Aotearoa New Zealand’s Skills Revolution: Investing To Grow Tomorrow’s Prosperous, Future-fit & Capable Kiwis

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By Kerry Topp, Associate Director, Transformation and Innovation

We can’t slow down the rate of technological change, change is rapid and all around us. The skills cycle, the rate at which skills are needed, is rapidly increasing both globally and in New Zealand. 

 We are at the crucible moment where leaders in Aotearoa New Zealand need to be proactive and responsible in the “right-skilling” or retraining of their workforce. For right-skilling, organisations need to have a strategic plan for talent to make the shift. Any good talent strategy should focus on retaining and training existing talent, as well as acquiring new workers.

“It’s becoming more important to prepare than adapt. By the time you realize the need to adapt, it may already be too late.”Greg Satell | Author | Speaker | Innovation Adviser

In this context, what can we do as leaders to ensure our organisations, society and above all, our people, are future-fit and ready, now? In this post we will look at why we believe it is crucial for corporate leaders to increase their investment in employees’ skills today so New Zealand Aotearoa is able to increase the prosperity, wellbeing and capability of our people, organisations and country, tomorrow.

The Skills Revolution Is Here!

Recently Manpower, a global leader in contingent and permanent recruitment workforce solutions, asked 18,000 employers in 43 countries across six industry sectors how they expect technology will impact their business in the next two years, and how they are ensuring their workforce has the right skills and is ready to adapt – specifically, they looked at:

  • The likely impact of automation on headcount in the next two years,
  • Which functions will be most affected,
  • The strategies they are adopting to ensure they have the skills they need for technological advances.

“We are seeing the emergence of a Skills Revolution — where helping people upskill and adapt to a fast-changing world of work will be the defining challenge of our time.“ – Jonas Prising | Chairman & CEO | ManpowerGroup

What Manpower found was that more than 90 percent of employers expect their organization to be impacted by digitisation in the next two years. In addition, on average, by 2020, more than a third of the desired core skillsets of most occupations will be comprised of skills that are not yet considered crucial to the job today.

The World Economic Forum identified that skills cycles are shorter than ever before and some 65 percent of the jobs Gen Z will perform do not even exist yet. They also found that up to 45 percent of the tasks people are paid to do each day could be automated with current technology. We have of course adapted to the evolution of the labour market before — from tellers to customer service representatives, typists to word processors and personal assistants — disrupting, destroying, redistributing and recreating work is nothing new. The difference now is the life cycle of skills is shorter than ever and change is happening at an unprecedented scale.

“On average, by 2020, more than a third of the desired core skill sets of most occupations will be comprised of skills that are not yet considered crucial to the job today.” – World Economic Forum

The Conclusion Is Widespread

It is not just Manpower or The World Economic Forum that are drawing similar conclusions. The evidence of a skills revolution is also coming through loudly from the likes of the Big Four and research organisations, like McKinsey & Co, Gartner, PWC as well:

  • 51 percent of all activities can soon be done without humans, impacting and changing 60 percent of current jobs [McKinsey, Future of Work 2017].
  • The future of the workforce will be dominated by those born between 1980-mid 90s. And what they want from work is different. A strong sense of alignment on values and purpose, over profit, is the main goal. According to PWC’s Managing tomorrow’s people: The future of work to 2020 report, 88 percent are looking for alignment on corporate social responsibility, with their personal values.
  • According to PWCs Workforce of the Future study, 74 percent of global employees are now actively up-skilling themselves to take advantage of the new economy.
  • A study by Mavenlink found that given the opportunity, 65% of workers would pursue contract work. Whilst it’s not a new addition to hiring trends, it’s still worth calling out that flexibility is key, with the option to work remotely influencing the likelihood of accepting a position for 68% of new workforce entrants. There are many more ways to ‘work’ emerging and becoming main-stream. Which opens up new and creative ways for organisations to run their HR budgets, and individuals to design a career with more flexibility.

Those With The Right Skills Will Thrive

Based on this research, it is clear, those with the right skills will increasingly be in the driving seat, create new opportunities and have the choice and flexibility to work where, how, and when they like. Those lacking the right skills will increasingly be left behind and the outlook for the future for them is not rosy. There is a continued polarisation of the population that is playing out right in front of all our eyes and it will, if not rapidly addressed, be costly for society and business.

How Do We Ensure NZInc Has The Right Skills To Thrive?

