Fifty-four years ago, best-selling American futurist Alvin Toffler wrote: “The illiterate of the twenty-first century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.”

Today, his prediction seems remarkably prophetic. The skills landscape employers are facing in Australia and globally is dynamic, unpredictable and rife with opportunity.

According to the World Economic Forum (WEF), the average half-life of a skill is currently about five years. Skills that would have carried previous generations through a career of 40 years now require endless updates and expansions to keep pace with technological advancement. 

As a result, the importance of technical skills has been eclipsed by the importance of skills adaptability, says Ravin Jesuthasan, author, Senior Partner and Global Leader for Transformation Services at Mercer.

“The only thing that will keep us relevant is the ability to keep reinventing ourselves,” he says. 

“The skills where the premium is going to go up exponentially will be things like learning agility, curiosity, the willingness to look around corners and anticipate, the ability to see connections across two or more disparate domains – those are the skills that are really going to stand us in good stead.”

Building skills security

While much has been made of the potential negative impact of new technologies on job security, the WEF’s Future of Jobs Report 2023 found the majority of technologies being implemented across organisations are anticipated to create more jobs than they will displace over the next three years.

Artificial intelligence, arguably the defining aspect of the Fourth Industrial Revolution, is expected to generate a net increase in jobs of 26 per cent by 2027. Meanwhile, big data analytics is set to create a net 58 per cent increase.

The only technologies forecast in the WEF’s data to have a net negative overall impact on employment data were robots; both humanoid (designed to mimic human behaviour) and non-humanoid (machines devised for specific tasks, such as drones and industrial automation).

In light of this, future-proofing the workforce will mean focusing less on job security and more on skills security.

“It’s much easier and more important to understand how work is changing, rather than looking at what new jobs are being created,” says Jesuthasan, who will be a keynote speaker at AHRI’s National Convention and Exhibition⁠ in August. 

“A job is a blunt instrument. It contains so many different things. But if you can understand how the work is changing, that gives you a precise view into the types of skills that are going to be in demand because it’s much easier to map skills to tasks than to understand the myriad of different skills that might underpin a job.”

“The only thing that will keep us relevant is the ability to keep reinventing ourselves.” – Ravin Jesuthasan, Author, Senior Partner and Global Leader for Transformation Services at Mercer

Shifting towards skills-based hiring and mobility

When organisations are facing skills challenges, employers often assume that targeting candidates with qualifications from familiar institutions will be their safest bet, says Jesuthasan.

“In my industry, there’s an old adage, ‘No one ever got fired for hiring McKinsey,’” he says. “If you think about how talent is resourced today, it’s largely based on credentials and what you’ve done previously. Those two things reduce the risk to an employer that a person can’t do the job. 

“But if we move to a skills-based approach, it takes us from competing for the five per cent of people we might have traditionally looked at to looking at the 20, 30, 40 per cent of the population who could actually do the work.”

Rather than adhering to rigid roles, a skills-based approach breaks down the individual capabilities required to perform a given task and assigns them to employees with the appropriate skills and capacity, regardless of whether it’s part of their job description.

With skills shortages increasing in severity and complexity, this approach is likely to grow in popularity over the coming decade. We’re already seeing companies becoming more flexible in the qualifications they consider, says Jesuthasan. For example, in 2021, IBM announced it had stripped bachelor’s degree requirements for more than half of its US openings. At Google, job postings requiring a bachelor’s degree fell from 93 to 77 per cent between 2017-2021. 

At banking and financial services company ANZ, the benefits of a shift towards skills-focused hiring and mobility are already beginning to shine through. 

“I think that job roles will persist as a means to organise work, but now we’re getting a deeper skills-based view of what’s behind each role,” says Arun Pradhan, General Manager of Learning at ANZ, who will also be speaking at AHRI’s Convention.

“We’re developing the frameworks and investigating the technology that will allow us to look at a role and see that it’s 40 per cent adjacent to that role over there, even though it doesn’t look like it. And we’re trying to provide a faster way for people to match up those skills.”

Ravin Jesuthasen and Arun Pradhan will both be sharing their insights on future-ready HR practice at AHRI’s National Convention and Exhibition in August. Don’t miss the chance to hear from inspiring thought leaders and master practical strategies for now and the future. Secure your spot today.

Planning for the skills needs of the future

During the past decade, we have witnessed immense shifts in our ways of working, from mass digitisation to the proliferation of hybrid working. With the pace of change accelerating, it’s safe to assume future decades will bring even more transformative developments. 

