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Skills shortage

TEC members say skills shortage is getting worse.

Created for TEC Express, April 2007

Topic: TEC Confidence Indext Results

Economy not expected to improve, but most members plan to grow. TEC members are in build mode with strong plans to increase fixed costs and staff numbers to handle expectations that 80% of Australian members and 67% of New Zealand members will grow revenues this year, according to the Q1 2007 TEC Confidence Index. This is despite the fact that only 21% of Australian and 12% of New Zealanders expect their economies to improve in the next year.

With more than two-thirds of members in both countries saying that in the last year it has become more difficult to find staff, New Zealanders have the most difficulty recruiting and retaining sales and marketing people. Nearly half of Australians said they will be looking to recruit overseas, mainly for staff in professional services and trades.

Australians are more likely to recruit from competitors than New Zealanders (60% compared to 42%), but only a quarter of members in both countries are using strategies to stop their staff being headhunted.

In Australia, this year staff are less likely to move to a competitor (5% compared to 10% last year) or go looking for more money (24% compared to 41% last year), while many more are on the move and leaving for geographical reasons (13% compared to 4% last year). In New Zealand, staff are more likely to leave because of interpersonal/management issues with 27% reporting this as a reason, compared to 15% in Australia.

Seventy-one percent of New Zealanders and 69% of Australians offer employees a positive culture to encourage them to stay, and 58% of New Zealand members and 40% of Australian members have a formal program to lower staff turnover.

The quarterly TEC Index was completed by 318 Australasian TEC members in late February 2007 and, for the first time, included New Zealand TEC members. Following are overall highlights and Australian-state-specific highlights.

For your member-exclusive copy of the complete TEC Index results, email tec_index@tec.com.au with your group number.

Overall Economy Highlights

The number of Australian members who say the economy is in better shape today than a year ago has increased by a quarter from last year (28% now from 22% this time last year). But, it may have reached a plateau with only 21% believe it will be better this time next year.
In New Zealand, 54% of members think the economy has been stable over the past year with 25% saying it is worse and 21% saying it has improved. The majority (67%) expect more of the same in the next year and only 12% expected better conditions.
This economic outlook hasn’t stopped business optimism. In Australia, 80% say their sales revenue will increase in the next 12 months (up from 74% this time last year), compared with just 4% who anticipate a decrease.
New Zealanders are not quite as positive as the Australians on sales revenue, with 67% expecting increases and 12% planning a decrease.
Two thirds of Australians say their profits will improve this year, with only 9% (down from 13% this time last year) saying a drop in their profits is on the cards.
New Zealanders are more positive than the Australians on their profits with 71% expecting increases and only 4% expecting a decrease.
Australians are significantly more optimistic in terms of increasing their employee numbers this year compared to this time last year, with 65% suggesting they would increase staff numbers compared to 53% last year.
In New Zealand, 62% plan to increase staff numbers with 12% planning to decrease.
New Zealanders are much less confident about their currency than Australians. The value of the Australian dollar is expected to remain stable by 70% of members, while only 54% of New Zealanders expect stability and 33% expect a drop.

Recruitment & Retention issues - highlights

More than two-thirds of members in both countries indicated it was harder to find new staff this year than last year.
60% of Australians and 42% of New Zealanders are recruiting from competitors with employee referral schemes and recruitment firms the most popular strategies.
Only a quarter of members in both countries are using strategies to stop head hunters from taking their staff.
The most popular methods of those who do have strategies are using study support and share options to encourage loyalty.
The majority of members (83% in NZ and 69% in Australia) recruit to accommodate current business growth or to expand business into new areas rather than recruiting to replace staff.
In Australia, professional staff (IT, finance, HR) was cited by 30% as the most difficult area to recruit and retain quality staff followed by sales and marketing staff at 26%. In NZ, sales and marketing staff were named first at 54% followed by professional staff at 21%.
Recruitment agencies are still the most popular mechanism for hiring staff in both countries (42% in NZ and 32% in Australia).
40% of Australians indicated that ‘potential and ability to train’ is the most important criteria for hiring new staff, while New Zealand members value experience and industry knowledge most at 46%.
Multiple interviews were the most common method used in the recruitment process at 96% in New Zealand and 60% in Australia.
100% of New Zealand members and 88% of Australians said they sometimes or always include future team members in the recruitment process.
The majority of members (71% in NZ and 69% in Australia) said they offered a ‘positive organisational culture’ to encourage their staff to remain at their organisation, while 40% in Australia and 38% in NZ offer an improved salary. (multiple-answer question).
Full-time employees makeup the majority of staff (89% in Australia and 83% in NZ), and are also considered the most productive type of employee (82% by Australians and 71% by NZ).
Professional staff are the most common type of staff to be outsourced in the next 12 months in both countries.
88% of New Zealand members and 52% of Australian members indicated they did, or sometimes did, use contractors rather than hiring new staff, with 55% of members in both countries saying that using contractors makes them worry about delivery and performance.

