Labour Pains

Sunday, July 1, 2007 - 11:31

Calling all talent! In a time of record employment levels and acute labour shortages, employers are being forced to devise new strategies to find and keep the best. By Cameron Cooper

The days of job candidates sitting nervously in a hostile reception area waiting for a grilling at their job interview may be over.

At one major media company that runs call centres across Australia, a candidate-friendly approach is adopted as the skills shortage hits home. As generation Y candidates enter the office a peer greets them to have a friendly chat. The interview then proceeds; not in the form of an interrogation but a discussion about the applicant’s history, interests and motivations.

“It is as much a selling job as it is an assessment job to get the right people in,” says Peter Fullbrook, Managing Director of performance improvement consultancy Prosell, which is seeing a growing number of its clients adopt this interview strategy.

Fullbrook has no doubt that the skills shortage is forcing companies to rethink recruitment strategies.

“The ones that are struggling are doing it the same old way; placing ads and seeing how many responses they get, and trying to find among those responses people who are of sufficient quality for the job,” he says. “Those having more success understand that they actually need to sell the job and the company.”

Different world, new solutions

The skills shortage is having a real impact on international business. Declining birth rates, young staff who switch jobs regularly, skilled employees moving overseas, and early retirement: these and other factors have conspired to produce labour shortages throughout the Western world. Few sectors have been spared, and industries such as engineering and IT have been particularly hard hit.

Eric Leape, the Founding Director of human resources strategist Berrico Consultants, says many nations are struggling to find enough talent.

“The United Kingdom, the US, Japan, Australia, New Zealand: they’re all in the skills-shortage basket. Canada is screaming [for retail and mining workers],” he says. “If you’ve got two legs and a heartbeat, you’ve got a job.”

With the skills shortage now an acknowledged impediment for business, the focus has switched to finding new solutions. In Australia, the Federal Government has developed a National Skills Shortages Strategy to address the problem, particularly in the trades. Migrants are seen as one quick fix, while CEOs are assessing options such as more staff career development and flexible working arrangements to recruit and retain workers.

Flexible arrangements

When job training companies themselves are revising their workplace strategies to keep staff, you know the skills crisis is starting to bite.

At the APM Training Institute, a Sydney-based business that schools students in marketing, public relations and event management, more than half the employees are on flexible work arrangements.

General Manager Paul Dumble says APM has had to abandon the “old-fashioned” concept of a 9-5 job. Job sharing and part-time work is in. “That brings with it a whole set of new challenges to manage flexible work arrangements…but it’s worthwhile,” he says. “And it’s what we have to do to attract and retain people to our organisation.”

Dumble says APM business itself is thriving as employers bypass recruitment agencies and online job sites to go directly to training institutions to employ students. Internships are growing in popularity because they provide work experience for students and access to a talent pool for employers. “Companies are using our internship program as almost an extended job interview,” he says.

The trend towards internships, according to Dumble, will extend to employers being reluctant to wait for students to graduate from university. He explains: “Increasingly, companies are discovering that for entry-level positions…you don’t need three years at university to go into those roles.”

Whatever solutions emerge, Dumble is adamant that employers will increasingly have to embrace a flexible workplace. He thinks business will ultimately benefit.

“Through job sharing you’re getting two heads for the price of one, in effect. If you choose the right people there are incredible benefits to be had.”

A mature approach

The skills shortage is also forcing recruitment agencies to adapt. Grahame Doyle, Senior Regional Director at specialist recruiter Hays, says his industry has started to look at initiatives “above and beyond what the employers are doing”.

For example, Hays has introduced an Age Advantage initiative that focuses on finding job placements for mature age workers. “So rather than looking at a narrow demographic, [we are] encouraging companies to widen the candidate pool they’re looking at,” Doyle says.

So-called grey workers, once shunned by business, are suddenly in vogue. Likewise, companies are moving to accommodate more working mothers and people with disabilities. Doyle admits, however, that many employers have been slow to embrace diversity, and are still stubbornly trying to hire “their ideal candidate”.

“We’re communicating to them the need to recognise they have to broaden their perspective.”

Retention strategies have become critical. In a Hays survey of more than 1000 employers, 43 per cent rated retention as the most important issue to their organisation last year. Doyle says agile SMEs with a “small, captive audience” are better able to introduce flexible work practices that will help keep workers.

“Career customisation” is also an option. Not all staff members want to be a high-flying boss, so work opportunities should be structured to factor in people’s life and career goals.

“There are very different dynamics across groups of people,” Doyle says. “For the back-office staff it may be simply making sure their environment is maintained as a really healthy, enjoyable place to work.”

Doyle offers some other recruitment suggestions: speed up the hiring process or quality candidates will be snapped up elsewhere; consider counter offers if a staff member tries to resign, because replacement hiring costs could be much higher; and assess the viability of bonuses such as share- or performance-related pay options for star performers.

