Tackling the talent crunch
February 28, 2012
By Nick C Jones, Director, Public Sector Research Centre
Talent shortages are having a real impact on growth and profitability. As PwC’s latest Annual Global CEO Survey shows, about a quarter of CEOs (29%) were unable to pursue market opportunities last year as a consequence and 43% of CEOs have seen labour costs rise as a result.
Indeed, confidence in revenue growth over the next 3 years is higher than confidence in the talent needed to execute strategy over the same time frame. But why? Clearly, talent is vital to global competitiveness: innovation and talent are two sides of the same coin. You cannot innovate without the right people - one third of CEOs saw reduced innovation as a consequence of talent shortages.
The lack of skills is a complex and frustrating challenge for business leaders, and tops the CEO agenda: the number one investment focus for CEOs globally is on creating and fostering a skilled workforce. So, what role has government, jointly with business, in overcoming skills and talent shortages?
As set out in ‘Taking responsibility: Government and the Global CEO’, released today, businesses appear to see a win: win in collaborating more with governments and so improving the quality of their workforces and their talent pipeline. This is part of a wider trend we have observed with businesses reaching back further into the talent pool and seeking to ‘grow their own’, with an increasing proliferation of employer-led universities and colleges.
But there are also examples emerging of a new type of public-private partnership involving a more active, strategic role being played by business in education. For instance, Pearson – which owns exam board Edexcel in the UK - is planning to start offering vocational degrees with a further education college (see http://www.bbc.co.uk/news/education-11990787).
There is a great opportunity for businesses, governments and educational establishments to work together to co-create solutions to meet business needs. And all sides have a role to play. Employers need to step up and play a more active, direct role in the development of the employability and business skills that they need. Education providers need to devise course curricula and training programmes which equip people with a range of ‘employability’ skills as well as their particular subject matter skills and expertise. A commitment to hard work, presentation and punctuality are every bit as important as basic numeracy and literacy (see Creating Opportunity, Rewarding Ambition,’ Centre for Social Justice).
Governments also have a role by helping develop new career entry paths, which provide (particularly for young people) recognised, credible routes to high-skill careers. Some of our international competitors have long had such systems. For instance, in Germany where at least 40% of school-leavers undertake three-year apprenticeships leading to a recognised qualification and youth unemployment is less than half of the UK level (9% and 22%, respectively – see http://www.tuc.org.uk/tucfiles/167/apprenticeships_Nov2011.pdf). Reducing barriers to entry and increasing access of candidates to opportunities, for instance by lowering the cost of vocational degrees and technical education programmes and boosting higher apprenticeships, will enable employers to tap into a broader, more diverse talent pool and expand the productive potential of the economy.
Nick C Jones
Director, Public Sector Research Centre
Contact: Nick C Jones | +44 (0) 20 721 31593