Insights: Addressing The Talent Shortage Conundrum
UK unemployment is at the lowest level seen since the mid 1970s, while the number of job vacancies continues to rise. In 2012, there was a ratio of 5.8 unemployed individuals for each job vacancy.
Now, there are just 1.7. The talent shortage is more acute than it has been for decades, and candidates with in-demand skills are firmly in the driving seat.
To find out about the impact that talent shortages have on companies, we surveyed nearly 40,000 employers in 43 countries. We asked how much difficulty they are having filling roles compared to last year; which skills they most struggle to find and why; and what they are doing to solve talent shortages.
Our research found that talent shortages are at the highest levels seen since our survey began in 2006, and employers in Japan, Romania and Taiwan report the most difficulty filling positions. In Japan, talent shortages are fuelled by an aging workforce, a lack of labour supply and immigration restrictions. Whereas in Romania and Taiwan, the growth of nearshoring and offshoring over recent years has left employers with unfilled roles – threatening growth and operational efficiency.
In the UK specifically, large companies with 250+ employees have the most difficulty filling job vacancies – with 50% experiencing talent shortages. Large companies account for 0.1% of businesses in the UK, yet they employ 40% of the total workforce, demonstrating the significant impact that talent shortages will have on the wider labour market.
Our research found that Skilled Trades, Drivers and Healthcare Professionals are the hardest skills to find in the UK. In fact, Skilled Trades have ranked as one of the most difficult skills to find since 2011, demonstrating that the problem isn’t going to fix itself overnight.
Why UK employers can’t find the talent they need
One-third of employers say the main reason they can’t fill roles is a lack of applicants. Given the low levels of unemployment currently seen in the UK, the lack of applicants may not come as a surprise. Another 26% say candidates lack the necessary experience.
Another commonly cited reason why UK employers can’t find the talent they need is because applicants lack the hard skills they need (14%) or they lack certain soft skills (6%). As companies digitalise and transform, finding workers with the right blend of technical skills and human strengths is more important than ever. For example, sales representatives need strong product knowledge, excellent relationship management skills, and the ability to use digital inventory and analytics tools – three skill sets that are very disparate. Furthermore, IT functions need technical capabilities, alongside people management and strong communication skills.
Finally, 8% of employers said applicants expect higher pay than is being offered, while 1% said their applicants wanted better benefits. It’s important that employers ensure their remuneration and benefits package is competitive, to prevent themselves losing out on in-demand talent to their competitors.
Addressing talent shortages today
The same old recruitment and workforce practices won’t yield different results. New people practices are required to overcome talent shortages, and employers are harnessing a number of key strategies to ensure they can secure the talent their business needs.
In today’s world of work, new roles are emerging as fast as others become obsolete. With this in mind, employers must recognise that what you are likely to learn is becoming more important than what you already know. This is why many companies are beginning to tackle talent shortages by upskilling their own workforce: 72% are investing in learning platforms and development tools to build their talent pipeline.
Companies are also trying to reach new talent pools, and attract people who would not previously have been considered for a role within their organisation. 41% of employers are recruiting from outside their traditional talent pool and looking to attract different demographics, age ranges and geographies, as well as groups like retirees, returning parents and part-timers. Added to this, more than one-third (36%) of employers are being more flexible about the education or experience requirements for their vacancies.
We’re also seeing employers readdress their workforce strategy and utilising workers in different ways. Skilled talent is looking to work with employers in new ways, giving rise to a whole host of non-traditional employment models – such as contractors, freelancers, gig workers, offshore workers, agency workers, and much more. With this in mind, 31% of employers are using different types of workers than they have in the past, and 29% are changing their existing work model.
The future of work
We know that we’re operating in a high-change environment. Strategies that are effective at overcoming talent shortages today may not be so effective in the future. This means organisations must continually review and refresh their hiring strategies, to stay ahead in the future of work.
Even if we don’t know exactly what the future of work looks like, we do know that companies perform better when they understand their people. And people perform better when they are understood. It has never been easier to identify people’s talents. Of course, this also means that if you want to remain competitive, you have to be even more discerning when it comes to spotting people’s potential before others can see it. By putting people first and creating a culture of learning, organisations can ensure both individuals and companies can reach their potential.
This article first appeared in the ninth edition of The Human Age Newspaper.