The difference between labour, talent, and skills shortages | with Kevin Green

Sam.

You're welcome.

Welcome everybody. Today's show, episode 109, is going to be talking about the difference between labor talent and skill shortages. You've probably heard about a labor shortage or a skill shortage or a talent shortage and maybe you thought, well, they mean the same thing. Well, news is they don't. Even prior to the pandemic and the great resignation or whatever phrase you want to give the kind of craziness we had in 2021, all industries have been acutely aware of the ever growing shortages in what they may have termed labor talent and or skills. And whilst as I said, they're often used interchangeably out in the wild of the media of HR of talent, there is actually a significant difference between the three both in terms of definitions and how organizations need to approach, remedy and look after these shortages. So today's guest, as I said on episode 109, is going to be helping us dive into this topic. I'm really pleased because we've been waiting quite a few months to try and get the scheduling right to welcome Kevin Green. And Kevin is the, is an author, but he's also the chief people officer at First Bus. And he's going to be basically kind of giving us insight because Kevin, for those of you who know Kevin, he's an expert in HR recruitment. You'll hate that I use that word expert, but he is right, let's be honest here. And it's, it's evident by the recent appointment he, he was made to first plus and he'll tell you all about that himself. But we're going to be chatting about his insight from many areas, both as a practitioner in a people role, but also an advisor to a whole industry and someone who dealt with government on this issue in the uk and we'll be digging into those differences. Kevin, you're very welcome to the show. It's wonderful to finally have you. We had to get through 108 other people before we got to you. Kevin.

Delighted to be here and I'm looking forward to the conversation.

Well, great to have you. And I'm wondering if you could open up by perhaps telling us a little about you, your own background, how you got to where you are today, some of the highlights along the way and perhaps introduce to our audience who First Boss is and what some of the challenges of your organization are today.

Yeah, I suppose the best way of describing myself is I'm sort of a business person, stroke HR professional. I've had lots of big HR jobs in my career, including Wall MAU, which is the big postal operator in the UK. I did that for five years early in the 2000s. I then did 10 years as the chief executive of the Recruitment and Employment Confederation, which is the professional body for the recruitment industry, where I ended up spending a lot of time looking at data and talking about big trends to government, about legislation, but also representing the recruitment industry that even then were struggling with some of these issues that we're going to be talking about today. Then sort of decided I was going to go plural. 2018, sort of was advisor to six or seven fast growth medium sized businesses. Wrote my book Competitive People Strategy which was shortlisted for Business Book of the year in 2020, which was great. And I did a lot of sort of public talking and all of that sort of thing, you know, presenting or whatever and I enjoyed that. Did the odd consultancy project and I ended up doing an interim HR Director or Chief People Officer job here, here and, and decided to, to stay. I, I tried it and they were keen to have me and I was keen to, to go back and do another big change and turnaround job. So this is a 850 million pound business, it's part of a FTSE 250 listed group and we just, about six months ago we divested of some of the businesses in the state, so First Transit, First Student and Greyhound. So the bus business is now sort of engine of growth, you know, because of the environmental agenda, we're going to go net zero by 2035. It's a legacy business where we are having to change at pace to do with the change in requirements, modal shift, getting people out of cars onto public transport. And what that means is we need to be a modern organization, digitally enabled, you know, getting people to experience a bus and use it for leisure or for work or getting to university school. So I just, just, I fell in love with the business really because it's real people doing real jobs every day and it's about change and restructuring the business. We got a couple of acquisitions currently that we're going through which is, you know, one of them is predominantly about a skill place, so we might talk a bit about that later. So hopefully that's enough for you. Johnny, about me and I suppose I've been rummaging around in, you know, not just the UK labor market, but the global labor market for the last 15, 20 years. And I think this is a sub that's close to my heart and I'm keen to explore it with your listeners.

Before we get into the main topic, can you give me some numbers in Terms of number of employees in the business, number of hires you typically make, and just rough split of where those skills are between, let's say, non technical, technical jobs, managerial jobs.