For many employers, this begs the question: If we don’t know what tomorrow will look like, how can we equip our people to succeed when it arrives?

According to Adina Leu FCPHR, Director of Workforce Strategy and Planning at the Australian Public Service Commission (APS), the difficulty of answering this question deters many employers from investing enough strategic thinking into their skills development. 

“Across the economy, there is little incentive for employers and managers to look at longer-term skills planning and invest in their current workforce to build the skills they’ll need, or that the sector or Australia will need, in five to 10 years’ time. Because of the high levels of turnover, they think, ‘Why should I? They’re not going to be here anyway.’”

As a result, future-focused employers must find ways to convince leaders to plant trees under whose shade they might never sit.

“It’s about moving away from [the mindset of], ‘I’m going to look after my own interests,’ and towards being part of a bigger ecosystem – whether it’s at an industry level or in the Australian economy,” says Leu.

As a government organisation with a workforce of over 170,000, the APS recognises the strategic imperative of mapping future skills needs by conducting in-depth scenario planning based on a variety of potential workforce futures.

“Of course, there’s a need to prioritise, because you’ll be generating 10s of scenarios, but you can’t plan for all of them,” says Leu.

In order to identify and plan for the most likely outcomes, the APS refers to the ‘megatrends’ published by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the long-term insights briefs developed by the Department of the Prime Minister and Cabinet.  

From digitisation to the global push to reach net zero, these trends are predicted to be the main drivers of evolving labour markets and skills demand over the coming decades.

“We are building out the workforce implications of some of those scenarios,” says Leu. “For example, we’re looking at the green transition, and the skill sets we’ll need in government to progress that transition and the green economy agenda for the country and globally.”

The APS is also actively engaging with educational institutions and early career programs to address skills shortages from the ground up. 

Exposing young people to career pathways available to them is particularly important to ensure skills pipelines are as diverse as possible, says Leu. “For example, we know there are shortages in some occupations and roles which are highly male-dominated – [things like] construction, engineering, cybersecurity and so on,” she says. 

“We also know that the seed for some of those career decisions is planted with kids as early as five. So, we need to have more interventions to get girls passionate about occupations like these ones in early childhood.”

“Learning is most effective at the point of need. The opportunity to immediately and constantly apply learning provides a reality check, learning reinforcement and a feedback loop.” – Arun Pradhan, General Manager of Learning, ANZ

An upskilling strategy fit for the future of work

One challenge that often arises with big-picture upskilling and reskilling strategies is push-back from employees asked to take part in them. 

In recent years, the speed of transformation has left some employees experiencing varying levels of ‘change fatigue’. According to Gartner, employees’ willingness to embrace change has dipped sharply, from 74 per cent in 2016 to 38 per cent in 2022.

To avoid employees feeling overwhelmed by the magnitude of upskilling and reskilling required, getting the timing right is crucial, says Pradhan.

“Strategic workforce planning can mean developing three-year modeling, but we need to consider an overlay of how early we can initiate upskilling before those skills become relevant,” he says. 

“Learning is most effective at the point of need. The opportunity to immediately and constantly apply learning provides a reality check, learning reinforcement and a feedback loop to accelerate learning.”

To provide this opportunity, ANZ will be rolling out a new Academy for foundational skills around data, digital and human skills.

“The ANZ Academy has team-based learning at its core, so people can apply what they learn immediately in their work with their peers,” he says. “It’s getting away from having a learning bubble over here and a work bubble over there, which forces busy people to make their own connections.

“Instead, we’re using blended experiences, team activities and contextualised stories to reduce the friction of on-the-job learning.”

In order for HR to formulate and deliver upskilling and reskilling strategies effectively, it’s imperative that they lead by example. 

“Use every opportunity to build a new skill,” says Pradhan. “Be that curious person who collects skills from work, parenting, hobbies or anywhere else, and is creatively combining those skills to deliver your unique value proposition and greater adaptability.”

A longer version of this article first appeared in the June/July 2024 edition of HRM magazine. Sign up to become an AHRI member to receive a bi-monthly copy.

Hear more from Ravin Jesuthasan on the shift towards skills-based hiring in the latest episode of AHRI’s podcast, Let’s Take This Offline. Listen to the episode below.

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Australia’s ongoing skills gaps are hampering productivity for over half of employers (57 per cent), according to a recent report from AHRI.

The report, based on insights from 607 senior business decision-makers across a range of sectors, also found that almost one in five workers (19 per cent) are considered “not proficient” in their role by their employer, a statistic which is consistent with AHRI’s most recent Quarterly Work Outlook report. 

