Organisations have historically moved from one skill shortage to the next. From switchboard operators in 1950s, to software engineers during the Internet boom in the 1990s, to IT workers during the Y2K crisis. In the recent Korn Ferry Pay Forum in Australia, our client panellists and reward experts concluded that talent shortages have always existed in some shape or form and organisations have typically used largely short-term reward and incentives to attract these hot skills. But most panellists also agreed there is a new talent crisis looming on the horizon, a talent shortage so massive that it may call for a global reinvention of work and redistribution of labour.
Korn Ferry’s research paper, The Global Talent crunch, forecasts that by 2030, demand for skilled workers will outstrip supply and, in some countries, within two years there won’t be enough skilled talent to go around. The financial impact of this talent shortage could reach U$8.452 trillion of unrealised revenue by 2030 and leave businesses without enough talent to achieve their strategies.
As the Pay Forum panellists reviewed and discussed the findings of the Korn Ferry study, it became clear that to overcome the crisis, reward professionals will need to work closely with the business to not only respond to the resulting pay pressures but to align talent practices and the Employer Value Proposition (EVP). Finding the right balance of rewards and benefits, workplace environment, flexibility and career development, will increasingly become a key differentiator in a market where skilled talent is hard to find. As our Sydney panelist, Carrie Luzar puts it, “…showing them the love as well showing them the money, is a longer-term play that will usually pay dividends beyond the person we are trying to affect.”
Listen to the panel discussion recorded in Sydney to learn the challenges faced by your peers and their insights into solutions to address skills shortages.
Transcript of recording, Korn Ferry Pay Forum 2018 panel, Sydney:
Carrie Luzar, Remuneration and HR Operations Manager, Alinta Energy
Erron Palmer, Head of Performance & Reward, NBN Co
George Ross, General Manager, Remuneration and Benefits, The Star Entertainment Group
Lindsay Every, Head of Retail, Head of Digital, Korn Ferry ANZ
Moderator: Trevor Warden, Head of Reward, Korn Ferry ANZ
Given some of the alarming skill shortage predications made by KFHG and the research, what are your thoughts on the probability of these shortages coming to pass, given the current market in Australia?
Erron: I think it’s interesting in terms of you see that report and then you see headlines in the newspaper saying the jobs will all disappear by 2020, and you sometimes scratch your head in terms of which way is this going? I think it’s interesting in terms of some of the organisations I’ve worked in and skill shortages I think I look back at the point that was made in relation to the IT sector where they looked at different skillsets where it’s more the thinking side of things. When I was working for an FMCG company they were having some trouble on the HSE side of things, looking for safety people. I said why don’t you go to the mining sector? There’s a lot of people coming out of the mining sector and they’ve got specific skills around safety, around operational and the quality of their skills far exceeds what you’d see in most manufacturing organisations. So, I think it’s more a point to looking at skillsets that aren’t necessarily from the same industry because you’ll find that you’ll have those skills. I think it’s also interesting in terms of some of, I’ve got friends and colleagues who are struggling to find work who are very skilled, so I think it’s very much pockets where it’s appearing, and I think taking that broader mindset to look outside might alleviate some of those problems.
George: Yes, the skills shortage is with us currently in our business which is quite a large cross-section from executive roles right down to frontline culinary of roles, we’re finding there’s an existing skills shortage, finding the right people to do the right job is inherently difficult, and that becomes more apparent the more we speak to people in the business. That’s going to be ever present and increasing. But I do think Australia’s really well positioned to take advantage of the location, the lifestyle and the attractive factors to bring the talents over here. But it’s really just trying to tap into what is that sweet spot that will retain them once they’re here to bring through that longevity.
We’ve seen examples of both where people have come over from international destinations. They’re attracted to the beach lifestyle, the warmer climate, safer environment socio-politically speaking, but yet when they’re coming to integrate into the culture of the organisation that’s really difficult, and I’ve had a very short-lived experience. And then in other parts of the business people have thoroughly enjoyed themselves and they have ended up making it a more permanent destination. So, I think, yes, that’s certainly a challenge that’s been faced, but I think we’re really well positioned to make the most of it and then obviously the remuneration side of things comes into play, which is another kettle of fish, which I’m sure we’ll talk to a little bit later down the show.
Carrie: Yes, I probably don’t have a huge amount to add, but I guess I suppose there are issues around particular skillsets that I suppose all of us are struggling with. I think the tightening of our immigration policies is an issue that will continue to cause a lot of debate and I’m sure ongoing drama and issues with getting particularly skilled people, I think there is also a lot of regional challenges, so some areas it is just really hard to get anyone let alone skilled people. So, I think that’s something that’s not going to go away anytime soon because I definitely do see it as an issue in our location.
