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15th May 2012

Tech Start-up CEOs Say Recruitment And Retention Is Their Biggest Challenge

pwcRevenue is not the biggest concern for Canadian tech start-ups according to a report on emerging technology companies released today by PwC. For the first time, the 150 CEOs interviewed listed managing talent as their biggest issue (26%) compared to revenue (25%) and funding (18%). Now in its 9thyear, the annual report found that:

  • Compensation was said to be the cause of most voluntary turnover (26%), followed by a lack of new challenges (23%).
  • Nearly half of involuntary turnover involved underdeveloped or under skilled talent – poor performance (41%) and poor skills fit (13%) were most often cited as the reason why CEOs let staff go.

“On the one hand you could say that Canadian start-ups need to do a better job of finding and keeping the right people with the right skills. However it’s disconcerting that the current talent pool may actually lack the skills, knowledge or experience needed by today’s tech companies,” says Peter Matutat, PwC’s National Emerging Company Practice Leader.

Nearly two-thirds said that over the past two years it has become more difficult to find the programmers and technical personnel they need. More and more technology and business-savvy engineers and developers are choosing to launch their own businesses. CEOs also say that the well established “brain drain” of Canadian talent to US companies continues to hurt their businesses.

“It’s promising to see so many entrepreneurs in the market but it makes the talent shortage and the need for training, development and support for Canadian-based innovation that much more acute,” says Matutat.

Matutat also says the smaller size of start-ups gives employees a bigger chance to make an impact but only if CEOs can capitalize on it. “CEOs should create a working environment where their team has a sense of ownership, the opportunity to be creative, and they are recognized and rewarded for being a part of the company’s success.”

Non-existent or ineffective total compensation packages are also a part of the problem – only 29% of the CEOs said they had a total rewards program in place. Forty-two per cent said that while they had one, they were not sure how effective it was. More than a quarter (28%) said there was no total rewards plan in place.

The 44-page report polled over 150 CEOs of emerging Canadian software companies on a variety of topics including growth, recruitment, M&A and exits, and raising capital. Overall, revenues in this sector are increasing with revenue growth at approximately 25% in 2011.

Follow our 9th annual Connecting Vision to Reality conference for the Canadian emerging tech community on Twitter at #v2r.

This entry was posted on Tuesday, May 15th, 2012 at 10:47 am and is filed under Business News, National News, Research Studies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
  1. Tami Quiring (@VillageGamer)
    12:48 pm on May 15th, 2012

    .@PwC_Canada_LLP study: Tech Start-up CEOs Say Recruitment And Retention Is Their Biggest Challenge http://t.co/SV1RPFvn

  2. ESACanada (@ESACanada)
    10:01 am on May 16th, 2012

    Tech Start-up CEOs Say Recruitment And Retention Is Their Biggest Challenge – http://t.co/EtME0Qcg

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