This problem is more significant in the public sector, where 24 per cent of employees aren’t fully proficient, compared to 18 per cent in the private sector.

With the integration of AI and other complex technologies moving at a rapid pace, it’s unsurprising that employers are lacking essential capabilities within their workforces. 

Skills and qualifications that previously sustained a career spanning 40 years or more now demand continuous updates and to remain relevant, posing significant challenges for learning and development teams to keep up with the speed of change. According to the World Economic Forum, the half-life of a skill is currently about five years. 

With that said, AHRI’s findings demonstrate that employers are not resting on their laurels. More than three quarters (77 per cent) are taking active steps to strengthen their talent pipelines. 

Below, HRM unpacks AHRI’s key findings on the driving forces behind Australia’s capability gaps, and how employers are responding.

Common causes of skills gaps

Employers identified a range of driving forces behind current skills gaps, mostly related to the rapid evolution of skill and business needs.

Figure 1 shows that evolving business or strategic needs are cited by 44 per cent of employers, while 42 per cent point to the constantly evolving skills landscape as a significant factor.

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Labour force figures released in January revealed in seasonally adjusted terms the unemployment rate rising from 3.9 per cent to 4.1 per cent. At the same time, the workforce worked 2.5 per cent fewer hours.

These figures could be explained by the fact that numerous sectors are struggling to fill roles, says Charles Ferguson, APAC General Manager of global hiring solutions provider G-P.

Research by G-P finds that 75 per cent of Australian executives have faced difficulty in securing skilled talent and that 82 per cent of businesses are now actively engaged in global recruitment.

The figures point to an opportunity for HR professionals armed with the right skills to help executives and boards lead their businesses into the next stage of success, says Ferguson.

“In the Asia Pacific region, I would suggest we’re at a strategic inflection point in terms of the way we measure productivity, and the way the workforce functions within the economy,” he says.

When we come up with a better way of measuring productivity, he says, it will involve the various tools, such as automation and AI, that each worker can use to do their job more efficiently. That will also be a measure of the success of each organisation’s HR program.

Productivity is in the hands of business

Matt Grudnoff, Senior Economist at The Australia Institute, agrees that the way we measure productivity – the simple measure of output per worker – requires a refresh.

“If you go back 40 years, goods production was the dominant part of the economy,” says Grudnoff. “Now, services are the dominant part. It used to be easy to measure productivity – the number of cars produced by the number of workers. But how can you measure the productivity of a librarian, or a journalist, or an aged care worker?”

Whatever the measure, increasing output per worker is going to be a central responsibility of the role of the HR professional, he says.

“The vast majority of people think productivity is about workers,” he says. “But workers have the least power in terms of improving productivity. All they can do is get educated, and Australian workers are doing that at higher rates than they ever have.”

The government also has some control over productivity, says Grudnoff, but not a great deal. It can introduce policies that encourage innovation, but it can’t enforce them.

The vast majority of power over productivity is held by businesses, he says. 

“Businesses decide how they are structured,” says Grudnoff. “They decide the type of capital and equipment available to workers to make them more efficient. They decide almost everything in terms of output per worker.”

“Overwhelmingly, productivity is about business, and HR people are the ones at the front line of organising a business in a more productive way.”

“It used to be easy to measure productivity – the number of cars produced by the number of workers. But how can you measure the productivity of a librarian, or a journalist, or an aged care worker?” – Matt Grudnoff, Senior Economist, The Australia Institute

A new future requires a new people strategy

There was likely concern for the future of fabric workers during the industrial revolution when their jobs were automated, says Ferguson. Eventually, those workers were retrained into roles required by future-ready businesses. 

That is exactly what is required right now. But in today’s work environment, there is rich reward for businesses that achieve a quick transition.

“This is a seminal moment for the HR function,” says Ferguson. “HR has this unique opportunity to assert themselves, to say, ‘The way we operated pre-pandemic is fundamentally different to how we’re going to operate post pandemic.’”

That includes how and where hires are made. Businesses that don’t utilise the global employment marketplace will naturally have a harder time filling roles, he says. 

It also includes how much flexibility can be offered around where and when people work, what training programs must be in place, where employment investment is made, what can be automated, and more.

“As the people responsible for being the nexus between technology, productivity, automation and human capital management, how do we strategically put those things together to elicit the most impact to the business, shareholders and stakeholders?” says Ferguson.

