Minding the skills gap

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With a skills deficit holding the UK back from economic recovery, whose responsibility is it to up-skill the workforce – the Government, the workers, or the employers?

There are seven million adults in England who cannot read and write to the level expected of an 11-year-old. So, is it any surprise six in 10 businesses think a lack of basic numeracy and literacy is holding back employees? Or that 42% of employers say they have had to provide remedial training for school and college leavers?

The numbers add up to a bleak outlook for employers, with 2010 research by Capita Learning & Development finding a majority (70%) of business leaders fear inadequate staff skills are the greatest threat to their ability to capitalise on economic recovery.

The basic skills gap in today's workforce is an issue that doesn't seem to be going away. But is tackling the issue an employer's responsibility? And if so, how can businesses become more involved in the design of training and qualifications, in a way that's both efficient and cost-effective?

These were all questions discussed in the second HR Lunchtime Debate, sponsored by online learning provider learndirect. Our expert panel featured Mike Williams, director of people development at DeVere Hotels and Village Urban Resorts, Paul Sissons, senior researcher at The Work Foundation and Dereth Wood, group director, adult skills at learndirect.

As before, we also invited those watching the lunchtime debate live online to take part in some research into the topic, following up with a further online survey. Over the next few pages we present our exclusive findings, revealing a real-life picture of how skills gaps are affecting today's employers.

"Skills are really important for a number of reasons," explains Sissons. "For individual firms, a more skilled workforce equals a more motivated workforce, which is better for productivity and quality of customer service. For individuals, skills are crucial in terms of how much you earn - they are an important driver of social mobility. Finally, for the wider economy and national economic competitiveness, having a skilled workforce is highly important.

"If an employer has a skills gap it can't fill through recruitment," he continues, "it might have to delay a new product or service, which then impacts on productivity and profitability. And if employees don't have the skills to do the job, other colleagues might have to pick up the slack, leading to all sorts of issues around motivation and morale."

When it comes to the skills employers feel workers are lacking, the softer ones come out on top, according to the 265 respondents who took part in our research. Management and leadership skills are lacking the most, being cited by 43% of respondents. Charles Elvin, chief executive of the Institute of Leadership and Management (ILM), says this should be a serious concern, as improving management and leadership skills is one of the most important challenges businesses face.

"A well-developed and supported manager is an invaluable company asset that can impact on business performance and guide organisations through the current economic climate," he explains.

Communication and time management skills also score highly, with 33% and 32% of respondents respectively naming them as challenges. More basic skills come lower, with 15% reporting problems with basic literacy and 14% with basic numeracy. Yet this still shows a significant proportion of the workforce struggles with its 'three Rs'. It all backs up the oft-repeated view that people are coming out of education without the skills they need to get on in the workplace.

Mark Webb, operations director at outdoor advertisement company Clear Channel, is actively looking to recruit young people fresh out of education. He has linked up with London Transport Museum's Routes Into Work initiative to achieve this. The museum works with young people not in employment, education or training (the notorious NEETs) to improve their softer employability skills, partnering with transport-related organisations, which then offer apprenticeships.

Webb says that for him, the main challenges come with the skills that are not just taught in schools. "Many young people don't know the art of writing a CV, for example," he says. "I'd expect it to be widely taught in schools, but it's not. Many young people think an email with their name and address is enough." He adds employers do have a responsibility to help and be patient. "We can help people understand the routines of work, the formalities and the discipline, like getting up early. A little more patience would be a good thing. With young people, you need to give them a little more room and time to adjust to working life - it's very different from school."

For Mike Williams, the findings echo his own experience with staff at DeVere. In the hospitality industry, he says, skills like good communication, teamwork and presentation are an absolute essential. "In hotels in general, people are applying for jobs with a higher level of competence in numeracy and literacy than they have in behavioural competencies," he says. "We'll hire on personality and train the skill. But it's about developing behavioural competencies, not just the technical skills. If you're checking in to a hotel, and someone is getting confused about the tills, but they are engaging and smiley, you'll forgive them anything. Those behavioural competencies are transferable between job roles and organisations."

But despite Williams' confidence in his employees' basic maths and literacy skills, and despite the confidence of many of our respondents, learndirect's Wood says she hears anecdotally from clients that "people are still lacking in the very basic skills, the maths and English as well as the behavioural side. The basic skills are absolutely vital. After all, if you can't read the instructions in the first place, you can't do the learning." As another service supplier recently told HR magazine: "The biggest employee benefit one of our clients provides is teaching people how to read and write."

The Work Foundation's Sissons says: "Those basic skills are the flaw in the core competencies people need to succeed in the workplace. We need to look at ways we can encourage people to develop those skills that put them into context." And since many adults may have bad memories of schooling and feel uncomfortable in a classroom context, we need to explore learning in an occupational context instead, he adds.

