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It feels as though we had moved beyond the point of talking about “unprecedented times”. But as we teeter on the verge of recession and economic uncertainty, it seems we are once again in rather uncharted waters. At least, from a talent perspective.
According to the latest economic statistics, the New Zealand labour market remains tight with elevated demand for labour. The unemployment rate was near a record low at 3.3% in the June quarter of 2022. Business confidence is starting to improve and we’re seeing a gradual increase in people arriving in New Zealand. This may positively affect business plans for expansion and further strengthen hiring intentions. After a period of slower growth in online job advertisements since March 2022, online advertising grew by 28% over the year to August 2022.
The skills shortage has been reported on for years. Prior to the pandemic, McKinsey released a study stating that 87% of organisations are either experiencing skills gaps now or expect them within the near future. Flash forward to today, and according to a survey of Fortune 500 leaders, the talent shortage is currently the number one threat to business success. Even as we creep into recession, companies are struggling to find (and retain) the people and skills they need to thrive.
How can organisations overcome this skills shortage?
In that McKinsey research, they identify three areas of focus to close the skills gap:
- Hiring and contracting
- Redeployment
- Building skills
From a high-level perspective, these points are on the right track – but we need to dig deeper. Companies can’t just hire their way out of this problem in a traditional sense. They must look at talent sources outside the norm and offer new levels of flexibility. They must look inwardly, too - identify the potential already within your ranks, nurture it, and enable movement. And finally, they must create and embed a culture of learning and development to stay agile and bridge the gap.
Let’s take an even closer look…
1. Leverage diversity, equity, and inclusion
It won’t come as a huge surprise, but it’s so important to remember – the best talent doesn’t always come from the most expected source. If your organisation cannot find people through conventional approaches, you must broaden your search. Focusing on diversity, equity, and inclusion is no longer a ‘nice-to-have’ or secondary pursuit, it is a major reason why organisations are flourishing and will be able to weather the storm of recession. One-size-fits-all thinking will only lead to ruin in this climate.
According to S&P Global Ratings, over 600,000 women have not returned to the US workforce since the pandemic. Unemployment for people with disabilities is twice that of the general population. 64% of unemployed men in their 30s have a criminal record. These are just some examples that illustrate where talent can be found if barriers are lifted. Finding, hiring, and engaging diverse talent requires a mindset shift. But if companies are willing to invest some effort, they can reorient their processes and tap these underutilised sources.
2. Don’t ignore flexibility and remote working
Earlier this year, a survey of over 500 HR and TA leaders found that ‘flexibility’ and ‘work-life-balance’ accounted for a combined 69% of the vote on what is keeping employees most engaged right now. If organisations aren’t offering hybrid solutions, then they’re going to be on the back foot when it comes to attracting talent.
Linda Jonas, a renowned expert on remote working, recently spoke about this, stating that: “we need to go back to the drawing board and see how everyone gets their work done best.” We all work differently and the arbitrary shackles of an office-based, 9-5 job does not guarantee success in any measure. Companies who are mandating returns are feeling the pushback. Thousands of Apple employees recently wrote an open letter to management stating: “let us decide how we work best and let us do the best work of our lives.”
In our own study “Flexible and Hybrid Working: Is it here to stay?” we found that after the arrival of the pandemic, we saw a huge shift towards flexible/hybrid working being a most- or full-time thing. It’s now nearly 50:50 at the employer level between those who offer it all the time and those offering it in certain circumstances. Meanwhile, 67% of employees said they can now work remotely all or some of the time.
3. Provide opportunities to upskill and develop
Hiring isn’t the only way to tackle this crisis. More and more, organisations are looking to grow the skills of their existing employees, offering targeted education programs to upskill and reskill their workforce with the aim of filling urgent gaps in the business. Many large US companies like Disney, Walmart, and Starbucks have set up initiatives that will cover college tuition costs for their employees. Amazon has also created over 1,500 apprenticeships in the UK, specifically designed to grow a bespoke talent pool.
