We often hear that ‘good talent’ is hard to find. But what constitutes good talent? And where are companies going to find the talent they need when the gap between worker supply and demand continues to widen? This podcast with John Hilton, news editor of HRD magazine, Andrew Lafontaine and Felicity O’Shannassy, organisational strategy experts at Korn Ferry, focuses on understanding the imminent skilled workers crisis and what HR and business leaders can do to mitigate the impact of the Talent Crunch.
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John: I’m John Hilton, news editor of HRD magazine. I’m pleased to welcome you to this podcast with Korn Ferry on the Talent Crunch. This audio offers advice and insights from Korn Ferry experts on the talent management areas that are crucial for organisations to get right in order to survive the looming talent crisis.
Our speakers on today’s podcast are Andrew Lafontaine, Senior Client Partner and Head of Organisational Strategy Practice, as well as Felicity O’Shannassy, Client Partner, both at Korn Ferry.
So, let’s start with you, Andrew, the Korn Ferry research found Australian companies could be short 739,000 workers by 2020. What do you think are the key reasons for this?
Andrew: Thanks, John. I think we need to look at some of the macroeconomic trends that both Australia and most economies are facing and therefore organisations are facing. The aging population for instance is very relevant for Australia with our median age fast approaching near the 40 mark in the next ten or so years.
We’ve got nearly full employment now with only a 5% unemployment rate across Australia, talks of, you know, lowering immigration numbers from 1.5% to 1.2%.
Also I think workers are telling us what they want in terms of a changing workforce attitudes, you have the gig economy, and then finally the technology advancements that have happened, all of these things are really changing the nature of work, the future of work, and in part that’s contributing significantly to the overall shortage of workers that we’re going to be facing as soon as 2020, which really is only, what is it, 14 or 15 months away.
Felicity: Yeah, I agree with what Andrew said but I think from what we’re hearing from our clients is that there is also a move away from those traditional careers. If you think about nursing and teaching, the shortages in those areas, I think in this day and age they’re perhaps not seen as glamorous as professions can be seen, as Andrew mentioned, the gig economy for example, so I think there’s a real shift in terms of those traditional careers versus what we’re moving to in a new era.
John: Excellent. The Talent Crunch Report also found that 54% of Australia’s C-Suite believe their company will be safe from this Talent Crunch. Why do you think the majority of Australia’s C-Suite are generally optimistic about the Talent Crunch?
Andrew: John, I think there are multiple reasons for why the C-Suite believe their company will be safe. I think first and foremost is that there’s a view that somehow technology’s going to just solve the problem for them but, you know, that’s not playing out at the moment, as we can see.
I think another reason is really a lack of deep understanding of their own workforce dynamics, where are the talent gaps. I think that all say that they have talent gaps in the technology space because I think that’s the one that’s most understood and broadly reported by the general media but I think beyond that they really wouldn’t have a deep understanding of those workforce dynamics and where the gaps are so they don’t really have, either at a senior level or at an organisational level, any real insight into their overall strategic workforce planning so what are the skills, the size, the shape, the location of the resources that they need both here and now for the immediate requirement.
John: Fantastic. Felicity, is there anything you’d like to add to that?
Felicity: Yeah, I’d probably just add I think it’s really easy when you see the figures that we’re seeing and the dates associated with them. It sort of feels like it’s a long time away and I think that’s just being human, and as Andrew said, you know, it’s really much easier to focus on filling immediate roles, and traditionally in my consulting career I haven’t seen organisations do the real strategic workforce planning well so, yeah, I think it’s a combination of factors but I think some of that ‘it’s not really happening to us’, could be behind it as well.
There needs to be a deeper understanding among the C-suite around their overall strategic workforce planning: what are the skills, the size, the shape and the location of the resources that they need both now and in the future. Andrew Lafontaine
John: Another surprising statistic was that three-quarters of respondents believe technology will be their greatest value creator by 2030. However, Korn Ferry’s research found that its people which is set to add $1708 trillion Australian dollars to the global economy while physical capital, including technology, will only add $732 trillion. Can we discuss this trillion dollar blind spot for companies across the globe?
