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What is Canada’s productivity paradox?
Canada, renowned for its abundant natural resources, highly skilled workforce, strong institutions, and research capabilities, faces a pressing economic challenge: a persistent productivity gap.
Despite these advantages, Canada is lagging its peers in productivity growth and innovation-based economic performance. This gap has hindered Canada’s ability to fully realize its economic potential and raised concerns about its long-term competitiveness.
This paradox has long been a topic of concern among policymakers, economists, and business leaders. Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, recently highlighted the urgency of the issue, stating, “You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass.” The Organisation for Economic Co-operation and Development (OECD) predicts Canada will be the worst performing advanced member country over the next four decades as measured by real GDP per capita.1
The recent tariff dispute between Canada and the U.S. poses a significant threat to Canada’s productivity. Disruptions in supply chains, increased costs, and higher inflation are all likely outcomes if tariffs are implemented. These events only underscore the urgent need for businesses to act now, implementing strategies to improve productivity and resilience.
Below, we delve into the factors contributing to Canada's productivity paradox. We explore the underlying causes such as low adoption of technology, insufficient investment in research and development (R&D), and cultural barriers to innovation. To unlock our nation’s full economic potential, Canadian businesses must take initiative to improve productivity and innovation. This report, developed through the collaborative insights of leading professionals from across our firm, provides actionable recommendations and lays out the path for boosting productivity. We focus on real-world solutions that leverage technology, cultivate a high-performing workforce, and streamline operations to enhance efficiency so your business can compete in the global economy.
BDO is dedicated to empowering Canadian businesses. To help you implement the recommendations outlined in this report, our team of skilled professionals is ready to work with you. We provide a comprehensive suite of services designed to support businesses at every stage of their journey, from initial strategy development to full-scale implementation and beyond.
What is productivity?
Productivity is a measure of economic efficiency, reflecting how much output an economy generates for a given amount of input. In simpler terms, it measures how much we can produce with the resources we have.
Key productivity measurements
Productivity can be measured in multiple ways; two common measurements include:
Why is productivity important?
Productivity is a critical driver of economic growth and prosperity. Contrary to what some may think, improving productivity doesn't mean working harder or longer. It's about increasing output per hour of work. A more productive economy can:
Canada’s productivity standing
Canada's labour productivity growth has lagged behind the U.S. and other advanced economies in recent decades. This productivity gap is evident in several key areas:
When comparing Canada to other countries, particularly the U.S., it’s important to note the differences in the size and composition of our economies, further compounded by distinct geographical and climate realities. Factors such as Canada's vast geographic size, leading to increased transportation costs and logistical challenges in some regions, and the impact of harsh winter weather on infrastructure and productivity, present unique challenges that cannot be easily overcome. Despite these differences, there are many areas for improvement. Addressing these gaps will be crucial for enhancing Canada’s productivity and economic performance.
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Understanding Canada’s productivity challenges
Several key challenges are hindering Canada’s productivity growth. By examining these factors, we can better understand the obstacles Canadian businesses face and identify strategic solutions to overcome them.
Insufficient investment in R&D
Low technology adoption
Industrial composition
Limited competitive intensity
Cultural barriers to innovation
Skills shortage and mismatch
Insufficient investment in R&D
Compared to our global peers, Canada's R&D investment as a percentage of GDP falls short. This underinvestment significantly contributes to Canada’s impaired productivity.
Government investment in R&D has been on the decline compared to peer nations.7 These investments play a crucial role in driving innovation and supporting long-term economic growth by funding research areas that may be overlooked by the private sector.
Similarly, business R&D investments have experienced a drop in the last 20 years, when compared to peer nations.8 Canadian businesses, particularly SMEs, often lack the resources and incentives to invest in R&D. Factors such as a risk-averse culture, limited access to capital, and a focus on short-term gains can impede R&D investment.
Recent changes to the Scientific Research & Experimental Development (SR&ED) tax credit program announced in the 2024 Fall Economic Statement brought welcome enhancements to funding innovation in Canada. These changes aim to incentivize R&D activity and support businesses in developing and commercializing new technologies.