Employment and education are a natural fit. But so few organisations are thinking long-term about this issue. If you’re struggling to find and retain the talent you need, it’s a no-brainer to focus on how you can generate and sustain it yourself.
In our study “Flexible and Hybrid Working: Is it here to stay?” we found that of the strategies employers are utilising to keep their staff members engaged, feeling valued and interested training/coaching/skills workshops came out on top at 88%, followed closely by flexible work hours (86%), employee recognition/rewards (73%) and non-financial benefits such as medical, mobile phone allowances or a car allowance (73%).
4. Optimise internal mobility
Sometimes the skills you need are right under your nose. Promoting internal mobility not only helps employers plug skills gaps, it also bolsters engagement and retention. But it’s a massively underutilised function. According to Gartner, only 33% of candidates who sought a new role in the last 12 months looked at internal opportunities, and recent Josh Bersin research showed that only 11% of companies actively promote a culture of internal mobility. This is despite it being cited constantly as a major plus-point from talent.
If economic conditions continue to decline, however, it’ll be the organisations who have active internal mobility programs that will flourish. Agile workforces that are encouraged to grow and develop within the company are a powerful source of stability and innovation. Look to Cisco’s ‘one company, many careers’ approach, where employees are encouraged to use an active internal jobs portal to seek out new opportunities and build skill sets.
This doesn’t appear to be the case in New Zealand; when we surveyed our candidates post-Covid in the “Flexible and Hybrid Working: Is it here to stay?”whitepaper, we found that the majority of Kiwi employees (36%) changed jobs once, moving to a new company. This was followed by 29% who stayed in place, 27% who moved more than once with different companies, 5% who moved once within their company, and just 3% who moved more than once within their company.
Conclusion
We are on the cusp of the next recession. But with such a low unemployment rate and job vacancies at all-time highs, talent is still at a premium. So even within this economic uncertainty, the skills shortage is ensuring that TA will have to adapt their approach to snag the people they need. We think the solution lies in DEI, remote work, education, and internal mobility – would you agree?
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Four ways to gain an advantage during the skills shortage
It feels as though we had moved beyond the point of talking about “unprecedented times”. But as we teeter on the verge of recession and economic uncertainty, it seems we are once again in rather uncharted waters. At least, from a talent perspective.
According to the latest economic statistics, the New Zealand labour market remains tight with elevated demand for labour. The unemployment rate was near a record low at 3.3% in the June quarter of 2022. Business confidence is starting to improve and we’re seeing a gradual increase in people arriving in New Zealand. This may positively affect business plans for expansion and further strengthen hiring intentions. After a period of slower growth in online job advertisements since March 2022, online advertising grew by 28% over the year to August 2022.
The skills shortage has been reported on for years. Prior to the pandemic, McKinsey released a study stating that 87% of organisations are either experiencing skills gaps now or expect them within the near future. Flash forward to today, and according to a survey of Fortune 500 leaders, the talent shortage is currently the number one threat to business success. Even as we creep into recession, companies are struggling to find (and retain) the people and skills they need to thrive.
How can organisations overcome this skills shortage?
In that McKinsey research, they identify three areas of focus to close the skills gap:
- Hiring and contracting
- Redeployment
- Building skills
From a high-level perspective, these points are on the right track – but we need to dig deeper. Companies can’t just hire their way out of this problem in a traditional sense. They must look at talent sources outside the norm and offer new levels of flexibility. They must look inwardly, too - identify the potential already within your ranks, nurture it, and enable movement. And finally, they must create and embed a culture of learning and development to stay agile and bridge the gap.
Let’s take an even closer look…
1. Leverage diversity, equity, and inclusion
It won’t come as a huge surprise, but it’s so important to remember – the best talent doesn’t always come from the most expected source. If your organisation cannot find people through conventional approaches, you must broaden your search. Focusing on diversity, equity, and inclusion is no longer a ‘nice-to-have’ or secondary pursuit, it is a major reason why organisations are flourishing and will be able to weather the storm of recession. One-size-fits-all thinking will only lead to ruin in this climate.
