With more businesses looking internally to find skills, could at-work training be costing your agency?

UK businesses are increasingly likely to upskill their own staff in the hunt for talent, a new study has found.

The cultural shift in the way companies scout for skills means less money going to external recruiting budgets and agencies.

The data, which forms part of the Open University (OU) annual Business Barometer, found that 63 per cent of businesses are struggling to obtain the requisite skills in 2019.

The lean UK jobs market has led to a massive upsurge of internal Learning and Development (L&D) schemes. More than half (53 per cent) of UK enterprises now operate some form of internal upskilling programme.

Perhaps more worrying for recruiters is the change in perception around this form of skills acquisition. A substantial majority (71%) of organisations believed that internal L&D was the best way to address organisational skills gaps.

Why the change of tact? It appears to be a case of efficiency, and savings. 68 per cent of surveyed firms found that candidates they were given were not suitable. £1.1 billion was spent last year, training new recruits to meet basic standards after they were hired. It means that, for much of 2018, enterprise was hiring staff it knew was unsuitable, and fronting the costs themselves. This one statistic alone reveals the true extent of the skills gap that was, perhaps until now, not fully realised.

No Single Solution for the Skills Gap

In fact, data from the report shows a significant, 30 per cent decrease in spending on talent acquisition. In nominal terms, business has forked out £4.4 billion in the past year to secure in-demand skills. This is down from the previous twelve months’ spend of £6.3 billion.

It should be noted that the skills budget accounts for many factors: including salaries, incentives, and bonus payments. It is not the total spend on external recruitment. However, if enterprises are seeking innovative ways to become more cost-efficient in their talent scouting, then agencies should expect to feel some of the impact of that, too.

Despite this, upskilling and training should not be painted as the enemy of the recruitment industry. In fact, quite the opposite. A healthy internal upskilling programme will remove unrealistic expectation and workload on a lean jobs market. It will allow consultants to operate within a realistic set of parameters for every hire – rather than chasing the “unicorn” candidate they know very well does not exist.

We have previously highlighted the extent of the UK skills gap. It has been apparent that recruiters could not solve the talent shortage on their own. A growth of L&D culture at work is one step in the right direction. But there are now calls for central government to play a greater part in closing the skills gap, too.

And, with a fresh team, there is hope that this can also mean a fresh start.

REC calls on chancellor to intervene

That is the expectation of the Recruitment and Employment Confederation (REC), who last month petitioned the government to alter the apprenticeship levy.

The REC has told the government to bring reforms to the scheme. Proposed changes would release money to fund a more flexible training initiative. Crucially, cash raised by the Apprenticeship levy would be made available to internal training and L&D programmes.

607 REC members contribute to the existing fund. Between them, they account for £104 million of unspent apprenticeship cash. Their inability to do so stems from the additional costs of supporting a paid apprentice while contributing to the fund. Businesses argue that money would be better spent on existing employees within organisations.

Back in June, the now-Chancellor Sajid Javid wrote in the Financial Times that:

“I will broaden the apprenticeship levy into a wider skills levy, giving employers the flexibility they need to train their workforce, while ensuring they continue to back apprenticeships.”

Now the REC is campaigning to ensure Mr Javid stays true to his word. Sophie Wingfield, head of policy and public affairs at the REC said:

“Javid’s recognition of the need to reform the Apprenticeship Levy is especially welcome.”

“The Levy was implemented with the best of intentions but could help benefit the progression opportunities for many more workers if it could be used for broader training.
We would welcome working together to end the scandal of locking-out temporary workers, so that critical industries facing skills shortages, like hospitality and social care, can access the talent they need.”

• READ MORE: The OU Business Barometer report is free to download, from this website