So I suppose it's about 14,000 people, about 14, 12,000. You've got about eight and a half, 9,000 bus drivers, where our turnover pre pandemic was 23% within a great resignation spike went up to 38%. So the cost of me hiring bus drivers increased by 20 million. So what, 20 million off the bottom line and cost us £7,500, about eight and a half thousand dollars to be able to bring, you know, a bus driver into our business. So that's one audience. Second audience IS engineers, about one and a half, 2,000 of them. Huge skill shortage area because we're looking at mechanical engineering, but I'm also looking at hybrid engineering. So as we get rid of combustion engines and we're running diesel buses, how do we start to think about the qualifications and skills for people where we're looking at electric or hydrogen? We've got hydrogen up in Aberdeen, we've got about 500 electric buses. And so that's a big transformation for us and clearly a skills issue. And then like any other organization, we've got marketeers, you know, professional capabilities. And clearly technology is important to us. So you've got about 3,000 or three and a half, 4,000 people that are, you know, in that sphere, professional, you know, professionals with professional qualifications. But the talent agenda is big. When you're going through change and you're trying to move that pace, remind our.

Audience that are listening, perhaps the podcast that we also broadcast live. Those of you listening live, we. We very welcome your comments and questions. You can join in on YouTube or LinkedIn with your questions for Kevin. And this is covering so many different areas of skills and professions and backgrounds. I think there's probably a question in there for everyone. So let me dig into the main topic. What is the difference between labor, talent and skill shortages? Kevin?

Yeah, I mean, I think you're absolutely right, John, in your introduction. People just use, you know, if you look at the media, they'll just talk about skill shortages or labor shortages. And in reality, you're absolutely spot on. They are different. So for me, a labor shortage is. It's where you're looking to hire people that don't need to have any previous experience or any qualification to do the job. So if you think of hospitality, you think of delivery drivers, agriculture, some manufacturing jobs, bus drivers. What you're really doing is saying what I need to do is to fire someone that's prepared to work for us, do the hours for the pay that's on offer. And what we can do is we can train them. So the example I always use is coffee shop barista. Now, if there's anyone from Starbucks or Nero's, they might disagree with what I'm just about to say. But hey, you know, I reckon you can train someone to be a really competent coffee shop barista within a week. Four things they need to know. They need to be able to make a great cup of coffee, a cappuccino, a latte, they need to be able to take payment, they need to be able to understand the products in the glass cabinet and sell those and. And they also need to be nice to the customer. Right, I could teach you that in two days. You know, I can show you, you can practice, I can give you feedback, you're sort of competent by the end of week one, by the end of week two, you could be our best performing barista. That's a labor shortage. That's where you basically take someone. It's, you know, $20 an hour. That's the job. I'll train you, you turn up every day in the right attitude and deploy the skills that I've trained. And I'm addressing my labor market now. The challenge that we have with labor markets is, and I will use some data from the uk, but this is a global phenomenon. You know, we are at full employment. We have more vacancies, 1.3 million vacancies than we have unemployed people. So what you have is employers all searching for people to do their jobs. And what that drives is salary inflation. Because the first thing we do is we offer more money to hire people and to retain the ones we've got. And what you get into is that vicious circle in terms of salary inflation. Now, there are some other things that I'm keen to talk about that I think people need to be doing. But let's get move on to skills shortages. Skill shortages is a very clear definition. It's where there are not enough people with the right skills and experience or qualifications to do the jobs available in the labor market and in the UK and certainly in most parts of sort of the developed world during the sort of 80s, 90s, right the way through the 2000s and when I was at the rec, there were four or five key areas. So technology, data scientists, software engineers, you had digital, digital marketeers, you had engineers, you had those sort of four or five areas where and off the craft skills within Construction, where there just isn't enough people with the right qualifications and skill to do the jobs available. So you know, the play there is clearly about growing your own, but not just growing your own. So how do you hire people, how do you train them, how do you invest in qualifications? But how do you create the right culture so they stick to your organization? Because other people will always be trying to attract them with a better proposition and increased pay? And then thirdly, and perhaps the area that more, many and more of your listeners are struggling with is talent. So I think of talent as skill plus. So if you're hiring a financial controller, you know, we want them to be professionally qualified. We want to have 15 years experience, worked in a different organization, to be numerous, you know, to be quite good, understand the difference between a P and L and a balance sheet and a cash flow and be able to give you some insight and look at data. That's the skill, right? But in reality, in our organizations today, we want our professionals to do more than that. We want them to think strategically, big picture, not ivory towel. They want to be able to roll up their sleeves and make stuff happen. We want them to understand trends, what's going on in markets, to have insight. Secondly, we need them to be change orientated. They're always, you know, are they someone that thrives on ambiguity? Are they looking to continuously improve the organization? Are they looking for, you know, to think about what the next idea is, how we can improve what we do, the offering to the customer, how we do things internally, you know, and in finance it might be, you know, I don't know, how do we do this differently? How do we use technology to become more efficient? It might be how do we provide more data to their business so they make better decisions? So, you know, there's a significant part in there about change orientation. And then thirdly, you know, I need people that can inspire, motivate and engage other people. So if I go, I'm really looking for a brilliant financial control. These are the skills I want. But I want talent, someone that adds value, that helps me grow and develop the business. And that's the definition and it's based on some research from Gallup that they did sort of 15 years ago. I used it at Raw Mail and I've used it in First Bus as a shorthand to talk about what we mean when we talk about talent. Because when I talk to other HR professionals about talent and you ask that tough question, so what is your talent shortage? Quite often you get a technical skill or you might Get a leadership development or high potentials now, fine. They're things that you need to focus on. But I think you need to think a bit harder and deeper about the talent that's critical for your organization to make it successful. And so for me, as part of any HR strategy, when you have those shortages in the labor market, you need to be innovative and creative and come up with nuances in terms of how do you address them. Now, in my organization, I've got all three, three at play at once. Some organizations may be weighted more towards skill or talent or labor, but in my organization, where I am now, we've got all three at play. And, and that creates, you know, some, some, some challenges.

