I originally wrote this article in mid-2021, in reaction to the number of New Zealand companies that were having a hard time finding skilled people. Half a year later, our borders are still (largely) closed due to the ongoing COVID-19 pandemic and the country's serious talent squeeze shows no sign of relenting.
I know it's a bit of a cliche to call these "unprecedented times", but at MyHR, we deal with well over a thousand employers across Australasia and we know how difficult things have been, and continue to be. We have also seen that companies that pay extra attention to way they organise and run the business can make it easier to attract good staff and keep the talent they have.
So let's dive into the factors that are driving the skills shortage, how this will continue to affect businesses in the short-term, and what you can do to recruit and retain top talent.
Reasons for our skills shortage
New Zealand has an enduring shortage of skilled labour that affects some industries more than others. The shortage is driven by a number of factors, some long-standing (e.g. the “brain drain” to Australia and the cultural tradition of younger Kiwis going offshore for their OE) and others more recent and localised (e.g. the demand for tradies for the Christchurch rebuild, and the demand for tech workers growing faster than training infrastructure).
Typically, NZ businesses have been able to fill any gaps in the workforce by looking to skilled migrants.
That all changed in March 2020, when the country closed its borders in response to the spread of the COVID-19 virus. Suddenly, the numbers of non-NZ citizens migrating here plummeted.
In 2019, NZ’s net migration was 52,000. In the year ended December 2020, it was just over 44,000 but 87 percent occurred in the first 3 months of the year, before border and travel restrictions kicked in. Estimates for 2021 have the country running an annual net migration loss of around 4,000, with over 60 percent fewer non-NZ citizens arriving and over 40 percent fewer Kiwi expats returning home.
Yet despite the impact of COVID-19 lockdowns and restrictions, NZ’s economy is in much better shape than many predicted. Unemployment is at 3.4 percent (September 2021 quarter) and while our GDP has fluctuated, annual growth to September 2021 was up 4.9 percent.
The government’s macro solutions
The NZ government has recognised that systemic problems need systemic solutions and it has initiated a number of responses to address the skills shortage, such as:
- Fees-free training, one or two years paid if you complete your qualification.
- Free trades training through the Targeted Training and Apprenticeship Fund.
For the first time since 2009, domestic student numbers at tertiary institutions increased in 2020. However, there are still no silver bullets for anyone as these macro solutions are taking a long time to have an impact on the skills shortage.
The size of the labour pool in NZ is only going to change slowly as people retrain and upskill and we open the borders again in the year ahead.
The opportunity: company solutions
The good news is, there are plenty of things employers can do to find and retain the best talent from our existing labour pool.
Traditionally, not all small to medium-sized enterprises have been good at taking a step back to think about the way they run the business to attract the right kinds of employees and to retain them. This sort of design thinking does require an investment of time and energy, but it is an investment worth making.
What you’re really looking for is a couple of convincing reasons why a candidate would choose to work for your business instead of someone else's.
At a broad level, it boils down to a few key things:
Can you compete with your wallet and pay top dollar for talent? This is the most obvious lever to pull, because most people like earning more money, but it’s also the most costly to the business.
If you aren’t able to compete with the highest salaries or wages, perhaps you can offer other benefits or perks, like bonuses or profit sharing (be sure you get legal advice before you do this).
But don’t fret if you are still unable to compete on money or benefits, there are plenty of other things that people are motivated by and will look for in an employer.
Type of work
Is your work really interesting? Do you have projects, products or systems that no-one else in the industry has? Is it technically challenging?
Sure, there is often a lot of repetition in many roles (there are only so many ways you can make a coffee or reconcile accounts at the end of the month), but being able to offer unique work or a wide variation of tasks can be compelling to people.
If you do have interesting work or clients that offer it, be sure to talk to candidates about it. People love to hear how working with you will give them access to exciting or different projects or clients.
Does your business have structured performance reviews and development plans? Are there really clear pathways to promotion, leadership and management progression? Do you have renowned experts that can act as mentors or coaches to more junior staff?
Providing opportunities for growth and development can be a great way to differentiate your company from your competitors. Just be sure to articulate them well, and match any promises with actions.
Culture and team
Team vibe and how people are treated can really make or break a job, especially for people who are more relational or in more transactional roles.
“Culture” gets bandied about a lot in business, but there is a team environment and how it feels to work somewhere that is tangible.
Is the team fun to work with? Do people feel safe, respected, and supported? Do good people get help to shine and is poor performance or toxic behaviour properly addressed? Is there connection within the business, clear communication, and a coherent set of values that people embody?
