Is your Business Prepared??

Like it or not..........The shortage of both Skilled and unskilled people is now rapidly approaching!

Demographics clearly show that New Zealand, the South Island in particular, is rapidly heading into a skills shortage at levels we have not experienced previously.

For some years now I have been speaking with clients, industry and business groups, highlighting to them and raising their awareness of the need to give consideration in their planning and to prepare for the significant labour and skill shortage ahead. Indeed, it is my view that the very core of the way in which we organise the world of work currently will need to be reviewed.

Many have smiled as they remind me that the recent recession New Zealand experienced from early 2008 until mid-late 2009 has largely solved the problem, and that at present there is in fact a surplus of both labour and skills which in their view will not change.

To those people my response has been: "Read my lips......the challenge has not and will not go away"! effect, all the last 2 years has done is to create a short term timing lag in the inevitability of it all.

Statistics New Zealand, the Department of Labour and many others who study and observe demographic trends all agree, New Zealand like most of the developed western countries has the same challenge ahead. Indeed predictions are that given Europe's aging population and low birth rate the population may fall by as much as 50 million over the next 25 years.

Our own national birth rate has now fallen to 2.1 births per female adult. It is generally accepted that for a population to replace itself requires a minimum of 2.5 births per female adult. Australia is sitting at 1.78 and the UK at 1.66.This should give us further cause for concern as those countries will largely rely upon immigration to fill the gaps.

Our decreasing birth rate over many years, combined with the exit of many of our young people abroad, explains why we already have a deficit of people in the 20-40 year age bracket - the worst since records began.

In the South Island right now, only 8 people are entering the work force for every 10 who are retiring. (2006 census stats) The North Island is faring somewhat better with 14 entering for every 10 retirees. However, business growth predictions for New Zealand are significantly weighted to the mid/upper North Island, which will still enjoy similar shortages in the medium to long term. Provincial towns and rural New Zealand are already feeling the impact as their younger people continue to gravitate to the major cities, to Australia, the UK and other countries where the best career opportunities are to be found.  

To further emphasise my point! If the Australian Birth rate sits at 1.78 and the UK and Europe around 1.68, where are they going to source the necessary workforce skills from?  .......obviously technology will continue to make for increasing effectiveness and fewer requirements for people, but not so much as to stem the shortfall.

Immigration, increasing the number of women in the workforce, and, most importantly retaining more mature workers will be essential.

New Zealand is therefore what we in the Executive Search & Selection industry call, a "Source Country for workforce Talent".

We are now at the point where the first of the baby boomers are beginning to retire; this will progressively result in a massive exodus from the labour market with fewer people to replace them. Right now in Canterbury alone, 13 people are reaching the age of 65 every day of the week- multiply that impact right around the country, and it is easy to gain some idea that what has been talked about extensively over the last ten to fifteen years in particular, is now in fact reality.

So what does all this mean and what are the implications for New Zealand business?

From where I sit, there first needs to be a major attitudinal shift amongst employer/decision makers  in respect to adapting effective short, medium and longer term strategies for the people side of their business. In order to do this they need to understand, recognise and acknowledge that the rapidly approaching Skill shortage is in fact a reality, and does not simply lie in the respective imagination or minds of consultants like myself or the demographers.  

A key element of any such strategy should be a focus on how to recruit, retain and continue to make effective those in their business who are aged between 55 and 70 years.  Between now and 2051, the number of older people (those aged between 45-64 years) is expected to rise from about 35% to nearly 45% of our total working age population (NZ Dept of Statistics).

This has both advantages and disadvantages. Older workers mostly have more workforce experience and therefore higher productivity - also, and as I have often quoted over my years in recruitment, the performance of workers generally (with obvious exceptions) does not appear to be significantly impaired by age. As the baby boomers approach retirement they are enjoying higher levels of good health and vitality than previous generations. "60 is the new 50"!

