How to Narrow Critical Skilled Labor Gaps
No matter your perspective on the skilled labor gap issue—whether you believe it’s due to the need for more training, increased salaries, or simply the need to relocate skilled labor—our research has found that the skills gap is a reality.
The joint research partnership of Training magazine, research/ analyst firm Brandon Hall Group, and SME (formerly Society of Manufacturing Engineers) found that:
- More than 55 percent of manufacturing organizations say a lack of skilled labor affects their ability to grow the business.
- More than 35 percent of high-tech organizations say a lack of skilled labor affects their ability to manage costs and grow the business.
- Some 33 percent of health-care organizations say a lack of skilled labor affects their ability to comply with external quality standards and regulations.
In this final installment of our series on addressing the skilled labor gap, we’ve summarized our findings and pulled together a list of key practices that had the greatest impact on addressing skilled labor gap challenges for our 850 survey respondents.
Through these adjustments, organizations are finding that not only are they able to address their skilled labor issues, they also are achieving improvements in employee engagement, business outcomes, and the overall sustainability of their businesses.
Our key practices to address the skilled labor gap are:
- Create a workforce strategy and plan
- Balance the basics
- Define critical roles
- Assess your workforce
- Create captivating cultures
- Create local relationships
- Hire with development in mind
- Make knowledge sharing and transfer a business priority
- Invest in training and development
CREATE A WORKFORCE STRATEGY AND PLAN
More than 82 percent of our research participants stated that they employ skilled workers, and of those organizations, more than 88 percent reported problems finding skilled workers. Yet, more than half of those organizations struggling to fill skilled labor positions felt they only had regional skilled workforce problems, which means that with a little planning and some realistic mobility models, they could address some of their issues.
Still, more than 50 percent of the organizations in our research reported that they do not have any level of enterprise-wide plan in place for filling skilled labor gaps among their critical roles.
Oceaneering, a global oilfield provider of engineered services and products, with annual revenues of more than $2 billion, employs more than 10,000 employees. In the last eight years, the organization experienced more than 20 percent growth—and as the business demands grew, the talent supply for highly skilled technicians was falling. The company needed a workforce strategy that went beyond simply hiring required skills.
Oceaneering’s operations team outlined a phased workforce strategy that highlighted business outcomes as the primary goal:
- Build a skills- and competency-based approach to managing the talent risk.
- Find a flexible technology partner to help manage the process.
- Integrate the approach into everyday hiring and work to minimize operation costs.
- Manage engagement concerns through integration of recognition, succession planning, and rewards into the program framework.
- Assess the success and opportunities, and make adjustments continuously.
Oceaneering’s efforts started in 2008 and gave the company the capacity to grow with industry demand and the ability to meet numerous global emergencies with teams that were prepared and ready.
BALANCE THE BASICS
Our interviews and the supporting survey data suggest that pay is an issue across most skilled labor roles, and many organizations are in the process of adjusting salary ranges and job descriptions to more accurately define the value of each skilled role. But it is not the only issue. Communication and leadership issues cause just as much frustration in filling critical skilled labor roles and retaining those employees.
The health-care industry felt that communication issues were a much bigger challenge than pay ranges. In fact, many health-care organizations mentioned on-call requirements, long working hours, and stressful work environments as major retention issues.
Baptist Health South Florida employs more than 14,000 employees and 2,000-plus physicians in its regional health-care environments. It faces the challenge of hiring and keeping highly qualified health-care practitioners. It agreed that the biggest requirements for today’s skilled health-care workers were positive work environments and flexible working schedules. As Zoe Hernandez, director of Leadership Development and Talent Management, says, “Most of our employees went into health care because they want to take care of people and they like the ability to be home with their own families. If we don’t address those needs, then all the training in the world won’t help.”
DEFINE CRITICAL ROLES
More than 68 percent of organizations use competencies at some level in defining their skilled job roles, but only 20 percent create complete hiring profiles that also include expectations concerning cognitive abilities, motivation factors, and cultural fit factors for their roles. Some 61 percent of organizations built their training programs based on specified competencies that were defined in skilled labor job roles.
Those organizations that leverage competencies in job roles and in developing training programs were more likely to have engagement scores that have gone up versus down, and we also saw a higher likelihood of revenues growing by 10 percent or more in organizations that leverage competencies. Organizations such as Oceaneering partner with industry associations, such as the International Marine Contractors Association (http://www.imca-int.com) to obtain a starting point for their critical industry competencies. Oceaneering leveraged its predefined competency framework and models as the basis of its selection and development programs. Most organizations then add specific competencies necessary for their unique environment to those original competency lists. Competencies provide a consistent starting point for hiring, assessing, and eventually developing your skilled workforce—now and in the future.
ASSESS YOUR WORKFORCE
More than 47 percent of organizations assess their skilled workforce at some level today, and 20 percent plan to implement some level of assessment in the near future. Assessments are an essential element for many organizations’ strategies for addressing the skilled labor gap. We found organizations are leveraging their assessment data by:
- Targeting learning and development, reducing unnecessary time away from critical work
- Identifying employees’ potential for coaching, supervisory, or even training roles
- Aligning known and unknown skills to open job opportunities within the organization
- Allowing organizations to expand an employee’s current job role
- Providing objective feedback for employees on their own development opportunities
When Mike Williams became the new head of HR for Trinity Industries, a diversified industrial company that employs more than 18,000 employees, he faced a 20 percent retention rate and the need to expand skilled labor at many sites by more than 100 percent within two to three years. Annually, the organization spent more than $45 million on a temporary-to-hire staffing model that resulted in placing very few good candidates from a large pool of unskilled and unemployed applicants.
