Talking Talent

As the growth rates of emerging markets continue to accelerate and further expand beyond the current leaders – Brazil, Russia, India and China – the power of these regions in the global IT industry is becoming more pronounced.

Gartner estimates that IT spending in emerging markets will grow at a compound annual growth rate of 9.9 per cent to reach $1.3 trillion by 2011.  In comparison, mature markets will spend more overall ($2.5 trillion by 2011) but invest a smaller percentage (4.6 per cent).

And with the rapid rise in IT growth in emerging nations, analysts are predicting that the global ICT industry will be ‘borderless’ by 2015.  This means that organisations, including governments, will increasingly source their ICT from around the globe without regard to the ‘country of origin’ or ‘headquarters’ of the vendor supplying the solution, be it software, hardware, telecommunications, IT services, or people.

It’s fair to say that Australia will have more to worry about than simply how well our rowers and cyclists perform by the time London 2012 rolls around.

As organisations leverage low-cost, highly skilled labour sources, nations such as Australia will be at a significant competitive disadvantage unless we find a distinct value proposition. 

Functions which can be digitised or automated are most likely to be sent offshore, so building those skills which are valuable locally and less easy to replicate are crucial to underwrite Australia’s economic prosperity.

As the WEF report clearly demonstrates, those countries leading the world in ICT readiness have a coherent government vision of the importance of ICT, coupled with an early focus on education and innovation.

Australia possesses an abundantly-skilled, culturally and linguistically diverse workforce that excels in high value, creative problem-solving skills.  Our people have a reputation around the globe for their ability to develop integrated business solutions through applied ICT technology. 

But, just like the Aussie stars of the track and pool, our people need nurturing.  We have the capacity to develop world-beating ICT products and solutions – but we need support, investment and incentives to ensure we keep our place up the front of the pack.

As the Olympics circus packs up its tent for another four years, sports-mad Australians are left to contemplate a lighter medal haul than anticipated, alongside a sinking spot on the medal tally board.

While our less-than-impressive efforts at the velodrome and on the track have us shaking our heads, the British press are singing the praises of Old Blighty, pointing out that their athletes had shown “what can be achieved with dedication, good coaching and sensible funding”.

And there’s the rub.  Should we really be surprised when a massive financial investment in sport yields results?  And should we marvel when economic powerhouses such as China, with its huge population, and the US, with its combination of high Gross Domestic Product (GDP) and population, top the medal table? 

A high population provides a strong base from which to draw talent – whether it’s athletes or technologists.  GDP is a good indicator of a country’s prosperity, with affluent countries more likely to have the spare cash to invest in elite sports systems (or technology infrastructure, as the case may be).

But my question is this: will Australians ever experience the same sense of bruised national pride as we slip further down the global technology leader board?

There are dozens of ways to measure the competitiveness of a country’s ICT capacity, but the Global Information Technology Report, released by the World Economic Forum (WEF) in April is a good yardstick. 

The Report uses the Networked Readiness Index (NRI), covering a total of 127 economies in 2007-2008, to measure each nation’s degree of preparation to participate in and benefit from ICT developments.  The NRI assesses the economy’s ICT environment, readiness of key stakeholders and ICT usage.

And, according to WEF, Australia is nowhere near medal contention.

Top of the league this year was Denmark – which won only two gold at Beijing, but grabbed the WEF gold for the second year in a row.  Close behind was Sweden (despite just four silver medals and a bronze in Beijing), Switzerland (two gold medals), the United States (runner up at the Olympics, with 36 gold medals) and Singapore (just one silver medal). Australia came in at number 14.

So, what’s more important for our future success?  Is it golden moments in the pool or world-beating high technology performances?

While we’ve all heard the doom and gloom about the dire state of our nation’s skills shortages, let’s look at what organisations can do to keep the employees they have and maximise their potential.

To start with, it’s time companies started paying more than lip service to the often-recited slogan: “People are our greatest assets.”

While this basic reality is well understood by most companies, a fundamental change in people management is essential for organisational growth. If we really believe that people are our company’s greatest assets we should measure the importance of them within our companies.

So how do we put systems, processes and reporting in place to get better focus on the development of human and knowledge capital within organisations?

