In the course of several HR audits over the last few months, I have repeatedly thought about how employers can address the shortage of skilled workers.

In this post I would like to share some of the insights and would be very happy to receive comments and additions.

Transition from SWP to Operational Action Plans

Unfortunately, still too often, many employers do not start with valid production and workforce planning, but with hectic, planless recruitment. Since I have already discussed workforce planning (SWP) several times on this blog, I would like to take a closer look at the operational action plans that are derived from HR planning: buy, build, borrow – first discussed at the Conference Board in 2015.

This time I’ll start with “borrow”: Because the recruitment of skilled workers is becoming more and more demanding, some companies are resorting to external forces and involving personnel service providers. What is often overlooked is that these service providers also find it difficult to recruit high-quality skilled workers – not only experienced machine and plant operators, but also production assistants!
Basically, the more solid the production and sales planning, the more there is to be said for hiring staff. Apart from a few other advantages, this is usually more cost-effective than resorting to contract labour or other external forces.

The following paragraph is now about “buy” and “build”.

Employers tackling skills shortages

Employers are often singled out for being reactive, for classifying everything as difficult or for having already resigned themselves – unfortunately, this also applies to the issue of vocational training!
With this article I would like to encourage employers and name some concrete measures that some of them have taken on the basis of our HR audits and thus achieved success.

More and more employers are enticing applicants with entry and starting bonuses in job advertisements and are making the frequently increased salary details more transparent.

Secondly, employers are lowering educational requirements and focusing on candidates with skills such as adaptability, problem solving, team orientation and interpersonal skills.
Closing skills gaps is done through training, mentoring and on-the-job development immediately after hiring. These onboarding investments are necessary but pay off in the medium to long term. Such programmes are called on-ramping programmes.

Third, employers are thinking ahead and considering how the nature of work will change. Over the last two years, many have invested in automation and digitalisation; robotics in manufacturing has increased. Sometimes business models have been completely modified.
This longer-term view requires a continuous reassessment of the skills people need to do their jobs and is driving the creation of new roles that may not exist today but will be essential in the future.
A study by the RWI Leibniz Institute for Economic Research and the IBS – Institute for Structural Research – provides interesting insights regarding robot use and consequences on employment. The authors of the study emphasise the ultimately higher productivity and demand as well as the focus on further training.

This brings me to the last and fourth point: continuous reskilling and upskilling are becoming increasingly important. This is currently evident in both apprenticeships and continuing education programmes.

All four points have been proven to contribute to staff retention.

Key figures yes, but be careful

In the HR audits conducted, I was surprised by the consistently inadequate data quality. The simplest key figures are sometimes not available, or only as a total across all recruited professions.

Classic key figures such as “time-to-hire” and “cost-per-hire” must be interpreted with caution. Because: With a view to the above-mentioned competences, the pre-selection is faster, but more effort is invested in the personal selection. And that is a good thing! Depending on the degree of automation of the test procedures, etc., the costs per recruitment can rise. This figure does not yet include the costs of onboarding!
A too rigid view of costs is therefore counterproductive and should adapt to the new realities. The fact is: this proactive approach by employers goes hand in hand with rising labour costs. What would be the alternative? A reactive approach would mean not being able to find workers, not being able to use production capacities and growth potentials, and thus having to accept a loss of profits.

From the abundance of possible key figures, I would like to highlight the following:

  • Conversion rate I und II
  • Sourcing channel effectiveness / cost
  • Time to accept, time to productivity
  • Offer acceptance rate
  • Revenue / profit / cost per FTE
  • Labor cost per FTE / percentage of revenue / percentage of total expenses
  • Training expenses per employee / training efficiency
  • First-year/month turnover rate
  • Candidate & employee experience

With a view to sustainability, DIN ISO 30414 and the indicators it lists provide valuable pointers.

Powerful analytics solutions can now use high-quality data and algorithms to predict which recruitment measures promise suitable hires (predictive analytics). However, due to the often poor data quality, such solutions are very rarely found in practice.

Conclusion

Before dealing with concrete personnel needs and the resulting measures, one should address the issues of culture and leadership. The purpose of a company and its underlying goals determine the context for leadership and the effectiveness of certain leadership styles. Saying “we don’t have time for that now” does not solve the problem, it makes it worse.

Employers make their jobs visible to the above four points, streamline their recruiting and hiring practices, and provide a personalised candidate experience to succeed in the competition for skilled workers. Once applicants have expressed interest in a job, employers conduct the selection and hiring process expeditiously along some cut-off criteria and valid testing procedures. Every bad hire costs time and money and reduces necessary productivity levels!

As long as freelancers insist on their “free” status and reject any employment offers – this tendency is increasing among professionals! – employers will have to orchestrate so-called workforce ecosystems. Details can be found in the 2022 study “Future of the Workforce”.

There is no quick fix for dealing with the skills shortage. The good news is: More and more companies are rethinking and changing their approach to addressing, recruiting and onboarding skilled workers. In my opinion, there is no alternative to an approach that is based on sustainability and takes all areas into account: From compliance and ethics, to cost, leadership and culture, to skills and productivity.