Williams immediately focused on improving the candidate screening process with the implementation of enterprise-wide behavior-based assessments, new interviewing methods, and solid background checks. The new behavior-based assessment tool allowed Trinity to expand its talent pipelines—opening up the doors to more women, military, and other diverse populations.
Today Trinity has reduced costs of hire by over 60 percent and turnover has declined by 30 to 40 percent, while improving the overall diversity of its workforce. These results occurred within four months of program implementation.
CREATE CAPTIVATING CULTURES
Respondents who identified themselves as having controlling cultures in their organizations across all survey responses were twice as likely as other cultures to mark their engagement scores as declining, which can have a detrimental effect on retention, especially for skilled labor.
Williams from Trinity Industries also found that workplace culture played a major role in retaining the most talented skilled workforce. Trinity implemented a behavioral awareness program called “Civil Treatment Training” to ensure that trust, integrity, and a safe and secure work environment were embedded throughout the organization.
CREATE LOCAL RELATIONSHIPS
More than 87 percent of survey respondents have no relationship at all with local vocational and high school entities for youth, and more than half of the organizations felt they also don’t have a strong relationship with two- and four-year-degree educational entities. Our research found these relationship gaps are the greatest missed opportunities.
Those organizations that rank themselves as first-rate in managing community and educational relationships were 50 percent more likely to have all of their key performance indicators moving in a positive direction.
Dan Conroy, vice president of Human Resources at Nexen Group, Inc., has been working diligently for years to create strong local relationships with both the community and local educational environments to ensure that the small manufacturing organization of 125 employees constantly is supplied with the top talent required to meet growing business needs.
Nexen Group has created programs that offer tours to preschools and lunch and learns with local high school guidance counselors and works closely with tech colleges to ensure the two-year degrees align with its specific needs. Nexen then hires from those programs. “These are the kind of things that changed the game for us—active elbow grease in creating the relationships between K-12, technical colleges, and business leaders,” Conroy says.
HIRE WITH DEVELOPMENT IN MIND
More than 23 percent of organizations surveyed chose to focus their hiring on only those who already have the required skills for a job role—with the expectation of acquiring talent that can hit the ground running. Our analysis found that, across all survey respondents, those that preferred to hire employees who already were trained to perform most of the specific job requirements had slightly higher performance indicators than those that preferred to hire employees who were not as highly trained but provided onboarding programs or development as needed. But those organizations that correlated with the highest levels of ongoing business performance were those that chose to provide consistent development opportunities.
They were twice as likely to have most of their key performance indicators moving in a positive direction. Oceaneering realized it needed to create a continuous learning model to build talent pipelines inside the company, as well as bring in employees with the future capabilities who might not have the necessary technical skills. To achieve this goal, the training largely was taken out of the classroom and centered on hands-on experiences that could be accomplished over time, including:
- Flight simulators and hands-on technical programs that provide safe training environments
- Experiential checklists that allow on-the-job learning and practices
- Hands-on classroom experiences, i.e., testing and real equipment maintenance
MAKE KNOWLEDGE SHARING AND TRANSFER A BUSINESS PRIORITY
Almost 45 percent of organizations had no formal knowledge transfer process in place at the time of the survey, and interviews confirmed that many organizations have no plan in place to address this concern.
URS, an integrated tech services construction organization that employs more than 57,000, was facing dramatic knowledge loss due to industry retooling and pending retirements. The organization made early investments in implementing an incentive program and technology for knowledge transfer efforts within the company. Today, URS has been highlighted by the Construction Industry Institute as being one of the only companies in the association that already has a plan, program, incentives, and structured tools in place for the knowledge drain crisis. As the division head of HR states, “We rolled it out to all regular full-time and part-time employees—this meant office workers, facilities supervisors, maintenance sites, and construction engineers in the field. Our belief is that everyone has knowledge that is valuable, and our success has proven that.”
INVEST IN TRAINING AND DEVELOPMENT
More than 33 percent of organizations stated that they have no regular training budget set aside for development needs of skilled workers. Yet, those organizations that set aside at least 2 percent of their revenues or more for skilled labor training and development were correlated with improvements in both engagement and key performance indicator metrics.
In health care and high tech, our interviews found that although budgets may be set aside for development and training, it was a challenge to find time for on boarding and development for the most in-demand roles. Budgets needed to include investments in doubling up resources on shifts and project delays, as well as pure program costs.
Our research confirms there are skill gaps in the market today. It is not simply a matter of supply and demand. Skill gap issues are exacerbated by regional growth and decline cycles, as well as the need to rebuild relationships from the beginning of the educational cycle all the way through to on-the-job development opportunities. Multiple opportunities exist for organizations that hire skilled workforce employees to improve their approaches to acquisition, development, and retention. The data point toward the fact that addressing these issues not only improves the actual skill gaps, but also correlates with improving company profitability and performance outcomes.
Stacey Harris is vice president of Research and Advisory Services for Brandon Hall Group (http://www.go.brandonhall.com/home), a research and analyst firm serving the performance improvement industry throughout the United States and abroad.