Why skills shortages are a growing concern to CEOs

The shortage of qualified people to carry out vital roles is a problem that generates more than its fair share of column inches. Just last week, HR consultancy ManpowerGroup claimed that the UK jobs market is facing a “critical shortfall” of qualified workers, with the issue being felt most strongly in the north of England.

 

In the face of such stark warnings, employers are understandably concerned about the difficulties this can cause. Replacing high-quality staff is a significant business continuity concern – one that, at its worse, could damage hard-earned relationships with customers or make it significantly harder to carry out certain essential tasks.

 

It was therefore no surprise to see a new global report from PwC revealing that chief executives are now more concerned about the effect of a skills shortage than at any other point in the past six years. Indeed, three-quarters of CEOs surveyed rated the issue as the biggest threat to their business, up from less than half six years ago.

 

The problem was rated as even more serious by UK chief execs, with 84 per cent branding the availability of key skills as a threat to their organisation’s growth prospects.

 

Jon Andrews, leader of PwC’s global people and organisation practice, explained: “Despite rising business confidence and ambitious hiring plans, organisations are struggling more than ever to find the right people with the right skills to achieve their growth plans. The digital age has transformed the skills shortage from a nagging worry for CEOs into something more challenging.”

How businesses are tackling skills shortages

Skills shortages are ultimately an external issue – CEOs have little or no control over the quality of candidates available to fill important positions – but there are still steps that a business can take to mitigate the impact.

 

According to PwC, firms are hoping to tackle shortages head-on by making greater use of contingency workers, part-time employees, outsourcing and service agreements, while also identifying a wider mix of skills and looking for candidates in different demographics, geographic locations and industries.

 

The need to find new ways to fill talent gaps is even motivating M&A activity. More than one in four CEOs said the need to access people with the right skill sets is the biggest reason for them to collaborate with other organisations.

 

These trends have created what PwC describes as a “gig economy”, in which workers with the most sought-after skills have the power to dictate when and where they work.

 

Respondents also called on the government to play its part in tackling the skills gap, with three-fifths arguing that the creation of a skilled and adaptable workforce should be a top priority.

Technology driving demand for skilled workers

Mr Andrews says businesses are facing a “complex and shifting world”, in which huge change is being driven by technology: “They desperately need people with strong technology skills that are adaptable and can work across different industries, but these people are hard to find and they can afford to charge a premium for their skills.”

 

“Organisations can no longer continue to recruit people as they’ve always done – they need to be looking in new places, geographies and from new pools of talent,” he added. “Businesses also need to make use of data to understand exactly what skills they need, and where they will need them, to focus their future hiring efforts.”

 

Our Market Reports combine our review of the prevailing conditions in the risk management recruitment market together with the results of our 2015 employer survey.