We need to measure, value and manage our most important asset - our people. Start by analysing the results of customer satisfaction and employee opinion surveys. Ask your employees whether they feel they’re well led, whether they understand where their organisation is heading, if they feel part of that direction and whether they feel engaged in where their leaders are taking them.

Organisations have much to learn about their achievements and challenges by consulting with their employees and customers. And more importantly, measuring staff and customer satisfaction can predict the company’s success levels in the next 12 months.

The future of any organisation relies on its ability to harness its human potential, and all business leaders wanting to succeed must aim to extract 100 percent from each and every staff member. If you compare the way we manage cash and inventory you wouldn’t survive running an organisation wasting up to 60 percent of those assets. We shouldn’t allow ourselves to waste human assets.

With an economy in its 17th year of uninterrupted growth, Australia’s skills shortage has never been worse. People are crying out for doctors and nurses, bricklayers and plumbers, code cutters and engineers . In states that are booming thanks to a mining bonanza - Western Australia, Queensland and South Australia - engineers, surveyors and truck drivers are in short supply.  The Economist has reported that one state-owned water authority complains that it is losing truckers to mining companies offering A$100,000 a year - more than double their previous salary.

While the war for talent wages, Australian companies are fighting back to help employees find a better work/life balance.  Across the spectrum of Australia’s economy, Australian enterprises are focusing their attention on reviewing and enhancing their entire employee value proposition, rather than pumping extra funds into salary increases.

In a tight labour market ‘soft benefits’ such as wellness programs, rewards and recognition, child care and parental leave options can be the difference between keeping and losing an employee.

Parental leave policies, in particular, have once again been under the spotlight for review – particularly the number of weeks of paid leave, staggered parental leave payments, return to work policies and child care assistance schemes.

Many companies pay a ‘baby bonus’ for women on maternity leave, and provide more options as they transition back into the work force.

Global technology services company, EDS, offers its employees twelve weeks’ paid maternity leave as well as flexible work arrangements which help retain their top talent.  Flexible work arrangements include returning from maternity leave on a part-time basis wherever possible and flexible hours to suit family life.

Employee wellness programs have also gained in popularity as an alternative to greater levels of salary spending. Wellness programs often include the provision of onsite health and fitness programs, yoga classes, bowls filled with fruit, onsite health checks and health education seminars.  Wellness programs also make good business sense, healthier employees are more productive employees.

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“An organisation is only as good as its people.”

We’ve all heard this phrase.  Without good people, a company’s products and services suffer and, ultimately, so do its profits.

But how do you pay more than just lip service to the concept of putting your people first?

The first step is to recognise that a seismic shift has occurred in our attitudes to work.  For the majority of workers, work is no longer just about the money.

Experts agree that base pay is a secondary career consideration over career development.  Although remuneration remains an important factor in attracting and retaining employees, it’s not the number one carrot.

Other ’softer’ factors, such as the quality of the work experience, are becoming more significant considerations for joining and staying with the organisation. Modern workers workers want work-life balance and less workplace stress. 

Looking after staff must be considered a bottom line business imperative.  It can cost five times the original investment in a mid-level manager to replace that manager, and therefore retention becomes a central concern for any responsibly run organisation.

Roger Collantes, regional training & development director, for Citibank says: “Nuture and grow staff. Identify top talent, franchise runners and then process the system to keep them. Secondly, recognise the nature of Generation Y, they need to be understood. More pay isn’t their hook, they want the ride, choice and experience of a lifetime.”

Australia is not alone in facing skills shortages across the economy.  Read about the Singapore story - with a thriving economy and a demand for talent, Singaporean firms cannot affort to ignore attraction and retention issues.

I’ve lived through the 1980s boom, early 90s bust, late nineties boom, early naughties bust and and the late naughties boom.

However, each bust time we shed staff and each boom time we wonder where the skilled people are and why young Australians, who saw their parents downsized, are not loyal to big corporations .  I think a philosopher once said that “doing the same thing and hoping for different results was the definition of insanity.”

Every CEO and manager I talk to is finding it difficult to attract sufficient numbers of the right skills, right here and right now.  And Australia has an ageing population and a low fertility rate, so four and a half times fewer young people are joining our workforce than did 30 years ago.

According to forecasts from the Australian Government, around 70 per cent of new employment to 2011–12 is expected to come from four industries. The largest contribution is projected to be from the Health and Community Services industry which is expected to add 170 000 jobs over the next five years, growing at 3.0% per year.

