What comes after the pandemic? The great skills shortage. and in this scenario, it’s employees who have the upper hand. We asked the experts to share what is driving the 'war for talent', and how businesses can ensure they attract and retain the cream of the crop in a post COVID-19 world.
Bridget Loudon has a message for anyone who runs a business in Australia. “We are in an unprecedented skills crunch right now,” the CEO and co-founder of online employment marketplace Expert360 told Qantas magazine in July. “If you talk to any leader, at the top of their mind is the skills and capability shortage. They have no idea how they’re going to fill it.” This lack of talent, says Loudon, who’s also a non-executive director of Telstra, has enormous ramifications. “We’re seeing winners and losers emerge in the business world based on who can access talent fast enough.”
The great pandemic pivot of 2020 has morphed into the equally daunting “post”-pandemic pivot of 2021. While last year’s turbulence saw employers grappling with staff lay-offs, furloughs, hiring freezes and pay cuts, this year is all about staff and skills scarcity and a sharp escalation in the war for talent. It’s enough to make your head spin.
With unemployment dipping below five per cent for the first time in a decade, job vacancies at their highest level ever and applications per job close to the lowest for nine years – plus a robust economic recovery and Australia’s international border closed – experts are warning that employers face an era of tumultuous turnover.
“This environment is ripe for people changing jobs and it’s only going to accelerate,” says Ben Hamer, PwC Australia’s future of work lead. “Microsoft’s Work Trend Index indicates that more than 40 per cent of workers are looking to change their roles.”
Much has been made of staff shortages in sectors ravaged by the foreign short-term-visa worker drought – hospitality, agriculture and healthcare, for example – but competition for employees is escalating in many executive and white-collar professional jobs, too. Those with tech skills, in particular, are in hot demand, as companies scramble to transform their digital platforms.
“Competition for top talent is tough and only getting tougher,” says Andrew Brushfield, a director at recruitment agency Robert Half, which specialises in financial services and technology. “Australia’s strong economic forecast and renewed consumer confidence is stimulating aggressive recovery and growth initiatives, which are leading to businesses increasing headcount.” His firm’s 2021 Salary Guide reports that 82 per cent of corporate leaders are concerned about losing top talent in the wake of the pandemic.
While Brushfield and others say hiring challenges stem partly from “residual uncertainty” preventing workers jumping ship, some suggest this “shelter in job” approach is giving way to what’s been dubbed The Great Resignation Wave as those who kept their jobs reassess what matters, cushioned by increased savings. For some, this means a role or career change; for others, it’s taking a break after the exhausting demands of the past 18 months.
“Things have changed substantially; the pandemic has had an impact,” says Gregory Robinson, managing partner of executive search and board advisory firm Blenheim Partners. “The number of executives open to exploring opportunities has significantly increased. Whether it’s the shift to working from home or uncertainty in organisations moving forward, executives have been far more receptive to interactions [about moving jobs]. For some, it might be because the boss is physically out of sight. For others, there’s a bigger question surrounding purpose – what does my company represent? What am I contributing to? Am I or the company playing a role that will help society?”
Robinson says purpose and culture are the dominant themes of his discussions with senior executives, along with working-from-home policies. Although job security is also an important consideration, he says restructuring and downsizing by large organisations have led to many executives “losing faith in the concept of loyalty” and “considering where leadership is taking them in the new, post-pandemic world”.
For employers, the rapidly changing jobs market means the balance of power is shifting in many sectors. “The pendulum has swung from the employer and the bargaining power sits firmly with the employee,” says Hamer. PwC’s 2021 CEO survey revealed that 60 per cent expect to increase staff numbers in the next 12 months and 68 per cent are concerned about the availability of key skills. “We’re seeing job shortages across a wide range of critical industries that can no longer rely on skilled migrants, while a decreased reliance on face-to-face work means that individuals are applying for jobs in different cities, regions, states and, in some cases, countries – all while still working from their living room.”
With talent liberated geographically, smart companies are making sure they articulate a clear employment proposition, according to Kendra Banks, managing director of employment marketplace Seek Australia & New Zealand. “And they need to be prepared to market to candidates just as they market to potential customers,” she says. To do this successfully, organisations must first pay close attention to what candidates actually want. Winning the race for talent requires a deep understanding of what employees value. Research around the world shows this has changed considerably over the past year and a half – flexibility is the name of the game but as a basic benefit, not a perk.
Slack Technologies’ Future Forum Pulse for June 2021, based on data from more than 10,000 knowledge workers in the United States, Australia, Germany, Japan, France and the United Kingdom, showed compensation remains number one but close behind was a flexible schedule and work location. “Companies who want to attract and retain top talent must offer a new way of working – a flexible model of when, where and how,” the survey argued.