At Datacom, we believe that now is the time for company leaders to be responsive and responsible! We cannot slow the rate of technological advance or globalisation, but we can invest in employees’ skills to increase the resilience of our people, organisations but also society. I contend that we are seeing the emergence of what World Economic Forum calls, the Skills Revolution.

Yes, individuals absolutely need to nurture their ‘learnability’: their desire and ability to learn new skills to stay relevant and remain employable; but leaders in New Zealand need to take immediate action to fast track the upskilling and reskilling of existing employees to ensure New Zealand Aotearoa has access to a workforce with the skills required for the future.

So, let’s have a look at what we are doing to support the resilience of our people.

In a recent McKinsey survey, 75 percent of executives said they believed reskilling would fill at least half of their future talent needs, given the war for talent and hiring difficulties. The survey highlighted that people working in IT and customer-facing roles are likely to see the greatest increases in demand, but they also anticipated rapid growth in demand across almost all industries and geographies for data analysts required to make sense of big data, and for specialised sales, product and commercial managers to commercialise new digitised offerings.

At Datacom we firmly believe that from learning comes creativity and from creativity comes innovation. One of the activations we have in this space is Datacomp, our annual innovation hackathon, which has been running since 2012 and is designed to keep our people sharp and give them an opportunity to trial and test new skills and experiences in a safe environment.

Watch Datacomp 2018 video

One of the benefits of Datacomp is that every year each person in our business gets the chance to take part in a significant learning and development opportunity. Our goal in providing the program – called Datacomp StayingSharp – is simple, to add to our peoples’ C.V.s! Not because we want them to go, but rather, because we want them to stay.

Over the last seven years that Datacomp has been running we have seen over 1,000 people trained in lean canvasing, design thinking, presenting and pitching, plus get ongoing exposure to the latest technology and insights.

Having The Opportunity And Feeling Safe Are Important

Our view is that giving our people the opportunity to keep up-to-date with the latest trends, ways of working and tech is positive and inspiring for all – most importantly, our people and customers. We aim to give our people a safe environment to experiment and try new things, things that they don’t necessarily have the opportunity to do in their day job.

Datacomp 2018 winners

Winning team from Datacomp 2018

We don’t do this lightly. We are actively and deliberately seeking to lead our own people and also other organisations to keep up with the ever-demanding skills cycle.

“Remember, you’re not in charge. You are responsible for those in your charge.” – Simon Sinek | Founder | Visionary | Author | Speaker

As Simon Sinek, internationally acclaimed speaker and author, said leaders are not responsible for the job. Leaders are responsible for the people, who are responsible for the job.

Watch Simon Sinek speak.

If we accept that the pace of technological change has accelerated us to a crucible moment where leaders in Aotearoa New Zealand need to invest in employees’ skills today to increase the prosperity, wellbeing & capability of our people, organisation & country, tomorrow, then as a leader, I encourage you to ask yourself: what are you doing to deliver a brighter future for your people?

Further references

 

Transforming Payroll and Human Capital Management through BPaaS

By Mark McWilliams

Generally, businesses find their time and ROI are highly correlated; it is rare to find an opportunity to obtain significant returns without a large investment of time or resources. This rule is debunked, however, when you apply the Business Process as a Service (BPaaS) model in order to dramatically increase operational efficiency. By outsourcing processes that are expensive or inefficient to highly-specialised, third-party organisations, you can reduce total operating costs while putting time back into your employees’ days. In turn, you can invest these savings in important strategic goals, fostering company growth and attracting top talent.

BPaaS can be advantageous when used for both standardised and strategic processes, such as payroll and human capital management, respectively. While using BPaaS for standardised processes like payroll allows for greater savings, BPaaS brings greater efficiency to complex processes like HCM.

Managing payroll through BPaaS

Payroll is perhaps the best example of a function that can be revolutionised through BPaaS; it holds little strategic value, but is a necessary component of business operations. The primary goal of payroll, rather than to gain an advantage over a competitor or increase revenue, is to pay employees in a correct and timely manner. Especially for small businesses, the costs of operating a payroll department can be exceptionally high, and could be better served by a trained, external provider. Recent research shows that most organisations are unable to achieve best practice benchmarks in managing their payroll internally, with most delivering an efficiency rating less than half that of a well-run process. Further, the pricing difference between performing payroll in-house and using a BPaaS solution can be as high as 70 per cent.

