chandler macleod group whitepaper preview - skills utilisation

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SKILLS UTILISATIONHow effectively are businesses utilising the skills at their disposal?


Skills Utilisation in Australia

A$54.8 billionAnnual cost of employee disengagement to the Australian economy Source: Gallup

ToP 3 feelings individuals feel as a result of skills underutilisation:1. Loss of job satisfaction2. Boredom3. Feeling of being unappreciated Source: Chandler Macleod

#1 reason for employers to pay attention to employee engagement: Organisations with engaged workforces have 147% higher earnings per share than those who don’t

Source: Gallup

Australian managers and executives who are highly

engaged in their jobs: 1 in 5 Source: Gallup

The good newSEngaged workplaces can boost economies

Source: Chandler Macleod

only 24% of Australians are engaged in their jobs Source: Gallup

The bAd newS

Almost 1 in 10 organisations estimate that more than half their workforce has significant skills underutilisation


Employees who don’t advertise all their skills

to their employer for fear of being perceived as

overqualified

Employers who assume their employee’s

skills are >50% underutilised

Proportion of employees who report

that their skills are underutilised

Employers who can estimate the level

of underutilisation in their workforce



Australia’s productivity growth woes have sent politicians and business leaders on an urgent search for answers. With productivity across most segments of the Australian economy well below world-best practice, leaders are looking for productivity triggers - and utilisation has become a buzzword.

Unsurprisingly our latest research confirms that skills underutilisation exists and that organisations with engaged workforces have 147% higher earnings per share than those who don’t - the surprise is that skills underutilisation presents at far higher levels than employers presume.

� There is no general definition of skills utilisation. Consequently, organisations don’t measure what they can’t define. 81% of employers cannot estimate underutilisation within their own organisation, and although skills shortages impact on their performance, just 17% have tried to quantify the cost of skills shortages.

� While employees and employers are agreed that skills are being underutilised, employers vastly underestimate by what extent. Of those employers who could put a figure on underutilisation, most approximate it at less then 20% and only 8% believe the level of underutilisation is over 50%. But almost two thirds - 64% - of employees indicate that they have skills which current or recent employers are not utilising, and 74% report that their employer does not know all their skills.

� In our current variable economy, different sectors are adjusting to structural changes with varied pace and emphasis. However, whether organisations are concerned with cost cutting or with revenue growth, labour productivity remains a key driver for success, and skills utilisation is a key process of labour productivity.Today’s businesses are doing more with less; they have worked hard to push the productivity levers of process efficiency, restructuring and systems standardisation, leaving better utilisation of human capital as one of the last remaining productivity levers.

� Nine out of ten - a massive 91% of employers surveyed - indicated a current skills shortage within their organisation. This is up from 58% in our October 2012 Productivity white paper. With skills shortages in some areas and industries threatening to trigger wage inflation and risk growth, the need for the business community to pay much greater attention to the issue of skills utilisation is heightened.

� The need for outstanding leadership, culture and values, supportive HR practices, communication and employee engagement has never been more crucial. In particular, strong and innovative leadership and management within organisations plays a key role, acting as both a ‘trigger’ and ‘enabler’ of skills utilisation.

� The costs and benefits of skills utilisation do not solely rest with employers. Personal decisions made by employees have a significant impact on skills utilisation at an individual, an enterprise and a national level. Remarkably, 42% of employees we surveyed said they do not advertise all their skills to their employer for fear of being perceived as overqualified. Employees need to share the responsibility to engage, communicate and manage the use of their skills. If their employers have little to no knowledge of their skills, underutilisation will occur.

� Organisations of any size or sector can lift their productivity by better exploiting their employees’ full range of capabilities. Those that start pushing towards their utilisation potential now stand to gain significant advantage over those whose inertia keeps them stuck at their current level, or even sliding backwards. Not realising these benefits is something organisations can ill-afford at the best of times; it is something they especially cannot ignore in the current economic climate.

Key Findings

About the research:The research for this white paper was conducted for Chandler Macleod by Lonergan Research during January 2014. The methodology comprised an online survey, with responses gained across a range of industry and organisation sizes, as well as secondary research across a range of published articles and reports.

