British employers have a problem. According to figures released this week by the Bureau of National Statistics, there are currently 1,294 million job vacancies in the UK. The number of officially unemployed now stands at about 1.25 million and if you include the mismatch between vacancies and the required skills, you are dealing with an acute shortage of workers.
Early stage companies have a specific problem. With demand outpacing supply, wages are rising — albeit not as fast as inflation — and large incumbents are arguably better placed to pay higher wages than those at the start of their journey.
Founders seeking technical talent are among those most affected by the shortages. For example, last year companies in the industry posted two million job openings, but their hiring efforts were hampered by the simple fact that there weren’t enough skilled people to make ends meet. Indeed, according to Tech Nation – a body set up to promote the sector – about 12 million workers have no technical skills.
So should founders and their management teams just shrug and resign themselves to fighting a talent bidding war? Or should they take matters into their own hands and look further afield for the people they need?
That was something I discussed with Dr. Mona Mourshed this week. She is the founding CEO of Generation, a non-profit organization created to provide employees with the skills they need to pursue their desired careers. Generation’s European office, a global initiative, operates in the UK, Ireland, Spain, France and Italy. Training people for technical jobs is a particular focus, but the organization also works in other sectors. As things stand, Generation works with approximately 9,000 labor partners, of which founder-led SMEs represent a significant percentage.
The experience trap
Like dr. Mourshed sees it, founders who use traditional recruiting strategies are in a kind of bind. “The vast majority of hires are based on the fact that we need someone with two to three years of experience,” she says, “but if everyone does that too, it gets very expensive.”
So what’s the alternative? “There is a conversation going on – employers think they may need to invest in their own pipelines,” adds Dr Mourshed.
There are indications that employers are changing their policies. A report – Addressing skills and labor shortages by the UK Chartered Institute of Personnel and Development, pointed to a series of measures to attract skilled people. Think of the higher wages mentioned above and the introduction of flexible working. Neither tactic increases the pool, but the CIPD found an increasing focus on upskilling and developing new talent pipelines.
But building a talent pipeline is a big question for founders under pressure from small businesses. What can be done practically?
dr. Mourshed says the Generation model offers a way forward. Essentially, Generation works with employers to determine if there are any job openings for particular skills. Once that’s established, a cohort of students is assembled, made up of people who might otherwise struggle to find their way into high-paying jobs. Initially the focus was on young people, but now the program also includes adult students. Interns can only have a secondary education or they can already have a diploma. The common factor is that they do not have the required skills.
“The goal is to give our graduates the skills they need,” says Dr Mourshed. The focus on practical skills has resulted in an 83 percent placement rate among 65,000 graduates.
So is this something that smaller, founder-led companies should consider? Well, as Dr. Mourshed points out, small businesses have limited resources. They may like the idea of building their own talent pipelines but lack the resources. Working with a partner who can train people outside the industry is one way to get ahead.
It will take some culture change. For example, once graduates are trained, employers must commit to demonstration-led interviews, rather than screening candidates based on the experience on their resume. This gives the graduates the opportunity to show what they can do. “We want to break through the bias,” says Dr Mourshed.
There must also be an openness to diversity and inclusivity in recruitment.
But is this something founders are willing to embrace? “We’re talking about the desperation index,” says Dr. Mourshed. Those desperate for talent are more likely to change their hiring policies.
Generation offers only one way to build a skill base. There are other organizations working in this sector and there is also a government funded apprenticeship scheme. In some cases, entrepreneurs take matters into their own hands.
For example, Agent is a marketing agency based in the North West of England. This is an industry also hit by staff shortages as too many agencies try to tap into a finite talent pool. Founder Paul Corcoran has responded to the challenge by establishing The Agent Academy as a social enterprise. The aim is to educate people who would find it difficult to take a first step up the media industry ladder. After a 12-week pilot, 12 people were offered a job. Since then, 400 people have taken the course. Agent has hired 10 of them and others have played roles in marketing and advertising elsewhere.
There are several ways founders can address the skills shortage, other than simply paying more. Looking further afield and being willing to train people with no experience is one solution.