Preview the key findings from Chandler Macleod Group's latest whitepaper on Skills Utilisation. To receive the full whitepaper, visit http://www.chandlermacleod.com/skills-utilisation-white-paper

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SKILLS UTILISATION
How effectively are businesses
utilising the skills at their disposal?

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Skills Utilisation in Australia
A$54.8 billionAnnual cost of employeedisengagement to theAustralian economySource: Gallup
TOP 3
feelings individuals feel as a
result of skills underutilisation:
1. Loss of job satisfaction
2. Boredom
3. Feeling of being unappreciated
Source: Chandler Macleod
#1 reason for employers to pay attention to employee engagement:
Organisations with engaged workforces have 147% higher earnings per share than those who don’t
Source: Gallup
Australian managers and
executives who are highly
engaged in their jobs: 1 in 5
Source: Gallup
The good news
Engaged workplaces can boost economies
Source: Chandler Macleod
Only 24% of Australians are engaged in their jobs
Source: Gallup
The BAD news
Almost 1 in 10 organisations estimate that more than half
their workforce has significant skills underutilisation
Source: Chandler Macleod
Employees who don’t
advertise all their skills
to their employer for fear
of being perceived as
overqualified
Employers who
assume their employee’s
skills are >50%
underutilised
Proportion of
employees who report
that their skills
are underutilised
Employers who can
estimate the level
of underutilisation in
their workforce
Source: Chandler Macleod

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Australia’s productivity growth woes have sent politicians
and business leaders on an urgent search for answers.
With productivity across most segments of the Australian
economy well below world-best practice, leaders are
looking for productivity triggers - and utilisation has
become a buzzword.
Unsurprisingly our latest research confirms that skills
underutilisation exists and that organisations with
engaged workforces have 147% higher earnings per
share than those who don’t - the surprise is that skills
underutilisation presents at far higher levels than
employers presume.
„„ There is no general definition of skills utilisation.
Consequently, organisations don’t measure what
they can’t define. 81% of employers cannot estimate
underutilisation within their own organisation, and
although skills shortages impact on their performance, just
17% have tried to quantify the cost of skills shortages.
„„ While employees and employers are agreed that skills are
being underutilised, employers vastly underestimate by
what extent. Of those employers who could put a figure
on underutilisation, most approximate it at less then 20%
and only 8% believe the level of underutilisation is over
50%. But almost two thirds - 64% - of employees indicate
that they have skills which current or recent employers are
not utilising, and 74% report that their employer does not
know all their skills.
„„ In our current variable economy, different sectors are
adjusting to structural changes with varied pace and
emphasis. However, whether organisations are concerned
with cost cutting or with revenue growth, labour
productivity remains a key driver for success, and skills
utilisation is a key process of labour productivity.Today’s
businesses are doing more with less; they have worked
hard to push the productivity levers of process efficiency,
restructuring and systems standardisation, leaving
better utilisation of human capital as one of the last
remaining productivity levers.
„„ Nine out of ten - a massive 91% of employers surveyed
- indicated a current skills shortage within their
organisation. This is up from 58% in our October 2012
Productivity white paper. With skills shortages in some
areas and industries threatening to trigger wage inflation
and risk growth, the need for the business community
to pay much greater attention to the issue of skills
utilisation is heightened.
„„ The need for outstanding leadership, culture and values,
supportive HR practices, communication and employee
engagement has never been more crucial. In particular,
strong and innovative leadership and management
within organisations plays a key role, acting as both a
‘trigger’ and ‘enabler’ of skills utilisation.
„„ The costs and benefits of skills utilisation do not solely rest
with employers. Personal decisions made by employees have
a significant impact on skills utilisation at an individual,
an enterprise and a national level. Remarkably, 42% of
employees we surveyed said they do not advertise all
their skills to their employer for fear of being perceived as
overqualified. Employees need to share the responsibility
to engage, communicate and manage the use of their
skills. If their employers have little to no knowledge of
their skills, underutilisation will occur.
„„ Organisations of any size or sector can lift their
productivity by better exploiting their employees’ full
range of capabilities. Those that start pushing towards
their utilisation potential now stand to gain significant
advantage over those whose inertia keeps them stuck
at their current level, or even sliding backwards. Not
realising these benefits is something organisations can ill-
afford at the best of times; it is something they especially
cannot ignore in the current economic climate.
Key Findings
About the research:
The research for this white paper was conducted for Chandler Macleod by Lonergan Research during January 2014. The methodology comprised an online survey,
with responses gained across a range of industry and organisation sizes, as well as secondary research across a range of published articles and reports.
386 senior businesspeople and 258 employees were surveyed in February 2014.