Increased R&D investment is essential for Canada to foster innovation, enhance productivity, and compete effectively in the global marketplace. Businesses that prioritize R&D can reap significant benefits through:
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Product differentiation
- Enhanced competitiveness
- Improved efficiency and productivity
- Long-term growth
- Economic resilience
Canada’s performance in intellectual property (IP) ranks near the bottom among peer nations, just above Italy and China.9 Investments in productivity-enhancing technologies such as machinery and equipment and IP directly improves the individual worker’s productive capacity.
While Canada’s national IP strategy is a positive first step, more needs to be done to protect IP and ensure Canada’s competitiveness in the global economy.
Low technology adoption
Canada lags other OECD countries in the adoption of advanced technologies, including information and communication technology (ICT), robotics, and artificial intelligence (AI). For example, ICT investment as a percentage of GDP in 2021 was lower in Canada (2.5%) compared to the U.S. (3.7%).10 Investments in ICT are uniquely positioned to boost total factor productivity and enhance Canada's competitiveness.
While there is no question that Canada has many innovative companies, the adoption of new technologies across the board has been hindered by several factors. A significant barrier is the lack of government incentives or support for technology adoption.
The pandemic-era Digital Adoption Program, which provided funding to businesses for technology consultations, demonstrated the positive impact of such initiatives. Unfortunately, that funding ended, halting the momentum of organizations looking to transition to the cloud, enhance resilience, or fortify their cybersecurity capabilities.
AI-driven innovations, particularly large language models, hold promise for enhancing productivity, lowering costs, and driving economic growth. While Canada boasts a globally competitive generative AI ecosystem, with a strong concentration of AI talent and venture capital investment, Canadian businesses lag their peers in AI adoption. Canada has the second lowest AI adoption rate among G7 countries at 22%.11 This disparity may be attributed to the fact that Canada’s economy has many small and medium-sized businesses, many of which struggle to implement and scale AI technologies due to resource constraints. As AI and emerging technologies become more accessible and reshape how companies operate, creating new jobs and tasks, it is critically important to see more firms embrace the technology.
Industrial composition
Canada's economy has a large natural resources sector, which can present unique challenges to productivity growth:
The composition of Canada's economy significantly impacts overall productivity levels. For example, an increase in the share of workers in industries with above-average levels of labour productivity can boost overall productivity levels, while a decrease in the share of labour can reduce overall productivity.13
Canada, like many other nations, is experiencing major structural changes, including the green transition, the realignment of global trade, and the increasing digitization and use of AI. These transformations present both opportunities and challenges for enhancing productivity.
Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, also highlighted in her speech,
The green economy transition
The transition to a more sustainable economy can be seen as an opportunity for growth and productivity for Canadian businesses. Firms will need to innovate and adopt new technologies to remain competitive in the green economy. Additionally, the labour force must adapt to the changing skills requirements associated with this transition.
The threat of President Donald Trump’s tariffs and protectionist trade policies may slow this transition. Higher costs, uncertainty in cross-border trade, and reduced market access could hinder investments in emerging clean technologies and slow down the progress towards a greener economy, ultimately impacting Canada's productivity. To mitigate these risks and build resilience, businesses should look to diversify trade relationships and reduce dependency on the U.S.
Limited competitive intensity
Canada saw a clear decline in competitive intensity.
Canada’s economy grapples with limited competition in certain industries, particularly telecommunications and information services. A 2023 report by the Competition Bureau of Canada found a consistent and clear decline in competitive intensity in Canada between 2000 and 2020. This decline has led to diminished incentives for innovation and efficiency improvements—impacting Canada’s overall productivity.
Statistics Canada’s Survey of Innovation and Business Strategy found that businesses that face more competition are substantially more likely to introduce innovations than those with fewer competitors. In response to changes in competition in their main market, over one-third of businesses (38%) introduced or accelerated the introduction of new goods or services, while over half (55%) responded by introducing new technology or new processes.
Limited competition can lead to a range of negative consequences:
Cultural barriers to innovation
A risk-averse culture and fear of failure among entrepreneurs and businesses can significantly inhibit bold innovation and investment in new ventures. The Conference Board of Canada’s 2024 Innovation Report Card highlights that more than half of Canadians who see good startup opportunities are deterred from taking action by a fear of failure. This fear is influenced by the perceived economic consequences of entrepreneurial failure, which can be particularly significant in the current economic climate.