Andrew: Yes, I think, John, that there’s no doubt that senior leaders, CEOs and the C-Suite, are definitely thinking that the technological advancements are going to drive the innovation that will help them with this Talent Crunch but I think if you look at the OECD report, a recent report that found that really only 14% of jobs in OECD countries are highly automatable and another 32% could substantially change in response to technology, clearly that’s not going to drive the answer in terms of this blind spot, the trillion dollar blind spot that countries and organisations are facing if they don’t turn their attention to other forms of addressing the Talent Crunch.
John: Great. Felicity, is there anything else you’d like to add to that?
Felicity: Look, I agree with what Andrew said there, but, yeah, a really important point is regardless of automation and technology there still will be a need for those highly skilled people to manage, apply and enhance automation and technology and I don’t think leaders are thinking that one through. There’ll still be a need for creative high skills and for personal engagement in roles and I don’t think robots will do that too well so I think there’s still that element there that’s required.
John: 2020 is not too far away. What would be your advice for HR professionals and business leaders to prepare for the Talent Crunch? Andrew?
Andrew: I think the most important thing that they need to deal with, they really need to develop their own internal capability around strategic workforce planning so not just traditional workforce planning and looking at the next 6 and 12 months, but really looking at strategic workforce planning where you’re not just looking at the roles that you need, but actually looking at the whole value chain that creates the work that you need to produce and then where can you actually source the skills, where can technology support that and really do some scenario planning on the next sort of three and four and five years of where the business strategy is heading and the workforce that’s going to be needed to deliver that strategy.
And part of that strategy will include obviously both that talent acquisition so bringing in new recruits, but it’s also got to include how do you develop people within, how do you re-skill, re-tool individuals who might have the ability, the aptitude, the capability to move into different roles as part of that different scenario, different business outcomes that you’re trying to achieve in order to stave off the Talent Crunch and make sure you have enough in the workforce in your organisation to deliver what you need to deliver.
John: Felicity, is there any other advice you’d like to add?
Felicity: Yeah. Particularly for our newer and younger generations joining the workforce, I think there’s a real opportunity for organisations to rethink their employee value proposition and their recruitment approaches. Our younger generations are really looking for that purpose and to make a difference and I think if organisations can hone in on that, that is a real attraction, as well as learning and development and career progression so that’s another way of relooking at how do you attract the right people and the right talent.
There’s a real opportunity for organisations to rethink their employee value proposition. Our younger generations are looking for that purpose and to make a difference and I think if organisations can hone in on that. Felicity O’Shannassy
John: So, Andrew, the research also found that 45% of leaders said they would pay a premium to attract critical highly skilled workers who would most likely be recruited overseas. How significant is that finding?
Andrew: Well, I think this is now for Australia, if we just focus on Australia for a moment I think it’s a real interesting point because the government has now really tightened the conditions for the 457 visas so the whole process now of trying to bring in these workers that we used to be able to bring quite easily into the country and that process has been really tightened so there may be a question of even can they bring them in now, based on the immigration changes especially around the 457 visa issues.
But I think the other issue is that starting to pay premiums for workers that come into your organisation does potentially set you down a bit of a dangerous path in terms that could impact your overall financial bottom line. It potentially then start that process of raising your overall cost base in terms of salaries and your people costs across the organisation as other people see what other people have been brought in for, and then really, that does make an issue down the track in terms of the shape and size of your organisation.
I also think it’s the long-term issue. As I referred to before, organisations need to think about not just the talent acquisition side of bringing people in but how are they putting in a long-term range plan around developing their people to build these specialist skills that a lot of the CEOs and the C-Suite are talking about, and that they’re happy to pay a premium for. Maybe reinvest in that premium into developing their own people, this might also be an option for them.