That places extra training firmly in the camp of the employer. So are they offering it? Our results show that, unsurprisingly, it's lack of time and budgets that present the biggest barriers to skills development in an organisation. Time constraints come out top - 57% of respondents say they find it difficult to spare time off - but another 47% report they lack the budget for skills development. And a further 20% say their company's structure gets in the way.

"One of the worrying things we've picked up on in the last six or seven years is a downturn in how much employers are training," says Sissons. Although he is keen to stress that employers still "spend an awful lot of money" on training, this downturn creates a catch-22 situation. As the next question in the research found, the main reason for employers investing in training is to "grow talent from within" (50%). If that really is the case, shouldn't they be investing more time and money in their training, and striving to overcome shortages of time and budget? Other key justifications for investment include increasing productivity (46%), ensuring long-term competiveness (39%) and improving staff retention (39%) - all, you would think, crucial reasons for employers to find the budget or make the time for a little extra training?

Elvin from the ILM certainly thinks that's the case when it comes to management and leadership. "Employers should be fully focused on investing sufficiently in leadership and management development at all levels," he says.

"The challenge," says Sissons, "is striking the balance when it comes to budgeting for training and time off for staff." But he continues: "Skills are such a fundamental driver of performance and profitability. Those investments in finances and time are what's needed if firms are going to thrive in a difficult environment."

Elvin adds that having a talent plan "will ensure organisations have an adequate supply of managerial talent, not just for their current needs, but for the future. Businesses with strong internal talent plans can also reap the benefits of improved company culture and employee loyalty".

So, it's absolutely critical that skills development is tied to business strategy - especially if the board needs convincing of why investment matters. "It's so important to recognise what your business strategy is," says Williams. "At DeVere, ours is that we are going to expand and open new hotels, so I am going to direct my training to our general managers strategy. We want to create a competitive advantage through a distinctive service experience, so I want to connect my budget to that. It's aligned with business strategy; it's not just training for the sake of training."

And as Wood at learndirect points out, if you're not investing in growing skills internally, you will be paying for it in other ways, either through increased recruitment costs or reduced productivity. "[Having skills gaps] shackles a business and restrains it from growing and diversifying, and could even lead to it losing customers," she says.

Within those companies that are investing in training, how this learning is delivered throws in a few surprises. Sure, e-learning is a big deal, with 45% of the research respondents using it, but what's even more popular is learning delivered by in-house staff at the trainee's usual workstation (56%). For those who do prefer e-learning, time and money again are the key drivers: 63% of employers like the fact staff can learn in their own time, and 50% find it more cost-effective.

"We all live in a digital age, not just younger people," says Wood. "The internet and technology have transformed the way we work, shop and communicate, so they have got to feed into producing more flexible learning. We need to be careful how we manage it, but if we can really blend online with face-to-face and behavioural learning, we can help people be more motivated, and put the learner at the centre. We can look not just at the 'what' we're delivering, but the 'how', and really make a difference to the workplace, the teacher and the learner."

That 'how' of delivery again places the onus on employers. Within the rules and regulations surrounding learning and qualifications, what can organisations do to take control of their staff and skill needs?

One answer could be employer ownership of skills. An initiative currently being piloted by the UK Commission for Employment and Skills (UKCES) invites employers to put forward proposals to improve skills in the workforce, and successful bids will receive government funding.

"I want to encourage businesses to seize this opportunity and work together to develop ambitious and far-reaching proposals which support sustainable skills, jobs and growth for all," says Charlie Mayfield, UKCES chairman. However, our research suggests that although the Government's vision may be clear, the way it is promoting employer ownership of skills is not: 72% of respondents had not even heard of the Employer Ownership scheme, and only 7% said they were actively interested in pursuing it.

Given that 88% of respondents agreed it was "very important" (56%) or "quite important" (32%) for employers to get involved in the design of skills programmes, it appears the Government could be missing a trick. "Employer ownership is a trial," says Sissons. "But it looks like that's the way we are going in terms of policy: moving towards greater employer ownership of skills generally. If organisations are interested, watch this space and be ready to take the opportunities as they become available."

"It is very early days yet," adds Wood. "The Government is looking for employers to come up with innovative solutions for solving not just internal issues, but getting together in consortia. It's a good time. Organisations have got an invitation to work with others to propose new ways of working and new qualifications. Qualifications can be a bit rigid; this is an opportunity to suggest things that work for you as an employer."

This all points towards having employers, suppliers, the Government and employees themselves all take on a proportion of responsibility for the skills shortage, and working together to fix it. "When we ask whose responsibility it is - employer, employee or the Government - the answer is it's everyone's responsibility," says Sissons. "We need employers, the Government and individuals co-investing, not just in terms of finances, but also in terms of time. Employees do need to grasp the opportunities that are available to them."

And whatever challenges organisations may be facing in terms of skills gaps, now appears to be the time to start thinking differently, according to Wood. "This is an interesting moment," she says. "Employers and organisations that are supporting learning are going to be given some more freedoms. Now is the chance to work together and design learning differently. We should seize the opportunity."

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