According to S&P Global Ratings, over 600,000 women have not returned to the US workforce since the pandemic. Unemployment for people with disabilities is twice that of the general population. 64% of unemployed men in their 30s have a criminal record. These are just some examples that illustrate where talent can be found if barriers are lifted. Finding, hiring, and engaging diverse talent requires a mindset shift. But if companies are willing to invest some effort, they can reorient their processes and tap these underutilised sources.
2. Don’t ignore flexibility and remote working
Earlier this year, a survey of over 500 HR and TA leaders found that ‘flexibility’ and ‘work-life-balance’ accounted for a combined 69% of the vote on what is keeping employees most engaged right now. If organisations aren’t offering hybrid solutions, then they’re going to be on the back foot when it comes to attracting talent.
Linda Jonas, a renowned expert on remote working, recently spoke about this, stating that: “we need to go back to the drawing board and see how everyone gets their work done best.” We all work differently and the arbitrary shackles of an office-based, 9-5 job does not guarantee success in any measure. Companies who are mandating returns are feeling the pushback. Thousands of Apple employees recently wrote an open letter to management stating: “let us decide how we work best and let us do the best work of our lives.”
In our own study “Flexible and Hybrid Working: Is it here to stay?” we found that after the arrival of the pandemic, we saw a huge shift towards flexible/hybrid working being a most- or full-time thing. It’s now nearly 50:50 at the employer level between those who offer it all the time and those offering it in certain circumstances. Meanwhile, 67% of employees said they can now work remotely all or some of the time.
3. Provide opportunities to upskill and develop
Hiring isn’t the only way to tackle this crisis. More and more, organisations are looking to grow the skills of their existing employees, offering targeted education programs to upskill and reskill their workforce with the aim of filling urgent gaps in the business. Many large US companies like Disney, Walmart, and Starbucks have set up initiatives that will cover college tuition costs for their employees. Amazon has also created over 1,500 apprenticeships in the UK, specifically designed to grow a bespoke talent pool.
Employment and education are a natural fit. But so few organisations are thinking long-term about this issue. If you’re struggling to find and retain the talent you need, it’s a no-brainer to focus on how you can generate and sustain it yourself.
In our study “Flexible and Hybrid Working: Is it here to stay?” we found that of the strategies employers are utilising to keep their staff members engaged, feeling valued and interested training/coaching/skills workshops came out on top at 88%, followed closely by flexible work hours (86%), employee recognition/rewards (73%) and non-financial benefits such as medical, mobile phone allowances or a car allowance (73%).
4. Optimise internal mobility
Sometimes the skills you need are right under your nose. Promoting internal mobility not only helps employers plug skills gaps, it also bolsters engagement and retention. But it’s a massively underutilised function. According to Gartner, only 33% of candidates who sought a new role in the last 12 months looked at internal opportunities, and recent Josh Bersin research showed that only 11% of companies actively promote a culture of internal mobility. This is despite it being cited constantly as a major plus-point from talent.
If economic conditions continue to decline, however, it’ll be the organisations who have active internal mobility programs that will flourish. Agile workforces that are encouraged to grow and develop within the company are a powerful source of stability and innovation. Look to Cisco’s ‘one company, many careers’ approach, where employees are encouraged to use an active internal jobs portal to seek out new opportunities and build skill sets.
This doesn’t appear to be the case in New Zealand; when we surveyed our candidates post-Covid in the “Flexible and Hybrid Working: Is it here to stay?”whitepaper, we found that the majority of Kiwi employees (36%) changed jobs once, moving to a new company. This was followed by 29% who stayed in place, 27% who moved more than once with different companies, 5% who moved once within their company, and just 3% who moved more than once within their company.
Conclusion
We are on the cusp of the next recession. But with such a low unemployment rate and job vacancies at all-time highs, talent is still at a premium. So even within this economic uncertainty, the skills shortage is ensuring that TA will have to adapt their approach to snag the people they need. We think the solution lies in DEI, remote work, education, and internal mobility – would you agree?