Mind the (real) talent gap

Blog posts

31 Jan 2018

Duncan Brown, Head of HR Consultancy

Follow @duncanbHR

This is a time of year when we at IES are helping employers in our HR Network to develop, update and refresh their people and HR strategies. This gives us a nice overview of the current principles, priorities and planned initiatives for the UK HR function this year, as well as the practical difficulties in our continuing cash-constrained times of joining these three ‘P’s up.

Amongst the usual visions of ever-more-efficient, customer-focused and agile functions, I am surprised by the lack of focus on whole workforce skills. Leadership development and high potentials’ talent management initiatives there are aplenty, but these approaches reflect a wider decline in off-the-job training in the past 15 years. Talent management, it seems, is something of an elite pursuit.

The odd enthusiastic and creative use of the Government’s apprenticeship levy to upskill lower skilled workers and to address EU-migrant-plugged skill shortages in areas such as construction, are out-numbered by continuing criticisms of the inflexibility of the legislation and this new ‘employer tax’. Lack of resources, outsourcing, deliberate strategies of ‘workforce segmentation’ and focusing on the already-skilled and -professional seems to be the rationale in individual employers. Many in HR that I know are uncomfortable with this ‘elitist’ concept of talent management, yet the majority seem to be going along with it.

This is in marked contrast to what government policymakers and organisation leaders themselves say is required. Workforce analysis after workforce analysis carried out by IES, ranging from the NHS general nursing and oncology staffing to recruitment and retention challenges in the retail sector, highlight future declines in the labour supply. Mercer forecasts that, irrespective of the impact of Brexit, the domestic UK workforce will, for the next 30 years, decline in total size for the first time since the mid-19th century. And then we have technology…

‘Reskilling top of mind at World Economic Forum’ was one commentator's take on the discussion at Davos last week. Announcing a major IT skills initiative by the WEF Governors, Mike Gregoire, CEO of CA Technologies, emphasised the urgency of reskilling white collar workers, six million of whom are forecast to lose their jobs through the continuing advance of automation, digitisation and robotics. He also criticized the lack of progress in increasing the workforce supply in the tech sector through improving the gender mix.

Mckinsey forecast this month that 375 million people or 14 per cent of the global workforce will be ‘displaced’ (consultant-speak for ‘made redundant’) by 2030 and so ‘executives increasingly see investing in retaining and upskilling existing workers as an urgent business priority’. In an earlier study, they also warn of the danger of technology reinforcing a ‘winner takes all’ economy in which the ‘digital-have-nots’ fall increasingly behind the ‘haves’, widening damaging and divisive inequalities in society and employers.

Civil service chief executive and cabinet secretary, John Manzoni, gave an insightful talk at LSE last week on the restructuring and reform designed to create ‘the best civil service in the world’, going well beyond the usual generalities of impossibly-wonderful technology supporting a super-efficient and totally un-stressed, mega-healthy professional workforce.

Announcing the civil service transformation plans to close 600 government offices and move thousands of civil servants to 20 regional hubs, Manzoni said the impetus for change had already been provided by advances in technology; citizens’ increasing demands and fiscal pressures; and Brexit, which provided an additional reason to transform the way government works. However, he emphasised the benefits (beyond cost) of having the latest technology and flexible facilities for reinforcing new ways of working, for employees as well as government. He also criticised the short-term focus of politicians and emphasised the ’critical’ importance of investing in ‘stronger skills in areas like project management, delivery and commercial’.

The workforce, talent management and diversity and inclusion strategies announced over the past 12 months by Manzoni’s chief people officer, Rupert McNeil, emphasise the importance of developing the whole workforce. For McNeil, ‘the route to leadership positions at the top of the civil service should be as open to those on the frontline, from prison officers to Jobcentre work-coaches, as it is to those in traditional policy roles’. He also believes that ‘for large parts of the public sector, automation and cognitive technology will make jobs more interesting and more empowering,’ freeing up staff from administrative chores to focus on policy expertise and public service activity.

So, as well as the flagship Leadership Academy investment for senior civil servants, the civil service has been one of the most enthusiastic adopters of apprenticeship programmes, with the two-year Civil Service Fast Track Apprenticeship programme now paralleling the traditional graduate equivalent.

This theme of more investment in wider management and staff training, a more inclusive concept of talent management, and even a return to compulsory training programmes in areas such as performance review, is evident more widely in our recent talent management research. Case examples such as Sandy Begbie, chief people officer at Standard Life Aberdeen, who spoke at our IES annual HR conference late last year, highlight what some might see as a return to traditional HR philosophies of ‘growing your own’.

If you invest in workforce skills, you need to pay for them. Putting together material for our forthcoming series of workshops on low pay with our friends at Eversheds and CIPP has highlighted for me the overwhelming evidence that investing in skills and increasing wages, more than pays off for the employer. Begbie, for example, has been an enthusiastic supporter of paying the real living wage, believing that ‘younger people more likely to be on the living wage are “one of the most engaged and enabled” groups, and have some of the lowest turnover’.  A recent report for the Low Pay Commission highlights that underneath yet more employer moaning about the escalating costs of the National Living Wage, the government’s move is forcing employers to provide staff with extra training (45%) to drive productivity improvements.

IES would like to see more HR functions following the lead of Begbie and McNeil to address the talent management challenges of the future. If companies can afford a record €323 billion/seven per cent increase in their dividend payments, then they can also afford to invest in the productivity-enhancing upskilling of their staff, which will drive those investor returns on a sustained basis in the future.

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Any views expressed are those of the author and not necessarily those of the Institute as a whole.