HR must also be skilled up

Just as workforce designers during the industrial revolution had to look to the future and learn new ways of work before they could reskill the fabric workers, today’s HR professionals also require new knowledge to guide businesses to future success.

“At the moment, I’m not hearing much conversation around what HR needs to be successful,” says Ferguson. “Organisations like the Australian HR Institute have been telling this story for a while, but now the rest of the business world needs that story to be heard. It needs to be brought into the boardroom.”

The HR function should be looking at strategic workforce planning, says Ferguson. It must define future jobs, skills associated with those jobs, which parts of jobs can be automated and how and where talent can be found. 

Do they need to be sourced from the business’s local community, or from across Australia? Or can the job be done by a person with the right skills who lives in Chile, says Ferguson.

“This is a seminal moment for the HR function.” –  Charles Ferguson, APAC General Manager, G-P

In terms of practical outcomes for HR from recent jobs data, Ferguson offers four insights.

1.  “Do the research required to have the conversation with your peer group within the business around how to strategically analyse the workforce planning aspect,” says Ferguson. 
2. “Decide on the methodology to assess the current state of the workforce, to identify the gap between where you are and where you need to be.” 
3.  “Collect relevant, credible data that is relatable to people outside HR. If it isn’t quantifiable, it doesn’t have correlation to the business audience. How does employee satisfaction relate to sales productivity, for example?” 
4.  “Identify which jobs really do need to be done on-site and which can be done anywhere in the world, to help solve the talent challenge.”
   

If we don’t get employment and productivity right, we all end up poorer, says Grudnoff.

“Only three things affect the economy in the long run – population, participation and productivity,” he says. “The first two give us the number of workers, and productivity gives us the output per worker.

“If your output is higher per worker, you’ve got more money per worker, and everybody benefits. The higher the productivity, the more wealthy the country will be.”

Develop the necessary skills to build and sustain a high-performing work team and tap into the full potential of team members with this short course from AHRI.

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In September this year, the Australian Government announced it had commenced work on establishing a National Skills Passport – an initiative that represents an important paradigm shift in our employment landscape.

While it may present as a standard government initiative on the surface, it is anything but ordinary. The program has the potential to deliver one of the most meaningful changes to the Australian workforce that we’ve seen in a generation. 

Until now, our employment landscape has favoured the fortunate. Having a CV and a university degree has been the measure of success in recruitment, and it has locked out of the workforce those who may not have pursued a traditional education path.

But, as we look down the barrel of a digital skills crisis where the demand for tech capabilities continues to skyrocket, we need a better way of tracking and verifying skills and facilitating lifelong learning. 

Access to skills education creates new pathways to employment for everyone – and this is how we’ll be able to level up Australia’s workforce.

Having a means to digitally verify, track and manage an individual’s skills is not a ‘nice-to-have’, it’s a critical capability in the skills-led employment agenda that is fundamentally required to ensure Australia has the skills it needs to thrive, while evening the playing field for all Australians to find meaningful work.

What is the National Skills Passport?

The National Skills Passport was introduced as part of the government’s Working Future employment white paper to make it easier for businesses to employ workers and for candidates to demonstrate their skills. The government is committing $9.1 million to support a business case and consultation around the initiative.   

The Passport is essentially a practical, scalable way for our nation to recognise and utilise qualifications within the modern workforce. It has the potential to seamlessly integrate an individual’s qualifications and credentials, spanning both practical training and higher education. 

As a single point of truth for skills, it empowers workers to effectively showcase their abilities and competency to employers, transcending traditional barriers that may have hindered career progression. 

“The program has the potential to deliver one of the most meaningful changes to the Australian workforce that we’ve seen in a generation.” – Cia Kouparitsas, Chief Customer Officer, WithYouWithMe

By unifying diverse educational backgrounds and experiences, the National Skills Passport fosters inclusivity and equal access to opportunities for individuals from all walks of life.

For employers, it solves the key challenge of accurately tracking and verifying credentials and qualifications, and ensuring the right skills are in place for the right roles. By incorporating digital badges and leveraging verified skills, employers gain invaluable talent marketplace insights for enhanced human capability management. 

This approach guarantees a comprehensive understanding of employees’ capabilities, irrespective of their source, allowing for targeted upskilling and reskilling to proactively prepare for the future.

Where to next for the National Skills Passport?

As technology continues to shape the job market, we know it’s essential that individuals’ skills and qualifications are documented in a reliable and accessible manner. This initiative not only ensures that individuals are equipped to thrive in a rapidly evolving workforce, but also simplifies the hiring process for employers. 

