14 May 2014

Australia still a global laggard in talent practices: Netherlands #1

LinkedIn and PWC have recently trumpeted that Australia is the world's worst country for effective white collar recruitment and retention practices due to 23% of new hires quitting their job within 12 months of starting. Our closest cultural cousins, the USA and the UK, were far better with 15% and 12% respectively.

This information is taken from research undertaken by PWC in analysing the 277 million professionals on LinkedIn as well as 2600 employers and then reported in the white paper Adapt to Survive.

The centrepoint of the paper is a concept called Talent Adaptability. This concept is explained in the report:

The capacity of a market to match supply and demand efficiently depends on the ability and willingness of employers and employees to adapt to changing circumstances and align skills with available opportunities. If this alignment is less than perfect, a mismatch occurs and optimum productivity can't be reached.

There are two essential ingredients to adaptability. First the ability of employers to look differently at sources of talent.

This means investigating new geographies and sectors as sources of new talent as well as investing in existing employees, equipping them with the necessary skills and motivating them to adapt to meet new challenges. Secondly of course, this requires willing individuals who are prepared to embrace change and apply their skills somewhere new. In order to assess adaptability in a particular market we need to look at both sides of the equation.

The report has assessed eleven countries on their respective talent adaptability and provided a Talent Adaptability Score out of 100 (the recruitment and retention practices ranking where Australia ranked bottom, as mentioned above, is just one component of this Score).

The Netherlands ranked highest with a score of 83. China ranked lowest with a score of 23 and Australia ranked 6th with a score of 52. The UK ranked 2nd (67) and the US was 5th (57).

I won't go into the various reasons behind the rankings. You can read those yourself in the full report, if you are interested.

On the face of it, I think the score for Australia is probably fair. From my vantage point I think employers have a lot to answer for with respect to lack of flexibility. Unfortunately, I think the recruitment industry is just as much in the spotlight on this issue as any other industry.

How many of these recruitment agencies have put even a small amount of resources into constructing a half decent careers page?

How many recruitment agencies insist on ‘recruitment experience' as an essential part of the selection criteria?

How many recruitment agencies use 457 visas to recruit their own staff?

As much as we criticise our clients for being inflexible, I think many of us in this industry should be taking a long, hard look at ourselves before we point the finger elsewhere.

What does the report recommend? In this blog I won't go into the recommendations for individuals (Future-proof your career), educators (Offer courses and job training that produce adaptable people) and governments (Create the climate for adaptability) but it's worth noting here what the report recommends for employers.

Of the seven strategic imperatives for employers, the three that I believe are the most relevant are:

1.    Use talent analytics to identify the skills that are central to the business strategy today and in the future: Challenge HR to prove its worth (and earn its seat at the boardroom table) by providing the insight that identifies ways to encourage adaptability, improves hiring and unlocks competitive advantage.
My comment: How many Australian companies genuinely understand (through objective assessment tools) the key competencies that drive performance in the business currently, and will be necessary to drive it into the future? I am prepared to bet very, very few. Two years ago I asked the Head of Recruitment at an ASX Top 10 company whether they used competency maps for recruitment and development. ‘No' was the answer. I was flabbergasted.
2.    Balance hard and soft skills: Test for an absence of highly transferable attributes such as communication, problem-solving and collaboration skills. Recognise and nurture these attributes through tailored programmes such as coaching and mentoring, negotiation and conflict resolution training.
My comment: The key word here is ‘test'. As very little benchmarking is done in Australian companies, there is significant ignorance amongst employers as to how much improvement could, potentially, be achieved in employee performance through targeted coaching and training.
3.    Broaden and balance your recruitment strategies: Improve internal mobility - develop and nurture the people you already have - alongside external recruitment strategies that look wider and further for new talent.
My comment: Innovation in Australian recruitment strategies is very much the exception, not the norm. Given how relatively poorly recruitment conferences are attended and how little time, if any, is given in HR conferences to the topic of recruitment, it appears that a majority of Australian HR/Recruitment leaders are content to do the same old things each year.