The other industries likely to add large numbers of new jobs are Property and Business Services (136 200), Retail Trade (128 200) and Construction (82 500). Personal and Other Services (43 400 new jobs) and Accommodation, Cafés and Restaurants (39 000) are also expected to contribute a large number of jobs.

At the same time, analysts are saying that workforce participation rates will decrease in all states and territories across Australia between now and 2012. In Tasmania and the Northern Territory the supply of labour is not expected to meet the demand due to an ageing population and low population growth. Participation rates will decrease by 3 per cent and 2 per cent in each state respectively.

We simply cannot continue to be precious about accessing labour pools and skills in other economies across the globe.

Functions which can be digitised or automated are most likely to be sent offshore so building those skills which are valuable locally and less easy to replicate are crucial in underwriting economic prosperity for Australia.

More than 100,000 students come to study in Australia from China and India and have to leave to apply for their work visa offshore. When Intel’s Andy Grove noticed the same phenomenon in the US in the late 1990s, he questioned why every foreign student wasn’t given a green card when they graduated.  This question is still relevant in Australia today.

Following on from yesterday, Australia’s population is projected to age progressively from the median age of 36.4 years in 2004 increasing to about 41 in 2021 and about 45 years in 2051.  By 2051 around 26 percent of Australia’s population is projected to be aged 65 years or older, compared with 13 per cent currently.

Extensive research has concluded that immigration beyond current levels would have a diminishing impact on retarding the ageing of the population. This reflects ageing being a gradual process and that most migrants who enter Australia would themselves be part of the aged population in 30 to 40 years time.

This means harnessing ‘grey power’ is vital if we are to continue to compete on a global stage.

With the economy facing capacity constraints and the population ageing, it doesn’t make sense to have skilled people driving taxis.

Fifty-year-olds are still perceived as being past their used-by-date in the workforce.  At the same time, the latest census data reveals that 11 per cent of Australia’s population is between 55 and 64.  It is these people that the ICT industry needs to do more to attract, retain and retrain.

Research analyst firm, Mercer, says that workers aged 55 and older, particularly women, appear to be the answer to the ongoing skills and labour shortage – not generation Y – and Australian employers must consequently shift their focus from young to old to maintain productivity.

Research findings reveal that by the year 2012 the amount of workers in the labour force aged 55+ will increase by 14 per cent whilst the amount of workers aged 25-54 will increase by only 5 per cent.

Furthermore, the amount of women aged 45+ will increase by 12 per cent whilst the number of men in the same age group will increase by only 6 per cent

Mercer’s Tim Jenkins says that there’s a sense of urgency for employers.  By 2012 demand for skills is expected to increase 18 per cent in the construction industry; 13 per cent in the accommodation, café and restaurant industry; and 12 per cent in the wholesale industry, but with no guarantee that demand will be met with supply.

“In four short years there will be close to a quarter of a million more workers aged 55+ in the Australian labour force and assumptions about what an employer should expect from an employee, and vice versa, have to change.

“Australian employers have to re-define what the average daily and weekly job looks like and how it is remunerated in order to hold onto older workers, maintain productivity and keep downward pressure on wages that, according to our research, are forecast to rise at an average annual rate of 4.2% between now and 2012.

This seismic demographic shift threatens the sustainability of many Australian businesses.

So why does a recent survey by career management firm, Linkme.com.au, tell us that almost three-quarters of Australians believe that finding new employment – across all industries - after 50 is almost impossible.

People are telling me that they feel ‘on the scrapheap’ once they hit 45, and yet these are the very people who have a lifetime of skills and experience to harness.

One woman I spoke to said she was advised to change her resume to say ‘more than 10 years’ experience’ instead of ‘more than 20′ and to remove the dates from her degrees – all to reduce the perception that ‘older’ means ‘out-of-date’.

In industries where work is increasingly based on knowledge-creation, the focus needs to be on the workplace as a key arena for encouraging ‘lifelong learning’ as part of work.

Retaining and retraining older workers will save recruiting costs, maintain institutional memory and technical knowledge and give a higher return on investment in training.

However, it’s not just the responsibility of employers.

