Hertfordshire Business Skills Gap Survey 2014-15

Contract research for the Local Enterprise Partnership around measuring the degree of skills gaps in the Business Community.

The purpose of the Hertfordshire Business Skills Gap Survey (HBSGS) was to explore the understanding of Hertfordshire businesses' skills gaps and their perceived causes, the impact these are having on the respective businesses' performance, and the actions they have or are taking to address these.

In the introduction section to this report it was noted that skills contribute significantly to local economic output, by influencing productivity and employability. Alongside these basic economic roles of skills, there is another more influential one that directly impacts on those important antecedents of increasing economic output: enterprises, investment, value and new industries; that is its dynamic role [5]. The dynamic role of individual skills is critical for enterprises and industries in:
• Developing enterprising behaviour likely to lead to new venture creation;
• Creating a high quality and valuable workforce, facilitating the attraction of FDI’s and other local enterprises, and at the same time retaining existing employers in the local economy;
• Helping to develop leadership and management skills in the Managers, Professionals and Associate Professionals that understand and support further skills development in the workplace, on the one hand increasing productivity, but also helping develop new product/service market strategies that lead to high-value activities in the local economy;
• Providing a pool of highly skilled individuals who will be the foundation of new developing industries, and help develop these throughout their initial growth development cycle.
Local economies whose key strengths are a high-level of skilled residents, capacity for creativity and innovation and excellent transport and logistics infrastructures are best served by having a diverse economy around key high-growth sectors. This provides a greater variety of employment opportunities for workers and entrepreneurs with varying levels of skills, education and work experience. Hertfordshire has historic strengths in creating knowledge and transforming that into economic growth, the aerospace sector.
Repeated research demonstrates the critical value of innovation in driving economic growth and development[34]. One of the fundamental values of innovation is in driving competitive advantage by creating new and more efficient methods of generating products and services[5]. The net benefits of these innovation drivers is that they ultimately gain more market share and grow their businesses, and recruit more employees.
The HBSGS highlights a number of areas where Hertfordshire employers have identified potential barriers to addressing their workforces’ skills gaps:
• 73% of HBSGS respondents committed to ‘increased training’ as the primary tool by which they address skills gaps in their staff, 50% resorted to recruiting new staff, whilst 45% redefined the job role and responsibilities to help their staff. HBSGS findings show that Hertfordshire business investment in training is high, and is comparable overall with other leading LEPs in England. Overall investment in supporting businesses to prioritise and allocate resources to training is beneficial. However, public sector resources to invest in the different skills training both in the businesses, and at our local further education colleges and universities is very challenging[5]. This workforce development by enterprises has a very positive effect on the local economy, by effectively up skilling the current local workforce and generally improving their productivity. This has the additional benefit of enhancing the competitiveness of Hertfordshire businesses, and increasing the likelihood of employees remaining in the business. Another reason for Hertfordshire businesses favouring an increased training strategy is the difficulty these businesses face in recruiting new staff with the required skills and experience, a factor picked up in other LEP skill studies[31], and at a national level by the UKCES study in 2012[11].
• National studies by the British Chamber of Commerce (2011) identified that only 45% of employers surveyed were very, or fairly, confident of recruiting graduates. Most accepted that graduates were not fully prepared for the work place. Many identified that they lacked basic skills and competencies (30%), had a poor attitude or motivation in the workplace (20%), and had limited work experience (40%). This links with the HBSGS findings and analysis of where Hertfordshire’s workforce structure is changing as Managers and Professional occupational roles are increasingly, calling with higher skilled employees, most of whom will be graduates, with their inherent skills gaps. These Managers and Professional occupations encompass a broader range of tasks, outside of those normally associated with these roles 10 – 20 years ago, stretching those incumbents’ current skills and demanding higher skills levels. Hence these employers are more demanding of their graduate entrants, looking beyond basic skills and for signs of agility and flexibility in their thinking and approach.
• 51% of HBSGS respondents committed at least one staff member to ‘on-the-job’ or ‘off-the-job’ training in the previous 12 months. The UKCES survey recorded that 59% of businesses had committed at least one staff member to training in the previous 12 months. Nearly 56% of micro businesses and 17% of small businesses admitted to no formal staff training. Of those businesses that did not engage in skills training over 50% cited the principal reason being that their staff were full proficient, the next most cited reason was financial cost (27%). These are very similar to other LEP areas[31] and the national picture[11].
• HBSGS findings revealed that 70% of businesses had either/both a training plan and budget for the current year, this is comparable with adjacent counties like Buckinghamshire (64%) and Berkshire (69%)[31]. Almost all of businesses that take action over identified skills gaps undertake skills training, with some complementing this with the recruitment of additional staff with the required skills, and redefining staff roles[11]. Over 90% of Hertfordshire businesses that use external training companies are very satisfied with all forms of provision, this is comparable with other adjacent LEP areas[19, 30, 31, 35].
• HBSGS highlighted that apart from very job specific skills training, many businesses provided broader training on: supervision/mentoring skills for line managers, leadership training and business management. This perhaps reflects that over 52.8% of Hertfordshire employment is in professional and management occupations, these staff do receive more training compared to any other business occupations. Hertfordshire is ranked fifth in LEP areas regarding having a high-technology, knowledge intensive economy and having relatively high levels of employment in scientific Research and Development (R&D) activities[5]. The knowledge-intensive sectors depend on a high-level of ‘tacit’ knowledge, they utilise the expertise and experience of high-skilled people - people who require on-going training to remain productive, creative and innovative.
Hertfordshire businesses are well placed, through access to skilled and qualified workforce, to take the opportunities presented by an improving local economy. But more businesses will need to be persuaded to invest in recruitment, training and development of their existing and new staff. These new recruits will become the backbone of their future workforce as existing workers grow old and retire, and as such will need continued access to training to help develop and react to changing skills needs. The business case for Hertfordshire business investment in this is a mix of short-term (lower employee churn, cost effectiveness, flexibility and willingness to learn) and longer-term benefits (creative and innovative culture, openness to marketplace insights and networks and future-proofing).