By providing a standardised platform to verify skills, the National Skills Passport is a practical way to build the workforce that we need for the future: one that is skilled, diverse and ready to tackle the ever-growing demand for specialised skills in today’s competitive job market.

The potential of this program is significant. The stakes are high, and the hard work has just begun. While a National Skills Passport stands as a beacon of potential for matching skills with opportunities, getting it right is imperative. 

Its success hinges on meticulous planning, close collaboration with industry leaders and an unwavering commitment to ensuring it is a solution that truly empowers individuals and the greater workforce. 

The successful delivery of a National Skills Passport will be a win for both business and individuals, provided we navigate this high-stakes terrain with precision and foresight.

Cia Kouparitsas is the Chief Customer Officer at WithYouWithMe.

Develop the necessary skills to build and sustain a high-performing work team and tap into the full potential of team members with this short course from AHRI.

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Skills gaps are a major concern for organisations around the world, which is why employers need to start thinking about how they can innovate their approach to filling critical roles – especially when it comes to digital capabilities. 

While it is well known that successful digital transformation relies on the power of a strong digital workforce, it’s also well documented that companies globally are still struggling to close the gaps that have been crippling innovation for some time now. 

While many suggest skills shortages are to blame, it’s becoming increasingly evident that organisations simply aren’t clear on where their genuine gaps exist, what their digital needs really are, and what abilities their workforce possess (outside of their job descriptions). 

This latter point is especially important as many employers don’t realise that the capabilities they’re so desperately seeking are often lying dormant within their own workforce. Without a clear understanding of where your organisation currently stands and where you need it to be when it comes to workforce skills, it’s almost impossible to identify and fill critical voids – no matter the state of the labour market. 

This is where workforce skills mapping can be used by organisations to obtain an accurate view of their current capabilities and productivity, the skills required for optimal performance (both now and in the future), and any gaps that need to be filled. Well-executed skills mapping helps organisations meet critical needs and remain resilient and agile throughout uncertain times. 

What is skills mapping?

The process of skills mapping involves assessing, identifying, and evaluating the skills and capabilities held by existing employees in an organisation, the capabilities that may be missing, and the skills necessary to perform any given role well. 

It identifies exactly which tasks and requirements are crucial to an organisation, which employees could benefit from additional training, and those who could be upskilled or transferred into critical roles. Aptitude and temperament assessments can also be applied alongside skills mapping to provide even greater insight into a workforce’s skills and abilities and ensure the strongest team dynamic is achieved. 

Having a comprehensive outline of the skills and competencies required for employees to reach the next level means organisations can create clear pathways for professional development and enable greater talent mobility.

Skills mapping allows organisations to maintain a consistent measure of skills and competencies and identify the individuals who are best suited to fill gaps. It can also assist retention by offering employees growth opportunities within the organisation. Through systematically unlocking the potential within an existing workforce, skills mapping can maximise training ROI, reduce churn and increase productivity, without risking burnout. 

A skills framework to follow

By identifying the unique skill sets of each employee and illustrating exactly where gaps in an organisation exist, leaders can approach strategic resourcing with a level of certainty, enabling them to make more informed decisions and create more resilient and agile workplaces. 

There are a number of skills mapping frameworks organisations can utilise to understand and mobilise their workforces more effectively. When it comes to competency frameworks for the digital world, many larger organisations and institutions – including the Australian Government – have turned to the government’s Skills Framework for the Information Age (SFIA). 

Mapping the skills of your entire workforce against the SFIA framework is an effective way to get a complete picture of your capabilities and productivity, including where there are genuine skills gaps, the potential to upskill and transfer employees, and where you may be oversubscribed. 

SFIA is an accurate, industry-standardised way to assess where an organisation sits in terms of workforce skills, and the people strategy it should implement going forward. By using a data-driven process, SFIA aims to eliminate bias with an end goal of delivering a more equitable and capable workforce.

In order to remain agile and innovative in a rapidly changing landscape, organisations need to ensure their workforce is optimised to meet business demands and remain competitive on the global playing field. In the context of economic uncertainty and perceived talent shortages, workforce skills mapping is a great solution.

Cia Kouparitsas is the Social Impact Lead at WithYouWithMe (WYWM).

Once you have finished skills mapping, you can set your team up for success by signing up for one of  the 50+ short courses that AHRI has on offer. Make the most of AHRI’s EOFY offer to save hundreds on training.

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