Exclusive: Australia falters on retention

Supply chain hiring trends strong but we still lag behind Asia when it comes to holding on to the best people, survey finds

Exclusive: Australia falters on retention
Australia falters with people management

By Anna Game-Lopata | September 29, 2011

Supply chain hiring trends in Australia remain stronger than other western economies, but we still lag behind Asia when it comes to acquiring and holding on to the best talent.

That's, according to Global recruitment and consulting firm Logistics Executive Recruitment’s 2011-12 Employment Market Survey, just released exclusively to SupplyChain Review.

According to the annual survey, most businesses have experienced growth over the last 12, and 80 percent of employers expect staff levels to either remain the same or increase in the coming year.

"This suggests demand for talent in vital roles will be at least as high or stronger in the coming 12 months compared to the past year," says Logistics Executive Recruitment CEO Kim Winter.

Meanwhile, 64 percent of executives, representing mainly third and fourth party logistics providers, distributors, fast moving consumer goods companies (FMCG) and manufacturers, report greater difficulties employing quality talent in key positions.

Only 7 percent say attracting and acquiring talent to meet current and future demand has become easier.

"These results support other strong evidence that our industry continues to suffer from significant skills shortages across many positions," Winter says.

The survey reveals roles executives most recently had trouble filling include logistics and transport, supply chain, distribution and warehousing, a pattern unchanged from last year’s survey.

"The high demand and low supply for these roles is the result of ongoing pull factors at play due to the massive requirements of the energy and resources market," Winter says.

"Secondly most organisations are facing considerable pressure to up skill and optimise business performance."

Despite their difficulties, Australian employers are the least likely of all the 82 countries surveyed to recruit offshore.

There was a slight increase in the number of respondents who say they would consider recruiting from overseas in roles where skill shortages exist.

"This year 62 percent indicate international candidates would definitely be an option compared with last year’s figure of 56 percent," Winter says.

"As in prior years, executives see the main constraints to the employment of overseas people as visa issues, lack of cultural fit and language difficulties."

By comparison, over 70 percent overseas based respondents say they will consider recruiting from overseas.

Worryingly, this year’s Supply Chain and Logistics Employment Market Survey reveals Asia leads Australia in virtually all key indicators of hiring intentions from and qualitative and quantitative perspective.

"This is a direct result of the continued strength of Asian economies as not only traditional bastions such as China, India and Singapore continue to lead world growth stats but this trend now also includes countries such as Indonesia and Vietnam," Winter says.

"In a talent short, highly dynamic and competitive environment, employers need to be open to a much wider source of skills that could contribute value to the organisation," he adds.

Along with productivity and customer satisfaction, retaining employees figures high on the list of significant challenges CEOs believe their businesses face - a change from previous years.

"The survey reveals CEOs think talent retention is a greater challenge than attraction," Winter says.

"In the past, talent attraction has been slightly more of a focus than retention. This suggests companies are deliberately looking inward to protect human assets.

"Having witnessed the fallout and cost to the organisation of losing key team members, C-level executives are beginning to understand the true value of retaining them. Seeking a replacement simply causes too much of a distraction from core tasks."

While retention, training and leadership development are the top ranked challenges for recruiters, the survey shows Australian companies are still lacking strategies to properly address these issues.

For example, only 67 percent say their company engage formal, standard ‘on-boarding’ processes, the name given to induction policies to welcome and help new staff settle in, develop goals and ‘get on board’.

"This is a poor result compared to significantly higher levels of formal on-boarding across the other key regions such as Asia and the Middle East," Winter says.

Also, just 62 percent say leadership gaps are systematically identified in their company, the same figure as last year.

"Given that leadership development is in the top three issues earmarked for attention next year, this result seems too low. We believe this identifies an area of real concern for companies."

"Organisations often make the mistake of realigning business strategy and operations without redeploying, recruiting or exiting talent across vital elements of the organisation.

"This can have a direct negative impact on the execution of critical initiatives," Winter says.

Given last year’s survey revealed a large disconnect between management and HR, Winter says it’s encouraging to see 90 percent designate the relationship essential this year.

However just 66 percent feel HR is sufficiently aligned to business outcomes, down slightly on last year. When asked if their organisation supported HR adequately respondents advised this is the case only 67 percent of the time – well down from 81 percent in 2010.

"This suggests that the HR function still remains undervalued in many organisations," Winter says. "Possibly the true value of HR is either under utilised or not fully understood by many senior executives."

The survey finds 69 percent of those responsible for recruitment think staff turnover in their companies isn’t too high. Forty-four percent say it is generally 5 percent or less.

But Winter says his experience over the last year leads him to believe these figures may be understated.

"Only a small percentage of those surveyed were involved in recruitment and many executives indicate a reluctance to move positions during turbulent economic times."

Surprisingly, executives surveyed complain of significant recruitment difficulties on the one hand, yet just 10 percent say skills shortages are impacting their business to a ‘high or critical’ degree. Just over 46 percent says skills shortages have impacted their business ‘to some degree’ whereas last year this figure was just over 50 percent.

"Our view is that most organisations are yet to fully understand the impact of skills shortages on their organisations," Winter says.

"Many executives attribute poor business results to external competition or internal operational factors, overlooking the fact that people are the resource that makes the decisions most likely to determine performance."

As in previous years respondents this year believe it takes slightly longer to recruit today than two years ago.

Currently the bulk of respondents fall in the range 21-35 days whereas they believe two years ago it ranged from 16-30 days.

A whopping 90 percent of employers say salary benchmarking is important to them, a rise on 85 percent in 2010, while employees still maintain money isn’t always the key factor attracting them to roles and keeping them there.

"Our employment market surveys over several years show the desire for career advancement is ahead of remuneration as the main reason people join companies," Winter says.

"‘Cultural fit’ with a company and ‘company values’ figure as primary reasons for both joining and leaving.

"As Generation X and Y populate executive ranks they are asserting their preference for work environments that cater to their personal and social needs," Winter adds.

"Worker friendly workplaces can now include crèches, gymnasiums, flexible work hours and free meals.

"Collaborative leadership and management styles along with an emphasis on corporate social responsibility (CSR) are also ranked highly by younger generations."

To prove the point, over 70 percent of organisations surveyed say they have a CSR program, motivated by a desire to benefit society.

"Respondents underline that CSR creates a strong public image in the community however only 29 percent measure ROI around it," Winter says.

Even when considering re-locating for work the survey shows career development before salary as a key consideration, followed by lifestyle advantages.

"Australians are prepared to move long distances for the right role once their key considerations are met," Winter says.

"Twenty-nine percent have moved interstate and 25 percent have moved internationally. Seventy-eight percent say they would consider relocating again in the future.

"That’s a strong message for employers, suggesting interstate talent can be acquired if the employment proposition is pitched around career development, salary, life style and family."

The survey shows the majority (73 percent) of salary increases in the last year were in the range of up to 5 percent.

"Seventy-six percent of respondents anticipate a pay rise which corresponds fairly well with the 73 [percent] that achieved one," Winter says.

"Ensuring the organisation has the appropriate design to meet business plans will be important this year," Winter predicts.

"There is a growing trend for businesses to adopt mapping projects that create visibility on available talent across the wider market before recruiting from a local or known pool of candidates.

"Attracting and acquiring new talent is a constant challenge but also represents the opportunity to inject vital new expertise into the business," he says.

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