Q1 2007 TEC Index State Points

Click on the following links to navigate to information about the following Australian states:

New South Wales
Victoria
Queensland
South Australia
Western Australia

About the TEC Confidence Index

The TEC Confidence Index is conducted quarterly with the Q107 questions completed by 318 Chief Executives from 19-28 February 2007. The global survey involves more than 2,500 Chief Executives from the US, UK, Canada, Malaysia, Australia and New Zealand across a range of industries including retail, legal, accounting, tourism, manufacturing and exporting.

The TEC Confidence Indexes are summary measures of the answers to seven identical questions asked in 5 countries. The questions focus on current and expected conditions in the economy, the firm’s plans to expand employment and investment spending, and the firm’s estimates of expected growth in revenues and profits. The index values are calculated as percentage changes from the initial survey which was conducted in March 2003.

The TEC Confidence Index also provides a focus each quarter on particular areas that are relevant to Australian Chief Executives, as follows:

Q1: Recruitment and Retention
Q2: Training
Q3: Workplace Issues
Q4: Leadership

New South Wales

Economy

NSW members are most pessimistic about current economy conditions with only 17% suggesting conditions had improved over the last year, a significant drop from last quarters result where 24% said the economy had improved
NSW is the most optimistic of the states in terms of expecting to hire new staff this year with 72% expecting to put staff on
82% of NSW members believe their revenues will increase in the next year, while 63% believe their profits will increase

Recruitment & Retention issues

67% of NSW members indicated it is currently harder to hire new staff compared to a year ago
NSW members identified that sales/marketing & professional staff were the most difficult to recruit at the moment (33% and 26% respectively)
The predominant methods used to hire new staff are recruitment agencies (27%), online advertising (29%) and personal referrals (20%)
68% of NSW members use multiple interviews to recruit staff, more than any other state
67% of NSW members indicted they offer a ‘positive organisational culture’ to encourage employees to stay with their organisation
47% of NSW members who plan to recruit from overseas see a need to recruit ‘professional staff’, more than any other state
60% of NSW members do not have a formal organisation-wide program to lower staff turnover, the highest of any state
42% of NSW members indicated they do not measure the full financial impact of replacing staff, the highest percentage of any state
34% of NSW members indicated that professional services staff would be outsourced the most in the upcoming year, equal highest of any state

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Victoria

Economy

VIC members are more positive on the current state of the economy with 32% saying it had improved, opposed to 22% last quarter
VIC members (22%) are more optimistic that the overall economic conditions will improve in the next 12 months, up from 11% last quarter
VIC members are the least optimistic of the states in terms of the next year’s fixed expenditure increasing with less than half (46%) expecting it to increase
73% indicated they expected sales revenue to increase – the lowest of the states but still positive overall
63% indicted they expected profitability to increase – equal with NSW as the lowest of the states
VIC members are the least optimistic of the states in regards to increasing staff numbers in the next 12 months, with 57% expecting it to increase

Recruitment & Retention issues

67% of VIC members said that it is harder to recruit quality staff than this time last year
Recruiting to accommodate current business growth was identified as the main recruitment strategy by VIC members with 38%
‘Sales/marketing’ and ‘professional services’ staff were identified as the as the most difficult to recruit, both with 28% respectively
'Potential and ability to train’ (41%) was identified as the most important criteria for hiring new staff
Multiple interviews (57%) was identified as the most common method used in the recruiting process
The main reason identified for staff leaving an organisation was ‘interpersonal and management issues’ with 17%, the second highest of the states in this category – QLD was highest
70% offer ‘positive organisational culture’ to encourage staff to remain
45% indicated they would be looking to hire from overseas this year, with ‘tradespeople’ the main role with 32%
58% indicated they did not have a formal organisation-wide program to reduce staff turnover and 37% indicated they did not measure the full financial impact of replacing staff
81% indicated they would be outsourcing in the next 12 months – the highest of the states; professional services was identified as the main category to be outsourced with 34%
60% indicated they are using contractors rather than hiring new staff- the highest of the states

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Queensland

Economy

86% indicated they expect there sales revenues will increase this year – the highest of all the states
QLD members are most the positive of the states regarding the current state of the economy with 36% saying it had improved
67% indicated they expected an increase in fixed expenditure this year, up from 55% last quarter
66% expect their staff numbers to increase in the next 12 months