Many Australian organisations, including NAB and Macquarie Bank, are embracing a permanent hybrid model of working partly from home and partly in the office, while others are letting workers choose their own schedule. Deloitte Australia, for example, has abolished official working hours, with no requirement to be in the office for any set amount of time. Its employees can also swap public holidays with other days of religious significance, take a WellbeingFlex day of additional annual leave and have up to three months away to pursue personal goals.
Aside from flexibility, perks are also in demand, with Robert Half reporting that 64 per cent of Australian businesses are offering new non-financial employee benefits, including gym memberships, financial counselling and health insurance. It’s as much about staff wellbeing as it is about building a strong culture to link remote workers.
“Not all companies can compete on salary alone – particularly in the wake of last year’s difficulties – so employee benefits are an important tool to compensate existing staff and attract new hires,” says Brushfield, adding that Robert Half has introduced permanent hybrid work and expanded wellness initiatives globally, such as mental-health workshops and virtual fitness classes.
Seek’s most recent data, based on interviews with 4800 Australians by independent consultants Nature, shows that flexible arrangements for work hours and location are the top two perks most valued by jobseekers but a car park, mental health support, active learning and development programs and early-finish Fridays are also popular. Rounding out the preferred picks are mentorship, a day off for your birthday, a company car and free meals.
Other benefits offered by Australian companies include superannuation for employees on parental leave (Viva Energy), paid family violence leave (Commonwealth Bank), two “doona days” a year (Carman’s Kitchen) and “ice-cream delivery day” (Wisr).
There’s a greater focus, too, on employee education and upskilling. The Woolworths Group, for instance, is spending $50 million over three years to train 6000 staff in digital, analytics, machine learning and robotics, while Optus has announced customised upskilling university courses. Salesforce also offers employees up to $7400 per year for job-related education.
“The acceleration of digital transformation efforts last year has fed into a heightened importance placed on technical training demand among employees looking to futureproof their own capabilities in increasingly digitised fields,” says Brushfield.
For those businesses that don’t pivot fast enough to nab or retain the best talent, the consequences are “devastating”, according to Robinson. “Organisations that accept average talent in their top leadership ranks will get found out and left behind.”
Research from McKinsey & Company underscores the late Steve Jobs’ famous observation that “a small team of A+ players can run circles around a giant team of B and C players.” McKinsey’s findings showed that leading performers in highly complex jobs were 800 per cent more effective than the lowest performers – and even in low-complexity jobs the top-ranked staff were 50 per cent more effective. And yet, the 2017 report concluded, 82 per cent of companies don’t believe they recruit the top talent.
The pandemic has presented an (often terrifying) opportunity for organisations to reimagine their employee-value proposition and how they attract the best workers. Some have embraced the challenge but some are moving too slowly.
“Many companies are still stuck in the inertia of waiting for the market to settle and the pandemic to be a thing of the past before they react but by then it will be too late,” warns Hamer. “Organisations need to act now and with PwC research highlighting that 74 per cent of Australian workers want hybrid work across home and office, one thing is clear – it’s all about flexibility.”
Almost every sector is reporting staffing challenges. Seek’s June Employment Survey highlights applications per job are down in 25 of the 28 industries they monitor and job ad growth is up between 37 and 42 per cent across most sectors compared with two years ago.
“There are more jobs available in recent months than we have ever seen before,” says Kendra Banks, managing director of Seek Australia & New Zealand. “It’s a great time to be looking. However, our research shows that people are nervous about switching roles and hirers are finding it tough to attract talent.”
The sharpest job application declines have been for face-toface roles, particularly those paying less than $70,000 in sectors, such as hospitality, hit hard by COVID-19 restrictions and the loss of about 300,000 short-term migrant workers. But there’s plenty of employer pain across myriad sectors.
Australia was already suffering a pre-pandemic tech-skills shortage and the boom in demand for digital transformation, data analytics, automation, cloud platforms, web development, ecommerce and technology and cybersecurity protection for working or studying from home has turbo-charged the deficit. Specialists in these areas can expect salary hikes of up to 20 per cent, according to a Randstad Technologies report – although anecdotal evidence suggests candidates are asking for up to 50 per cent more.
“Digital transformation has redefined the skills called for across nearly every sector,” says Robert Half director Andrew Brushfield. “The latest competition for talent is reflective of the discrepancy between where the critical skills shortages are and the availability of skilled talent.”
In finance, too, Brushfield experienced professionals. People with skills in forecasting, budgeting, analysis, compliance and risk and strategy planning are in high demand from companies working on new opportunities and future business strategies.
The PR Institute of Australia reports a shortfall of professionals with crisis communications skills, needed for updating customers about lockdowns, for instance. The advertising industry is also suffering staff shortages as the post-pandemic ad dollar surges and the usual pipeline of mainly British overseas talent dries up.