On the other hand, a higher proportion of older workers lack qualifications and may not be as computer//technology literate because - many of their skills have been learned "on the job" or be specific to particular occupations. This of course can potentially constrain the ability of older workers to adapt to changes in technology....but certainly not always and not as "a given" which seems to be the common assumption.

At the present time age discrimination is currently, like it or not, a very real and somewhat alarming factor in recruitment decision making in New Zealand.

Executives and managers in particular, who are over 55 years of age and who find themselves on the market may be lucky and find a role in a small to medium company. However from a corporate perspective their careers are effectively over. Most either create their own future through consulting activity, starting or buying a business, or in many cases effectively buying themselves a job.  

Another phenomenon to emerge over recent years has been the progressive emergence of the role of "HR Advisor" particularly in medium to large companies.

Reporting to either the Director of HR, General Manager HR or possibly working as independent contractors, by far the majority of these HR Advisors are aged between 27 and 45 years of age and from my own observation are predominantly female. Most have very good "technical skills", with a strong focus on process, procedure, systems, legal and compliance matters and are generally very strong in the area of relationship management. Very few in my experience however understand the realities and responsibilities of Managing a business and what it actually means to be accountable for the profitable performance of a business or business unit, particularly where the blowtorch of competition exposes itself, or its very survival is at stake. In fact I would go as far to say that most do not have management aspirations-rather they see themselves in a support or advisory role-a role in which they appear to be most comfortable and effective. (All care no responsibility)?

I have also observed within this group a definate gap in their ability and at times an unwillingness to take the time to recognise and understand the capabilities and transferable competencies of the older workforce.

There is a trend to skim through job applications either manually or via technology, searching for "Key words or phrases, expressions or modern management buzzwords" thereby eliminating those who express themselves differently. This invariably leads to older workers not even getting past first base even though they may well have exactly the skills & competences required whilst the catch cry of "We didn't get anyone who met the criteria to fill the role" is frequently the response to/by hiring managers.

Perhaps most disappointingly, on at least four recent and separate occasions in Christchurch I have been told by HR Advisors that there is no way that they would recruit "someone as old as my mother or father!" Frankly, not only is that attitude totally out of order but it is certainly not in line with the thinking businesses in New Zealand need to adopt in relation to future Human Resource requirements. Making maximum use of the workforce will require breaking down the negative stereotypes that surround age.

Having said that, I am sure those four people are the exception to the rule as my general observation of HR Directors and HR managers in this region at least is that they have lifted the game significantly over recent years. Most are adopting a truly strategic approach and doing a great job. (At least in companies where they are allowed to do so and where the CEO and the Executive team understands and supports the strategic significance of the function and the critical role it plays in the success of the business)

I have used "HR Advisers" in the context that they are becoming increasingly more powerful and influential over recruitment and "people management" issues and decisions.

Perhaps the occasional "clipping of the HR Advisors wings" from time to time may be a positive thing to do to ensure they keep on track. 

As it becomes harder to recruit new workers, employers may invest in more technology and/or develop ways of holding on to older people for longer. Many older workers while still wanting to work may like greater job flexibility. Options for employees include offering part time work or phased retirement or perhaps bringing back retirees as contractors.

One of the great advantages of employing mature and older employees is that they still retain a real sense of loyalty and commitment; they can also be relied upon to do their job without close supervision. Mostly they do not mind doing the repetitious, or what younger people might consider "boring" tasks. Neither is promotion or the high dollar the primary motivator for them therefore they often stay on for longer than is the case for someone who is perhaps developing a career.

Job sharing roles are perfect for the older age group .... Not just two people but possibly 3 and 4 who between them take responsibility for ensuring that a single job gets done.

My message to employers then in terms of their future people/workforce planning is: "the way in which we organise the future world of work will require some creative thought and a significant attitudinal shift by both employers and employees" ......start thinking the time is now!! 

Barry T Knight

Please note: Parts of this article were adapted from various papers and publications by Statistics New Zealand, the Department of Labour, the "Babyboomers Guide" and from recent published quotes in the New Zealand news media).

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