Lindsay: Yes, just a couple of things to add. I think our view comes from a cross section of clients that we interact with. It means long term structural change, we all know that, and Australia’s not really good at that historically, I think that’s the part of the problem in getting organisations to face more, facing a more mid to long term structural change and fund that is challenging. But even, I mentioned earlier the Microsoft event we co-hosted the other day, I was talking to one of the guys there whose son is a, studying data half way through a degree and is already facing into the fact that by the time he comes out the skills of generating the data’s not what they’re going to be after because artificial intelligence is going to do a lot of that. He needs to be able to interpret it. So, the point got made again around the Gig economy and the ability for people to transition between jobs. So, it needs that, it just feels like it needs that long-term thinking, but short-term flexibility to really move with things like that. I mean that guys going to come out very skilled at cutting code and data, but actually what businesses are going to want is how to use it more.
So, I think some positive things are happening now. I think there’s a lot of awareness around it. There’s a lot of investment in stem and educational side of things. We’re getting better as an eco-system, so businesses are working with external partners and collaborating a lot more, and then we go and throw immigration challenges into the mix. So, we’re trying to become a global hub and then we change the immigration laws. And that’s an example for me also you need to think long term, but then a short-term immigration policy gets in the way. So, I just feel a lot of those things will come to bear and already there, but we have to take a midterm view.
In your experiences you will have seen many cycles of “hot jobs”, skills in demand for short periods of time. What have been some of the more successful Reward related interventions to deal with these?
Carrie: I worked for a consulting engineering company in the middle of the mining boom so we had a huge shortage and a definite cycle of hot jobs at that time with engineers and I think what we, a lot of companies in that group tried to do at the time was limit their exposure long term by doing things like paying allowances, market premium allowances and things like that to try and I guess acknowledge and accept it at the time, but not building in for the long term. I think the reality is that went on for so long that those allowances could never really be taken away. So, I think there’s some, probably learnings from that around there isn’t really a quick fix when it comes to pay, unless it’s a really short term hot job.
I think probably my learnings from that time would be again thinking back to what Trevor’s being saying, yes, some of it isn’t financial, some of it is actually making it a place that people want to work and sounds obvious but, yes, the engagement drivers that make people stay often are bigger than pay. I think particularly if it’s not just around the working conditions, but also the direction that the company’s going. If it’s an exciting prospect, a place where things get done and people are moving forward, they’re much more likely to stay. They can see the future for them. So, yes, I suppose my thinking is there’s not so many, you can throw money at the problem and yes, increase people’s fixed pay or give them short term allowances or what you think might be short term. But I think really what it comes down to is a bit of showing them the love as well as the money and yes, I feel like that’s a longer-term play that will usually pay dividends beyond just the person that you’re trying to affect.
Erron: We did put an allowance on, back in Y2K, and again it was the premise of “would you prefer to have a job past the year 2000 or not?”. So, we’re going to pay the premium. But I think Carrie’s right in terms of sometimes that just sits there and just never goes away. I think an interesting one was we can all search and we had the PNG gas project, so a lot of pressure on local employees in relation to help me use a very interesting culture, but I’ll go and work for money, long term is not in their mantra. So, we put in place some specific programmes around retaining key employees. It was interesting the MDs take on it versus senior management because senior management think, ah, retain the engineers, the local people to look after the operations. They said what happens when you turn up at the airport and the driver’s not there.
So, again thinking around who are the people we’re going to impact? So, we drove it down very deep in the organisation to highlight things around what mattered to them. And I think it comes back to the whole EVP premise around the organisation where you want to work. I got interviewed for an article and I was speaking to Remuneration experts and board members, and I threw out a purpose and the journalist said, what are you talking about? And I said, well, it’s not about the money. It’s about no one told me purpose of being who I am, having control and having a purpose. So last month said I’m working at the NBN. It’s interesting because there was a fantastic purpose in that organisation and people wanting to join because it’s national building, and I agree we’re not good at putting infrastructure in place as a country. But there’s a purpose there that people are flocking to because I want to be part of something bigger. So, I think it’s looking past that Remuneration piece to again engaging that whole EVP space.
Lindsay: Just a couple of last points, firstly, our view from the digital practice I lead on hot jobs, cover some of the things we’ve talked about before, but actually it’s hot elements of jobs because it’s not just a data head. Just about every role now is, could be customer facing, related to customer strategy, is getting people flatter structures closer to the customer and therefore these hot jobs are people that can face into ambiguity constantly and so it’s not just about a job title. It’s, I think it’s here to stay that thinking is here to stay and that’s the reach we’re going to continue to get.
Just a sort of, what we’re seeing overseas interestingly, and have some of these conversations locally that are still hard for Australian businesses to get their head around, some colleagues overseas are saying businesses need a menu of personalised options for rewards. American companies outside Silicon Valley who want to say, Hi, from Silicon Valley face just the same challenges we do if the traditional East Coast business trying to get somewhere out of Silicon Valley, those businesses can have people doing similar jobs opting in and out of different kind of rewards and benefits. And that’s a real challenge for traditional organisations when you think about comparing people in the same roles. So, we’re in an era of personalisation, how do you personalise remuneration and reward?
