Strategies For Addressing Critical Skill Shortages
When the number of job vacancies exceeds the supply of people with the required qualifications nothing good happens from an organization’s viewpoint. Turnover rates increase and much of the talent relocation is dysfunctional, even for the acquiring organizations that must pay inflated rates. When technology and/or different approaches to doing work create new skill requirements there is rarely an opportunity to equip an adequate number of candidates with competence in those skills quickly. Ever since Y2K the IT world has been turbulent. New demands are continuous…cybersecurity specialists, and now AI capable candidates. Even if organizations attempt to get things done using contractors and “gig-ers” the inadequacy of supply is not resolved if the contractors cannot find enough qualified people.?
One of the recurring drivers of insufficient supply for highly technical occupations in the U.S. has been the low volume of people entering university programs in Science, Technology, Engineering and Mathematics (STEM). Although there has been an adequate supply of these skills globally the U.S. is disadvantaged by an absurd cap on H1-B visas. Politicians attempting to gain favor with unions by “protecting” U.S. workers impose these limitations, even though the result has been offshoring the jobs when employers give up trying to meet the demand.?
One common approach is to pay whatever it takes to fill staffing gaps. Another is to focus on skill development, either internally or by sponsoring programs through universities or training organizations. A third is to completely outsource activities, but this again can only work if the subcontractors can find enough people and it is economically viable.?
Staffing strategies in turbulent markets
Although the “gig economy” has been prophesized as the new best thing it is having trouble getting off the ground. Job security is important to a large part of the country’s workforce. Gone are the days when a significant portion of the labor force consisted of day laborers who lined up to vie for temporary work. There has been a shift from recurring activities to project work in many industries and occupations. In theory that should create demand for “project workers” in place of employees for some roles. Talent platforms have proliferated and some of them may have hundreds of people available for short-term assignments on a rental basis.? But an uncertain income stream is often frightening for someone to try to raise a family or to pay off student debt and establish a decent lifestyle. The unique health care system in the U.S. also poses a huge obstacle to those wishing to remain independent.
Workforce planning systems used most frequently in the past require forecasting demand and supply conditions. The approach illustrated below may fit a context with predictable conditions… like planning a cruise during which the environment is unlikely to change dramatically. Both the sources and losses of supply must be determined in advance and then continuously adjusted. This approach still has merit, but when supply and demand get out of balance it is difficult to make the necessary adjustments. When newspapers shifted from typesetting to computerized front-end systems there was sufficient time available for seeking the talent that would be needed and determining what to do with those possessing the skills that would become obsolete. The same opportunity existed preceding the Y2K event. That is not the case today. The pace of change has produced frantic scrambling as organizations decide how to meet their staffing needs. The pandemic destabilized workforce management and planning for the future (reports of an Avian Flu outbreak makes “glad that is over” a questionable state of mind). AI and other emerging technology tools are likely to have an even greater impact on organizational capabilities.
The environment today argues for a system that is more suited for whitewater navigation, illustrated by the approach illustrated below.?
The major difference between this second model and the first is that planning is based on a range of possible futures (scenarios) rather than a single predicted future. It uses environmental scanning like the first model, so that changes can be identified and responses created. But this approach demands assessment and potential adaptation on a continuous basis. Some planning professionals do not view this as planning, but rather as reacting. But when in turbulence immediate responses and adjustments become necessary.
Alternative Staffing Strategies
Impacting demand. One approach that can alleviate critical skill shortages is deciding not to adopt every “shiny new thing.” Although that sounds like giving up and making do with obsolete approaches it does not have to be. The “first mover” advantage has been heralded in the marketing management literature as a license to charge more and sell more than later adopters when a new product is unique. But being there first may require a “ready… fire… aim” approach, rather than a “ready…aim… fire” strategy. Adopting new technology may result in a need to debug imperfect products or systems for the providers and to struggle with realizing the supposed potential. AI is going to create many miscues for first adopters and their customers and the rate at which it is evolving obscures the potential dangers. Trying to hire “experienced” AI specialists may result in settling for someone who has been involved in limited trails with unknown impact… and usually at a very high rate of pay.?
The AI love affair is just the latest in a trend to maximize the use of technology as soon as it is available. The rush to customer service technology over the last decade has generally enabled an employer to replace people with robotic systems. On paper it has generated cost savings. But if customers find no joy in working through ten prompts when their new product is spraying water all over the kitchen may decide there are other providers that enable them to talk to someone when that is needed. Since there is rarely a recognition that another cost… lost of future customers… may offset any accounting gain.?
