Will 2012 be a year of HR complacency or a year of competitive advantage?

by 19 Jan 2012

At the start of each year, we simultaneously reflect on the past while making plans for the future. The past year suggests that we are in for a bumpy ride in 2012. There’s no indication that the economic uncertainty and market volatility of 2011 will stabilise any time soon, and few executives are banking on a speedy recovery. Talent2’s APAC Market Pulse Study found that as of November 2011, 91% of APAC business executives were concerned about an imminent recession. However, the fiscal-focused headlines may be distracting us from more important issues at hand. For Australian HR directors, 2012’s biggest worry shouldn’t be the state of global markets, but the outmoded operating models which they base their strategies upon.

Australia’s HR industry must resolve to refresh its current practices if it wants to stay globally competitive. At present, market conditions are still relatively stable in Australia, a luxury few other countries are enjoying. Nevertheless, stability is a double-edged sword. On one hand, it means the severity and frequency of market pain points is minimised; on the other, it can breed complacency and the belief that a “business as usual” mindset is enough to stay competitive. Australian HR directors need to wake up to the fact that the game is slowly but inexorably changing, and that they’ll need new strategies and models if they want to stay ahead of the pack. 2012 will see opportunities exist to take advantage of the relatively favourable market conditions in Australia, helping businesses establish a competitive advantage, as well as weatherproofing against future uncertainties. Yet businesses are not thinking differently and not realising the current potential. By failing to sufficiently protect their organisation’s soft underbelly, this malaise could be costly come tougher times.

If you look closely you can already see signs of what to expect in 2012. We’re still seeing a prolonged shortage of skilled labour in Australia, which has had implications for most businesses in one form or another. The Australian Government’s National Skills Shortage Report in June 2011 found that most sectors are encountering shortages of experienced workers combined with increasingly high qualification requirements amongst employers. Metropolitan employers are only able to fill around 64% of vacancies, with that number dropping to 56% for regional employers*.

While shortages are largely confined to skilled labourers at present, the professions are by no means immune: Talent2’s APAC Market Pulse Study found that 79% of APAC businesses are having trouble filling middle management positions. And 65% of businesses in the APAC region are having recruiting problems due to skills shortages. The numbers may not yet be at a “tipping point”, but we could easily reach one in 2012 if the HR profession doesn’t itself undergo a major shift in mindset.

Current HR doctrine is increasingly inadequate on several counts. Employers are continuing to use out of date practices such as using multiple recruitment agencies to cover the same tasks, adding millions of dollars to their bottom-line expenses with little demonstrable benefit. HR executives are still focusing on formal qualifications rather than a potential recruit’s working experience, compatibility with workplace culture, and complementary or transferrable skill sets. And too few organisations are focusing on strategic talent management in areas like retention and engagement, despite growing evidence to suggest that salary size is only one factor for today’s potential recruits.

If Australian HR doesn’t make significant changes to its core models, these shortcomings are only going to hinder us more when competing on a global scale. Australian companies may be happy to rest on the status quo, but businesses in other parts of the APAC region are pushing hard to grow at double-digit rates – and many are succeeding. Just less than half the respondents in the Market Pulse Survey said they’d enjoyed consistent growth since the Global Financial Crisis despite near-universal fears of recession. It’s clear that business in the region isn’t just letting any 2012 turbulence catch it unaware.

So competition from our neighbours is going to increase in 2012 with talent becoming harder to find and attract within our shores. The way we can address this is by rethinking our models and strategies to meet these challenges head-on. Top companies worldwide are already looking at alternatives to traditional recruiting, with many recognising the benefits of outsourcing, a trend that we expect to continue in 2012. A quality Recruitment Process Outsourcing (RPO) provider focuses on the quality of hire and candidate experience, helping businesses to develop their employment brand to attract talent in a skills short market. Many of these companies need a flexible RPO solution that lowers their fixed costs in low periods of recruiting activity helping them to keep costs in check in a volatile market. RPO over traditional recruitment provides economies of scale, economies of scope, cost reduction and flexibility.

In a skills short market, businesses need to think not only about new hires but also turn their strategic focus to employee retention , through everything from learning programs and social events to cultivating side projects and entrepreneurship during office time**. We’re seeing a jump in outsourcing to contingent workers like freelancers and contractors, who are often a lot more flexible (and cost-effective) than permanent hires. And we can prepare to meet a predicted influx in talent migration to Australia and Asia out of the beleaguered US and European markets. These three trends are likely to underpin how HR approaches 2012 both in Australia and worldwide.

Knowing what to expect is only one step, however. HR directors need to take active measures to change the way they do business to be as effective as possible for 2012. Considering outsourcing solutions, fostering unique workplace cultures and facilitating increased employer-employee dialogue all take significant amounts of time and commitment. But the results – stronger retention, heightened productivity, and more talent wanting in – are well worth it no matter what happens in 2012. New Year’s Resolutions are never easy, but this is one which Australia’s HR industry can’t afford to break.

About the author

Andrew Grant is the global managing director of recruitment managed services at Talent2

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