Canadian business productivity benchmarking tool

1. Who can use this tool?

The tool can be used by small, medium-sized, and large Canadian businesses in almost all business sectors.

2. What is this tool used for?

The tool is used for comparing the productivity of your business to that of your peers in the same industry based on five separate indicators: 1) Overall level of productivity; 2) Revenue per employee; 3) Profit per employee; 4) Labour productivity; 5) Capital productivity.

Please note that this tool is designed to provide a general overview of your current situation in terms of productivity. Since every business has unique features, a deeper analysis may often be necessary.

We recommend that you talk to a BDC operational efficiency expert in order to determine the nature of the improvements or changes to be made.

3. Why is it important to compare the productivity of my business?

Measuring and comparing the productivity of your business is an essential starting point on the road to improvement. Many entrepreneurs believe that their business is as productive as it could possibly be and are often very surprised to find significant gaps that separate them from their peers.

They often presume that the profitability of their business cannot be increased since it has reached maturity, whereas low productivity could be the cause.

A BDC study about productivity demonstrates that a business that formally measures its productivity improves profitability and generally sees higher sales growth.

Download the study at bdc.ca/productivitystudy

4. Can I conduct scenario analyses with this tool?

The tool was not designed to conduct scenario analyses, but to provide a general overview of your current situation according to five key productivity indicators in comparison to your peers in the same industry.

1. How does the tool work?

The tool compares your level of productivity with that of your peers in the same industry using your industrial code (NAICS code) and data from your corporate federal income tax returns.

You’ll need the following information from your federal corporate tax records: T2 Income Statement Information (schedule 125); T2 Balance Sheet Information (schedule 100); T4 Statement of Remuneration Paid; Capital Cost Allowance (CCA—schedule 8).

2. How do I find my industry or its NAICS code?

This tool uses Statistics Canada’s North American Industry Classification System (NAICS). These classifications can be consulted at www.statcan.gc.ca or by clicking on the following link: NAICS Codes

Most companies will be able to benchmark themselves at the sixth- or fifthdigit level. If not, the tool produces results at the fourth- or third-digit level. The sixth-digit level is more detailed than the third-digit level. Therefore, productivity indicators at the sixth-digit level are more reliable.

3. Why is it necessary to use data from my federal business income tax returns?

This source of data was selected because it makes it possible to obtain estimates from a majority of Canadian businesses in multiple industries, from manufacturing to services.

The tool was developed using anonymous data taken from the federal business tax returns of more than 600,000 Canadian businesses from most business sectors. It is the result of a partnership between BDC and Statistics Canada.

4. Can I use an estimate of my data rather than figures taken from my tax return?

You can use an estimate from your financial statements. However, the results will be less precise and therefore less valid, since the data used to compare your productivity comes from federal corporate income tax returns.

5. Why is my industry not part of the database?

Some industries are not represented in the database because it was not possible to obtain quality estimates using the available financial data. It is also possible that there are too few businesses in the industry for Statistics Canada to be able to provide valid data, or that the activities of the field are too dissimilar. However, almost 90% of industries in Canada are represented.

How do you ensure the confidentiality of my data?

The data that you provide remains entirely confidential. The tool does not require any data that could establish a link between the information provided and your business.

All information provided in this questionnaire will remain confidential and will be used solely by BDC and Statistics Canada for the purpose of the evaluation. Your information will not be transmitted to third parties.

Please note that the responses provided in this main are general guidelines only and do not constitute an evaluation of your particular situation. We recommend talking to a BDC operational efficiency specialist in order to determine the nature of improvements or changes to be made at your business.

1. How is my overall level of productivity compared?

Your overall level of productivity is measured based on the efficiency to generate revenues given the resources used (people and tangible capital assets).

Statistics Canada calculates and compares the overall level of productivity of a business to that of its peers using anonymous financial data taken from federal corporate income tax returns organized by industry.

2. My revenue per employee

Below average: On average, each employee of your company generates less income per year compared to your peers in the same industry. Generally, this means that your peers manage to sell more with the same or fewer employees.

Above average: On average, each employee of your company generates more income per year compared to your competitors in the same industry. Generally, this means that you have succeeded in selling more with the same or fewer employees as your peers.

3. My profit per employee

Below average: On average, each employee of your company generates less profit per year compared to your peers in the same industry. Generally, this means that your production costs in relation to your sales are higher than average.

Above average: On average, each employee of your company generates more profits per year compared to your peers in the same industry. Generally, this indicates that your production costs relative to your sales are lower than average, keeping in mind that there is always room for improvement.

4. My labour productivity

Below average: On average, each employee of your company generates less added value compared to your peers in the same industry. Generally, this indicates that your competitors are more productive.

Above average: On average, each employee of your company generates more added value compared to your peers in the same industry. This generally means that you are more productive than your peers. However, there is always room for improvement.

5. My capital productivity

Below average: Your business generates less added value for each dollar invested in capital assets (ex.: Machinery and equipment). However, a low level of capital productivity could be explained by significant recent investments in capital assets (with the goal of obtaining a short-term return on investment). This could also mean that you should increase sales in order to pay for these new investments.

Above average: Your business generates more added value for each dollar invested in capital assets (ex.: Machinery and equipment). However, a high level of capital productivity could be due to very low investments in capital assets or by capital assets that are too old (depreciated) relative to the industry average.

Why doesn’t the tool let me compare my data?

The following situations could be the cause:

1. You have used estimates rather than data from your federal business income tax return

We recommend using the data indicated in the tool to obtain a valid result. The tool was developed using data from the federal tax returns of Canadian businesses. This source of data was selected because it makes it possible to obtain estimates from a majority of Canadian businesses in all industries.

2. The data you have entered indicates that your business ratios are significantly above or below the industry averages

In order to obtain valid productivity estimates for each industry, Statistics Canada had to remove outlier data (data that positions the business significantly above or below industry averages), meaning that certain companies unfortunately cannot obtain productivity estimates. We are currently working to improve the tool in order to further reduce the percentage of companies that cannot obtain productivity estimates. In the meantime, you can contact your BDC Account Manager or your BDC Regional Office to find out more about our advisory services.

3. You have entered incorrect data

You are required to enter exact data, rounded to the nearest dollar. For example, one million dollars in sales is written 1,000,000 (and not 1 or 1,000). Moreover, the tool will generate an error message if the data entered is not coherent. For example, if the total amount in tangible capital assets is lower than the total amount of accumulated amortization of tangible capital assets, the tool will generate an error message, because a business cannot possess negative capital assets.