A strong culture and positive work environment will be a big part of attracting good people and either keeping them or driving them out of the business. So it's important to spend time thinking about what drives your company culture, whether it can be improved, and how it can be articulated to others (inside and outside the business).
This is a really hot topic, especially since the COVID-19 lockdowns and restrictions. Not everyone is content to sit at the same desk or machine all the time. Lifestyle and work-life balance are important to many people, now more than ever.
Are team members able to work from home some of the time? Do you offer flexible work opportunities, such as reduced hours, flexible schedules, various locations or offices etc? These are all inexpensive ways to make your workplace more attractive to both potential and existing employees.
The key is offering options and exploring people’s preferences. Also don’t overlook the fact that there are some employees who like regular schedules, coming to work to be part of a team, and performing their role without too much fanfare.
Meaning and impact
Employee expectations change with the times, and more and more people, especially younger people, want to know why their work matters, how it makes a difference, and what purpose the organisation serves.
This is usually pretty easy for charities and social enterprises to address, but it can be harder for private businesses.
Sometimes, the answer to "why does my work matter?" is at the individual or team level. Is the job you're recruiting for one that is absolutely critical to the business and the livelihoods of their teammates? Do you solve a tricky problem for your customers?
The answer could also be at the community or business level. Do you help people connect and build stronger relationships? Are you involved in your local community, either directly or through pro bono contributions? Do you provide an essential service? Would your customers struggle to find another supplier if you were to close up shop?
Your employees work could matter at the industry and "big issue" level too. Does your organisation tackle a problem that no-one else is working on? Are you pushing technology in your field further and driving innovation? Does your work tie into a broader social, political, or economic issue that people care about?
Regardless of why your people's work matters, whether you provide an essential service to your local community or if you're solving world hunger, you can still make it clear to your team why their work is important, with regular internal feedback, connecting customer feedback to your team, and making it clear what the final outcomes of all their hard work are.
Putting the pieces together
Focusing on these key areas will mean you can answer the question: “why should someone choose our job over one with another company?”
When you know that answer and can clearly and convincingly articulate why someone would want to join your team, you can play to your strengths (it will also bring awareness to any areas you need to focus on improving). Develop this within your company, include it in your recruitment materials, and talk to candidates about it.
This simplifies the recruitment process a lot – you know exactly the “product” you’re taking to market with candidates. You’re not trying to be everything to everyone, because you’ve identified your points of advantage or difference, and can appeal to the sorts of people that will fit your business and the role.
Work on ensuring your strategies and systems are sustainable. It’s not about securing one star performer, once. You want to be able to recruit good people whenever you need them and to ensure you retain your talent.
Ensure your HR practices are solid
Remember, the easiest way to recruit is to not have to in the first place. Some movement in your workforce is normal and bringing in new people with new perspectives and ideas can be great for the business.
But you want to be able to retain your best employees and treat them well, so that they won’t have reason to leave. If you are regularly losing people you would like to keep, it’s really important to understand why they are leaving (exit interviews are great for this). Most of the time, it will be down to one or more of the 6 factors we’ve talked about.
Having good HR practices and processes really helps build a solid foundation for the employment relationship and supports competing for talent in these key areas. So having all your compliance side sorted, whether it’s watertight employment agreements and job descriptions, or clear communication channels. Any slackness in these “hygiene’ areas can lead to employees being uncertain or disengaged down the track, and harm your company culture.
An effective performance review system is critical to your people’s development and your business’, especially if you have a large team. People want to know they are improving, which areas they need to focus on, and that there is a structured path to progression. You also want to know which of your people stand out for greater responsibility or future management opportunities.
If you are competing on salary or wages, you need to have your remuneration reviews in place so you have a good sense of what the market is offering and where you should be.
Again, it’s all about having all the right pieces in the right places so you can attract top talent and keep them with you to help drive the business.
Frequently asked questions
Is it illegal to recruit employees from another company?
It’s not against the law to hire (or “poach”) employees from another company, even if they’re a competitor.
However, be careful what the employee that you’re trying to hire has in their employment agreement. If their current employer has included a restraint of trade or non-solicitation clause, the employee may be legally prevented from working for you (or from doing certain kinds of work for you).
Where's the best place to advertise for quality candidates?
There is no complete, one-stop shop, so aim for a wide audience by advertising your vacancy in a variety of places, including social media and the more traditional recruitment avenues like job websites, publications, and boards.
It’s wise to do some research to find out where candidates in your industry are looking; this will help you target your advertising.
Also, be sure to keep a constant eye out for talent - internal as well as external - and build connections and networks so you have a bunch of good candidates to reach out to.