Global businesses face need to up pay amid talent shortage

17 January 2018 Consultancy.uk

Research of 2,500 businesses in 36 economies, has highlighted profitability downgrades in nine out of ten businesses. As mounting pressure for talent is increasingly likely over 2018, bosses are expected to see real pressure to concede to demands for increased pay for skilled workers in the near future.

Grant Thornton research suggests that a squeeze on skilled employees is set to put pressure on companies over the coming 12 months. As workers with in-demand skills leverage their position to demand higher wages, even top companies could experience significant pay pressure, which may impact profitability. In turn, some experts suggest this could increase inflationary pressure, as companies up prices to maintain profit margins.

In spite of this, the analysis, from Grant Thornton’s continuing International Business Report, shows that the number of businesses expecting their profits to increase over the coming 12 months has fallen five percentage points, from 47% to 42% in the latter half of 2017. The US exhibited the largest such fall, a drop of 10 percentage points, while conversely, Germany remained by far the most pessimistic, with political uncertainty – thanks to the continuing failure to form a government following inconclusive elections – seeing 25% more businesses in the leading EU economy anticipating falls in profit.Global businesses face need to up pay amid talent shortageMore generally, ‘optimism’ remains high across the globe however, with US firms’ optimism gaged at 70%, followed by Chinese businesses at 52%, in what is a three-year high.

The UK

The UK, meanwhile, continues to find itself in uncertainty – profitability expectations in the second half of 2017 fell to 39% of respondents, while business optimism has plummeted to a net 9%, the lowest level seen since the start of 2013. With the UK’s business scene recently rocked by the collapse of major construction firm Carillion, a turbulent 2018 already appears to be on the cards for the British economy.

Over the next 12 months, the UK faces other challenges, including access to key skills becoming increasingly scare – particularly in light of EU national concerns around the effect of Brexit – and as it stands, around 38% of leaders say that skill shortages are on the rise. Currently the UK faces the opposite problem suggested by Grant Thornton for the globe, as a sustained stagnation in real wages has placed increased pressure on households, and limited consumer power. As a result the UK economy continues to grow at a slower than average rate. The lack of access to skills could be a positive in some aspects then, as it may finally see wage increases, with competition for skills potentially pushing up remunerations (cited by 78% of Grant Thornton’s respondents) over the coming 12 months.

Commenting on the figures, Francesca Lagerberg, Global Leader at Grant Thornton, said, “Profits are under pressure. Wage bills are firmly on the rise as businesses try to tackle the skilled worker shortage.  It’s an issue that is becoming acute. In all the years surveying businesses, this is the highest level of concern we have seen about the potentially negative impact of a lack of skilled staff on growth prospects. Companies are having to compete for skills - both to retain those they have and recruit those they need. As a result, we are seeing businesses plan to boost pay. This reflects what we are hearing from companies around the world, and firms paying staff more is almost certainly hitting the outlook on profits.

She added, “Nine in ten of the world’s largest economies have reduced their profit outlook for the coming year. The impact will be significant and are real threat to long term growth. Diverting profits to pay staff is understandable. But it will limit firms’ ability to invest in future long-term growth through R&D or plant and machinery. Furthermore, if profits are depressed, businesses may look to increase the price of their goods and services – which creates inflationary pressure. As businesses plan for the coming months and years, it will be critical to ensure a balance so that other investments are not abandoned altogether.”

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Why leaders must balance technical expertise with soft skills

17 April 2019 Consultancy.uk

Soft skills matter in the workplace just as much as technical expertise, writes Samantha Caine, Managing Director of Business Linked Teams.

For too long technical expertise has been seen as the marker of a strong candidate for development into a sales or leadership position. Sales and leadership candidates are tasked with demonstrating a diverse and wide-ranging set of technical skills, yet their aptitude in these technical skills or ‘hard skills’ cannot signify great leadership potential. This is why a healthy balance of soft skills and technical ability is required. 

So what exactly is the difference between technical skills and soft skills? In engineering, it’s crucial to demonstrate knowledge of physics as well as a strong grasp on mathematical equations. Yet, in any industry, it’s important for leaders to be able to interact with other people effectively with soft skills like communication, empathy and adaptability. 

Business Linked Team’s 2018 study into internal leadership development revealed that 69% of large organisations are prioritising the identification and development of future leaders from within the workforce. As more and more organisations begin to invest in sales or leadership development within their existing workforces, more focus needs to be placed on ensuring the right soft skills are in place. 

With those soft skills in place throughout the workforce, the business will benefit from a wider pool of potential leaders developing under their noses, and it should be the same where sales candidates are concerned. 

It’s not just about easier access to ideal candidates for these positions without the rigmarole of recruiting from outside of the organisation. The leadership development study also found that 89% of HR decision makers say succession planning has become a top priority. Those currently serving in leadership positions can’t lead forever and the same goes for those generating sales for the business.

Why leaders must balance technical expertise with soft skills

From people leaving for new opportunities or retirement, to people simply stepping aside to focus on other areas of the business, successful leaders and salespeople require experienced and capable successors that will be ready and able to confidently step into their shoes and pick up the mantle without the business experiencing any lapse in performance.

Soft skills make stronger candidates

When it comes to the soft skills required, a strong leader must be able to manage through clear communication and effective time management, coaching and goal setting. They must be able to demonstrate empathy and empower their teams to be successful, productive and fully engaged. And beyond simply giving direction, they must also be able to take direction from those above them and cascade the business strategy down through their teams. 

A strong sales candidate must possess the ability to communicate value to the customer, negotiate well and protect margin or the ability to increase the scope of a particular sales opportunity. 

With the relevant soft skills in place, the business will benefit from increased productivity, greater agility against changing market conditions and greater transparency. In turn, this will provide visibility on issues and inefficiencies while removing opportunity for miscommunication. All of this can transform the culture of a department, improving employee satisfaction and reducing staff turnover. 

Ultimately, developing leadership or sales candidates will require the business to strike the right balance between technical skills and soft skills, and this requires an effective and sustained learning journey.

A balanced learning journey

Facilitating and supporting the development of leadership and sales is best achieved by establishing training groups. By cultivating training groups, businesses are creating talent pools that will inspire and support each other on the learning journey. However, personal goals and learning objectives must be defined for each individual based on their own existing skillsets and the skills that each individual needs to develop. 

With the emergence of e-learning, businesses recognise the value of online-based learning activities, yet many make the mistake of opting for one-size-fits-all solutions which are solely focused on self-study. A development solution will only deliver true return on investment if it combines e-learning activities with group learning activities that provide opportunity for shared experiences and support.

A blended learning solution that combines self-study and face-to-face group learning activities will aid strong development of the talent pool through shared experiences. Through these shared experiences, those undergoing the training will organically develop a support network that supports the development of the group as much as it supports the development of each individual. 

The blended learning approach is supported by one of the seven principles of human learning that socially supported interactions aid the individual development of expertise, metacognitive skills, and formation of the learner’s sense of self. The strongest opportunities for development can be unlocked by blending workshops with online activities such as virtual sessions, peer coaching, self-study, online games and business simulations. But it’s crucial to provide a blend of one-to-one and group sessions too.

Beyond delivering a better learning outcome for the employee, the blended learning approach allows organisations to adapt their training quickly and easily to shifting business demands in an ever-changing landscape.