One area that Canada does excel in is early-stage entrepreneurship. Canada has more individuals than any other peer nation who are either emerging entrepreneurs or owner-managers of new businesses. However, challenges remain in scaling up homegrown businesses and competing on a global level. The allure of more mature innovation ecosystems, particularly in the U.S., can divert entrepreneurial talent and ideas away from Canada. To address these challenges, it’s essential to provide entrepreneurs with the necessary tools, resources, and support to grow their businesses and achieve global scale.
Organizational cultural barriers
Organizations that struggle with innovation and productivity often exhibit the following characteristics:
- A lack of recognition and feedback hindering employee motivation and engagement.
- Poorly communicated expectations leading to confusion, frustration, and a lack of direction among employees.
- Insufficient resources and tools limit employees' ability to do their jobs effectively.
- Employees who feel they lack autonomy and that their contributions are not valued may be less engaged and motivated to innovate.
Overcoming Canada's pervasive fear of failure is essential for tapping into the nation's thriving entrepreneurial spirit. Amplifying and celebrating innovation success stories can foster a culture of achievement and inspire promising innovators. By cultivating a culture of innovation, Canada can improve its productivity and secure a prosperous future.
Skills shortage and mismatch
Canadians are highly educated, the share of post-secondary educated Canadians in the 25 to 64 age group increased from 39% in 1999 to 59% in 2019, the highest share in the OECD and well above peers like the U.S. (48% in 2019).14 However, many graduates, particularly in STEM fields, are attracted to opportunities abroad, leading to a "brain drain”.
“Incentive programs that encourage companies to retain their intellectual property and investment dollars domestically will have a positive cascading effect on talent retention and growth,” he added.
Higher levels of education do not guarantee that skills will be fully utilized. In 2019, approximately a third of all post-secondary educated workers were employed in jobs that did not require post-secondary education.15 This skills mismatch indicates that even if workers possess in-demand skills, they may not be matched with appropriate jobs. Emphasizing skills over degrees, enhancing career planning in high school programs, and increasing the use of co-ops and internships can better align skill development with labour market needs.
Canada, like many other countries, is facing significant demographic shifts, particularly with an aging population. As the baby boom generation continues to retire, the ratio of working-age individuals to the overall population is decreasing. This demographic change poses challenges for productivity and economic growth, as a smaller workforce must support a larger retired population.
One area for improvement is credential recognition. Immigration is a key driver of population and workforce growth in Canada and many skilled immigrants face difficulties in having their qualifications recognized and utilized. Canada needs to streamline the evaluation and accreditation of foreign credentials to enhance the productivity of the current immigrant workforce but also increase Canada’s competitiveness in attracting future immigrants.
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Performance of key Canadian industries
Productivity growth differs considerably by industry and is influenced by a range of factors, including the pace of technological change, the ability to automate and mechanize production, and the impact of regulations or red tape. Below, we explore key industries, delve into their productivity challenges, and offer recommendations for improving productivity.
Financial services sector
Manufacturing sector
Technology, media, and telecommunications sec...
Financial services sector
The financial services sector plays a crucial role in the Canadian economy, serving as a cornerstone for financial stability and economic growth. From 2000 to 2019, the finance, insurance, real estate, and renting and leasing sectors demonstrated a commendable labour productivity growth rate of 1.74%, surpassing the national average of 0.96% across all business sectors.17 However, when placed in the context of OECD countries, the sector's productivity growth ranks "middle of the pack," signifying further potential for improvement.18
Challenges facing the financial services sector
Despite GenAI’s promise for improving productivity, many mid-market financial institutions have yet to fully embrace it. One common barrier is the "proof of concept" trap, where initial pilots fail to translate into widespread adoption due to regulatory uncertainty. To fully bring these technologies into production and realize their benefits, organizations must address underlying infrastructure, cybersecurity, ethical considerations, and data privacy and protection concerns. By investing in a technology adoption framework and fostering a culture of innovation, financial institutions can unlock the productivity gains that GenAI offers.
