeline-management

[7] https://www.shrm.org/topics-tools/news/hr-magazine/competencies-hold-key-to-better-hiring

[8] https://www.forbes.com/sites/roncarucci/2024/01/24/one-more-time-why-diversity-leads-to-better-team-performance/

[9] https://hbr.org/2016/11/why-diverse-teams-are-smarter

The Future of Work & Learning Brief is compiled by Jeff Griffiths and Stephany Laverty and Tristan Hall. Through this monthly brief, keep on top of developments in the workforce and how education and training are changing today to build the skills and competencies needed for the future.