Savings alone aren’t the only advantage of BPaaS, however. BPaaS is also an attractive option for businesses that otherwise struggle with certain aspects of their operations — be it due to a lack of technical expertise or training, small staff or outdated IT infrastructure.

Human capital management

As I noted in my last post, BPaaS can also successfully optimise strategic business operations. Take, for example, a business’s hiring and talent management operations. While these are typically functions over which organisations desire a high degree of control, they do not necessitate performing them completely in-house.

By using BPaaS to manage processes such as talent acquisition, organisations can tap into a much wider range of potential employees and establish a rigorous, yet standardised, recruitment process. From a talent management perspective, BPaaS providers can help an organisation set up and facilitate onboarding procedures, defining role competencies, regular performance and development reviews and succession planning. As a result, businesses may not only reduce hiring costs and attract talent faster, but also learn more about current employees’ strengths, weaknesses and untapped potential — making for a much more agile, thriving company.

With these advantages, businesses can expect to become more competitive, better-positioned to achieve their strategic goals and faster innovators. By outsourcing payroll and human capital management functions to specialised providers, organisations significantly reduce their overall expenditures while increasing operational efficiency. Through BPaaS, a business can remove its weakest link, eliminating the burden of tedious processes and strategically redirecting revenue streams.

Mark McWilliams has 25 years of experience in the technology sector and is Director of Datacom Investments.

He has detailed knowledge across the IT spectrum from data centres through to governance, with everything in between. He has also worked with organisations that have varying needs from a security standpoint, including those with advanced requirements such as banks and government agencies.

The Rise of Managed Payroll in Australia: A Q&A with Datacom Director Mark McWilliams Part II

Here’s Part II in our Q&A with Datacom Director Mark McWilliams on the managed payroll market in Australia and how SaaS and cloud are becoming game-changers in the industry.

Q: Cloud seems to be an increasingly viable option for running payroll —what benefits does a cloud model provide?

A: Cloud is really about the commercial model. Running a system like payroll in the cloud commercial model is very powerful— as long as the provider embodies cloud principles in its contract. These characteristics and benefits include:

  • On-demand self-service: The client can unilaterally provision new capabilities as needed without human intervention.
  • Broad network access: Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin- or thick-client platforms (e.g., mobile phones, laptops, and PDAs).
  • Resource pooling: The provider’s system resources are pooled to serve multiple clients using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to client demand.
  • Rapid elasticity: Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale out and rapidly released to quickly scale in. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be purchased in any quantity at any time.
  • Measured service: Cloud systems automatically control and optimise resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., number of employees, reports generated, pay slips produced). Resource usage can be monitored, controlled and reported, providing transparency for both the provider and client of the utilised service.

Q: What factors should organisations consider when deciding whether to enter into a fully-managed or partially-managed (SaaS) BPO agreement?

A: There are essentially four key factors to consider when it comes to outsourcing payroll. The first is the organisation’s size and complexity. Does your organisation do the same type of pays, or is it varied? If the answer is the latter, it might reduce your risk and overall costs to fully outsource due to the multiple award configurations, employee types, shifts and so on.

The second factor centres on the knowledge of your internal payroll team. If you have a strong internal team with ingrained knowledge, it may be better to retain that team in-house and opt for a partially-managed, SaaS solution. The third factor, which is also related to your payroll staff, is whether or not you are legally able to migrate your payroll to a service provider at all.

The fourth, and likely most important factor, is which outsourcing option will truly accelerate optimisation of human capital management in your organisation. For instance, if you have an internal team that’s highly motivated and they want to run with it, let them run your payroll through the SaaS option.

Q: What are some of the key traits organisations should look for in a managed payroll provider?

A: Stability is No. 1. Don’t choose a fly-by-night organisation. Clients need to know that the organisation is robust and will continue to pay your people without risk of downtime. The provider needs to be a specialist in the area with sufficient local critical mass to understand what’s happening in the market, both nationally and locally. For instance, in the Victorian public health system, which Datacom Business Services has served for the last 40 years, an understanding of federal and local laws and what’s going on reduces the risk that people will get paid late or incorrectly.

The other key consideration is whether the provider has a robust system with a solid future development roadmap. Basically, is the platform going to reach a point in the near future where support ends? SAP, the technology DBS will use to run payroll and human capital management, has a roadmap out to 2020, for instance.