"To ensure successful adoption of new technologies, it's essential to release technology in smaller, more frequent increments and gather continuous feedback,” said Rishan Lye, Consulting Leader at BDO Canada. “By embracing imperfection and maintaining momentum, organizations can foster a more engaged and productive workforce, while also benefiting from the insights gained through ongoing feedback,” he added.
Recommendations for enhancing technology adoption and productivity in the financial services sector
Financial services institutions have a notably more complex way to get innovations and technology adoption from ideation to deployment to adoption. To address these challenges and improve productivity, organizations should consider the following recommendations:
Manufacturing sector
As the backbone of Canada’s export economy, the manufacturing sector plays a pivotal role in supporting productivity and driving international competitiveness. Historically, manufacturing productivity has outpaced the overall econoamy. However, recent trends indicate a deceleration in this growth rate, with labour productivity increasing at a rate of 0.88% per year from 2000 to 2019, falling slightly behind the aggregate business growth rate.19
Additionally, Canada lags its peers in the deployment of robotics.20 This suggests a missed opportunity to leverage technology to enhance efficiency within the manufacturing sector.
The sector has faced significant challenges in recent years, including the impact of COVID-19 and trade disputes with the U.S., which have disrupted supply chains and increased costs for Canadian manufacturers.
The impact of COVID-19 on manufacturing
The COVID-19 pandemic dealt a significant blow to the Canadian manufacturing sector, disrupting supply chains, raising costs, and forcing businesses to prioritize short-term survival over long-term investments. The situation has now stabilized, and manufacturers are regaining the financial flexibility to reinvest in advanced technology and R&D.
Challenges facing the manufacturing sector
The manufacturing sector has been grappling with a persistent labour shortage, intensified by two phenomena that emerged around the time of the Covid-19 pandemic.
The great resignation
Many workers re-evaluated their approach to work and priorities, leading to a wave of resignations across various industries, including manufacturing.
Aging workforce
A large demographic of manufacturing workers have retired or are reaching retirement age, creating a talent gap as experienced employees leave the workforce.
A significant labour shortage paired with an unskilled and untrained workforce has hindered productivity and competitiveness for the sector. Investing in training and upskilling as well as adopting automation and advanced technologies will be critical to renew and augment the workforce, improve efficiency, and help the sector catch up. Delaying these investments can further widen the gap between Canadian manufacturing and its global competitors.
Recommendations for enhancing productivity in the manufacturing sector
Technology, media, and telecommunications sector
The technology, media, and telecommunications (TMT) sector in Canada is a dynamic and rapidly evolving field. This industry, encompassing biotechnology and pharmaceuticals to information technology and AI, is characterized by its cutting-edge innovation, focus on R&D, and entrepreneurial culture. The TMT sector is crucial for Canada’s economic growth, contributing significantly to employment, innovation, and exports.
Lessons from the TMT sector
Other industries can benefit from adopting the following strategies employed by the TMT sector:
Challenges facing the TMT sector
Despite its strengths, the TMT sector faces several challenges that can hinder productivity growth:
Recommendations for enhancing productivity in the TMT sector
To address these challenges and maximize productivity in the TMT sector, the following recommendations can be considered:
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Strategies for improving business productivity
Increase R&D investments
Enhance technology adoption
Leverage partnerships through PE and M&A
Foster a culture of innovation
Maximize government incentives
Risk management
Increase R&D investments
As we know, Canada's overall spending on R&D lags behind peer nations. The benefits have been stated, R&D enhances human capital, product differentiation, competitiveness, productivity, and economic resilience.
To increase R&D investments businesses can implement several strategies:
Increased R&D investment is essential for Canadian businesses to foster innovation, enhance productivity, and compete effectively in the global marketplace.
Enhance technology adoption
There is a strong correlation between leveraging advanced technologies and increased innovation and productivity within businesses.
Leadership’s role in championing technology
Leadership plays a key role in championing technology, creating value, and encouraging experimentation. Matt Glenen, Technology Consulting Partner at BDO Canada emphasized the importance of viewing technology and IT teams as strategic partners to the business. “One of the biggest barriers to technology adoption is the lack of leadership that truly understands its importance. With many of my mid-market clients, IT is often still perceived as the people giving you the laptop and keeping the lights on,” he said. “However, it needs to be seen as a strategic enabler and a partner to the business.”
