How To Combat The Worldwide Skills Shortage

In the past decade, we have experienced a steady erosion of skills among people working in various industries, professions and businesses. This includes many large industries like chemicals, petrochemicals, oil refining and the like. This is a very provocative statement which will, no doubt be hotly contested by some people, but nevertheless it is true, like it or not. This is the reason why one often hears a cry among HR professionals, business leaders and management gurus of a “worldwide talent crunch”. A side effect of this skill erosion has been an increase in salaries and benefits in many companies to those employees who have retained or enhanced their skills ( as contrasted with the pay cuts seen everywhere not so long ago), as well as concrete steps to stem attrition at all levels. This paper attempts to provide an insight into the issue as well as provide a solution for companies and businesses that are suffering from this problem.

History of the problem

The problem of the skills shortage can be directly attributed to three reasons. The first and primary reason is the “Downsizing “ effect. The second reason is Demographics. The third reason is that not enough young workers are entering the workforce in some sectors. We will study these one by one and also attempt to provide a solution.

Downsize ‘em all!

In the mid to late nineties, there was a wave of a new management fad that cut across all sectors, industries and professions. This fad was the concept of “downsizing” and “rightsizing”. Coupled with its cousin of “outsourcing”, it played a dominant role in creating todays’ problem. Like many other temporary quick fixes, it only proved the old adage , that the solution to a problem can create a bigger problem.

Until the nineties, typically employees in most companies, shared between them, a vast body of knowledge, that was the real driver of the growth and profitability of the business. This was never acknowledged or measured as such by top management seriously. Thus this “intellectual property” of the business was never cared for properly. Merely having a physical location (like an office or a factory) and machines (or plants or computers or other physical assets) and money in the bank, does not make a business. The business requires skilled people, in various functions, having diverse skills, to glue it all together. They co-ordinate the people and assets, use the money productively and thus create value. This key insight was lost on the swashbuckling managers and cost-focused bean counters of the “cutting nineties” (a term similar to the swinging sixties, but more sinister), who looked askance at people, mocked them as mere “cost centers” and concentrated on cutting them out of the business.

No doubt that every business does acquire some flab and bureaucracy as it grows older, but this wave of downsizing threw out the baby along with the bathwater. This scored the managers of those days some brownie points and lifted the bottom lines of those companies during the recessionary times by some percentage points. Not to speak of the increase in their own bottom lines because of the bonuses and stock options. But then, when the economy picked up again, this downsizing process left the companies with gaping skills shortages. This left companies with little or no resources to again expand capacities, regain their market positions, introduce new products or even to take care of existing products.

This opportunity cost has been never seriously measured by any of the management gurus, to my knowledge.


In Europe the average age of the population has now increased. This fact is well known and publicized often. However, what is not emphasized enough, is that the aging is far from uniform. In some industries, like chemicals manufacturing, the average age of a typical plant operator is more than 50! Besides, because of the decrease of retirement age by the industry (in its cost-cutting era), it means hundreds of these operators would retire at the same time, permanently cutting off their knowledge of so many years of industries and processes. There won’t be enough operators to go around since this age profile cuts across many chemical companies in the western world. Hence, once these operators exit the workforce, finding replacements won’t be easy. Ditto for other large manufacturing sectors.

Bad PR and “Uncool” industries & sectors

Professional PR managers say, that there is no such thing as “bad PR”, any publicity is good, if it generates interest among a community to discuss it. While this may be true for businesses like software or mobile phones, bad PR has badly affected the chemical industry, by painting it as eco-unfriendly, polluting and bad smelling. This is simply untrue with respect to many chemical industries today, who have far less pollution & environmental problems today. In fact most of the problems of pollution and warming in cities can be attributed to vehicular pollution rather than industrial pollution. However, who’s listening? To the youngsters graduating out of college the “chemical industry” is simply “uncool”. There also do not seem to be many efforts at correcting this view from the manufacturers of chemicals. Besides, the memory of the downsizing campaigns is still fresh and nobody wants to join the chemical industry, IT industry or other manufacturing industries, to make a career. They would rather join a TV channel, become a Radio Jockey, or go into the hospitality business or perhaps even try stock broking or merchant banking. This “bad PR” has also hit the IT industry in the US, where not many young people are enrolling in Computer Science courses in universities, because of the fear of not getting jobs due to outsourcing. Thus this leads to further shortages from the IT businesses point of view.

