Building capability to address talent gaps

It’s become almost impossible to open a newspaper or click through a digital news site and not see an article about Australia’s skills shortage. With the strongest jobs market in almost five decades and near-record low levels of unemployment, many employers are struggling to find people to fill their openings.

According to the National Skills Commission, the number of skilled occupations experiencing labour shortages has nearly doubled in the last year. In fact, the figures suggest that almost one in three occupations are currently experiencing worker shortages, up from 19 percent in 2021. 

While this might be the biggest labour shortage Australia has experienced in decades, skills shortages have been a major concern in many industries across the country since the 1990s. Statistics from the Department of Employment and Workplace Relations show that there hasn’t been enough pastry cooks and vehicle mechanics since 1994 or panel beaters, refrigeration mechanics or automotive electricians since 1998. And in the professional space, specialised engineers, nurses and secondary school teachers have also been in short supply continuously since 1996. 

The causes of skills shortages are often complex and multi-faceted and can vary with industry or occupation. An ageing workforce and problems in attracting and retaining people are common causes, as well as changing social trends and even increases in the number of national construction and resource projects can impact the demand for specific occupational or technical skills. 

A lack of progression in training approaches and training availability can also be key contributing factors. As skills requirements relating to new technology continue to evolve, employers are faced with a growing need to attract multi-skilled people who can keep up with increased automation in the workplace. The automotive and pharmaceutical industries are examples of this; skill sets have changed significantly over the past 10 years, with a significantly increased need for skills in electronics and IT. 

In response to the current skills shortage the Federal Government has recently committed an extra $1.1 billion to the TAFE sector to create 180,00 fee-free places. They’ve also lifted the permanent skilled migration intake for 160,000 to 195,000. 

‍Unfortunately, neither measure will actually fill the overarching skilling shortfall, which means that private organisations must continue trying to close their own gaps. 

According to McKinsey, hiring is the most common tactic for addressing skill gaps, with two thirds of companies prioritising this approach over the last 5 years. Looking ahead five years; however, McKinsey predicts that skill building within existing employees will overtake hiring to become the most effective way to address workforce gaps. 

Many companies already include training and learning as part of their employee development pathways; however, reskilling programs are generally at an early stage.

Companies that have not yet started reskilling their employees should consider taking the following actions:

1. Understand which skills you need

Some skills gaps are more obvious than others. Understanding which skills to develop requires an in depth review your business’s strategic needs and value agenda.

By determining where new value will come from in the future, you’re likely to find capability gaps and from there pinpoint key roles that will drive or protect that value.

As a starting point, leaders should use granular data to assess their strengths and future opportunities compared with organisational performance, operational issues and other guiding strategies.  

2. Be strategic and invest in fundamentals

Decide what actions need to be taken to address each gap. Most gaps will require input from a mix of approaches including hiring. A key question to ask is which employees should be reskilled first? 

Designing reinforcements to sustain behavioural changes is another important guiding principle. Making direct associations between desired behaviours and actual business outcomes relevant to employees is a proven technique for doing this. Enforcing consequences, both positive and negative, will also provide real-time course corrections to keep behavioural change on track. Be sure to prepare your workforce for change by explaining the reskilling agenda and clearly outlining each employee’s reskilling options.

3. Build training capabilities with digital tools and partnerships

Any learning journey should be a blend of in-person and digital learning opportunities.

When designed well, virtual skilling programs provide clear scalability and cost advantages.

The Covid-19 pandemic has also demonstrated that virtual experiences can meet or exceed the efficacy of in-person offerings, with 87 percent of learners agreeing that they were at least as effective as in person events.

Investing in good digital platforms is key, as well as focusing on interactivity over content. The curriculum should help employees retain new skills as well as apply them to their role. 

If your organisation needs to cultivate a broad range of skills, you’ll likely need to assemble training resources from multiple providers, including universities and technical organisations. 

4. Establish a change culture

Fostering a culture of lifelong learning will encourage employees to develop new skills. From leadership through to entry-level employees, it should be clear that the opportunity to develop skills will directly correlate with increased opportunities for advancement within your organisation.

Skill development should also take place across an organisation, rather than in silos. This means that if technical teams are getting upskilled, for example, then leadership should be learning how to better support the new needs and goals of those employees.   

In summary

The causes of skills shortages are complex and can vary with industry or occupation, but a lack of progression in training approaches and training availability can be key contributing factors. 

Private organisations must continue trying to close their own gaps rather than relying on government investment and policy changes.

In particular, McKinsey predicts that skill building within existing employees will become the most effective way to address workforce gaps.

Companies that have not yet started reskilling their employees should consider taking actions such as understanding which skills they need, being strategic and investing in fundamentals, building training capabilities with digital tools and partnerships, and fostering a culture of lifelong learning.