Throwing money

On the salary front, Doyle argues companies should be benchmarking their remuneration levels against industry standards. As talented employees become harder to find, he says pay levels are rising for many jobs and companies need to be aware of market rates.

If not, he says “passive candidates” – essentially, contented employees – may become disgruntled if they start to look outside and find salaries for their skills are significantly above where they’re at now.

Some businesses are simply throwing money at the skills shortage problem through higher salaries. In most cases, it does not work, according to Berrico Consultants’s Leape. He says boosting remuneration can actually damage staff morale if not handled properly.

“What is happening with individual bargaining is that people who have been working at the business a long time are suddenly finding people who arrived 10 minutes ago are doing the same job, sometimes not as well, and are actually being paid more.”

Leape says most organisations should ramp up training rather than salaries to address a skills problem. To this end, he urges managers to abandon a common mentality: what if I train them and they leave?

“The corollary to that is: what if you don’t train them and they stay,” he says. “It’s getting the balance right. If you don’t have training, people walk or don’t come. If you do too much of it, you can argue that you’re not getting the return on investment.”

Overseas workers

In the absence of enough local workers, using migrants to fill skills gaps is an increasingly viable option.

Matthew Franceschini, CEO of Entity Solutions, a business that offers contractor management, migration and payroll services, says bosses need to understand that hiring overseas workers is not taking jobs away from Australians. In fact, it can actually help domestic employment as well.

“I’ve seen a number of projects that couldn’t commence, and subsequently 30, 40 or 50 Australians didn’t get work, because of one or two key skills that the company didn’t have,” he says.

“From a technological perspective there is absolutely no doubt that immigration does enhance opportunities for all Australians. But culturally we learn a lot from other countries. And if handled correctly immigration can enhance a situation in the workforce culturally as well.”

Entity Solutions has registered migration agents on staff and also sponsors overseas professionals through the Federal Government’s 457 migrant visa scheme. Most skilled workers come from Britain, but there is a steady flow from North America, Europe and Asian nations with strong English-language skills such as India and the Philippines.

With the days of workers receiving a nice gold wristwatch for long service behind us, Franceschini says the employment market will never be the same again. Companies that fail to embrace migrant workers and other solutions such as home-based staff, telecommuting and part-time placements “will be left behind”.

Immigration consultant Assyl Haidar, the CEO of LIVE IN australia.com, agrees that the importing of skills can help all parties. His business has helped more than 60,000 skilled professionals and their families come to Australia.

Haidar says many businesses require assistance to locate and integrate overseas professionals because of complex immigration laws. “We’re able to work with recruitment firms or a human resources manager to identify potential candidates from an international pool of clients,” he says.

Haidar says it is essential that employers put in place a smooth transition and settlement strategy for workers and their families, and points out that businesses often underestimate the complexity of Australian immigration laws.

“Also, they can underestimate the time and the cost involved in finding the right people from overseas. The good news is that when a bit of planning and effort is put into that process, it has a remarkably positive impact on how quickly the skilled professional becomes productive, and how long they’re going to stay.”

Another alternative to employing full-time staff is the use of independent professionals, or I-pros. Franceschini says there is a growing trend to employ these white-collar workers on an assignment basis to plug short-term skills gaps.

“They are very professional people who have specific skills and come in and do the job and don’t get too concerned or bogged down with all of the other matters that go with employment,” he says. “They add a lot of value to organisations.”

He says some studies into the cost of employment have shown that a permanent employee on a wage of $100,000 really costs employers twice that much when overheads and other costs are factored in. While a typical I-pro may cost 30–50 per cent more than a permanent staff member on an hourly basis, if they are briefed and chosen carefully they may be more cost-effective in the long term.

Poor management costs

At Berrico Consultants, Eric Leape says the cost of poor management has become a very big issue in an environment of talent shortages.

Leape cites statistics suggesting that 60 per cent of first-line managers are underperforming, compared with 30 per cent of middle managers and 10 per cent of executive managers.

The scary aspect of those figures, Leape argues, is that first-line managers are in direct contact with those employees that a business tries to retain. Not only that, but they have the most interaction with clients too.

His advice is clear: spend more money training new supervisors to harness their management potential and develop “softer” skills such as teamwork and relationship building.

Prosell’s Fullbrook agrees that the main reason people quit a job is dissatisfaction with how they’re managed.

“Organisations need to respect that the role of managers has a huge impact on job satisfaction, and therefore, the longevity of employment,” he says. “What people want is managers that add value; gone are the old days of just supervision. It’s all about good performance management strategies, it’s sharing experiences, it’s coaching.”

Fullbrook adds that more focus is required on performance achievement and job enjoyment for staff. While there needs to be some pressure on employees to perform, the key is to get the balance right.

“It’s about paying a little more attention to things like environment and some of the non-work-related stuff.”

Grizzly old bosses and negative workplaces will just not cut it anymore for today’s workers and those gen Y candidates sitting expectantly in reception.