Trevor: Thanks. Just a none that earlier everybody was talking cafeteria packages, to some extent Australia moved to a fixed approach because of what happened with FBT and what happened with Super, and it sort of wiped out the cafeteria approach. But definitely more and more people are talking about it again so, yes. So, we’ve got to get better at giving people what they want and not just what we think they want.
Lindsay: I think in the digital space the last question I get asked is remuneration. What problems am I solving? What can I innovate around? What place time can I have? They want that kind of Google like story I guess in terms of what they can do in their day.
Trevor: Thank you. If I think I heard you all correctly Erron, George, Carrie and Lindsey, we’ve finally got to the point in the world where we’re saying EVP is important, it’s not enough only money anymore. Good to hear that. I think even four or five years ago with four people on the panel it wouldn’t have come up with every single panel member, so, yes, the world’s changing pretty quickly. Still do your REM benchmarking, but it’s certainly not the be-all and end-all really, is it?
The “Build vs Buy” debate doesn’t seem to get talked about much anymore, as most organisations talk about “Build” as part of their EVP. Have any of you ever seen a successful “Buy” strategy
Lindsay: Well, I hear a lot of that and it’s positive to hear build because it means there’s a lot of internal mobility discussions. If there’s a shortage of talent, then you’ve got to also look at who has that attribute that you can train up. But there is a lot of talk around partnerships, ventures and external connectivity which means buying doesn’t have to necessarily be the answer. We see that a lot with digital companies or professional service companies making acquisitions of a skillset they don’t have, and then bring those businesses together. But it doesn’t have to be a full acquisition. It can be the partnership play as well. So, I’d say that the buying now is also about what you do in external partnerships and you don’t have to necessarily have all that talent in-house.
Carrie: I’d say we’re a quickly growing company so for us building our own is definitely part of it, but we can’t succeed if we rely on that. So, I think in this financial year so far, we’ve grown our headcount by about over 30%. So, we have to hire that talent in. So, I think that’s a big part of our strategy of being a successful challenger in the market and growing our business. I think the other thing that we are grappling with is the, I suppose the improvements and the journey of change. The going from a smaller business to playing with the big boys. And part of that is around some of the things we need to do are short term, so there comes that the partnership or maybe it’s the borrow not necessarily buy. So, bringing in people for short term contracts because we know it’s just a stop gap. We need a resource for a shorter time or we need a skill that we don’t have, but we won’t need that skill forever. So, I think for us that’s definitely trying to be a place where people want to work, so that’s a big part of our proposition in terms of culture and we’re trying to hire people that want to make a home in our organisation. But a big part of that is making sure that we’re attractive to new talent because we can’t, we don’t have the capacity to keep on growing it from within.
George: Yes, I think there’s no one set rule that works. I think a good mix of build and buy is really an optimal solution. The new economy that we’ve seen of talent is that many people want to have more than one job, so it’s becoming really about interests along a wide spectrum of companies that they work for and projects that they get exposed to. The research also alluded to resourcing on a project basis which we found in our business to be really useful. You bring people in. The Queens Walk Development in Brisbane is through a partnership that’s seen that build to the end and then that will move on. But I also find that often, if you need a catalyst for change, or if you really need to inject very quick change in the business, bring in new ideation and so forth, the buy model does work well and that then attracts a whole lot of new talent. We’ve seen that certainly in our marketing space of late.
But I think if you’re looking for a safe pair of hands that’s where that build model does work and we’re going through a process now at the moment where we’re trying to take a snapshot of our talent DNA, to find out from our team members what it is that they aspire to, where they want to be in five years-time? What is their mobility like? Under-toning that with performance ratings and so forth so we can create these career aspirations and pathways because there’s nothing worse than having a build aspiration but that’s not credible, that you can’t deliver on and it does take investment and does take time. So, I think a bit of both is in order, but so that borrow strategy that Carrie mentioned also has a place in today’s labour force and the trends that we’re seeing.
Erron: In terms of a buy strategy, I was working for an FMCG organisation prior to NBN and the intention was to turn the organisation around in two years, back into profit. We had a very definite strategy of just pulling new people in. And again, it comes back to that dealing with ambiguity, how do we change what we do? How do we push back? When you’ve got Coles and Woolworths pushing very hard on what you do, pushing your margins down and you successfully turn the business around two years back to profitability, and it’s continued to go. Unfortunately, you get to the next stage and say: what got us here is not going to get us there so again it was a re-change. But it was a very definite strategy of bringing in that next senior minus one to basically turn that business around, which it did successfully. So, again, very identified so it did work extremely well in that situation.