386 senior businesspeople and 258 employees were surveyed in February 2014.


The research underpinning this report uncovered the following key areas that business leaders urgently need to address to realise the sizeable latent potential associated with skills utilisation:

� With Holden, Toyota and Ford exiting local production, and other manufacturing closures such as the decision to close Alcoa’s Geelong smelter, Australian industry must be more innovative in recognising and deploying skills as our labour force is required to evolve into new industries.

� Re-think business models. Discern which work needs to be done by full-time employees and which can be done more efficiently through contracting, outsourcing or offshoring. When employees are not utilised for 100% of their time and skills, it may make economic sense to outsource. This applies as much to senior managers as it does to other employees. For example, you may need an IR Manager to deal with complex employee laws, but if employing a full-time employee means their skills and time would not be fully utilised, it may make sense to outsource.

� Better use of technology. There are many possibilities for applying data capture and measurement around skills utilisation. Implement some form of time recording – by capturing timesheets you will better understand current utilisation and productivity. Use an employee engagement survey to drive changes in productivity. Don’t just track employee training – go a step further and use your HRIS to conduct skills audits, move underutilised employees into the right roles, and track, support and retain staff.

� Hire for BestFit™, not just qualifications. Simply matching employee skills and qualifications to the job is not enough. High performing organisations find and keep employees with the right skills and the right attitudes necessary to help the business reach its goals by contributing their talent and expertise.

� Set the tone from the top. CEOs must make productivity a priority by setting the tone and following through. Businesses will see the most benefit from initiatives where leaders weave them into performance expectations for managers and enable employees to execute on those expectations.

� Engage and up skill line managers. Leadership and management have a greater impact on skills utilisation than any other factors. The best utilisation strategy can’t succeed unless it is adopted by managers who have the skills and understanding necessary to engage and motivate employees. Engage and reward managers, and support them in acquiring the knowledge and skills needed to better utilise their employees.

� Conduct a Skills Audit. Because it takes time to alter skill levels, businesses must not only understand their current demand for skills, but be able to predict future demand. Conducting a skills audit can uncover the skills and talents you have access to now, as well as help forward planning to improve future productivity and utilisation.

� Implement job design. The step following a skills audit, job design leads to job enrichment, engagement and in the best case scenario, better skills utilisation. Ensure work is designed to make full use of employee’s skills and abilities, and design jobs to involve teamwork, flexible job descriptions, multi-skilling and flexible work arrangements.

� Get the culture right. As Peter Drucker is famously quoted as saying, ‘culture eats strategy for breakfast’. An open culture which gives employees flexibility, autonomy and a supportive environment where they can contribute their ideas is a key success factor in successfully introducing skills utilisation practices.

� Provide flexible working options. Mobility will play an increasingly important role in hiring practises as employers look further to recruit talent and fill skills gaps. Consider virtual teams, outsourcing, international placements, contracting and job sharing as opportunities to increase your skills base and more fully utilise the skills you do have.

� Offer training for casual and part-time employees. IBISWorld Chairman Phil Ruthven says that by the middle of the century, all workers will be their own enterprise as contractual arrangements supplant the concept of being an employee. (25) With the changing face of the workforce, it no longer makes sense to invest less effort in up skilling part-time and casual employees and independent contractors.

� Reward productivity. Identify metrics and support managers in setting productivity goals for employees. Motivate employees to deploy their ability by linking productivity metrics to performance reviews and reward employees financially with a share in productivity gains.

� Employees need to be more transparent. If they want more satisfying and better jobs and improved career pathways, employees need to start having honest conversations with their managers about their skill levels and how these are being utilised. Employees will also need to take more responsibility for driving their own skills development, training and education, especially as they are likely to have multiple careers throughout their working lives. Equally, employers need to be receptive to these conversations and ensure the channels for disclosure of skills sets remain open.

Recommendations


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SKILLS UTILISATION

http://www.chandlermacleod.com/skills-utilisation-white-paper