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Rethinking how establishment skills surveys can more effectively identify workforce skills gaps
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Rethinking how establishment skills surveys can more effectively identify workforce skills gaps

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Through a multicountry, practice-based review of establishment skills surveys, this article identifies conceptual issues with defining and measuring skills gaps. By harmonizing divergent ...

Through a multicountry, practice-based review of establishment skills surveys, this article identifies conceptual issues with defining and measuring skills gaps. By harmonizing divergent conceptualizations, an operational definition of skills gaps as a situation in which current employees lack the skills to perform their jobs which results in the compromised ability of a firm to meet business objectives is proposed. This operationalization of the concept offers a more complete answer to how firms are impacted by workforce deficiencies in achieving business objectives implying that understanding job proficiency without assessing the organizational context in which workforce skills are deployed towards market objectives is insufficient. By addressing measurement issues, an alternative approach to establishment skills surveys is advanced that can play a more effective role in determining how workforce skills influence achievement of firm business objectives. The open systems model of the firm is used to explain how skills gaps serve as a bottleneck to the overall functioning of the firm and to demonstrate that firm mitigation strategies are subject to managerial perceptions which can influence the effectiveness and level at which strategies are targeted. A typology of the causes of skills gaps is also proposed as a starting point for government intervention.

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  • 1. Rethinking How Establishment Skills Surveys Can More EffectivelyAbout Us Identify Workforce Skills Gaps Tahseen Consulting is an advisor on strategic and organizational issues facing governments, social sector institutions, and corporations in the Arab World. You can read more about our capabilities at tahseen.ae An alternative approach to skills surveys that can play a more ▲Public Sector effective role in determining the suitability of workforce skillsSocial SectorCorporate ResponsibilityCONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of Tahseen Consulting is strictly prohibited www.tahseen.ae | 1
  • 2. A multicountry, practice-based review of skills surveys reveals skills shortages are anexpressed difficulty in recruiting individuals from the labor market with a particular skill set Skills Shortage Definition Implied by Typical Survey Approaches Filtering Criteria: Reasons why the vacancies are difficult to fill Difficult to fill vacancies attributed to skills related Skills Shortage Filtering Criteria: Are reasons such as any of these vacancies A skills shortage is a sub-set of hard-to- difficult to fill? • Lack of relevant skills fill vacancies due to a low number of • Lack of experience applicants attributed to at least one of Establishment survey • Inadequate qualifications the following reasons for recruitment Difficult to fill identifies firm difficulties: vacancies identified level vacancies Difficult to fill vacancies attributed to other reasons • Lack of required skills such as • Lack of work experience the company • Unsuitable to the work demands • Too young/old • Attitude/presentation • Lack of qualifications the company • Other demands | 2
  • 3. However, the concept of a skills gap lacks conceptual clarity … Skills Gap Definition Implied by Typical Survey Approaches Survey approaches to detect incidence and Based on the survey approach, a firm faces a extent of skills gaps skills gap in the following scenarios … Direct Single Question: asks a question such If respondent agrees that there is a gap as “Do you think there is a skills gap in your between the organization’s skills needs and organization?” its current workforce skills Skills GapsEstablishment survey or self assessment Proficiency Range/Quantification: If one or more staff are felt not to be fully These survey respondents are asked how many (or to give proficient at their job; If ranges are given, a approaches imply that a range) employees within an occupational cutoff proficiency level is specified below skills gaps refer to the group are fully proficient in their jobs which a firm faces a gap following scenarios: Dual Direct Question and Proficiency: If respondent agrees with the direct question • A situation in which combines both the approaches above asking or has non proficient staff. Typically only one employers perceive both a direct and a proficiency question measure is shown to avoid confusion. current employees to be less than fully Skills-Specific Upgrading Approach: proficient for their respondents specify which skills areas need If respondent indicates any incidence of a current jobs upgrading from a list of skills or rank the skill that requires upgrading in the firm’s extent to which skills are underdeveloped current workforce • A gap between the on a likert scale skills of current employees and the Importance-Proficiency Gap Analysis: Gaps are assessed by subtracting the % of skills needed to respondents rank skills according to their respondents indicating employees are meet business importance to performing a particular job proficient in a skill from the % indicating objectives and then assess employee proficiency on that a skill is important. If the importance is likert scales higher than proficiency, a gap is concluded. | 3
