Skill Shortages, Leadership and the Labour Market

International/Australian Trends Human Capital

Paul Baker Director Federal and NSW Government, Education, and Public HealthHudsonMay 2007

Major Franklin and the Importance of Silver (19

Century)

Global Labour Shortages

Canada6.4%

United States4.7%

United Kingdom

5.3%*

Portugal6.5%*

Netherlands6%*

Sweden5.6%

Japan2.4%

Austria4.4%

Australia4.6%

New Zealand3.6%*

France10.1%

Germany10.6%

Brazil11.5%

Note:Periods varySource: Quickseek

(August 2006)

Unemployment Rates for Key EconomiesUnemployment Rates for Key Economies

Global Labour Shortages

Labour Force Growth will Slow to a Crawl

Data: Watson Wyatt Worldwide 2004

* Projection

Compound Annual Labour-Force Growth Per Decade

0.8

1.7

2.6

1.6

1.2

0.8

0.40.2 0.3 0.2 0.2

0

0.5

1

1.5

2

2.5

3

Declining Employee Tenure

1/3 in Jobs Less Than 2

Years

2/3 in Jobs Less Than 5

Years

½ Employed on Interim or

Contract Basis

Source: U.S. Department of Labor (BLS) Employee Tenure Surveys, 2004

05

10152025

50's 60's 70's 80's 90's 00's

Depression

Survivors

Pension Seekers

Victims“Free Agent

Nation”

Powerful Forces Drive Human Capital Pressures

Human Capital

RetiringBaby Boomers

Globally DeployedWork Force

More TransientLabor Pool

Shortening TechnologyLife Cycles

Acute Shortage of Skilled Workers

Movement to Knowledge Economy

Human Capital Drives Corporate

Australia has a Number of Unique Characteristics

• Significant change in the Australian labour market in the past decade:

10.5M……………. “Australian Workers”

7.35M (70%)……. “Permanents”

3.15M (30%)……. “Contractors/ casuals” growing at 2-3% per annum – 60%p/t; 14%f/t (as at June 2006 est.)

• If trend continues by 2015 the majority of Australian workers will be contractors/casuals

• Over 2.25M (22.5%) Australian workers change their job each year- internal /external changes

The bottom line

Where precisely is the Australian labour market heading?

What are the timelines?

Why should we be concerned?

The bottom line……..

0

0.5

1

1.5

2

2.5

3

1944-45 1964-65 1984-85 2004-05 2024-25 2044-45

Pe

r ce

nt

2003-04

Looking Forward: Growth in population of working age

WORKING POPULATION

MARKET DEMAND

BABY BOOMERS RETIRING

2002 2007

EVOLVING JOB MARKET

Evolving Job Market

X and Y GENERATION

X(29-41yrs) and Y(17-28 yrs) Generation

Are there significant generational differences?

Where and how will this affect the supply of labour?

Where do the “baby boomers” sit in all of this?

“Skill Shortages, People Management and Leadership”……what is possible and

which directions should we consider?

The Equation-a framework

• “Increase” the supply of people.

• “Decrease” (prioritise) positions

• Improve the “matching” process.

(All possible strategies and responses fit under one of the above)

Increase Supply of People

Supply Measures –(Indicative examples)

“Valuing” existing employees-new benchmarks in retention, incentives and conditions….. (major piece of silver)

Innovative sourcing and mapping candidate communities; Talent Pools; Search Strategies

Institutional linkages -University/tafe/Schools

Increased Marketing –Media and Celebrities

Internal Mobility -valuing/retaining workers

Integrated “Solutions”

Recruit to “culture” and “attitude”

Demand

Demand Measures-(Indicative examples)

• Recruitment – In house first option -Valuing existing workers/ easier access. Then to “Broker”

• Significant continuing Growth in Contracting / flexible work patterns

• Employment Brand-value proposition

• Management “Talent Pools”; Managed /Master / Other Vendor strategies

• Outsource-In House – A major trend

Increasing pressure on Wages and conditions- need to reward those employers who train and educate (e.g. through the taxation system) tax those who do not.

Improve “Matching”

Better Matching – (of people and positions)

If people were placed one day earlier in 2004 - have returned $3000 million to the Australian economy.

• Continuing growth of technology partnerships with Human Capital services

• Relationship with Human Capital Services extends to “in-house” all employees

• Greater need to coordinate and sequence match training with internal/external work experiences.

• Importance of vocational training- enhanced fit to prospective job in recruitment process before and after.

Skill shortages……….

• Require responses from each of the forgoing categories…

• Applied to your situation

(Major piece of silver)

What type of leaders do we require? What strategy?

Leadership … McKinsey Research

INNOVATION (a highly desirable and sought after quality):

• Requires a “whole of workforce” commitment

• Workers require “quality improvement” and “transfer of skills” to be rewarded…….without fear of losing their jobs

• With four generations in the workforce…..communicating effectively (to all four equally) is a necessary major challenge for anyone aspiring to lead

Strategies and Responses …………..

• The right leaders convince people opportunities are worthwhile

• Success depends on the whole leadership team

• “Heroic Leader” is a myth

• Focus is on: activities fostering team action; channelling team discontent; minimising intrusions; and encouraging reflection

• Developing internal talent………moving non producers out of leadership positions

What McKinsey Research is saying

What McKinsey Research is saying

Managers of People and Leadership Teams:

• Must be trusted and respected throughout the organisation

• Inspire and command

• Listen with an open mind; consistently truthful; becoming more approachable

• Leadership Teams require a common direction; shared understanding of goals and values; a capacity to expand capabilities in response to change

Words/Phrases most frequently used…………

• Visionary

• Inspirational

• Trusted

• Truthful

• Respected

• Consistent

• Leadership “Teams”

• Internally developed

• Communication – across all generations

A reality check!

• So you have all these qualities, your people are highly trained and motivated, and the team is a “well oiled machine”………..

• Are you bullet proof?

The Reality

• “Valuing” your existing workforce has just taken on a whole new dimension.

• “Leaders” at anytime have… capacity to “inspire” and “focus” the talents of many different people.

• Economic conditions and the need to survive are going to demand a greater attention to these issues than organisations have experienced at any point in their existence.

• The issues compound for geographical areas outside of major labour supply areas.

If you were able to take anything with you from the present and transport it to 2010 as improvements in

the supply of Human Capital …….

What “Silver” would you take?

What would be your priorities?