Talkstars 2012: Donal Graham, Deloitte

In the run up to Shared Services & Outsourcing Week 2012, April 16-19 2012, Melbourne, Australia, we are cornering some of our keynote speakers to get their perspective on the marketplace. Barbara Hodge interviews Donal Graham, Partner at Deloitte (Australia).

To listen to a podcast of this interview, and see a brief video-clip of Donal, click here.

Barbara Hodge: Donal, while most of the world seems to be decrying a lack of jobs it seems that Australia’s experiencing a little bit of the reverse predicament -- not a lack of jobs but a lack of workers. Deloitte’s recently done some research titled "Where is your next worker coming from?" What can you tell us about the challenges for the Australian market place that lie ahead -- specifically, what you’re calling the "new reality"?

Donal Graham: Yes, in Australia the main competition will be for workers, not for jobs, in the next few years. There are a number of things driving that demand: first and foremost is the resources boom, primarily fuelled by China but also by places like India. Australia’s lucky enough to sit on fairly large deposits of things that these growing economies want, such as iron ore, precious metals, aluminium, and so on. The huge demand for these resources is driving substantial investment -- billions and billions of dollars in mining, infrastructure, ports, railroads, and so on. And in line with that there is a huge demand for skilled workers.

The second thing is that Australia, like many other developed countries, is facing the retirement of the Baby Boomer generation. We do have an immigration programme, but it won’t cover the high number of retirees over the next few years. In fact, we’re facing a situation where for every five new workers that come out of higher education, four of them will effectively be covering retirements.

As a result, Australia is currently sitting on unemployment of effectively 5%, which is pretty close to full employment. And there are huge skill gaps and unfilled vacancies, which are also drawing workers away from areas such as manufacturing and services, into the high wages that the mining boom is offering.

How might the globalisation of the workforce offer a potential solution?

There are several ways that we see globalisation providing at least some solutions. First would be increasing off-shoring for various services. Australia probably has been slower than many other countries in adopting off-shoring. It’s happening, but it’s coming off a fairly low base. I think off shoring does have a role to play in areas such as financial services and general services.

The second area concerns immigration. Australia has just increased its annual immigration to about 180,000 a year; that’s still only about three quarters of a percent of the overall Australian workforce, and is nowhere near enough to fill demand. Certainly, changing visa requirements would be a step in the right direction. At the moment, in Australia, you can get a six week visa to come and work with your company or an organisation on a short term basis. There is also a four year visa that you can get. We think that there’s a gap there for a new class of visa, between six and 12 months, to allow companies to bring in skilled workers from overseas to fulfil project needs and so on.

Finally, one interesting technique that we’ve seen generate some interest and success is around the use of crowd sourcing, which is about leveraging the internet and interested parties around the globe, to fix problems. We’ve seen this work with incredible results in areas such as complex data mining. So there are three ways in which I think globalisation can contribute to the skill shortfall in Australia.

And what about domestically, Donal, how would a changed approach to education or diversity support new talent pools within Australia itself?

One thing we need to do is reinvest some of the bounty from our enormous mineral and other deposits into much better educational outcomes, better vocational training. And there’s a lot of debate around how best to do that in Australia.

In terms of diversity, Australia in 2009 was ranked 18th out of 33 OECD countries in terms of the participation of women aged 45-54 in the workforce. This means there are a huge number of women who exit the workforce to have families, and don’t ever come back in a meaningful fashion.

When it comes to migrants, or political refugees, for many English is a second language and that becomes a barrier to them participating in the workforce. We have an indigenous population in Australia, which has much higher rates of unemployment than the rest of Australian society.

There is a lot that could be done to encourage more of the diverse workforce participation, also in terms of disability. Roughly 5% of the Australian workforce is on some kind of disability pension. Our studies on that have shown that about 60%-odd have a minor disability, and could fulfil a much more productive role in the Australian workforce. So there are a whole range of opportunities, but also complex issues that need to be addressed and that could have a beneficial impact on workforce participation.

Donal, in summary, what are some of the smarter companies today doing to pre-empt these shortfalls lying ahead?

We see some of the smarter companies developing an over-arching talent strategy, expanding it across the whole gamut of where they might find their future workers. These kinds of companies are developing policies that on how to encourage workers to stay in the workforce longer so that they don’t retire when they might be eligible. They are using a range of flexible workforce arrangements, different kinds of incentives, and certainly much earlier recruitment or identification of talent from higher education and other areas.

Some of the companies are being very innovative in terms of encouraging indigenous workers, particularly in remote areas where indigenous people live near mining communities. So the smarter companies are not excluding any particular areas.

And looping back to shared services or business services -- what is the impact of all this going to be on business services delivery for Australian organisations?

Well, shared services or business services, by nature, are parts of organisations where a core focus is around productivity. So, good shared services organisations have great skills around lean processes, and continuous improvement. They’re consistently looking at how to implement better systems, better processes and improved productivity. And these kinds of capabilities can be taken further than the existing shared services framework or paradigm, to look at much wider business performance. Also, the use of off-shoring can be extended and shared services obviously has a critical role in terms of how off-shoring can be adopted successfully for Australian companies, perhaps initially in some of the traditional areas around technology and financial processes, but also extending, perhaps, into areas that are more value-adding and where there are particular skill shortages.

Donal, thank you so much for your time. We look forward to hearing more from you at Shared Services & Outsourcing Week 2012.

To listen to a podcast of this interview, and see a brief video-clip of Donal, click here.