John: Andrew, you argue that the Talent Crunch will force companies to review their definition of talent. Traditionally the chosen few talented individuals are people that have been assessed and placed in the top quadrant of the 9-box grid or fit certain success profiles. Why is this definition of talent problematic?
Andrew: Yes, I think it’s problematic because there’s been a lot of, I suppose, you know, lip service, to be honest, in organisations around the fact that, you know, that talent exists at all levels in our organisation, but really the focus has just been at that 9-box in that high potential group and that’s where a lot of the investment’s gone so I think organisation are going to have to broaden that definition of talent because it is too narrow as it stands today, and understand that talent does really truly exist, not just at every level but again it exists across the whole value chain of whatever product or service you are trying to get out to, you know, your customer so how do you actually identify that talent across that value chain and really start to develop that.
And I think the other overlay is that the technology has also changed the way we think about talent because there are new roles that are being invented, there are new components of roles that are being invented and so organisations really need to think about, well, is the talent really those people who may be now just working in technology but are also understanding how the application of technology needs to impact our organisation and our business strategy, whether it be business models or goods and services or the customer experience, so that whole concept of how the technology impacts the organisations is also impacting what that definition of talent is in these roles.
Technology has not only created new roles but new components of roles so organisations really need to look at their entire business models and customer experience and how the technology impacts the talent is in these roles. Felicity O’Shannassy
John: Great. Felicity, do you agree that the definition of talent is problematic, that traditional definition?
Felicity: Absolutely. When you think about the different age groups that we have in the workforce now, working flexibly, for example, is increasingly popular so that certainly means that roles, jobs, talent is going to change. Business models are changing, and as Andrew mentioned, with that pace of technology change and digital, the traditional definitions of talent aren’t going to work moving forward and when you think about the impetus around the Talent Crunch, I think organisations really do need to do some fast footwork in terms of redefining what talent means for their organisation and in their industries.
John: That’s an interesting point and leads to my next question, Andrew, what does the more contemporary definition of talent focus on?
Andrew: The companies that we’re dealing with at the moment and working with around their talent strategy are really looking at does that traditional view of looking at performance and potential and then putting people into that 9 box still really delivers the business outcomes that they’re trying to achieve.
What they’re now really doing is taking a much broader view of talent and redefining talent, taking a view of what’s that strategic view of talent mean; as I said before, what’s the value chain in terms of the products or goods or services? How does the talent actually line up against that, that they definitely need talent across all, as I said, levels of the organisation and it’s not just talent in the more senior roles so they’re really reviewing that whole talent mapping component, undertaking assessment to define both technical and behavioural competency frameworks that they need as part of their talent matrix. All of these things there’s a much more holistic view of talent than just that very narrow definition of performance and potential.
John: So, Felicity, what does the more contemporary definition of talent focus on for you?
Felicity: Once again, linking back to my previous answer, I think as organisations rethink how they operate, how they’re going to operate in the future, what is their business model, how do they work in an agile and flexible manner. They may have different teams working in different countries, in different time zones.
I think it’s all around working through, when I think Andrew alluded to this, working through what does talent mean for their organisation. For me it’s not around one definition for all organisations, for all HR departments, for all industries. I think each organisation may have a specific definition of talent for their organisation and I think that, for me, is where the difference is.It's not about one definition of talent for all organisations, for all HR departments, for all industries. I think each organisation may have a specific definition of talent for their situation, their business model. Click To Tweet
John: Andrew, how can organisations pinpoint where gaps and skills shortages are emerging?
Andrew: I think, again, the organisations we’re working with are really starting to think this issue through around the shortage of talent and what we work with them around and help them understand is, firstly, you do need to have a very clear understanding of your business strategy and then how does that actually cascade down into a people strategy, so what does that mean in terms of cascading your business people, your business strategy into your people strategy? You really need to think through your different components are so what do the complementary models look like, what does their career path look like for our different job families, what are the skills, both the technical and behavioural, that we need to deliver on the strategy.
