In the Fight for Talent, Start Early...

Will the skills shortage hinder business growth?

Working life has returned to some semblance of normality after the impact of Covid and there’s hope that businesses can begin to successfully transition from the recovery phase to the growth stage.

However, a chronic skills shortage is hindering business growth, a theme we discuss with clients on a daily basis as we support their growth plans and the statistics speak for themselves. The CIPD recently reported that four in 10 employers have hard-to-fill vacancies, and the latest report from the Open University found that the UK skills shortage is costing organisations an eye-watering £6.3 billion. The skills shortage was with us before Covid and, unless we do something different, it will be with us after Covid as well.

So, what is the answer?

Unless you have very deep pockets, a budget for contractors and can out-compete on salary and rate for in demand skills, we believe that long term skills planning combined with recruiting at more junior levels could be the solution. How often, in the sporting world, do we hear of the importance of investment at grass roots level? It’s an approach that is easily translatable to business and brings with it so many benefits to the individual, your business and the wider economy.

It isn’t simply that early career candidates present more available talent right now, although that is true, it’s about a change of mindset and understanding that you can put your business in a stronger position in the long term by strategic recruitment planning.

By focusing on investment in training and development, you have the chance to build a culture of evolving talent. If you’re struggling to retain staff, investing in less experienced candidates can nurture and pave the way for your company’s next generation.

Employees that feel rewarded and valued have a willingness to adapt and learn and are likely to be fully invested in your L&D programme, affording your company an opportunity to develop a workforce specifically trained to meet your business’ needs and culture.

And, of course, there’s a financial incentive to recruiting at this level. Put simply, you get more value for money if you can obtain early and retain for longevity. In the war for talent there are a lot of available graduates and apprentices who represent great value and can develop with your business. Skills such as a natural aptitude for tech can have a positive impact on driving your business forward in the adoption and use of new software and technology.

Read more on IT skills in demand

Recruiting at this level can also help you to deliver on your Diversity and Inclusion strategies, an important theme we spend a lot of time discussing with clients. Entry level roles are a great place to build in diversity strategies; LinkedIn’s National Gen Z Survey found that 76% percent of Gen Zs say that a job in a workplace that is diverse and inclusive is important to them and that furthermore, they expect inclusiveness to be the default.

Nurturing and retaining skills in-house also benefits your other employees. The most recent Employee Engagement report from Predictive Index found that a culture of promotion and development leads to high levels of engagement and productivity. If your company doesn’t have a culture that supports internal growth and movement, the ability to promote employees or develop career paths becomes much more difficult. Rather than working as part of an existing culture, you’re swimming upstream against the culture.

So, as a long-term strategy for growth, where talent is short, hiring more inexperienced staff and developing your team from the inside may be the only solution.

With just 28% of businesses adopting a skills gap analysis for future growth*, identifying and addressing future skills shortages and presenting career pathways within your organisation will ensure you are well placed to outperform your competitors, whilst retaining and developing your existing team.

*Aon Human Capital