Skills Shortage Looming

Around the world, governments are predicting serious employment challenges relating to a pending shortage of key skills. The UK Commission for Education and Skills (UKCES) contributes to policy and research on employment and in its report, Working Futures 2012-2022, predicts that by 2022, two million vacancies requiring higher level skills will arise.

In another recently published report, The Employer Skills Survey, UKCES estimates that 20% of all vacancies arise when employers cannot find people with the skills and qualifications they need yet almost half of all businesses surveyed say they have employees with skills and qualifications that are not being fully used at work. Just as the business context moves on, so do the skills necessary to meet them. And where people have skills but are underutilised, they too move on.

There are predicted consequences and implications of this impending shortage including:

  • heavier workload for other staff required to cover the gap
  • increased operating costs
  • difficulties in meeting quality standards
  • greater difficulty in introducing new working practices

What can be done to address this and how does it impact on HR, L&D departments and the companies and institutions that design and deliver development programmes for them?

Perhaps predictably, over three-quarters of those employers who identified a skills gap are trying to overcome them by increasing their investment in training, greater staff supervision and development on the job and more regular and better connected appraisal activity. Yet a quarter have not yet acknowledged any danger.

What Needs to Change?
The increasing alignment in many organisations between strategic business priorities and investment in L&D will, among other things, help to avert a major skills shortage.

Increasingly L&D professionals are more closely aligned to business strategy generally and more so with HR systems and processes. This enables them to identify and make a more powerful case for investing in the skills and knowledge to sustain their organisations through turbulent times.

Many other changes are also taking place reflecting a more strategic approach to L&D:

  1. Greater emphasis is being placed on the measurement and analysis of the inputs and outcomes of development interventions.
  2. L&D departments are working more closely with line managers to upskill them in how to identify their training needs, create L&D plans and follow up programmes to embed learning.
  3. Investment in management training is supporting talent development and retention, while upskilling and encouraging more facilitative approaches amongst more experienced managers.
  4. This stronger dialogue with managers helps to align future programmes with anticipated skills gaps.
  5. More robust and objective evaluation of existing programmes is being undertaken to establish which offer value for money and added value to the business. Those that don’t may need rework; those that do may need to be carefully protected even when budgets need to be cut.
  6. Clearer longer term succession planning and better identification of those employees that could fill vacancies with some training and support. Good induction and follow-up programmes that help to ensure that new employees have training plans in place to get up and running as soon as possible and development plans for the future.
  7. Seek ways to enhance the efficiency of programmes. For example could a more blended learning approach with a significant work based element make learning more accessible and readily applicable. Linking programmes to live priorities not only provides a rich seam of data about the impact on the business but is often seen as win-win by participants and managers and a more efficient use of precious time.

This content originally featured on HR Magazine, an online HR publication for people-focused, forward-thinking, business leaders who want insight into, and examples of, business-contextualised HR to develop high-performing organisations.

How to spot the transformative technology for your business

How to spot the technologies that might radically change your business model? In his interview with The Bottom Line, Mike Lynch, founder and chief executive of technology company Autonomy, uses an example from the legal system to answer this question.

technology change

This is an interview after a recording of the OU/BBC co-production The Bottom Line.

Learn more about The Bottom Line programme and make use of free learning materials on OpenLearn.

Connecting the dots: institutional theory and organisational management

Guest blogger:
Professor Brian Smith
Professor Brian Smith, Visiting Research Fellow at The Open University Business School, Adjunct Professor at SDA Bocconi in Milan.

When I was a young graduate trainee, I sometimes wondered how it felt to be one of those senior guys (they were almost always men then) whose word was law and who seemed to me to be all powerful. I imagined feelings of power and authority and looked forward to the day I’d get there. When I reached that level, those memories seemed innocent and naïve as my dominant feeling, and those of my senior peers, was that of frustration. Why, I wondered, was it so difficult to get anything done?

cc by Victor1558

When I moved into academia, I was surprised and, to be honest, a little irritated that there existed a whole body of research that spoke directly to these frustrations of senior managers. Surprised because I considered myself a pretty well-read executive and irritated because if I’d known this stuff earlier it would have helped me get things done. The problem is, as with much management research, all the good stuff is wrapped up in jargon and published in journals that managers never get to read.

A good example of this work is institutional theory, generally acknowledged to be the creation of Philip Selznick. In essence, this body of work describes organisations like big companies as being confined by the values of their external environment. DiMaggio and Powell expanded on this, describing three sets of pressures: coercive (legal), normative (cultural) and mimetic (seeking to imitate). Their paper’s title, “The Iron Cage Revisited,” is a pretty good description of how many of my management colleagues felt.

When I first read this work, coming from a corporate background, the scales fell from my eyes. Some of the pressures had obvious manifestations (e.g. coercive regulatory pressures) but others only became understandable when I put my experience in the context of institutional theory. The hassle I had received from the doctors in medical affairs (I worked in the pharma and medical technology sectors), for example, or from the sales team, were obvious examples of normative pressures stemming from the sub-cultures of their professions.

And mimetic pressures were clearly seen in all the pressure to adopt ‘industry best practice’ that, whilst we justified it in rational terms, often seemed a senior management whim that we were forced to serve. This rationalisation of emotional whims is also discussed by the institutional theorists, who talk about ‘rationalised myths’ as a way firms maintain ‘social legitimacy’ in their business environment.

I now use institutional theory in my work trying to understand how firms compete. I’ve discovered that the jargon and journals aren’t the only reason this valuable knowledge isn’t used much by practising executives. The other reason is that they usually prefer simple, quick answers and institutional theory doesn’t do quick and simple easily. It needs thought and careful application. Take, for example, the pharmaceutical industry’s current problems with pricing and government pressure to reduce costs. To many of us in the industry, the picture of ‘big bad pharma’ painted by activists and pressure groups seems unfair and to neglect the contribution the industry has made to the incredible health outcomes we now have. If the industry had used the ideas of institutional theory, we would have understood the cultural pressures we face and predicted the situation we now face. As an industry, pharmaceutical companies have lost a lot of social legitimacy, which sounds academic until you realise that it’s the direct cause of the industry’s pricing and political activity.

So, whilst I try not to have regrets, I regret that I’d not learnt about institutional theory earlier. It would have made me a more effective, and rather less frustrated, executive. Still, if you’re an executive reading this, there’s still time for you. Brave the jargon, throw out your suspicion of the academic and learn some more about institutional theory. Or of course you could create a rationalised myth for why you don’t and stay in your iron cage.

Professor Brian D. Smith, is visiting research fellow at the Open University Business School and Adjunct Professor at SDA Bocconi in Milan, Italy. He y. He welcomes comments or question.

Further reading

1. Selznick, P., Leadership in Administration: A Sociological Interpretation (1st Edition), New York, Harper and Row (1957).

2. DiMaggio, P. & Powell, W., The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organisational Fields, American Sociology Review, 48, 147-160 (1983).

Follow me on twitter @drbriandsmith

P.S My New Book, The Future of Pharma, is now available at Amazon or