Once you start to do those different components then you can start to think through, okay, well, we actually need to also now access and develop our people. A lot of organisations historically have just gone straight to the development component and have some very broad brush development programmes that they would roll out to everyone. Many organisations are now using assessment as a way of actually identifying and really honing in on the skills that are needed in different parts of the organisation to deliver on different parts of the strategy rather than a one size fits all, so now that to me is some of the changes we’re seeing at the moment where organisations are starting to pinpoint those gaps in the skills shortages that are emerging.You do need to have a very clear understanding of your business strategy and how does that actually cascade down into a people strategy. Click To Tweet
John: Felicity, is there anything you’d like to add to that?
Felicity: I would probably add to that, traditionally when it comes to workforce planning it’s been an HR-led activity and I think that’s an antiquated approach. The workforce is all about, as Andrew indicated, delivering on business strategy and I think the way that organisations are going to pinpoint those gaps and skill shortages is for this conversation, this work to be a business-led approach with the support and facilitation of HR. I think importantly, as I mentioned, in previous times we’ve seen HR pushing this barrow on their own. I think the way we’re going to make some movement in this sphere is business and HR working together, hand in hand.
Traditionally when it comes to workforce planning it’s been an HR-led activity. But the workforce is all about delivering on business strategy and I think the way that organisations are going to pinpoint skill gaps and shortages is for this conversation to be a business-led with the support and facilitation of HR. Felicity O’Shannassy
John: Technological change is happening quickly and the headlines can sometimes appear alarming. For example, it wasn’t that long ago that NAB reported that they will need to replace 6,000 non-IT roles with 2,000 digital roles by 2020. What would be your advice to HR professionals, Andrew, and business leaders who are anxious about this aspect of the future of work?
Andrew: Well, I think the first thing is that they’ve got to get on the front foot, and what I mean by that is they’ve really got to, first of all, identify and acknowledge that there’s going to be an impending talent and labour shortage in the workforce, but in terms of getting on the front foot there’s three things I think they need to do. There’s no doubt that they need to get internally better in terms of their own strategic workforce planning, and the tools and the capabilities and the support all now really exist for organisations to really have a better understanding of some of the workforce challenges that they specifically have or will have based to deliver their business strategy.
But I think also, secondly, is that most organisations tend to go straight to the recruitment side so the sourcing side of it so how do we keep bringing in new people and new people in to fill some of these talent gaps or these emerging technical or other gaps that we have in an organisation. They need to do both. They need to both look at the talent side of it, the acquisition side of it, but they also need to look at the development side of it.
As I said before, how do we develop the current people that we have, how do we retain them, how do we retrain them into some of these roles, and you can really only do that if you have, as we are saying before, a really good understanding of you’ve assessed them, you understand their gaps and now you put the development in place so for me they’ve got to do, get on the front foot, understand what the workforce looks like in terms of where they are and need to get to, but then pull both levers, both your sourcing strategy in terms of recruitment but also your development, the assessment and development strategy in relation to your existing employees.
Most organisations tend to go straight to the recruitment side, they keep bringing in new people to fill some of these talent gaps. They need to do both. They need to both look at the acquisition and development sides of it. Andrew Lafontaine
John: That’s great advice. Felicity, is there anything else you’d like to add?
Felicity: Yeah, probably just to that, and I absolutely agree with what Andrew said there but I think also it comes back to organisations really understanding what does technological change mean for them, what does automation mean to them, what does digital mean for them and I think organisations are still working through that and I would suggest they need to get on top of that very quickly because as we know, technology changes very quickly, digital capability changes very quickly so that’s a key component to being able to answer those questions around appropriate workforce and talent.
John: Thank you so much Felicity and Andrew for your expert insights today. And thank you everyone for listening to our podcast on the Talent Crunch. Goodbye from all of us.