39. Navigating Skills Shortages
How to attract, train, and retain top talent in a competitive market.
Imagine this - Your business is growing, but you can’t find qualified candidates for key roles. You need employees with technical expertise, leadership abilities, or specialised industry knowledge, but the talent pool seems limited or non-existent.
As a result -
Existing employees are overworked, leading to burnout and frustration.
Projects are delayed or fail due to a lack of expertise.
Customer satisfaction declines, affecting reputation and revenue.
Competitors with skilled teams pull ahead, making it harder for your business to stay competitive.
Critical skills shortages occur when the demand for certain skills exceeds the supply of qualified workers. This can happen due to industry shifts, emerging technologies, or changing business needs.
HR psychology tells us that employees are more likely to stay engaged and productive in businesses that invest in skills development and talent pipelines. If leaders fail to address skill shortages, they risk business stagnation, employee dissatisfaction, and increased turnover.
The challenge? How do you identify, attract, and retain the talent needed to bridge skills gaps and future-proof your workforce?
The Solution – A Three-Part Approach - Identify, Attract, and Develop Talent
Effectively managing critical skills shortages requires a proactive strategy that balances immediate hiring needs with long-term workforce planning. Here’s how to identify skill gaps, attract top talent, and build a sustainable talent pipeline.
1. Identify and Prioritise Your Most Critical Skills Gaps
Before hiring or training, leaders must clearly define which skills are missing and which are business-critical.
A. Conduct a Skills Audit
A skills audit compares current workforce capabilities against future business needs.
List the essential skills required for business growth.
Assess current employees’ skills—who has what expertise, and where are the gaps?
Identify future skills needs—what expertise will be required as your industry evolves?
HR Best Practice - Involve employees in the skills audit process—this helps identify hidden talents and areas for upskilling.
B. Categorise Gaps Based on Business Impact
Not all skill gaps require urgent hiring. Prioritise based on -
Mission-critical skills – Essential for daily operations (e.g., compliance, technical expertise).
Growth-driving skills – Needed for expansion, innovation, or entering new markets.
Future skills – Emerging competencies that will be needed in 3–5 years.
Red Flag - If multiple employees have similar skill gaps, the issue may be a hiring or training weakness rather than an isolated shortage.
2. Attract and Retain Talent in a Competitive Market
Once skill shortages are identified, leaders must adopt creative strategies to attract and retain skilled employees.
A. Expand Recruitment Beyond Traditional Talent Pools
If local talent is limited, consider -
Remote and hybrid roles – Widen the search to national or global candidates.
Part-time, contract, or freelance hires – Tap into gig workers and specialised consultants.
Hiring for potential – Recruit candidates with strong foundational skills and provide additional training.
HR Insight - Companies that focus only on “perfect-fit” candidates risk long-term vacancies—hiring adaptable talent and training them is often a better strategy.
B. Strengthen Employer Branding to Attract Skilled Workers
In-demand talent chooses employers based on workplace culture, growth opportunities, and leadership quality.
Highlight career progression pathways to attract ambitious employees.
Promote workplace flexibility to appeal to top candidates.
Showcase employee success stories to reinforce a positive work environment.
HR Psychology Insight - Employees are more likely to join and stay with businesses that align with their values and career aspirations.
C. Improve Retention to Prevent Further Skills Loss
A critical skills shortage can worsen if existing skilled employees leave. Retention strategies include -
Competitive salaries and benefits – Ensure pay matches industry benchmarks.
Recognition and career growth opportunities – Provide clear pathways for promotion.
Work-life balance initiatives – Prevent burnout and job dissatisfaction.
Red Flag - If skilled employees frequently leave for competitors, assess whether your retention efforts are strong enough.
3. Develop Internal Talent to Bridge Long-Term Skill Gaps
Since hiring skilled employees isn’t always feasible, businesses must invest in upskilling existing employees.
A. Implement an Employee Upskilling and Reskilling Program
Offer structured training programs tailored to skill gaps.
Provide mentorship and coaching to fast-track employee development.
Encourage cross-training so employees gain knowledge in multiple areas.
HR Best Practice - Companies that invest in internal talent development reduce hiring costs and increase retention rates.
B. Build Partnerships with Educational Institutions
Collaborate with -
Universities and technical schools to create talent pipelines.
Industry associations to stay updated on emerging skill trends.
Apprenticeship and internship programs to train future employees.
HR Psychology Insight - Employees who feel supported in their career growth are more engaged and loyal.
C. Use Technology to Accelerate Learning and Skill Development
Leverage -
E-learning platforms for self-paced training.
AI-driven skills assessments to identify employee strengths and gaps.
VR or simulation-based training for hands-on learning in technical fields.
HR Insight - Companies that embrace digital learning tools develop talent faster and more cost-effectively.
Reflective Scenario – What Would You Do?
You need to expand operations, but there aren’t enough skilled professionals in your industry. Your best employees are overloaded, and you worry that if nothing changes, key staff will leave, worsening the skills shortage.
Using the strategies above, you might -
Conduct a skills audit to pinpoint priority gaps.
Broaden recruitment beyond local talent pools and consider hybrid roles.
Enhance employer branding to attract skilled workers.
Launch an upskilling program for current employees to close long-term gaps.
By strategically addressing skill shortages through recruitment, retention, and talent development, you future-proof your workforce against long-term hiring challenges.
Golden Nugget - "The strongest businesses aren’t the ones that always find talent—they’re the ones that build it."
By proactively identifying skill gaps, attracting high-calibre employees, and investing in internal development, SME leaders can stay ahead of industry changes and secure their company’s long-term success.