Earlier this year, I undertook some research work to gain a detailed insight into the skill needs of small to medium-sized firms (SMEs) across a range of sectors, focusing on examining current skill gaps and shortages as well as future needs from the view of both supply and demand for skills.
Whilst the work focused on businesses based in South East Wales, the results are also of relevance to businesses in North Wales and tell us a lot about what SMEs need to do to enhance their competitiveness through better skills.
First of all, the research showed that majority of businesses are currently facing skills gaps but cannot appoint new members of staff to fill these gaps mainly because of issues within each sector, including manufacturing, construction and services. For example, most manufacturing firms are having difficulties with technical skills but are focusing on addressing these gaps through intensive internal training as the technology changes or, where necessary, by promoting current staff and bringing in new recruits with the requisite skills.
There also seems to be difficulties with regard to flexibility within the businesses to take on further skills as current employees’ skills and qualifications are, according to the companies interviewed, being fully utilised.
This situation may not be too surprising given that there seems to be very little emphasis on human resource management as a strategic function within most of the organisations questioned and, more relevantly, few perceive workforce planning to be important. Certainly, that needs to change if firms are to deal with meeting skill shortages in the future.
More specifically, a number of key issues emerged in terms of demand from companies for skills development. These include the importance of soft skills in all organisations regardless of size or sector and the increasing relevance of leadership and management training for existing staff (although this was not perceived as an issue for newly recruited staff).
There is also a deficit in digital skills across all sectors not only in specialist subjects such as cyber security and big data but also in more basic skills for general applications.
The study also found that there were different generational challenges in the workforce. For example, school-leavers and graduates have a lack of understanding of the world of work in industries such as manufacturing and construction and this is affecting recruitment into those sectors. On the other hand, there are issues with an ageing workforce both in terms of succession planning and upskilling, especially in digital skills.
To meet these demands, there was extensive use of training from external providers by organisations, although a small number also delivered their own in-house courses. However, it was considered that providers should be more flexible in their delivery of programmes to businesses with many external training companies providing general support rather than bespoke programmes relevant to individual businesses.
Colleges, training providers and universities also need to ensure that their training content is up to date and can be provided across all levels, and to market their offering more directly to firms.
Many companies also felt that employability should be made a mandatory part of the learning experience within colleges and universities with soft skills embedded into the curriculum.
In terms of future needs, changes in digital technology were perceived to have a potentially large impact on all organisations in the region over the next few years, although many are not prepared for these changes.
The ‘work readiness’ of millennials was a concern for some firms and the increased importance on soft skill requirements to ensure individuals are employable when they leave education is a major challenge going forward. They also believed that addressing the issue of succession planning in retaining and improving skills within the workforce is important to all organisations.
Finally and most importantly, businesses strongly believed that the development of skills by policymakers should be a priority, something which has not been to the fore in recent times in either North or South East Wales. And if we are to become a more productive economy in the future, then we must ensure that our SMEs have the skills necessary to compete in a more challenging economic environment.