Employers and recruiters need to work together to uncover appropriately skilled workers in a shrinking workforce

Skill gaps are where existing employees lack the required qualifications, experience and/or specialised skills to meet the firm’s skill needs for an occupation. Skill gaps may apply to new employees, where employers are unable to find suitable applicants and recruit workers who need further training and/or experience to meet the firm’s skill needs for the occupation.

Skill gaps do not simply relate to formal qualifications. Employees in an occupation may have the necessary vocational qualifications for the occupation, but not the specialised knowledge, skills, and experience needed to adapt to new technology and new methods of working. Declining availability of appropriately skilled candidates and shortening time periods for recruitment mean that there will almost always be a skills gap.

Without enough adequately skilled workers, the impact of skill gaps on organisational performance can mean:

• difficulties meeting customer service standards
• difficulties meeting quality standards
• loss of business or orders
• delays in developing new products or services
• difficulties in implementing new productivity improvements

A significant shortfall in any of these areas can drive a business, already operating on a competitive edge, right out of the game. As labour markets tighten and skill gaps grow, no organisation will be able to misuse its talent.

At the departmental level the impact means that:

• staff cannot do the job in short term
• co-workers are expected to pick up the slack leading to job dissatisfaction and dissent
• managers get frustrated
• staff leave

 

Ultimately staff turnover is increased and the recruiting process starts all over again.

Skills Shortage a Significant Problem Globally
Labour shortfalls in various industries and occupations throughout the country are increasing at an alarming rate. This is due to a variety of factors on both the demand and supply side including:

Demand Side
• Technology changes within an industry
• Extended periods of strong economic growth.
• Growth of new industries and products
• New workplace arrangements such as
o Corporatisation and privatisation of government activities
o Growth of labour-hire
o Reduction in firm size
o Increase use of casual and part-time employment

Supply Side
• Ageing of the workforce
• Lack of interest in particular industries among potential job seekers
• Low levels of unemployment
• Changes in the numbers entering and completing training
• Negative birth rate
• Government policy and social development that has resulted in a lack of local skilled trades’ people and professionals.

The inevitable outcome of this employment gap is a drop in the capacity and productivity of Australian and New Zealand business and hence a reduction in national growth and profitability. Recent reports have warned that in Australia and more so in New Zealand the shortage of skilled workers has become so chronic, the economy and company profits will be impeded in the future.

This phenomenon is global and widespread with the reduced fertility rates and aging population issues in all Western countries. Business commentator, Robert Gottliebsen concludes that Australia cannot offer young workers the necessary salaries to compete with other countries also seeking skilled workers so we are also seeing skilled workers completely leave the Australian job market.

In its May 2007 “Skills in the Labour Market” report, the New Zealand Department of Labour noted the labour shortage was cited as the main constraint on expansion for 22 per cent of companies, well above the 17 per cent that has been the average for the past six years.

In addition, it seems some companies are just making do with what is around. "While employment increased strongly in the March 2007 quarter, there are indications that employers are hiring workers that are less skilled than they desire," says the report. "During their annual business and tax talks Treasury said some firms raised concerns about the quality of staff they are hiring. Not only is this indicative of long-term skill shortages, it is also negatively affecting labour productivity growth."

Skill shortage vacancies are increasingly found in education, construction, health and social care and among professional occupations. The most common occurrence of skill gaps is among sales staff, particularly in the retail and hospitality sectors. There are also increasing difficulties in the related areas of communication, customer handling and team working skills.

Collaboration is the Solution
Productivity depends on a highly skilled workforce, and an “appropriately-skilled” workforce is exactly what employers say they simply do not have. Australia and New Zealand needs to become more effective in education and training by raising the standards of quality and accountability. We need to strengthen public-private partnerships on education, beef up business involvement and take a holistic approach that encompasses all stakeholders: employers, industry, teachers, students and government leaders. In short, we need to make effective workforce development a top priority.

From an employer’s perspective addressing the skills gap is about very solid induction programmes and using methods for identifying exactly where the skills gaps lay and then having in place training mentoring and management to ensure new employees quickly acquire skills. “Employers are of course a crucial side of the skills equation, but education and training providers need to become more innovative and flexible in meeting the demands of business”, recommends Peter Davis, Managing Director, Frontline Recruitment Group.

From the recruiters perspective it means the focus of recruiting should be as much about candidate’s aptitude and attitude towards learning as it should be about their skills. In a tight labour market the “perfect candidate” is very rare – what clients do get is a “best fit” at the time from the candidates available. This means recruiting needs to focus on clear skills requirements for roles and clear measurement tools to understand where the skills gaps are. Interviews are not enough. There are a number of very good skills based tests available and companies should be looking at these to help them understand skills gaps for individual hires.

“Aligning training provision to employers’ and employees needs is fundamental, the whole skills area needs to become much more demand led. One size simply cannot fit all if we are to close the skill gaps, so clearly defining the job requirements and employees skill levels and then identifying any gaps is crucial in the recruitment process,” adds Mr Davis.

Frontline Recruitment Group recognises the significance of the skills gap issue and in order to benchmark skills gaps and resultant recruiting success against those gaps is currently trialling an instrument that is providing a skills gap analysis against generic job profiles. This trial is in its early stages however Mr Davis says, “As unemployment levels continue to drop the candidate shortage is going to become more severe and the skills gap wider in Australia and New Zealand. We are committed to developing our recruitment processes in order to increase the quality of new hires and reduce staff turnover amongst our clients. This trial is a significant step in that direction.”

Every organisation has limited resources whether they be physical resources, capital, people or time. Some skills imbalances are a feature of a competitive market and they will get worse as the “baby boomers” retire and the pool of workers diminishes. Industry, unions, community and government need to work together to address the issues with long-term solutions. Until that time, implementing a Skills Gap Analysis into your company recruiting process now will help you to prioritise your training and development needs and as such will allow you to increase the efficiency of your resource allocation.

 

Peter Davis is the Managing Director of Frontline Recruitment Group, a national network of franchised industry specialist recruitment Agencies. The Frontline Recruitment Group was established in 1995 and has expanded at an impressive rate to become one of the Asia Pacific’s leading retail recruitment consultancies. Today, the company continues to set the standard for industry specialist service with a personal touch as it expands into the construction, IT&T, banking & finance, health care and hospitality recruitment sectors.

For further information contact Peter Davis, Managing Director, Frontline Recruitment Group on 02 9347 3844 or national@frgteam.com