Kevin, I want to try and address the three areas individually because as you say, uniquely, perhaps they, you've all checked your challenges in all three areas. I want to hear about first person challenges, what you're seeing, what works, what you're seeing in the market, what the reality is in the uk, the US or other markets. Let's start with that labor shortage. And in doing so, maybe we'll jump into an article from Insider. And for the Backstage team, I'm going to jump to our second news story first, if you don't mind. It's to do with this labor definition you put forward, which I really like. Insider magazine, in an article by Grace Dean last month published this story about the Accor hotel chain and it was headlined Europe's top hotel chain is hiring workers without experience or even resumes because it's so desperate for staff. And for those who are not familiar with the Accor brand, they own Ibis and many other brands you're probably much more familiar with. I think they sum up quarter million employees around the world. And the short version of this, as I read it, Kevin, I'll get your opinion in a second, is that the CEO has come out and said, listen, we haven't perhaps invested in our staff in the past. We haven't paid them enough. It's a wake up call for the industry. We're having to increase their salaries, their wage. I think it's going up to make 25% in over a year or just under a year. We're going to have to give them more benefits, more flexi time, etc. Because I think one example that the article cites was that they were having to leave two floors of every hotel empty. They were having to send people away early after breakfast or dinner when they could have perhaps made more money out of them. They didn't have the staff and in this example, they are literally just hiring bodies to do the job and they need more bodies in their hotels. Talk to me about labor shortages. This example, your own experience, what people are doing. Because as you mentioned, if you have a situation, for example, in the US I believe for every, for every person available to do a job who's not doing a job today, there are something 1.6 or 1.8 vacancies as of data published two days ago. And the UK is something similar. Right. Literally there aren't enough people, people for the, the jobs in this labor market to your definition. Talk to me about this example. Is it. What do you think is working in this example? What are the alternatives to this? How do you fix the fundamental problem of there's not enough people? What are you doing?

