Beating the skills shortage
- Stephen Craft
- 24 September 2008
The economy may be slowing, but skilled workers are still very much in demand. That means you have to work a little harder to find and keep the quality people your business needs. Stephen Craft considers the options.
Content provided by the Commonwealth Bank of Australia
With the headlines full of gloom, it’s easy to forget that Australia is still in the middle of the strongest employment market in a generation.
In May 2008, the national unemployment rate was a meagre 4.3%, up a fraction on the previous month. To put that into perspective, the last time we saw unemployment around these levels was in November 1974 – when Gough Whitlam was in The Lodge, Ken Rosewall was runner-up at Wimbledon and Countdown had just hit the airwaves.
Even more amazingly, CommSec economists have calculated that in May this year there were just 2.6 unemployed job seekers for every vacancy – the lowest reading since records began 30 years ago. When you consider that only a fraction of those candidates are likely to have the skills your business needs, you begin to see the size of the problem.
Number of unemployed persons per job vacancy
Source: CommSec (using Australian Bureau of Statistics data)
It isn’t only the resource-rich states that are crying0 out for workers. In the ACT, far from the mines of Western Australian and Queensland, the May unemployment rate was a mere 2.7%. That’s very close to full employment.
Wanted: almost everyone
CommSec Equities Economist Savanth Sebastian says soaring commodity prices have had a flow-on effect to the rest of the economy.
“The commodity boom has seen a phenomenal increase in the demand for jobs across Australia – not just the mining sector, but also retail, property services and manufacturing industries,” he says.
“It is a challenge to attract and retain staff and it’s not going to get any easier.”
The Federal Government’s National Skills Needs List shows that we’re short of everything from pastry cooks to tree surgeons. And the scarcity of good staff is beginning to bite. A recent survey from the Australian Industry Group and Deloitte found that 70% of firms said skill shortages had affected their business over the last 12 months.
So how did this situation come about? Where did all the good people go? What can you, as a business owner, do about it?
Where have all the good people gone?
According to Andrew Blunden, Managing Director of Part Time Professionals, there are four main causes for the crisis:
- A booming economy. To some extent, we’re victims of our own success. After 15 years of economic growth and sustained job creation, it’s almost inevitable that talented staff are thin on the ground.
- An ageing workforce. As our former Treasurer, Peter Costello, was fond of saying, demography is destiny. With the baby boomers beginning to retire, the proportion of Australians of working age is projected to shrink. Similar trends across the developed world will see a high demand for skilled migrants internationally.
- Increasing complexity. New technology and growing regulatory complexity mean that we need a higher level of skill from our employees, boosting demand for qualified staff.
- Under-investment in skills. With the economy booming, our over-stretched education sector simply hasn’t been able to keep pace. In some professions, the problem is acute. To take one example, the Australian Financial Review reported in October last year that there were about four accounting jobs available for every qualified candidate!
Proportion of Australian population aged 65 and over – projection
Source: Australian Bureau of Statistics, 2003
How it’s hurting small business
Unfortunately, the skills shortage can hurt your business in many ways. With fewer qualified job seekers in the market, you may either have to leave vacancies unfilled, or employ someone without the experience you were hoping for.
When you eventually find the right person, it could be harder to keep them. A hot job market means higher turnover, which can cost you dearly in recruitment costs, lost time and lost knowledge.
Then there’s the prospect of a wages breakout, as employers outbid one another in an effort to find and keep talented team members. So far, wage growth has been fairly well contained in most industries, although miners and construction workers have enjoyed solid gains.
Five ways to beat the shortage
1. Create reliable systems
Writing down the processes that keep your business running is one of those important, non-urgent, jobs that busy managers never seem to get around to. Yet it’s probably the single most effective thing you can do to bulletproof your business against the skills shortage.
When you have reliable systems in place, you can fill the employment gap with less experienced (and less expensive) staff, then develop them on the job. They can be up and running faster, with less supervision, and if they choose to leave, your intellectual property isn’t walking out the door.
2. Don’t skimp on training
Staff development not only helps you turn less skilled team members into stars, it’s also one of the most effective staff retention strategies available.
When you offer your people the chance to learn and grow, you radically increase the chances that they’ll be fully engaged and enthusiastic. Your staff will also be more likely to stick around, without the need to bribe them with a hefty pay packet.
3. Hire part-time expertise
For skills that can’t be home grown, it can be very cost-effective to hire experienced, part-time people.
Andrew Blunden’s network of experienced financial professionals prefer to work part-time. He says their expertise is now available to small and medium businesses for much less than the cost of a full-time accountant or chief financial officer (CFO).
“Many smaller businesses would like to have the advice of a CFO to help them grow,” says Blunden. “This way, they have access to that advice for the same cost as a full-time bookkeeper.”
4. Collaborate with other small businesses
Peter Tobin from career development services firm Worklife International says many small businesses are collaborating to take advantage of each organisation’s unique skills.
“Recently, we referred some work to another small business, as we were asked to do something that was outside of our area of expertise, and they would do the same for us,” he says.
By collaborating, Tobin can continue to service his customers without the need to develop a wide range of skills in house. “There are lots of excellent providers of services and we need to take advantage of those skills in other organisations in order to satisfy our customers.”
5. Think differently when you recruit
In a crowded employment marketplace, thinking differently can pay dividends. When Newcastle-based digital agency Sticky Advertising needed a new web designer, it created a special purpose site, www.sh1thotdesigner.com.
Then they started a viral campaign to advertise the URL. Curious visitors were instructed to create a flash presentation showcasing their talents. Sticky Advertising soon found a candidate whose outlook matched its own.
Another simple but effective approach is to turn your staff into recruiters, by rewarding them for finding outstanding candidates. In the current jobs market anything you can do to build your brand as an employer of choice will help to keep quality
people knocking on your door.
