Article: The Employability Gap: IndiaSkills-People Matters Survey 2011

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The Employability Gap: IndiaSkills-People Matters Survey 2011

The 2011 Survey affirms the existing gap in expected vis-à-vis available skills which is forcing organizations to resort to innovative ways to make entry-level talent productive on the job
The Employability Gap: IndiaSkills-People Matters Survey 2011
 

81% of the participating companies stated that they spend between 3 to 6 months on training a new recruit at the entry-level

 

91% of the participants agreed that structured training is required for entrylevel hires and more than 70% respondents admitted to having a structured training program

 

The 2011 Survey affirms the existing gap in expected vis-à-vis available skills which is forcing organizations to resort to innovative ways to make entry-level talent productive on the job.

The IndiaSkills-People Matters Survey 2011 reveals that when looking at the quality of entry-level talent, industry expectations have been reduced to merely having access to candidates who have the capability to understand and learn the requirements of the job. There is a common acceptance that education cannot provide the required level of technical and functional skills. The reasons are many, including an outdated curriculum and absence of teachers who lack the required practical and functional expertise.

Only 4% of the respondents felt that an employee hired at the entry-level is productive immediately. Therefore, there is a need for organizations to focus on training them adequately to ensure that they start contributing to business productivity as early as possible. 81% of the participating companies stated that they spend between 3 to 6 months on training a new recruit at the entry-level. In some organizations representing 15% of the surveyed respondents, this time lapse can even be as long as one year.
A total of 169 respondents that participated in the Survey saw participation from leading organizations in India across industries with 57% respondents being Indian organizations and 43% being Multinational Corporations (MNCs). Respondents represent industries and sectors that were targeted for the Study: Automobile (32%), Banking, Financial Services and Insurance (22%), Retail (11%), Hospitality (12%), IT/ITES (8%), Construction (7%), Logistics & distribution (2%).

Entry-level talent & business competitiveness
Entry-level talent is seen as a source of competitive advantage in both services and manufacturing industries as expressed by 85% of the survey respondents. Companies today see entry-level talent as a way to fuel their growth plans by creating a pipeline of internal talent. Entry-level talent also balances manpower costs and increases alignment between people and organizational values and culture. This is crucial for the services industries as they hire for costumer-facing roles, like retail, healthcare, logistics, hospitality and insurance, where entry-level hires play a very important role for creating customer delight and they are instrumental in ensuring service experience and delivery.
For manufacturing industries, entry-level hiring has a significant implication on productivity, efficiency and ability to balance manpower cost as well as creating an internal talent pipeline.

Entry-level hiring
For majority of the companies in the service sector, especially those belonging to relatively new industries like telecom, insurance, retail, etc., hiring of entry-level has been both a compulsion and a strategic decision. For the more traditional services and manufacturing industries, hiring at the entry-level is a part of their manpower strategy to create a pipeline of talent for the organization, while increasing productivity and balancing manpower costs.
72% respondents expressed concern over inadequate availability of quality talent for entry-level job roles. There is varying perception across industries on whether the present market meets the required quantity of candidates for entry-level roles which mostly depends on the demand that each job carries. In the automobile industry where basic technical knowledge is expected when hiring, industry experts feel that the quantity of candidates is a problem. Whereas industry experts from the retail and hospitality industries feel otherwise, as they affirm that while ‘quantity’ of available candidates is not an issue, the ‘quality’ of available candidates is surely a problem they face.

Gaps in the education system
A primary reason for the existing skill gap was identified as the prevailing gaps in the education system, as confirmed by 83% respondents who affirmed that the present education system does not deliver the expected level of quality candidates demanded by the industry. The key problems in the present education system are outdated curriculum, lack of infrastructure to provide the right exposure and practical knowledge, quality of instructors, and lack of depth in skills learned both in functional and soft skills.

Hiring from the “skilled” talent pool
When speaking to HR heads, the survey reflected an undisputed preference for fresh candidates with vocational or skills training over other candidates. 83% of the surveyed organizations expressed that they prefer candidates who have some vocational or skills training when hiring entry-level talent.