Addressing skills shortages
Innovative businesses and advanced technology users reported skill shortages at higher rates (57.2% and 57.9%, respectively) compared to non-innovative or non-advanced technology users.24
Proper training of employees remains essential, as individuals play a key role in technology adoption. Without adequate training, issues may arise, impeding productivity and leading to underutilization of technology solutions.
Adopt cloud technology
Cloud technology offers a powerful tool for boosting productivity and efficiency. By consolidating technology infrastructure and eliminating legacy systems, organizations can reduce IT costs and streamline operations. Cloud-based tools enhance collaboration, communication, and flexibility, making it easier for teams to work together―regardless of their location. Additionally, cloud solutions can automate routine tasks, freeing up employees to focus on higher-value activities. Embracing the cloud can create a more productive and agile workforce, attract top talent, and provide a competitive edge.
Adopt AI technology
The adoption of AI and emerging technologies is set to transform business operations, creating new jobs and tasks. Canada, with its competitive AI ecosystem, is well-positioned to capitalize on this opportunity. To fully realize the potential of AI, businesses need to adopt these technologies meaningfully.
Here are some steps businesses can take to adopt AI technology effectively and safely:
Start by identifying areas where AI can add the most value, such as customer service, data analysis, or supply chain management.
Invest in training and development to equip your workforce with the necessary skills to work alongside AI. This includes technical skills, data literacy, and an understanding of AI’s potential and limitations.
Work closely with risk management teams to develop guardrails and clear guidelines for the safe use of AI tools like ChatGPT to prevent misuse and protect sensitive information.
Begin with small-scale projects to test the waters. Use these learnings to refine strategies and scale up successful implementations.
Continuously monitor the performance of AI systems and evaluate their impact on productivity and efficiency. Use insights gained to make informed decisions about future AI initiatives.
Case study: Microsoft 365 Copilot at BDO Canada
Microsoft 365 Copilot is a powerful AI tool that has shown promising results in enhancing efficiency and productivity within organizations. During the pilot phase at BDO Canada, 98% of our trial phase users opted to continue using the tool, with over 90% reporting a marked increase in the speed of their task completion. This example highlights the tangible benefits of AI adoption and the importance of integrating such technologies to stay competitive in the global market.
Leverage partnerships through PE and M&A
Private equity (PE) and mergers and acquisitions (M&A) can play a significant role in driving productivity growth for businesses. According to a Canadian Venture Capital and Private Equity Association (CVCA) report, PE-backed companies experienced over twice the rate of productivity growth in the three years following the initial PE investment than equivalent sized companies listed on the TSX. In this section, we delve into how leveraging PE and engaging in M&A activities can significantly enhance organizational productivity.
Leverage private equity
PE firms are focused on driving long-term growth strategies that align with fostering productivity and sustainable business success.
Here are ways in which partnering with PE firms can elevate productivity:
75% in PE-backed companies.
PE firms can provide capital injections to fund R&D projects, acquisitions, and other growth initiatives. As highlighted in the CVCA report, capital investment, as a share of revenue, rose by 75% in PE-backed companies post-deal, significantly faster than non-PE backed benchmarks. This enables companies to invest in new technologies, expand their operations, and enhance their productivity.
PE firms actively focus on improving operational efficiency. They leverage their industry expertise to identify areas for value creation, process optimization, and talent acquisition. They often have a roster of operating partners who have deep industry experience to streamline operations, implement best practices, and foster a culture of continuous improvement. Their strategic guidance and support help organizations significantly enhance their profitability and productivity.
M&A transactions
Engaging in M&A is another powerful strategy to boost productivity. M&A activities bring in fresh expertise, capital, and resources that many mid-market, privately held, and often family-owned businesses in Canada lack. These businesses frequently struggle with outdated management practices and insufficient technological adoption, which hampers productivity.
The recent tariff dispute with the U.S. has introduced significant uncertainty into the market, potentially slowing down M&A activities as businesses hesitate to make large investments amid trade instability. Despite this, M&A remains a viable option for many firms looking to scale operations, modernize processes, and enhance competitiveness in an evolving economic landscape.