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Organizations taking a broader view of delivering goods or services and of operational effectiveness may be more likely to consider alternative staffing and workforce management strategies.? By adopting a more cautious view of “upgrading” the skill mix of its workforce and the implementation of the newest technology, an organization may lessen critical skill shortages. Attempting to employ technology that will require critical skills for which there is a significant shortage in the marketplace may require upgrading the current workforce.
Utilizing existing capabilities within the workforce. Investing in employee training is viewed by accountants as a certain short-term cost with no certain and measurable future benefits. That is consistent with generally accepted accounting principles. Assets must be owned to be entered into the financial statements and employees are free to leave on Friday and not return on Monday. This precludes an ROI analysis being applied to training. Despite the likely benefits of training research studies have shown there is uncertainty about the likely return. But investing in employee training and development is like investing in research… it helps prepare the organization for the future.
Recruiting effectively. The way talent is recruited can impact the organization’s understanding of what the current workforce could do. When candidates are evaluated, their capabilities are usually compared only to the competency model for a specific job. What a candidate has done is the focus. What a candidate might be able to do or want to do is rarely explored deeply. Knowledge and skills used in doing different work might still translate to capabilities that would be useful in the open job. Managers tend to over hire and/or only consider experience with identical work. Their focus is not on evaluating how the person’s capabilities might be valuable in different roles. Given the current skill shortages it is not surprising that a manager wants someone who can do the urgent work starting day one of their employment. Managers also may hoard talent, even though the organization might benefit from increased employee mobility.
Re-evaluating skill retention efforts. One of the strengths of the U.S. labor market is the degree of talent mobility. Yet there are legal and logistical obstacles. The major impediment to rapidly changing employers or to function as an independent contractor is the U.S. healthcare system. Another is the widespread use of defined benefit pension plans as the source of retirement income. Although the use of defined benefit plans has dropped precipitously in the private sector it still is common in the public sector. Defined contribution plans enable talent to move more freely. They also avoid a massive accumulation of unfunded liabilities for the organizations using them. Most importantly, they enable individuals to make decisions about where they work and for how long. Adoption of a social security type of retirement plan and a medicare type of healthcare plan nationally would increase the freedom to optimize the aggregate utilization of skills. However, waiting for these changes can be viewed as fantasy, given the political climate.?
If skill shortages are the result of less-than-optimal utilization by employers, the concept of “pooling” talent could lessen the impact. In talent beehives like Silicon Valley, it is not uncommon for one organization not fully utilizing skills of some of its people to welcome their relocation to other organizations, even if they are product competitors. Hoarding underutilized talent does not benefit an employer or an employee. Product or mission-oriented organizations like NASA benefit from avoiding silos. When a project manager finishes a major mission his or her talent may be best utilized by another segment of NASA. When Welch became the CEO of GE he had to make it clear to managers in all divisions that their employees were GE employees, not their employees. Few wish to see their top performers go to another depatment within the organization and holding onto them even though they would be more productive in different roles seems logical, even though self-serving. Welch made it clear that talent sharing would be more rewarding than talent hoarding. Even smaller organizations often experience dysfunctional competition between segments. Facilitating talent mobility within the organization can have a large impact on alleviating skill shortages.
Partnering with competitors. Joint ventures have worked when mergers and acquisitions are not feasible. Johnson & Johnson partnered with another pharma organization, using their sales force in a region where J&J did not have one, to sell a product the competitor did not offer. This presented a unique opportunity for both partners to gain. It would be hard to imagine such a partnership between Microsoft and Dell, even though it is conceivable that a similar mutual benefit could be created. Employment laws, differences in employee compensation/benefits programs and workforce management strategies can be impediments. The perception of a partnership as a collaboration with an enemy spy can also present a cultural obstacle. The old adage that desperation can lead to new approaches may apply here.
The Bottom Line
Each organization must adopt strategies that result in the critical knowledge and skills being available. Whether they are available within the existing workforce, can be developed within the existing workforce or can be acquired via other approaches they must be accessible for the organization to meet its objectives.
About the Author:?Robert Greene, PhD, is CEO at Reward $ystems, Inc., a Consulting Principal at Pontifex and a faculty member for DePaul University in their MSHR and MBA programs. Greene?speaks and teaches globally?on human resource management. His consulting practice is focused on helping organizations succeed through people. Greene has written 4 books and hundreds of articles about human resource management throughout his career.