Skills shortages ‘stifling innovation’, says PwC report

Senior company executives have identified skills shortages as one of the main obstacles facing businesses, according to a study by PwC.

The firm’s 2019 HR Survey found that 75 per cent of respondents say their company is facing “talent constraints”, while 85 per cent say attracting and retaining the best staff is their biggest challenge for the year ahead.

The proportion of hiring managers who are grappling with skills shortages is up significantly from 45 per cent in 2017, when the last corresponding report was published.Technology, engineering and finance are the areas most affected by skills shortages, and this is “stifling innovation”, PwC said.

The report suggests that almost nine out of 10 personnel departments in top Irish businesses are planning for pay increases of about 2.5 per cent over the next year.

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Bonuses

A similar proportion are planning to make changes to their remuneration schemes, including adjusting bonuses and “revising the performance management system”.

About 60 per cent of the respondents suggested they were not satisfied with their organisation’s performance management schemes, describing them as just “somewhat effective” or “not effective at all”.

About 64 per cent said they would hold performance discussions with staff more frequently, although one fifth may remove their annual rating system, PwC found.

“The survey highlights that Irish businesses need to do more on strategic workforce planning. It is important as it gives organisations the ability to evaluate their current workforce and assess future requirements by looking at the projected gap between workforce demand and supply,” said Louise Shannon, senior manager of people and organisation at PwC.