Foster a culture of innovation
Fostering a culture of innovation can help Canada's pervasive fear of failure and improve productivity and operational efficiency. By encouraging creativity and experimentation, companies can drive new products or services, streamline processes, and ultimately drive growth.
Strategies for businesses to foster an innovative culture
Leaders must champion innovation, view technology teams as strategic partners, and educate themselves on the potential of new technologies. By setting the direction and encouraging experimentation, leaders can create an environment where innovation thrives.
Create an environment where employees feel safe to experiment with new ideas, without fear of failure. This can include, celebrating successes, rewarding attempts, learning from failures, and encouraging continuous improvement. Establish formal processes for idea submission and evaluation and empower employees to take ownership. It’s important to prioritize and align innovative ideas with business strategy to ensure they contribute to the company’s goals.
Implementing training programs to upskill employees and promote a growth mindset is essential for an innovative culture. Continuous learning and development helps employees stay current with technological advancements and ensures the proper adoption of technology. You can have the best tech in the world, but your people need to know how to use it and understand how it can help them in their role.
A highly engaged workforce is more likely to be innovative and productive. To achieve this, organizations can use tools like surveys and temperature checks to identify areas where employees may lack the tools, resources, or recognition needed to perform effectively. By developing action plans based on these insights, organizations align their culture with employee values, leading to increased engagement and productivity.
“When there is a culture of engagement and a culture that aligns with the values of the employees, productivity increases. It’s a direct correlation,” Nadeem Rasul shared.
BDO Canada’s approach to fostering an innovative culture
By following these strategies and learning from BDO’s example, businesses can foster a culture of innovation that drives productivity and operational efficiency.
Maximize government incentives
There are many federal and provincial government programs and incentives designed to help Canadian businesses boost productivity, innovation, and R&D. As Martha Breithaupt, Partner and Clean Economy Tax Credits Leader at BDO Canada shared, “Canadian businesses can look to the government for support to grow their business. Tax credits, grants, loans, and other programs are available to offset business spends on innovation, market expansion, and people.”
When considering direct funding, businesses should proactively plan for future projects and engage with granting agencies or funding sources early to promote their projects and secure funding in advance. With indirect funding, companies can benefit from tax credits, by retroactively claiming for eligible activities. This allows businesses to direct their own investments in their industry or technologies and later recapture those investments through tax benefits.
Let's explore some of the key programs and incentives that businesses should consider taking advantage of:
The Canadian SR&ED program offers substantial tax credits to businesses that invest in R&D and innovation. SR&ED activities typically occur when a company encounters a technological challenge that cannot be solved using routine engineering or by applying standard practice approaches. This type of industrial innovation occurs daily across many manufacturing shop floors and design labs. BDO can help identify and claim SR&ED opportunities, ensuring businesses maximize their potentially refundable tax credits and benefit from this valuable program.
Recently, the 2024 Fall Economic Statement proposed welcome enhancements to the SR&ED program:
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Increase the annual expenditure limit on which Canadian-controlled private corporations are entitled to earn an enhanced 35% investment tax credit, from $3 million to $4.5 million.
- Increase the prior-year taxable capital phase-out thresholds for the enhanced credit from $10 million and $50 million to $15 million and $75 million, respectively.
- Extend the enhanced refundable credit to Canadian public corporations.
- Restore the eligibility of capital expenditures for both the deduction against income and the investment tax credit components of the SR&ED program.
The Government of Canada has introduced five new tax credit programs to support the transition to a net-zero emissions economy. These Clean Economy Investment Tax Credits offset the costs of adopting clean technologies. By participating, businesses can create opportunities for innovation, recover costs, and foster growth. Technologies covered by the credits include solar installations, heat pump, wind turbines, and zero-emission non-road vehicles.
This funding will be available until 2034 and is part of a strategic move to meet Canada’s ambitious 2050 Paris Agreement climate goals, to keep pace with international competition for foreign green infrastructure investment, and to ensure Canada remains a leader in clean technology implementation.
Government incentives, including grants, loans, and procurement, are available to a wide range of industries and company sizes. These programs provide critical financial support for businesses at various growth stages, either directly or through intermediaries like non-profit organizations. BDO assists organizations in establishing a roadmap to access these funds, supporting innovation and productivity.