Yeah, I mean, there's a, There's a couple of starting points, isn't there? One of them is, first of all, you've most probably got a retention issue. So before you start going into the attraction of how do I bring new people to the organization, look at the people that are currently employed. You know, do some segmentation really understand them? Do some focus groups? Do surveys really get underneath? What is driving them to leave your organization? And, and for me, if I'm being honest, I think we, you know, here at first bus, I think we neglected our workforce for about five or six years. We could look at paying, I could see it erode over time against competitors, but against other markets. So we hadn't kept pace with what was going on in terms of pay. We have a very high ratio of supervisors and managers to frontline staff of over 50. So, you know, when we looked at the survey, some of the data was people feel unappreciated. They don't get talked to. The people who are doing a good job, aren't engaged. You know, we did some changes during COVID about shift patterns and things, which, you know, we did because we needed to survive. And, you know, we were going through a really tough time and we did that at pace. And really, again, the human consequences of how people organize their life. So there were some things that we needed to respond to. So what we've been doing is being very clear about our purpose, articulating our values, developing our managers. And we're driving a program depot by depl called people centricity, where we put some things in place, which is we change the manager's role, we give them some skills and training, and we do engagement surveys every quarter now across the whole workforce. And we've, you know, We've done stuff on pay, we've done stuff on benefits, but it's about that loop, it's about showing you care, giving feedback. You know, we've done things like giving everyone free tea and coffee. We're doing a cycle of work thing. So lots of things which are about benefits and stuff because you know that pay on its own won't work. Right. We know that it's the human factors which people make a judgment on. There's a great McKinsey article about the great resignation which talks about what are the key priorities and culture is 10 times more likely to drive someone to leave your organization than pay. Now what often gets happened on exit interviews is people go, well, I'm going to this job because they pay more. I don't go into because my bosses are very good and no one's talked to me and I haven't had any development. So what I think you have to do is do first of all stock on that retention bit and then I think there's a huge, you know, a huge amount for you to think about, about how do you go and attract people. So we're looking so for ours, you know, quite a traditional, predominantly mal, full time job, you know, so we've had to deconstruct some of our jobs. We're starting to think about how do we create more part time, flexible. So we tap into different parts of the labor market. So when we're attracting, we don't just play back images of white middle aged men, we're playing back, you know, women with children, we're playing back. So we, and we're working really hard on the cultural stuff so that, you know, we can then when we go out and talk about our brand promise or our evp, that we've got the ability to deliver that and some confidence that we can now deliver that going forward. So, you know, you've got to think about that candidate experience, you know, our recruitment processes. We went into, you know, when we were at 38% turnover, which means that, you know, I'm recruiting hundreds if not thousands of people each month. You know, what we were trying to do was to get faster and faster and what we did and we made some mistakes is we took out some of the quality checks, we took out some of the stuff at the beginning of the process and we got very, very silly. So we got a bit foolish and we were being incredibly busy, but there were people dropping out. So we made the process too long, it was too onerous and we didn't do any filtering. We Didn't. So we've had to reinvent the whole recruitment process as well, so that the candidate experience is great and, you know, people have got bits of video they can pop on, they can ask little questions. So loads of things just to make it enjoyable. We've also got managers to talk directly to people and done open days and all sorts of things. So some modern stuff, but we also done some old school, you know, we put posters up outside of all of our depots and we've done more stuff in the local community and all of that. So, you know, it's a blended approach to attract more people. Think about the jobs, think about the benefits. What are they interested in? Obviously, deliver it, but you've got to be trying to retain people as well as bring people in. So, you know, it's a, it's a. It's a big job in an organization where you've got high turnover, where you're trying to find people which everybody's trying to hide. You know, I'm competing against Tesco's, I'm competing against hotel chains and coffee shops and manufacturers and in every labor market. So one of the things we've started to do is do a bit of talent. Not, it's not talent, intelligent, but labor market intelligence. So in this market, I don't know, in Glasgow, where our depot is, well, who are we competing against at that price point, you know, and how do we differentiate our offering? So one of the things you've got to think about is if you're competing in a labor short market, you've got to have a good offering, but you've also got to know who you're competing against. So how you can differentiate yourselves and make it more appealing and more exciting.

Is there, Is there room for. I'm sure you'll say yes, but I just know perhaps how much room there is for innovation and technology to replace people. Because if you look again to the why, and maybe not necessarily in First Bus only, but if you look at again, that the labor data says there aren't enough people. So even if First Bus is successful every time, retaining more people and attracting more, more qualified individuals or interested individuals, it's. It's at somebody else's expense. And I remember back to the old days of the bus, there was a bus conductor or two driver with more staff involved.