Recruitment & Retention issues

69% indicated it was more difficult to find quality staffg than 12 months ago
Professional services was identified as the most difficult to recruit by 36%
40% indicated they used recruitment agencies as the main method of recruiting staff – the highest of the states in this category; 33% indicating they used online advertising – also the highest of the states in this category
50% indicated that ‘potential and ability train’ was the most important criteria for hiring staff – the highest of the states in this category
55% indicated multiple interviews was the most common method used to recruit staff
QLD members are more likely to have 24-34 year olds as their predominant employee age group – the highest of the states with 57%
Wanting more money’ was identified as the main reason for people leaving an organisation with 31%; 19% also indicated interpersonal and management issues were the main reason – the highest of the states in this category
53% indicated they would look to hire from overseas, with 45% of these indicating they would be hiring ‘professional services’ employees
47% indicted they did not have a formal organisation-wide program to lower staff turnover
21% indicated they expected staff to remain at their organisation for 1-2 years – the highest of the states in this category
Professional services will be outsourced the most in the next 12 months with 33%

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South Australia

Economy

Only 8% of SA members said the economy had worsened since this time last year, a massive decrease from the 39% that said it had worsened last quarter
SA members are by far the most positive of the states regarding the overall economic conditions in the next 12 months with 32% saying they would get better, a huge increase from the 4% that were positive about the economy getting better last quarter
SA members have very high expectations of increasing fixed investments with 68% expecting this to occur, the highest of the states
SA chief executives are optimistic about the current economy conditions with 32% suggesting conditions had improved over the last year

Recruitment & Retention issues

55% of SA members said it was more difficult to hire new staff than this time last year, compared to 67% in NSW and VIC and 88% in WA who said it was more difficult, indicating that SA has found it easier to hire new staff in the past year
SA members indicted ’tradespeople’ as the most difficult to recruit (32%), the highest of all the states for this role
The predominant methods used to hire new staff are recruitment agencies (29%) and print advertising (29%)
37% of SA members indicted enthusiasm & personality were the most important criteria for hiring new staff, the highest of the states which ranged from 22-28% for this criteria
61% indicated multiple interviews were the most common method used in the recruitment process, second only to NSW with 68% of members saying they use this method
21% indicted ‘poor performance’ was the major reason for people leaving their organisation, the highest of the states for this reason, while 21% indicated ‘wanting more money’ was a major reason for leaving
61% indicated that a ‘positive organisational culture’ was offered to staff to encourage them to remain with an their organisation
SA members (42%) are more likely to offer ‘improved training’ to encourage staff to stay, more than any other state
Only 29% indicated they would look overseas to hire new staff, significantly lower than the other states which raged between 53% to 45%
58% indicated they would be using contractors instead of hiring new staff, second only to Vic with 60%

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Western Australia

Economy

WA is far less optimistic about the current economic conditions than last quarter, with 34% saying conditions had improved, down from 48% last quarter
WA members are far less optimistic regarding the overall economic conditions in the next 12 months, with only 13% indicating it would improve – the lowest of all the states
69% indicated they expected to put on more staff this year
88% indicated it was harder to hire quality staff than a year ago – the highest of the states

Recruitment & Retention issues

Members in WA (41%) are more likely to recruit staff to expand the business into new areas of growth than any other state, and are the least likely to recruit to replace existing staff (16%)
44% identified ‘professional services’ are the hardest staff to recruit – the highest of the states for this category
WA members are more likely to use personal referrals (22%) as a method of recruiting staff than any other state, but the predominant method is recruitment agencies at 28%
44% indicated ‘potential & ability to train’ as the most important criteria for hiring new staff
WA members (28%) are more likely than other states to use single interviews as a method of recruiting staff, but the main methods are multiple interviews (47%) & panel interviews (31%)
WA members (63%) are twice as likely as other states to always involve a potential employee’s future team members in the recruitment process
WA members (43%) indicated the main reason for people leaving their organisations was ‘wanting more money’
77% identified ‘a positive organisational culture’ as the main offering to encourage staff to remain – the highest of the states in this category - 57% also offer improved salary packages – also the highest for this category
47% indicated they would look overseas to hire new staff this year, with tradespeople being the highest with 36%
47% indicated they did not have a formal organisation-wide program to lower staff turnover – putting WA ahead of NSW and VIC and on the same level at QLD and SA
WA members are more likely to use part-time employees (10%) and contractors (7%) than any other state
45% indicated they would use contractors instead of hiring new staff – the lowest of the states

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