Why higher salaries won't beat NZ tech skills shortage

No matter what your industry, a chronic skill shortage can threaten growth and future prospects, making it important to lay a long-lasting foundation that will help provide companies with quality employees for many years to come.

The CEO of one of New Zealand’s fastest growing tech firms says ensuring businesses forge tight relationships with local training providers, not relying on higher salaries to gain or retain staff, and creating a corporate culture that attracts graduates, are all key ways to combat industry shortages.

Origin, a Kiwi company which provides local businesses with outsourced IT solutions, currently employs 90 staff in its Auckland office.

However, CEO Michael Russell says a lack of skilled IT workers in New Zealand is one of the leading threats to the potential growth of the business.

The shortage of expertise - a common problem faced by many industries in New Zealand - has led Russell to look closely at ways to increase the pool of potential employees and keep skilled staff in the country.

“With a current revenue of $14 million annually, we expect to grow to $50 million by 2020, so it’s important to us that there are enough trained and experienced staff in the market to enable that growth,” he says.

One of the primary strategies is forming close relationships with local training institutes, says Russell, which allows companies to be referred the right kinds of students and graduate skill sets.

“We have a strong relationship with local training academy AMES IT, where they understand the type of student we are looking for and refer them to us,” he explains.

“We have had a number of excellent team members come through AMES. In fact, three out of four graduates end up working with us at the end of their studies, so we see this relationship helping provide us with a long-term and sustainable group of skilled staff for the future.”

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The relationship is a two-way street, with Origin able to offer their input to AMES on the skills that are most important for students to learn during their study, helping to shape the syllabus to reflect those core values and thus improve on the quality of graduates.

Meanwhile, the company - which provides IT services to businesses such as Les Mills and JUCY - provides their executives as guest lecturers to offer students’ insight into the industry while also offering work experience placements for students to learn more about the practical applications of their study.

“Being able to offer input into the training means we end up with graduates who are well-suited to our needs, but also allows those students to get a better understanding of the local industry and hopefully be inspired to stay in it,” Russell adds.

“Ultimately, both help to contribute to the long-term supply of qualified workers, and I believe the approach could be applied to any other industry facing shortages.”

However, finding skilled staff and keeping them are two very different things as most managers will appreciate.

Russell believes the first step is offering a clear path of progression for new graduates so they are aware of what they need to do and achieve in order to keep moving up.

And while it may seem an easy fix, he says offering higher remuneration to new employees is not a long-term strategy, even in an industry facing widespread skills shortages.

“We are smack bang on average for all starting rates” he explains. “I believe we as managers need to start treating employees as customers, by adding value to the relationship with them.

"Paying more may seem like a fix, but really it just commodifies your workplace.

"Employers need to understand that by applying the same psychographic segmentation methodologies to your potential staff as you would your customers, you’ll discover that only a small percentage are motivated solely by financial remuneration - and these are not necessarily the staff you want.

"If money is the only driver, then the next better offer that comes along will see them resign.”

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According to Russell, the answer for managers is to look for staff who want something more than just cash, and be flexible in rewarding team members who are after different things.

In particular, Russell says new grads from Generation Y want to be part of a social and fun work environment, which is something he has made a core tenet of Origin’s culture.

“We offer ‘perks’ for staff that not only make Origin an enjoyable workplace, but also reward employees in a way that a salary doesn’t," he adds.

It’s also key the team feels they are part of the overall purpose of the business - something the competitive Russell feels strongly about.

“We update staff constantly via weekly email and a monthly all-staff meeting on the journey that the company is going on - from wins to lessons learned to future events,” he explains.

“It's exciting to be a part of a winning team, and the opportunities that arise for individuals to progress are also exciting.

"And when we achieve big goals, we celebrate as a team - we are currently working as a company towards a big goal, and once we reach this will all be going to Rarotonga for a couple of nights.”

Russell says Origin has worked hard on branding the company to appeal to employees and make them want to work for the company.

“We've formalised our company culture with internal values - IT'S ON; Live IT; Be IT; Own IT - and an internal brand that reflects who we are, which is a mix of pop culture, gaming and Kiwiana,” he explains.

“The tagline ‘IT'S ON’ is not only about reflecting our competitive streak, but it also reminds everybody of our primary purpose: keeping IT on for our customers.”

With these safeguards and plans in place, Russell is confident that his company growth won’t be hampered by a lack of skilled workers.

“Despite New Zealand being a small place, and one that suffers from shortages in many industries, I believe Kiwi companies have the ability to address this issue with some careful planning," he adds.