Q: In terms of a forecast for the industry, where do you see payroll heading in the next five years? Will organisations continue to keep payroll in-house or move to a business process outsourcing model or an as-a-service model?

A: Between 2010 and 2015, the human resource outsourcing market (fully-managed) will grow in Australia and New Zealand from $1.3 billion to $1.9 billion in revenue, according to IDC figures. Human Resources Outsourcing (HRO) is one of the fastest-growing outsourcing segments, due to grow around 13 to 14 per cent for the next three to five years. So, it’s fair to say that the industry is going in the direction of outsourcing, in both the fully- and partially-managed capacity.

Learn more about managed payroll and human capital management.

The Rise of Managed Payroll in Australia: A Q&A with Datacom Director Mark McWilliams

In April 2012, Datacom acquired Enterprise Support Asia Pacific (ESAP), a provider of SAP and Software-as-a-Service payroll, human capital management implementation and support services. A year later, these services are being delivered throughDatacom Business Services, an independent entity within Datacom, so organisations no longer have to manage payroll. Director Mark McWilliams spoke with us about how payroll and human capital management are changing in the Australian market and which factors organisations should consider when deciding to outsource these business functions.

Q: Historically, businesses in Australia manage payroll in-house. What have been the reasons for this approach?

A: People don’t tend to change systems like payroll unless they have to due to things like software risk or there is some other compelling commercial reason such as a merger or need for cost reduction. And because back-office systems like payroll don’t get much attention — they don’t generate for the top-line result —, they are very much a case of, “If it isn’t broke, don’t fix it”. So there they are, systems that were implemented over a decade ago, still running quietly in the background.

However, today organisations have come to realise that managing their human capital more effectively can yield massive results for their business, both top line and cost, which then flows to a significant improvement in Net Profit Before Tax (NPBT).

Q: What are some of the areas or functions organisations struggle with when they manage payroll internally?

A: There are several big issues when you manage payroll internally, including:

  • Cost: Systems, depreciation, running costs, compliance costs, software costs, people costs all add up when you manage payroll in-house.
  • Integration: Often, payroll systems are islands of information in the corporate IT landscape, when, in actual fact, they should be a key tool used for critical business decision-making.
  • Business continuity: Often, in-house payroll systems have several single points of failure, especially in businesses with fewer than 1,000 people. Businesses might only have one person to manage payroll because they can’t justify more because of their size, which means that if that person is unavailable for some reason, there is a risk to payroll. All SMEs pretty much have this issue when they manage payroll in-house.

Q: When an organisation chooses to manage payroll internally, research shows it can actually cost more than outsourcing it — why is this the case?

A: Having to shoulder the burden of 100 per cent of all costs to manage payroll internally is the main driver. For example, if you have a 400-person organisation, you probably need at least one payroll person and somebody in reserve to manage payroll. If it is outsourced, you will likely pay for one third of a person; for the same number of staff, this represents significant savings. Keeping up with legislative compliance is also a significant cost for most businesses that manage payroll in-house. As a single organisation buying a payroll system, there is no scale leverage when negotiating the price for the system. There are no scale benefits when you manage your own payroll system.

Q: For organisations that do decide to outsource payroll, either in a fully-managed or partially-managed capacity, what usually sparks the decision to move ahead?

A: There are a number of drivers that spark the decision to move toward managed payroll:

  • Cost: In our experience, it’s usually 30-per cent cheaper to have a provider manage your payroll due to savings on internal staff, software maintenance and licensing. For every 1,000 employees, that’s likely to be a savings of $5,000 to $7,000 per month.
  • The drive to value human capital management differently: Organisations are being spurred to review systems relating to their people, considering areas such as cost of attrition, training shortages, people development and how best people contribute to corporate performance.
  • Joining a “club”: Many organisations have similar requirements with regard to contract types and complexities in payroll. For example, in healthcare, the unions negotiate very similar arrangements across the country, and often these arrangements are complex to implement when you manage payroll in-house. If a hospital can join with others, it can help reduce risk and cost and improve learnings from like-minded organisations.
  • Risk/compliance: Often, systems will be out-dated or unsupported or unable to implement required legislative requirements. This will necessitate a change.

Stay tuned for Part II of our Q&A with Mark on the shift in how Australian organisations plan to manage payroll. In the meantime, learn more about how DBS can help manage payroll and human capital management for your organisation.