Engineering is essential for the UK economy, constituting 26 per cent of the UK’s GDP; more than that of the retail and wholesale, financial and insurance sectors combined.
Yet the industry, which is already beleaguered by the familiar skills shortage, faces a new challenge. Sweeping changes brought by the fourth industrial revolution have created a perfect storm for the industry. These conditions now call for new, more robust, approaches to talent management.
Dr Whysall, tell us about the research.
The engineering market has been transformed by technological change that threatens to outpace many organisations’ ability to respond. We wanted to understand how businesses are responding to this from a talent perspective. We spoke to senior figures within engineering-led organisations, including CEOs, HR directors, talent directors, heads of talent, heads of L&D and resourcing specialists. Firms ranged in size from 1,500 employees to over 20,000 employees.
What did you find is holding firms back in their talent management?
In order to develop and grow, people need to be given opportunities to stretch themselves beyond their current capability, with the appropriate support mechanisms in place as a safety net. However, industries reliant upon STEM skills, where the flow of talent is already in short supply and projects often involve ‘high stakes’, tend to be understandably risk averse.
It could be the safety-critical nature of the work, or client expectations, or a symptom of an already stretched system, but with resourcing projects there’s a tendency to go to the safest pair of hands; ‘tried and tested’ employees who’ve delivered that type of project before.
This approach is a safe short-term solution, but it neglects the longer-term need to develop people, bring them through, and most importantly, to ensure a strong talent pipeline.
And how is this affecting the industry?
We’re seeing thin talent pipelines, with insufficient volumes moving through to keep them healthy; poor talent attraction and retention, too, since newly qualified individuals tend to have expectations of rapid career progression and a constant flow of development opportunities. The combination of inadequate supply and deficient succession planning has led to many firms operating with critical holes or ‘pinch points’ in their pipeline, whilst also losing talent as they’re unable to fulfil expectations of accelerated career development.
What do you attribute this to?
Our research detected a short-term approach to resource planning in engineering, which was in tension with longer-term talent development and succession planning objectives. We’re seeing current performance prioritised over longer-term considerations. So this effectively acts as a key limitation affecting the health of prospective talent pipelines in many of these safety-critical industries.
So, what can be done to reduce the risks associated with talent and skill shortages?
To help business leaders make key decisions around talent, HR has a real responsibility to take the lead. HR teams need to provide accurate data about who they’ve got, where, and how this capability meets current and future business needs. Without the right information and insight, firms just can’t make effective decisions on human capital management.
What can organisations do differently to counter the talent management challenges?
Employers can’t afford to wait for others to find a solution to their talent shortages. This requires taking the lead in exploring new approaches to closing the skills gap.
Applying the principles of supply chain management to the talent pipeline is one option. By looking ahead to identify the core capabilities they need to achieve their business strategy, and comparing this against current capability, a talent supply chain approach allows organisations to make informed ‘make and buy’ decisions. They can then determine what can be ‘made’ in-house through development and what must be ‘bought’ through recruitment, then look down the supply chain to check on the forecasted size and competency alignment of those populations, in terms of your particular needs.
Any tips on how they can go about this?
Making perfect predictions in a rapidly changing environment is hard. So, a combination of approaches is inevitable. Internal talent development activities, such as training, mentoring and other on-the-job programmes, should be designed to meet predicable needs as far as possible. You can then supplement these with external hiring for unpredicted demands and optimise the gig economy for resourcing non-strategic roles. Partnerships with other firms in the supply chain could also enable employers to provide new recruits with a more rounded experience than otherwise possible, through inter-organisational talent mobility.
How can construction organisations move towards a more proactive approach to talent management?
There’s a number of steps. The first, and obvious one, is to look ahead at where the business needs to go. Step back from immediate challenges to ensure that the talent development strategy is closely aligned not only to current, but also future, business needs.
Next, identify targeted development activities and other on-the-job learning opportunities to help employees develop relevant competencies, avoiding the ‘failure to transfer’ risk associated with off-the-shelf training packages, which may not develop the behaviours that really matter to your context.
Finally, offer employees appropriately stretching opportunities to accelerate their development, whilst ensuring that sufficient scaffolding is in place to support them. Promote a ‘fail safe’ philosophy by having regular monitoring and review points in place to provide an appropriate safety net.
Taking these steps should afford firms clearer visibility of their talent needs and greater confidence in their ability to close gaps in the pipeline. For an industry that has long suffered a skills shortage, new approaches to talent management are needed to ensure that talent becomes an enabler of success, not a constraint on what you can achieve, or how quickly.