Four strategies for SMEs to address skills shortages

There has been a lot written in recent times about the devastating impact the global labour shortage is having on businesses across the world. Studies have shown that as many as 87% of companies worldwide already have a skills gap¹ or believe they will have one within a few years as factors such as an ageing population, soaring inflation and COVID-inspired phenomena like The Great Resignation combine to put pressure on employers.

What has been missed in much of the commentary is that Australia’s small businesses are being particularly hard hit. Recently released data showed² large companies are growing their headcounts faster on the back of offering significant wage increases, while their small business counterparts struggle to compete.

The study showed headcounts at companies employing one to 19 people had fallen compared to a month earlier before remaining steady the following month. At the same time, bigger businesses continued to add staff, with headcounts at those boasting 20-199 employees growing 0.7% and companies with 200-plus staff expanding their ranks by 0.8%.

A complete team is crucial to the success of any business, especially as consumer demand shows no signs of abating. It is little wonder employers across Australia are increasingly desperate to attract and retain workers but the stark reality is large companies are able to offer wage increases and generous perks that smaller businesses simply cannot compete with.

Other than reaching deep into their pockets, what can small to medium enterprises do to combat the labour shortage Australia is experiencing? Well, they can start by considering the following tips and strategies that will give them the best chance of recruiting and retaining quality staff in the current climate.

Invest in employee training

Let’s be clear – the skills shortage crippling businesses is not ending anytime soon. As far back as 2017, the McKinsey Global Institute declared that up to 375 million global workers may need to learn new skills³ and change occupations by 2030 - and that was before the COVID pandemic caused further job upheaval. It is increasingly clear that organisations need to invest in upskilling and reskilling their workers to meet the evolving needs of the workplace and offset the challenges of recruiting new talent. From in-house programs and online training modules to mentorships and apprenticeships, it has never been more important for small businesses to think big when it comes to employee training.

Promote incentives and flexibility

Higher wages are on most employees’ wish lists but never underestimate the appeal of working for a business that cares. Offering something as simple as a free meal during shifts, staff discounts or professional development opportunities can be a creative and cost-effective way to turn a potential employee into a real one. The pandemic has also inspired many people to seek a better work-life balance and, in a tight labour market, the onus is on businesses to give them what they want. Be it hybrid workplaces, nine-day fortnights or factoring staff preferences into shift scheduling, there are many ways employers can boost job appeal without boosting wages.

Consider alternative resourcing strategies like outsourcing

As the talent pool in Australia continues to look exceedingly dry, many businesses are turning to offshore outsourcing providers that specialise in finding quality team members to complement those working in-house. The financial benefits are obvious, with outsourcing destinations such as the Philippines offering labour cost savings of up to 70%, but many small businesses are just as excited by the ability to access thousands of highly educated candidates that are renowned for their hard-working professionalism. They also appreciate how outsourcing mundane and repetitive jobs to offshore providers allows in-house employees to spend more time on meaningful work and, in turn, increase the likelihood of them not looking for opportunities elsewhere.

Embrace HR technology

The battle to acquire talent is too important to rely on antiquated methods of recruitment and that is why many employers have adopted cutting-edge solutions that give them the best chance of finding the right person for the right job as quickly as possible. The latest digital HR tools are able to automatically filter applications, send automated responses to applicants, utilise artificial intelligence for candidate matching and automate the reference checking process, not to forget the godsend of being able to conduct interviews via online video platforms. Once recruits have entered the building, HR technology can also assist with ongoing workforce management and employee retention efforts.

What does the future hold?

There is a reason many successful business leaders say their employees are their most valuable asset – it is true. This is especially the case for smaller enterprises and in a difficult labour market, it is essential they give themselves every chance of finding the best people to complement those already onboard. Headlines about skills gaps and global labour shortages should not be seen as something to fear but as a chance to be creative, think outside the box and find a way to stand out from the crowd.

One of the ways businesses are innovating and improving their HR function is by investing in HRO – otherwise known as human resource outsourcing. Explore the current state of the global HRO market, the statistics you should know and what HR tasks you can start offshoring to reap big benefits.

Reference:
1 https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/chart-of-the-day/mind-the-skills-gap
2 https://www.smartcompany.com.au/people-human-resources/human-resources/small-business-hiring-wage-hikes-employment-hero-sme/
3 https://www.mckinsey.com/featured-insights/future-of-work/jobs-lost-jobs-gained-what-the-future-of-work-will-mean-for-jobs-skills-and-wages