Training entry-level talent
Organizations face an equally challenging task of making the new hires productive within minimum time. The survey shows that 90% respondents agree that training is crucial in making entry-level employees perform on the job and organizations have to spend considerable time and money on training entry-level hires to make them productive.

Entry-level training programs
Training for entry-level includes training on values and culture of the organization, workshops on technical skills specifically required for the job and training for enhancing their soft skills. While 67% respondents addressed these in their entry-level training programs, 12% said they only cater to job-specific functional training. The increasing skills gap at the entry-level has forced organizations to invest on training programs to bridge this gap. 91% of the participants agreed that structured training is required for entry-level hires and more than 70% respondents admitted to having a structured training program in place for this purpose. From those, close to 70% use internal teams to deliver training programs, while 25% use external trainers/companies.
The qualitative survey also reflected that companies choose to outsource the technical or specialized trainings. Additionally, while most companies keep the design and coordination of training in-house, the delivery of the training is often outsourced to expert companies with qualified trainers, if required. Moreover, approximately 50% of the respondents are presently satisfied with their training effectiveness, while 21% feel that their current system is not effective and a significant 30% are not sure about the effectiveness of their current training processes for entry-level hires.

Training investment (time and cost)
At present, different industries and even companies within the same industry seem to follow different training models and incur different training investment, in terms of time and money, which varies significantly from company to company. Training costs include components like trainer cost, cost of facilities, cost of infrastructure and cost of salary of the person being trained, during the training program. A majority of the respondents confirmed that they spend 3 to 7 days in classroom training for entry-level hires (36%), while 29% of the respondents spend 7 to 15 days of training per annum. From all respondent companies, 25% said training interventions happen on a monthly basis, 29% quarterly, 12% twice a year and majority of respondents (34%) said their classroom training happens once a year. The total time taken for training is larger than the classroom training alone in most cases, as majority of the companies surveyed, include on-the-job training over and above the classroom training days.
In terms of financial investment and budgets for entry-level training interventions, 42% respondents said that they spend between Rs.10,000 to Rs. 25,000 per annum per hire and 26% of the respondents said that they spend less than Rs. 10,000 per annum per hire, while 20% respondents said they spend more than Rs. 50,000. Further, training cost calculation varies significantly, as some only calculate the classroom training costs while others include all interventions that an entry-level person undergoes before he/she becomes fully productive on the job role.

The vocational advantage
There is an increasing acceptance of vocational studies as 87% of the respondents agreed that education combined with vocational training, provides better candidates in terms of their job readiness, reduces cost of training and reduces time lapse in making entry-level hires productive.

Career mapping for entry-level hires
53% of the participants across industries affirmed they have a structured career path for entry-level recruits. Interestingly, almost 20% of the respondents are not sure if their career path is actually structured. From the companies that have a structured career path, only 37% believe that the entry-level talent is aware of these career paths offered and what they mean to him/her. Therefore in some cases, even if the career development plan exists, employees at the entry-level might not be aware of it. Overall, 57% of the respondents have training programs for career progression to support the growth of non-managerial levels.

The leaking pipe: The attrition problem
84% respondents affirmed that their attrition levels are higher than 25%. While organizations invest a lot on hiring and training entry-level talent to make them productive on the job, the increasing attrition levels make this complete process inefficient. 52% respondents agreed that entry-level attrition is driven by inadequate skills to cope with the job demands and 55% respondents agreed that attrition is also driven by the lack of awareness of growth opportunities.

The skilling edge
Companies across industries will continue to hire entry-level talent both, in order to capitalize on the present growth and also as a strategic investment for the future. Most respondents agreed that there is a supply and demand gap of talent in terms of quality of available candidates and hence training is an important investment to ensure new hires are able to adapt to the requirements of the job and become productive. Companies use different models of training but half of the respondents surveyed are either not satisfied with, or are uncertain about, the effectiveness of their current training process. Respondents also agreed that candidates who have undergone vocational training are preferred because they become productive much faster and therefore require less training time and investment by the hiring organization. The survey also revealed that investing in training to ensure that new hires are equipped for the job, as well as creating adequate awareness about the available career path, can contribute to reducing attrition to a great extent.
 

Topics: #HRInsights, Skilling

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