Yeah, I mean, for us, long term, I mean, let's be honest that the bus driving professional career, you know, we are already trialing autonomous vehicles. We've got some stuff, some experiments with them, some universities out in, in sort of the west of England, which, you know, it works, you know, you can do it, you know, look at how great a Tesla is. You know, you can control the vehicle without someone having to drive. So that, you know, long term, that's most probably one. But you know, in terms of automation, if you think about one of my sister businesses is a, that we've got four sort of train operating companies, you know, we're in the process of taking away all the staff in, how I call it in the stations that sell tickets because we can do all of that automated. Why do I've got 20,000 people working? Because we can automate that. Now what I've got then is I've got 20,000 people that I can reskill and turn into other things. So people on platforms or they might help us with bus drivers. So yeah, absolutely. Technology and the whole AI stuff and where you can digitalize and automate, you should do that if it provides additional value to customers. But it also means that you might get flex in terms of being able to take people and retrain them and, and get them into the areas where you've got the shortages because you don't need them doing the tasks that they used to do.

Let's talk about that skilling piece and I go to the next article I want to discuss, which comes from the BBC and it highlights again, it's a UK specific article, but I think it could be any country in the world today. And it's by Shona McCollum and it says UK tech talent shortage threatens to stifle growth in the industry. And this article particularly points to the fact that there were more than 2 million UK job vacancies in tech alone last year, which is more than any other labor area. Again, they're confusing the word labor with other areas here, but it's the problem we talk about and that there's literally this lack of digital skills and then there's this lack of specific, more technical skills. Now this article poses that, you know, there's a dilemma because tech jobs in the UK and I expect everywhere else pay on average double the amount of a non tech or average earner in the market. So it's not lack of incentive for someone to do this. What's happening? What is causing this lack of skills? If we take the second moving from labor to skill shortage and then what are you doing and what do you think is being done in the wider market that's working to tackle this?

So you just have to get back to the starting point. One of the great problems is we've never really married up education to the labor market. And the linkage between those has always been quite fraught. In most developed economies, certainly us, certainly the UK and most European countries, we're training people and doing great things in degrees, but people then not really having the skills to make them particularly attractive in the labor market. So what's always happened is employers have to take up the slack. You have to put put in the job specific training early in people's careers. So again, you know, what you see is the, you know, the growth in more graduate programs, the growth in apprenticeship programs, you know, really starting to try and get young people and then train them yourself and give them the skills that you think are valuable for them but also valuable for your organization over the next few years. Now that's quite a costly process and you have to build it into, you know, obviously your strategy and your business plans because, you know, taking someone, I don't know that's done a, you know, I don't know, sort of a history degree and turn them into a computer program is going to take a bit of time and it's going to cost a bit of money. The point I think is, is that many organizations have historically not done that investment at the front end. And they've basically gone for a poaching approach, which is, I tell you what, I'm not going to invest at the front end. I'm just going to pay a premium and try and attract people to my organization. And the problem you have is if that's the game, what you then get is you don't get any more people coming into the system. The system gets constrained and also happens is the price goes up. Because one of the ways in which you attract people is you pay them a 20% premium on what the competitor does. And that's a zero sum game for industry. So one of the things that clearly most economies are trying to do is how do we bridge that gap between education and training? How do we think about our labor market with a view to five or 10 years in the distance, how do we then start to think about the skills agenda and how we develop people? So in the UK there's been a lot of work that this government has done around thinking about further education and repositioning it. What we actually, you know, how we incentivize people to study the right things at university and certainly that has a big role to play. But secondly, employers are going to have to accept that in this environment where there are shortages, you have to Invest and you have to grow your own as well as try and attract people from the alternative. So I think a lot of it's about the development agenda but the other thing is it's about not just training at the beginning of crazy, it's the retraining stuff. So I think people are having more careers and I don't know, I started in computer software, I'm now at a digital marketing. I'm now going to end up doing something on, I don't know, online training, who knows? Yeah, but you know, and the skills develop. So the issue for me is again that how we think about careers and jobs, you know, I think we think about things quite linear over a longish period of time. And I think I saw something the other day that said, you know, most people can have 60 to 80 different gigs or work jobs within their lifetime. So you think about the skill requirements of getting people to getting ready for that. But it's also got to be driven by the individual. And I think that one of the things that we see about young people is they really do get this. They own their skills. They know that sometimes they need to take jobs as an intern or because they need the skills in the labor market and they will move sideways and they'll take creative jobs and they do side hustles and go off and work for a gig company because what it will do is give me skills and if I've got that, I know how valuable I am in the labor market. So I think one of the things you're starting to see is the candidate or the, the individual owning their career and really starting to think about what skills they need to acquire to get, you know, to fulfill the opportunities that are available. So I think there's a lot of things at play, but I think the fundamental is government and business trying to work it hand in hand and organizations really trying to think about their, you know, their development agenda for the front of of people's careers. But then the whole retraining and reskilling thing, a bit like us with the engineers, you know, how do I get engineers that have got, you know, been brilliant at doing combustion engines and all of that and now all of a sudden we haven't got any combustion engine. A bit of a change, you know, and all of a sudden I'm dealing with batteries and, and I'm now dealing with sort of, you know, so I'm much more of an electrical engineer. And actually I need to think and we're talking. Well, we've got to put, you know, we've got to put solar power and wind power up and I've got no experts in that. So I've got a skill and a talent requirement about how do I find people from energy companies to come and work for us so that we can put the infrastructure in to. Because, you know, you've got 56 depots around the country and I've got to put the infrastructure in as well as buy the vehicles. The vehicles cost me 100 million a year extra for a billion across the next 10 years. And if I. The labor's the constraint, not the money. The money's easy to get. Well, not easy, but, you know, the money is easier than the skills because it's there or it's not and you can spend it. But anyhow, so is that enough?