  • 4. The effectiveness of skills formation systems can be viewed in the context of allocativeefficiency in the external labor market and as effective utilization in the firm Assessing Skills Formation Effectiveness in Labor Markets and at the Firm Level Skills deficiencies within the Skills deficiencies internal external labor market to the firmSkillsFormation Effective Firm-level Utilization Allocative EfficiencyObjective of Workforce SkillsDescription Preparation of individuals with the skills, work Workforce skills levels meet the expectations ofof Objective experience, and qualifications in the quantity and employers either in terms of full occupational quality to meet labor market needs proficiency or in the ability to meet business objectives with current workforce skills levels Lack of conceptualEvidence of Skills Shortages Skills Gaps claritya Deficiency • Difficulty in recruiting individuals from external • Current workforce has inadequate skill types/levels labor markets with a particular skill set due to a to meet business objectives lack of skills, work experience, or qualifications OR • Employers perceive current employees to be less than fully proficient to perform their current jobs | 4
  • 5. Unicorns can live in a fantasy world; companies and countries cannot afford to Theory General propositions, commonly regarded as correct, used to explain and predict phenomena Theoretical Fantasies “The Facts” imply a need to: • Skills shortages are ephemeral and • Ensure conceptual clarity disappear as labor markets adjust • The pricing mechanism, exercised through • Reconsider current measurement approaches expected wage returns and premia leads to allocative efficiency within labor • Understand the causes markets • Determine consequences Fact A truth known by actual experience or • Devise remediation strategies observation The Facts Although shortages and gaps are both important • Persistent shortages and gaps over the last to study, the focus of this presentation is on decade in several countries understanding the phenomenon of a skills gap • Not short lived • Pricing mechanism seems ineffective: Firms consistently rank pay or the market mechanism as the least used measures | 5
  • 6. Due to the normative way in which it is conceptualized, there are a number of sources ofdifficulty operationalizing the measurement of the phenomenon of a skills gapHR or Manager Evolving Business Needs Blur the Individual and PeerRespondent Bias Normative Threshold Evaluation BiasInfluence Effects Evolving Business Objectives Overestimation of Abilities• HR departments may understate skills issues • Evolving business strategies may mean that • Evidence from psychology and economics to justify previous budgets current workforce skills do not match changes in suggests that people are over confident• Studies show a positive relationship between company strategy, goals, markets, or business regarding their abilities non HR respondents to skills surveys and the models reporting of skills issuesRespondent Subjectivity Changing Job Requirements Peer Positivity Bias• HR/managers may assess staff skills levels • Changing job requirements due, for example, to • Studies have shown that people rate familiar differently technology adoption or job promotion, might group members as better than average• HR/managers may also have different mean that a once proficient employee now lacks opinions on the importance of particular skills the skills to perform a new or evolving role.Occupations and Skills Are Contextual Some Employers are More Demanding• Respondents may have varying • Some companies may be more demanding of interpretations of the meaning of particular their employees skills or merge skills (i.e. confusing communication and customer handlingLatent and Unreported Skills issues• Latent skills needs may exist• Unreported skills needs may occur due to little hope that a skill issue could be resolved | 6
