Derek Abma,
Financial Post

OTTAWA -- A lack of talent in Canada's corporate managerial ranks is keeping the country from reaching its full economic potential, according to a report released Wednesday by the Institute for Competitiveness and Prosperity.

The group - an independent research arm for Ontario's Task Force on Competitiveness, Productivity and Economic Progress - says while Canadian managers are among the best in the world, there is room for improvement. This is particularly true in the areas of "performance management and people management," it said.

The report compares the performance of managers in Canada's manufacturing sector against those in other leading economies. It looks at anyone between the ranks of CEO and plant manager, or approximately the top-ranked 10% of a company, said James Milway, executive director of the institute.

The institute says a prosperity gap between Canada and the U.S., measured as GDP per capita, of about $8,300 is largely a result of better managers in the latter.

The institute attributed problems such as lower productivity, a lack of investment in technology and an "inferior performance in innovation" in part to under-qualified managers in Canada.

The institute said education is crucial to effective management. It said about one-third of Canadian managers are university educated, while just more than half in the U.S. are.

"Better educated managers are important to our prosperity growth," Roger Martin, chairman of the institute and dean of the University of Toronto's Joseph L. Rotman School of Management, said in a statement.

The report also said companies that operate internationally, rather in the confines of a single country, tend to have better management.

Mr. Martin explained in the report: "Well managed firms are more likely to achieve international success. This international presence requires better management to survive and thrive on the global scene. In turn, this better management leads to greater domestic and international success of the firm."

In order to improve the quality of managers in Canada, the institute recommends governments make management an important element of research and innovation strategies, place a greater emphasis on business education and research at post-secondary schools, and ensure that economies are open to international competition.

And it recommends that companies improve their management by effective recruiting, training and aspiring toward global growth.