Canada recently introduced the AI Assist Program, which will invest $100 million to support innovative Canadian SMEs that are building or actively incorporating generative AI and deep learning solutions into their core products and services.
These incentives can significantly reduce costs and give businesses a competitive edge. With BDO’s guidance, businesses can identify and navigate government incentives that lead to the development of innovative products, boost their market position, and attract additional investment.
Risk management: A critical component of innovation
Involving risk management teams or risk advisors as key stakeholders in the implementation of productivity-enhancing recommendations ensures that companies can innovate and adopt new technologies while maintaining compliance and managing risks effectively.
Here are some key strategies that can safeguard the organization and support innovation and enhanced productivity:
Clearly define and communicate the organization’s risk appetite to empower teams to take calculated risks within established boundaries.
Identify and evaluate potential risks associated with new technologies, processes, and initiatives. This promotes informed decision-making, ensuring resources are used efficiently to maximize productivity.
Ensure that new systems and processes meet regulatory requirements to prevent potential fines and penalties. This is particularly crucial in highly regulated industries.
Foster collaboration between risk management, compliance, and innovation teams. This ensures that potential risks are considered during decision-making, and appropriate measures are taken to mitigate them at the outset.
Creating an environment that encourages experimentation and risk-taking, while also emphasizing the importance of responsible innovation encourages the pursuit of projects that might otherwise be avoided due to perceived risks.
Preparing for tariffs
CEOs and business leaders need to start thinking about key challenges these tariffs present and start planning. We’re offering guidance and strategic advice to help you move forward.
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A path forward
Canada's productivity challenge is a complex issue with multifaceted causes. By understanding the factors hindering productivity, businesses can take strategic steps to innovate and drive growth. Addressing these challenges requires strategic investments and BDO offers a range of services to help businesses achieve their productivity goals. Our teams can provide guidance on leveraging technology, optimizing operations, upskilling your workforce, and more. By working with BDO, Canadian businesses can unlock their full potential and contribute to a more prosperous future.
BDO services to boost productivity
Sources:
12024 Innovation Report Card, The Conference Board of Canada, April 11, 2024
2The post-2001 productivity growth divergence between Canada and the United States, Statistics Canada, Dec. 21, 2023
3OECD Going Digital Toolkit, OECD, 2022
4OECD Science, Technology and Innovation Outlook 2023, OECD, March 16, 2023
52024 Innovation Report Card, The Conference Board of Canada, April 11, 2024
6Gross domestic spending on R&D, OECD, 2021
72024 Innovation Report Card, The Conference Board of Canada, April 11, 2024
82024 Innovation Report Card, The Conference Board of Canada, April 11, 2024
92024 Innovation Report Card, The Conference Board of Canada, April 11, 2024
10OECD Going Digital Toolkit, OECD, 2022
11Artificial Intelligence Technologies Can Help Address Canada’s Productivity Slump, TD Economics, May 28, 2024
1210 Key Facts on Canada’s Natural Resources, Government of Canada, 2023
13Finances of the Nation: The Canadian Productivity Landscape, Canadian Tax Journal, 2023
14A Critical Juncture: Assessing Canada’s Productivity Performance and Future Prospects, Finance Canada, 2023
15A Critical Juncture: Assessing Canada’s Productivity Performance and Future Prospects, Finance Canada, 2023
16Finances of the Nation: The Canadian Productivity Landscape, Canadian Tax Journal, 2023
17Finances of the Nation: The Canadian Productivity Landscape, Canadian Tax Journal, 2023
18Upping our Game: How Canada’s Financial Sector Can Spur Economic Performance, C.D. Howe Institute, May 11, 2021
19Finances of the Nation: The Canadian Productivity Landscape, Canadian Tax Journal, 2023
202024 Innovation Report Card, The Conference Board of Canada, April 11, 2024
21Canadian ICT Sector Profile, Innovation, Science, and Economic Development Canada, 2023
22Techtonic States: The future of business, BDO Canada, Nov. 24, 2023
23Survey of Innovation and Business Strategy, Statistics Canada, April 30, 2024
24Survey of Innovation and Business Strategy, Statistics Canada, April 30, 2024