  • 7. Four areas emerge as potential causes of skills gaps: recruitment difficulties; HR practices;strategic shifts in response to changing business environments; and transitional stages Market and Institutional Human Resources Management Structural Skills Gaps Transitional Skills Gaps Failure Induced Skills Gaps Related Skills Gaps Poor Skills Formation Policy Insufficient Staff Development Strategic shifts in response to Incomplete Orientation changing business and Integration • Lack or weakness of • Depressed levels or environments government institutions that inadequately planned training • Attributable to the beginning of prevent underinvestment in and development • Failure to increase and the employee-employer skills, provide adequate maintain workforce skills to relationship whether due to regulation, and coordinate Poor Retention and Motivation build and renew firm recent recruitment or post- stakeholders Practices competencies in response to merger employee integration changing business • HR practices that inadequately • Presumably decrease as Education and Training opportunities address employee retention or employees complete induction System Misalignment a misalignment of HR practices • A strategy-skills lag in which training and gain confidence in • Accessibility, quality, and the with sources of workforce current workforce skills lag new their roles degree to which education and motivation or expanded skills required by training systems produce alternative strategic directions employable students are associated with competency insufficient renewal Insufficient Individual Investment • Unclear returns to particular skills which negatively impact individual skilling decisions | 7
  • 8. Because an organization’s systems are interdependent, skills gaps serve as a bottleneck to limit overall effectiveness of the organization Effects of Skills Gaps An Open Systems Model of Organizations Implied by Questionnaires • Impact on strategic planning Strategic Logic Rationale for achieving organizational goals • Withdrawal from markets Management Processes • Withdraw from offering certain products Data gathering and interpreting, decision making, resource allocation • Strain on management Skills • Increased workload Intangible Resources Gaps • Lower morale Knowledge, capabilities, reputation, relationship Resource Flows • Turnover and increased recruitment costsData Flows • Difficulties introducing technological change Tangible Resources Equipment, buildings, materials • Increased operating costs Operations • Loss of efficiency/increased waste • Outsourcing Product creation, realization, support • Difficulties introducing new working practices • Delay developing new products or services Product Offerings • Loss of business or orders to competitors • Difficulties meeting quality standards Position in Product Markets • Difficulties meeting customer service objectives | 8
  • 9. The case of the Middle East: Many Arab countries face workforce skills deficiencies thatslow knowledge-based economic development and negatively impact high skill industries 10 High Skills Equilibrium United Kingdom Germany 9 Ireland Employer Demand for higher, knowledge-intensive Estonia • Strong demand for high level skills High Spain Czech Republic Hungary • Skills formulation institutions and the Lithuania Korea, Rep. 8 Latvia Portugal enabling environment work in tandem Knowledge Economy Index Ranking) Slovak Republic Greece • Knowledge-based economies with skills (as proxied by the World Bank Poland Croatia Chile Bulgaria lower levels of skills gaps 7 United Arab Emirates Qatar Romania Uruguay Bahrain Malaysia Costa Rica Kuwait 6 Serbia Brazil Russia Turkey • The perception of Arab employers Medium Saudi Arabia Jordan Oman Mexico Africa South may deter entry into knowledge- Belarus based industries which are perceived 5 Colombia Lebanon China to require skills unavailable in the Egypt Tunisia Sri Lanka Philippines national workforce or too costly to Morocco Botswana Azerbaijan build internally 4 Bolivia Vietnam Cape Verde Indonesia Syria Honduras India Guatemala Swaziland 3 Kenya Algeria Senegal Uganda Pakistan Ghana Low Skills Equilibrium Zambia Yemen Tanzania Lesotho Burkina 2 Nepal • Employers face few skill gaps in a Low Faso Mozambique Cambodia Bangladesh Ethiopia Eritrea predominantly low skilled workforce Rwanda Guinea • Little incentive to participate in 1 education and training and raise qualification levels and aspirations 0 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% Low Medium High % of firms with sufficient internal skills levels (1- % of firms reporting major or very severe skills gaps) | 9
  • 10. The interconnectedness of the various systems of the firm implies a range of approaches may be required to address skills gaps Remediation Strategies for Skills Gaps An Open Systems Model of Organizations Implied by Questionnaires Centralized systems for assessing the productive possibility frontier Workforce Strategic Logic • Predicting future skills needs planning Rationale for achieving organizational goals • Conducting skills inventories Feedback mechanisms and discretionary control Management Processes • Staff appraisals / performance reviews Data gathering and interpreting, decision making, resource allocation • Disciplinary action or making staff redundant • Nothing, leave to market Skills Development, motivation, retention, recruitment Intangible Resources Gaps • Training and development practices Knowledge, capabilities, reputation, relationship • Recruitment practices Resource FlowsData Flows Technical substitution Tangible Resources • Task automation Equipment, buildings, materials Altering production practices and routines Operations • Changing working practices Product creation, realization, support • Redefining existing jobs • Reallocating work within the company Product Offerings Position in Product Markets | 10