The effect of combined factors

The effect of all the factors in combination above, has been a dramatic shortage of skilled people in the industry. This creates not just problems of paying more for available skills or overtime, but the fact that a wrong operation because of lack of skills and / or training can result in a disaster, in case of a chemical company, affecting entire communities, not just individuals or companies. Wrong operations in other professions like the IT industry can have also serious undesirable consequences, which may also be catastrophic (imagine a software code with many bugs in your banking application software).

The solution to the problem

The only solution to the problem, is by spending more time, attention and money on training programs that enhance the skills of the workforce in general, refresh old skills that workers have and bring up the skills of the freshers or semi skilled workers who join the workforce, all in a short time. This can be achieved, only by employing innovative training solutions. The old training technique (which is hundreds of years old, by the way), can no longer be used effectively in todays’ situation.

We are talking about classroom based training here. When somebody says “training” to a manager, the first thing that comes to his/her mind is “Oh! My God! Not again! I am already short of xx workers and they ask me to spare somebody for training!!”. This is because many of us still associate the word “training” with “classroom training”.

This is of course not correct. The world has moved ahead and training can now be imparted online, at home, in the garden or on the beach. It is now ON DEMAND learning, thanks to the proliferation of the Internet, easy availability of PCs/laptops and mobile phones.

We are talking of e-learning and m-learning here. Besides being flexible, it can be imparted in bite sized chunks, easily digestible, over a period of time. Repeating it hardly costs anything, whereas a classroom refresher training directly doubles the cost.

An added benefit is that, for young entrants to the workforce, it gives them learning on platforms that they are already used to and comfortable with (i.e on laptops, PDAs and Mobile phones). It somehow enhances the “cool” factor and removes the image of the industry as staid, conventional and old-world.

Topics for learning

Previously there were not many courses with ready made topics with e-learning providers. Typically, most e-learning service providers used to provide custom-made, bespoke learning packages to individual companies. While this approach had its benefits, the downside is, that the courses are suitable only for the company for which they were designed, leading to a very high cost per user, nullifying the low cost advantages of e-learning.

However, now newer companies like Abhisam Software have e-learning titles on topics that are suitable to many process industries. Examples include Hazardous Area Instrumentation and Gas Monitors. Since these are standard courses, they can be offered at a much lower cost than the earlier custom designed courses. Besides, if the number of learners is sufficiently large (say about 50 or more) then some degree of customization of these courses is also possible, again at a low cost.


Due to historical reasons, there has been a skill shortage in the industries and businesses, all over the world.

This skill shortage will only worsen, as seniors retire and not enough youngsters enter the workforce in large numbers.

If somehow more youngsters do enter the workforce in large numbers, the cost of training them, using the traditional training methods will be prohibitively expensive and unviable. Also not enough technical training personnel are available, to offer one-on one training.

Using newer education technologies like e-learning and m-learning, knowledge and expertise, can be imparted quickly and precisely, to those people whose skills need to be developed. This can be done at a fraction of the cost of traditional learning. Thus new recruits can be trained effectively.
Using standard topics and templates for learning, reduces the cost of the training further. Customization if required, however is always possible. In most cases, even with the cost of customization added, the total cost of training using these modern methods is lower than the cost of traditional training.

Additionally, e-learning provides managers with a way to track training remotely, because most e-learning systems will provide test scores, record time spent on each module or page, log the students activity and provide very detailed measurements, that can be used to improve the training. Traditional methods hardly provided any data, save for a feedback form at the end which students themselves filled in, which then lies forgotten in some dusty file, forever.

E-learning and m-learning does not mean merely reproduction of classroom training materials into ‘soft’ copies and viewing them on a PC or a mobile. Companies like Abhisam Software provide e-learning that is media rich, with lots of pictures, Flash based animations (that simulate a process or show the working of a machine or a phenomenon), interactive simulations (that include the learner in the Flash exercises), real-life video clippings of events or procedures and online assessments. This kind of “rich-media” training is simply not comparable with the traditional classroom based training. The courses are designed with the help of several subject matter experts, Instructional designers, animation and user-interface experts.

Thus the worldwide shortage of skills can be addressed by using training to enhance workers’ skills, cross train workers, enhance the skills of semi skilled workers or freshers. This is possible only if company managements focus their attention on effective e-learning and m-learning philosophies. It is by far the best solution to bridge the skills shortage and gain competitive advantage.

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