On Rob, listening live is, you know, backing up saying, teach them the skills you need. Right. And, and I totally get that and you mentioned some of the programs, but can you walk me through how it plays out in real life? When you have a department manager and she's looking to hire, you know, she wants. She has a skill need of X. And as you probably agree, hopefully agree with me, most managers are addicted to hiring, right? It's the kind of quick, quick solution. We're programmed to go hire somebody. So how do you, you know, if you're building these resources because you're managing many functions in the people role, right, You've got learning and development, you've got talent acquisition, you've got talent development, other different departments. How do you actually build a structure where the skill you're trying to build internally actually get considered or put forward for those roles equally to an external job? How does it play it in real life on scale?

Well, I think there's a couple of things. Is one of the things that organizations are really rubbish at actually, in my experience, is any kind of planning around this. So, you know, you know, one of the things we've had to do is build, you know, create some sort of workforce. We got two workforce planning, which is, you know, what happens when the customers come back on the bus, what routes do we put on, how many drivers do we need? You know, very, very number driven. But then you start to go, well, you know, renewables, we go digital. Those are skills we want. Like, let's articulate those skills and let's put some numbers on those and let's look at that three to four years out because then I can do the development stuff if you're doing it real time. And I'm a manager and I'M going, look, I need six of these. When do you need them? Well, a month would be great. Well, I'm not going to develop them in a month, am I? So what you've got is a short term reaction to shortages that you need to be able to respond to. But the real issue is, have you got any kind of planning process around your people that enables you to predict requirements so that you can then put in place the training and development and the investment. So, you know, that's one of the things that hr, I think is pretty poor at in most organizations. And you really need to be good at that if you're focusing in any areas where you've got shortages, you know, labor skill and talent. So hence why the definition is important, why you then need to do some planning and then you need to take, you know, plans to put things in place.

Listener question for you, Kevin, back to one of your comments earlier about retaining talent from Jonathan Knowles on LinkedIn. How do you define your purpose in a way, and it's specific to your organization that bridges the difference between your legacy business and the future business? Because you mentioned obviously the kind of green, environmental kind of focus, which probably is a contradiction in some, some ways to the legacy business?

I mean, I mean, we went through a process, you know, and it's not easy. And the first thing is it was, you know, we use design thinking as the backdrop. So we went out and engaged quite a large percentage of our workforce and did some stuff about heritage. Tell us what you like about the organization, what's great, you know, what has longevity. And we then started to give them examples of the sorts of things that we think we're going to be doing in five or 10 years. So our strategy is quite simple. It's recover bus, better bus, bigger bus, beyond the bus. Right, okay. So we sort of got a strategy and we can articulate some of that stuff. So it's a really engaging process. Loads of surveys, loads of work, and we articulated stuff and we did it in real time with our leadership population through a number of events. And we've ended up with something that we think.