  • 11. Several survey design considerations must be taken into account in order to effectivelymeasure the sufficiency of workforce skills 1 Several sources of bias must be considered which impact incidence reporting The probing of generic skills applicable across industries and occupations is perhaps inevitable in light 2 of a lack of a common framework for describing sector and occupation-specific skills 3 Our current focus on general skills is not ideal but is overcome by operational compromises such as weighting occupational groupings and skills 4 Empirical evidence suggests an occupational level approach is more effective in highlighting differences between occupations , skills lacking, attributed causes, measures taken to resolve gaps, and impactsBy addressing the above operational measurement issues, establishment skills surveys can play a more effective role in determining howworkforce skills influence achievement of the macro level objectives of firms | 11
  • 12. A recommended establishment skills survey approachQuestions are asked foreach occupational group Incidence and Skills Lacking 1Occupational Group How many employees have all the skills to• Managers, directors and senior officials perform their job to• Professional occupations the required level? Thinking about your• Associate professional employees who do not In which departments and technical occupations How important is this This question refers to How important are the of your organization• Administrative and have all the skills to occupational grouping employees who have all the following skills to are there the most secretarial occupations basic skills, personal attitudes perform their jobs, to achieving your performing jobs in this employees who do not• Skilled trades occupations workplace specific, and how would you rate• Caring, leisure and Other business objectives? occupational grouping? have all the skills to technical skills that allows their sufficiency in the service occupations your company to meet following skills? perform their job?• Sales and customer service business objectives. It does occupations not refer to personal• Process, plant and machine performance, ability, or operatives individual attributes of• Elementary occupations employees. Causes Impact Remediation Barriers 2 3 4 5 How significant is this Which steps has this problem in terms of establishment made to the effect on your identify and overcome establishment’s ability Which of the following What are the main the fact that some to meet its business barriers would you say causes of some of your employees do not have objectives? may exist to your employees not having all the skills to perform developing staff with all the skills to perform their job ? How does the fact that all the skills to perform their jobs? some of your staff do their job? What impact have not have the skills to these interventions perform their jobs had on your firm? impact achievement of business objectives? | 12
  • 13. • For Further Information About This ‫للمزيد من المعلومات عن هذا العرض التقديمي‬ • Presentation ‫للحصول على العرض التقديمي الكامل لهذه المبادرة يرجى‬ To get a copy of the full presentation or to ‫االتصال بـ ويزلي شوالييه على العنوان‬ discuss the findings, please contact Wes wes.schwalje@tahseen.ae Schwalje wes.schwalje@tahseen.ae• For Inquiries About Our Services and ‫• لالستفسار عن خدماتنا ولعرض أفكاركم علينا‬ Requests for Proposals ‫لالستفسار عن خدماتنا أو عرض أفكاركم علينا يرجى االتصال‬ To inquire about our services or submit a ‫بنا عبر اإلنترنت باستخدام النموذج أدناه أو إرسال بريد‬ request for proposal, please contact us using fikra@tahseen.ae ‫إلكتروني إلى‬ the online form or send an e-mail to fikra@tahseen.ae• For Organizations Interested in Alliances ‫• بالنسبة للمنظمات التي لديها اهتمام بالدخول في اتفاقيات‬ ‫شراكة وفي تحالفات مع شركة تحسين لالستشارات‬ We are interested in opportunities where our technical skills and expertise can be used to ‫إننا مهتمون بالفرص التي يمكن من خاللها استخدام مهاراتنا‬ complement or diversify those of potential ‫وخبراتنا الفنية لتكميل أو لتنويع مهارات وخبرات شركائنا‬ partners to pursue specific government funding ّ ‫المحتملين بما يمكن من السعي للحصول على تمويل حكومي أو‬ opportunities, commercial contracts, or RFPs. ‫عقود تجارية. لبدء نقاش حول الدخول في تحالف مع شركة‬ To begin a discussion about entering into an ‫تحسين لالستشارات يرجى االتصال بوليد العرادي على‬ alliance with Tahseen Consulting, please walid.aradi@tahseen.ae ‫العنوان‬ contact Walid Aradi at walid.aradi@tahseen.ae ‫• بالنسبة للعاملين في الصحافة أو في وسائل اإلعالم‬• For Members of the Press or Media ّ ‫لالستفسارات المقدمة من قبل وسائل اإلعالم يرجى االتصال بـ‬ For media inquiries, please contact Wes ‫ويـزلي شـوالييه على العنوان‬ Schwalje at wes.schwalje@tahseen.ae wes.schwalje@tahseen.ae
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