Employees need to recognise that they work in a fast-paced industry where training is paramount.  Continuing employment or re-entering the workforce may require a commitment to retrain and some attitudinal shifts too.

The most important factor in a mature person’s employment prospects is: are they adaptable?  Those most at risk of redundancy and underemployment have had fewest opportunities to acquire new skills and develop a positive attitude to learning.

Australia’s economic growth – and our industry’s prosperity - is partly dependent on mature-age workers remaining in the workforce for as long as possible, so it’s time to discard negative perceptions of baby boomers and support them in their working lives as much as Gen-X and Yers.

Australia has to face up to its demographic destiny.

The age profile of the world is changing. While children and the middle aged currently dominate the percentage of population in most countries across the world, this will dramatically change over the next twenty years.  The 50+ group will catch up with the kids by 2020 and the proportion of 17-24 year olds is in decline, as is their absolute number within the world’s population.

So while we continue to talk about a skills shortage we are actually talking about a population issue and a distribution of labour across the nation and the world.

The recent release of a survey by the Australian Industry Group highlights the impact of the skills shortages on Australian businesses. In the survey, CEOs who were interviewed talked of how it is increasingly difficult to attract and retain the skilled workers required to survive and prosper in today’s economic climate.

Furthermore, skills shortages are starting to restrict the ability of Australian firms to innovate and improve their business models and functions. And we know that technology-led innovation delivers almost all productivity gains in industries – for example over the last decade 85 per cent of all productivity gains in manufacturing and 78 per cent in the services sector came from the application of technology solutions.

I’ve just joined Julia Ross after spending two years leading the Australian Information Industry Association – the lobby group for the computer industry in Australia.  From experience, I know that every year brings new challenges for the ICT industry and those employed in it - and 2008 is no exception.

Global economies are showing signs of weakness giving rise to speculation about the sustainability of the Australian economy. The depth of the sub-prime finance within Australian financial institutions is not fully disclosed and the impact therefore is not understood. The threat of recession in the US even after injections of money through interest rate decreases, tax cuts and superannuation have proven to be inadequate to ally fears.  China remains a critical trade partner to ensuring that Australia’s growth will slow but not decline dramatically. 

Consumer confidence is weakening. The Westpac Melbourne Institute Index of Consumer Sentiment fell below 100 in February, which indicates that pessimists now outnumber optimists. As the famous song goes “don’t wish too hard for what you want ‘cos you might get it.”

And if obesity is the result of an affluent lifestyle, the skills shortage is the outcome of a robust economy and high client demand. The ICT industry in Australia, for example, is a cyclical one with peaks and troughs that largely align to the demand for client projects - particularly large government projects and to economic cycles.

Enrollments in tertiary ICT courses are half of what they were in 2001. More than that there is continuing discontent about the workplace capabilities of graduates and a disconnect between industry needs and the perception of ICT as a career among young Australians.

The industry still suffers from the view that it is nerdy and full of spotty faced youths reinforced by those quirky folk on the BBC show called the IT Group, or Douglas Copeland’s book jPod, or evidence from my daughter who is doing Commerce and IT at ANU tells me is largely true.  But is it?  You tell me.

Sometimes in order to effect change we need to see a dramatic and dire view of the consequences of our actions.

An Inconvenient Truth and The Stern Report moved the world to debate.  Because they were so ‘in your face’, both motivated people around the world to combat climate change and accept personal accountability for living an environmentally sustainable life.

I hope that those people who read the Living Longer Living Better Report will feel the same, as the ageing population could precipitate Australia’s economic and social decline.

This report, developed in conjunction with IBM, is intended as a contribution to the debate around the challenges of an ageing population and how they can be dealt with.  It’s aimed at policy makers, business leaders and social commentators and while it reflects a world position, it draws particular attention to the issues in Europe (although its author, Dr Chris Gibbon, has been in Australia talking about the impacts here).

With declining fertility and regressive employment practices in operation for decades, the solutions to these challenges will not take effect overnight. The economic and social (metaphorical) ‘super-tanker’ will take years to be turned around, so we need to change course now.

The issue of an ageing workforce is particularly pertinent in the recruitment industry, as it affects the quantity and quality of skilled people available. We know now that the problem is not a skills shortage - it is a population shortage.  Finding ways to tap into the global talent pool is an imperative.