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The majority of Australia’s CEOs feel confident enough to hire more staff in the next three years, but many aren’t prioritising a strategic solution to skills shortages. PwC’s 24th CEO Survey found that 71% of Australia’s CEOs are optimistic about increasing headcount over the next three years - but there was a clear split on how to achieve organisational competitiveness.
The result could be a war for talent in the labour market, won by employers who actively engage their workforce and form a long-term plan that meets their changing needs and incorporates leadership development and upskilling.
More than half (53%) of Australia’s CEOs now consider the availability of key skills in their strategic risk management activities, and an increasing number fear unemployment could threaten growth (49% in 2021, up from 32% in 2020). But this may present a ‘glass half empty’ perspective.
This year, the level of concern over availability of key skills has fallen to 68% – a number that has been increasing over the past few years (78% in 2020, 71% in 2019). This drop suggests that as CEOs increasingly factor a skills shortage threat into their business strategies, they are gaining a sense of confidence.
The ‘glass half full’ view is found in recent research by PwC and the World Economic Forum, which suggests that by closing the work skills gap, Australia’s economy stands to gain US$90bn by 2030, which equates to 5.2% of GDP. From an employment perspective, this could generate an additional 200,000 jobs for Australians by 2030 (equivalent to a gain of 1.6% in employment).
The impact that COVID-19 has had on skilled migration in Australia has only amplified the need for local upskilling, especially for those industries such as infrastructure where the Government is investing into, and traditionally sources much of its talent from overseas.
But many of Australia’s CEOs appear in danger of missing the opportunity to locally upskill. Relatively few of them say that organisational competitiveness can be boosted by focusing on developing tomorrow’s leaders (16%). Some say a focus on work skills and adaptability (34%), while others point to a focus on health and wellbeing (37%). But none of these percentages are significantly high.
Interestingly, more than half of local CEOs point to workplace culture and behaviour (53%), which is noticeably greater than their global counterparts (32%) who are steering their focus towards productivity through automation and technology.
Lockdowns. Health and safety. Economic uncertainty. The list goes on. With so many issues vying for CEOs’ attention right now, it’s easy to become reactive and distracted. But it’s vital leaders step back to reflect on the past year and the rapid transformations that have occurred.
For many, this will require a mindset shift. During the crisis, many organisations benefited from a hierarchical leadership style, where directives were given ‘from the top’ to mobilise people around burning issues. But to prepare for the longer-term, leaders will need to adopt a more inclusive approach.
Leaders who listen and learn from their workforces and communities will benefit from a richer diversity of perspectives. This can help form a clearer picture of the skills that will be needed in tomorrow’s labour market – and where the gaps are today – so that plans can be co-designed to address this.
In anticipation of imminent growth, many of Australia’s CEOs (60%) expect to increase headcount in the next 12 months. That may be easier said than done, with stagnant wages growth1 and the brakes pulled on importing talent from overseas.
However, hiring opportunities will emerge for employers who think outside the box. The pandemic has proven that many jobs aren’t dependent upon workers being in a single location. While some organisations rush back to old ways of working, those who continue to offer more flexible working arrangements can make themselves more attractive to potential new hires from different locations across Australia, opening up talent pools previously not considered accessible. Furthermore, those same employers could broaden their horizons even further by hiring more overseas-based talent to work remotely, rather than rely on skilled migration.
Thinking outside the box also requires upskilling the existing Australian workforce. Thirty-three per cent of Australia’s CEOs have no plans to change their long-term investments in leadership and talent development over the next three years as a result of the pandemic. This may require a rethink.
Without sufficient leadership capabilities in the future, organisations will struggle to achieve their long-term strategic goals. As leadership becomes much more complex, there’s a risk of a growing gap between employee need and expectation, and leadership. To address this, business leaders should make greater investment into core skills.
When asked to list the three greatest challenges their organisation currently faces in its upskilling efforts, Australia’s CEOs cited a lack of resources, such as budget, people, time and knowledge (27%, up from 13% in 2020), disruption of day-to-day business activities (18%, up from 14% in 2020), and retaining upskilled employees (12%, down from 19% in 2020). The shift away from concern over retaining skilled employees is unsurprising given the difficult year many businesses have had, however business leaders must keep this at the heart of workforce strategies.
Health and wellbeing is another important part of the puzzle. In the past year, the lines between work and home have been blurred, underlining the responsibility that employers have to take a 360-degree view of their people. So, as well as developing technical, leadership and ‘transferable’ work skills, businesses can build workforce productivity and resilience with a strategy that prioritises mental health and wellness.
Culture, too, may require extra attention where workforces are dispersed. However, it appears Australia’s CEOs are ahead with 53% indicating they are changing their workforce strategy in relation to workplace culture and behaviours to enhance their organisation’s market competitiveness. By comparison, only 32% of global CEOs have indicated the same.
1 ‘Bleak outlook for pay rises: Australians might have to wait five years for return to 2% wage growth, The Guardian, accessed 18th January 2021, https://www.theguardian.com/australia-news/2021/jan/18/bleak-outlook-for-pay-rises-australians-might-have-to-wait-five-years-for-return-to-2-wage-growth
CEOs can’t necessarily protect jobs but they can protect people by giving them the skills they’ll need tomorrow. Businesses don’t have to do this in isolation. Individual companies (or entire industries) can come together with the government to develop not only their workforces, but also bold initiatives to reskill communities and help bridge the digital divide. There’s also an opportunity to engage with educators who are alive to fresh opportunities, having been disrupted like never before.
A united focus from business, government and educators can boost the skills and employability of people from all demographic and geographic backgrounds – and, in the process, meet future demand for new talent. As Australia seeks to rebuild for a post-pandemic world, CEOs can usher in a new era of partnership where organisations band together with others to futureproof their workforces, the economy and society at large.
Embed flexibility into employment models by adopting a broader view of working arrangements, from work that is automated and offshored, to the engagement of gig, contract, and casual workers to supplement the core Australian workforce
Engage workforces to co-design employee value propositions and future ways of working by better understanding their expectations and preferences
Invest in leadership and development programs to ensure leaders have the capability and mindset for navigating their teams and organisations through the disruption; including heightened areas of focus around virtual collaboration, wellbeing and industrial obligations
Understand the opportunities and challenges with emerging technology and improve workers’ and leaders’ knowledge of its potential.
Partner, People & Organisation Consulting, PwC Australia
Tel: +61 (3) 8603 6504
Lead Partner, Future of Work, PwC Australia
Tel: +61 424 299 014
Dr Ben Hamer
Director, PwC Australia
Tel: +61 437 159 517