We would do well to consider, given how many advantages Australia already enjoys in the global economy, that there are still massive untapped opportunities to dramatically improve our economic performance through better talent practices.

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  1. Ross though I have to admit that I have not read the original report of the study conducted by PWC and Linkedin researchers but based on the excepts of that study you've referrenced in this post, I am more inclined to come to a different but shocking conclusion about the implications of that study.
    Disruption creates order: According to the theory of thermodynamics, that seems to be the nature of all phenomena; physical and I dare to add social as well. What is being interpreted as higher disruption (more attrition of hires within 12 months of engagement) could actually mean an attempt (rather than inflexibility as it is being inferred but more flexibility of both employers and employees) to reach more order (alignment of skills and opportunities) in the workplace. At specific micro (company) level it may appear as a disorder (entropy) but this creates order (alignment) at the macro-level for the entire workplace.
    Now let’s take another look at some of the key words in the post; flexibility, adaptability, alignment, available opportunities etc. On the contrary, I posit that a workforce that is seeking more alignment will manifest more disruption! It seems that the report’s conclusion and it’s concept of Talent Adaptability is somewhat in contradiction with its original premise: “The capacity of a market to match supply and demand efficiently depends on the ability and willingness of employers and employees to adapt to changing circumstances and align skills with available opportunities.” How could PWC and Linkedin researchers and you then reach the conclusion that countries showing more attrition of hires within 12 months are less talent adaptable! Really? Or is it the opposite?
    An apt illustration I saw online (which unfortunately cannot be shown here due to limitation associated with formatting in this blog) demonstrates the deceptiveness of making judgment based on mere appearances by comparing two separate glasses;one filled with ice chips and another filled with water.It then rhetorically asks:Which is more disordered?The glass of ice chips or the glass of water? Common sense answer here might not necessarily yield for us the correct answer.The ice chips may appear to be more disordered while the glass of water may look smooth and normal but the correct answer belies our natural perception.Of course a glass of water is more disordered.
    I cannot stress enough the importance of exercising caution in the interpretation of any study.This caveat is extremely important both to those conducting the study and others who are consumers of such study.

  2. Brilliant report. I agree with this report 100%. Australia is facing the talent shortage but unable to keep the talent no matter what the reasons are. People from other nations willing to move there should think carefully prior to their move.

  3. kvsndkraja, the point here is not agreeing or disagreeing with the report! We know that it is possible for all of us to observe the same thing and come out with different interpretations. This is because interpretation tends to be tainted by each person’s frame of reference. Based on the excerpts referenced by Ross in this post I am inclined to disagree with the report because there is an apparent and fundamental contradiction of the researchers premise and conclusion.
    Contrary to your opinion, I think it is of utmost importance to know the reasons for “Australia facing talent shortage” as eluded by you, “but unable to keep the talent no matter what the reasons are”. Ironically, you seem to have volunteered one of the reasons when you pointed at (what I consider the paradox of) talent shortage and high attrition of workforce in Australia.
    If there was really a talent shortage what that meant was that workers have more job options to choose from. In a free and competitive marketplace, the law of demand and supply is always inimitably at play. All things being equal, as we say in economic parlance, this could automatically translate to higher wages. Faced with rising wages resulting from an apparent talent shortage, don’t forget that the Australian employer has to contend with other economic and regulatory policy uncertainties, is now more inclined to take precaution in committing to any long-term wage bills. This view seems to be collaborated by another study I read somewhere; it was revealed that Australian workers ranked first of all countries in their preference for temp employment opportunities. Call it cultural. It is more of a traditional society where there is more work-life balance in contrast with other western nations (It appears Australians love their vacations-no pun intended here).This situation, though inadvertent, has brought about an apparent match (alignment of interests) of employees and the employers’ goals in the workplace. BTW, I don’t think there is anything inherently wrong in the preference of any people whether to work perm or temp.
    Rather than caution people not to go to Australia to work, I will encourage anybody who is qualified to work there to take advantage of the job opportunities there. But be ready to work temp. Meanwhile, as a recruiter, I will focus probably more on closing more temp placements if I find myself in Australia.