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The research underpinning this report uncovered the following
key areas that business leaders urgently need to address to realise
the sizeable latent potential associated with skills utilisation:
„„ With Holden, Toyota and Ford exiting local production,
and other manufacturing closures such as the decision to
close Alcoa’s Geelong smelter, Australian industry must be
more innovative in recognising and deploying skills as
our labour force is required to evolve into new industries.
„„ Re-think business models. Discern which work needs
to be done by full-time employees and which can be
done more efficiently through contracting, outsourcing
or offshoring. When employees are not utilised for 100%
of their time and skills, it may make economic sense to
outsource. This applies as much to senior managers as it
does to other employees. For example, you may need an
IR Manager to deal with complex employee laws, but if
employing a full-time employee means their skills and time
would not be fully utilised, it may make sense to outsource.
„„ Better use of technology. There are many possibilities
for applying data capture and measurement around skills
utilisation. Implement some form of time recording – by
capturing timesheets you will better understand current
utilisation and productivity. Use an employee engagement
survey to drive changes in productivity. Don’t just track
employee training – go a step further and use your HRIS
to conduct skills audits, move underutilised employees
into the right roles, and track, support and retain staff.
„„ Hire for BestFit™, not just qualifications. Simply
matching employee skills and qualifications to the job is
not enough. High performing organisations find and keep
employees with the right skills and the right
attitudes necessary to help the business reach its goals by
contributing their talent and expertise.
„„ Set the tone from the top. CEOs must make productivity
a priority by setting the tone and following through.
Businesses will see the most benefit from initiatives
where leaders weave them into performance expectations
for managers and enable employees to execute on those
expectations.
„„ Engage and up skill line managers. Leadership and
management have a greater impact on skills utilisation
than any other factors. The best utilisation strategy
can’t succeed unless it is adopted by managers who
have the skills and understanding necessary to engage
and motivate employees. Engage and reward managers,
and support them in acquiring the knowledge and skills
needed to better utilise their employees.
„„ Conduct a Skills Audit. Because it takes time to alter skill
levels, businesses must not only understand their current
demand for skills, but be able to predict future demand.
Conducting a skills audit can uncover the skills and talents
you have access to now, as well as help forward planning to
improve future productivity and utilisation.
„„ Implement job design. The step following a skills audit,
job design leads to job enrichment, engagement and in
the best case scenario, better skills utilisation. Ensure
work is designed to make full use of employee’s skills and
abilities, and design jobs to involve teamwork, flexible job
descriptions, multi-skilling and flexible work arrangements.
„„ Get the culture right. As Peter Drucker is famously
quoted as saying, ‘culture eats strategy for breakfast’. An
open culture which gives employees flexibility, autonomy
and a supportive environment where they can contribute
their ideas is a key success factor in successfully
introducing skills utilisation practices.
„„ Provide flexible working options. Mobility will play
an increasingly important role in hiring practises as
employers look further to recruit talent and fill skills
gaps. Consider virtual teams, outsourcing, international
placements, contracting and job sharing as opportunities
to increase your skills base and more fully utilise the skills
you do have.
„„ Offer training for casual and part-time employees.
IBISWorld Chairman Phil Ruthven says that by the middle
of the century, all workers will be their own enterprise as
contractual arrangements supplant the concept of being
an employee. (25
) With the changing face of the workforce,
it no longer makes sense to invest less effort in up
skilling part-time and casual employees and independent
contractors.
„„ Reward productivity. Identify metrics and support
managers in setting productivity goals for employees.
Motivate employees to deploy their ability by linking
productivity metrics to performance reviews and reward
employees financially with a share in productivity gains.
„„ Employees need to be more transparent. If they want
more satisfying and better jobs and improved career
pathways, employees need to start having honest
conversations with their managers about their skill levels
and how these are being utilised. Employees will also
need to take more responsibility for driving their own
skills development, training and education, especially as
they are likely to have multiple careers throughout their
working lives. Equally, employers need to be receptive to
these conversations and ensure the channels for disclosure
of skills sets remain open.
Recommendations

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SKILLS UTILISATION