Skills – Acquisition and development is not enough, skills utilisation is necessary

About the Business Performance and Skills Survey

The Business Performance and Skills Survey (BPSS) is a study of skills utilisation from the perspective of the commercial establishment. The analyses and findings from this study will provide relevant and timely data on skills demand and skills utilisation at the establishment level for tracking and diagnostic purposes as well as to inform skills policies at the sectoral level.

It is generally acknowledged that a highly skilled workforce is the key to a competitive economy in this increasingly knowledge-based global age. Hence, it is essential that Singapore’s skills policies are geared towards raising the level of skills to enable the workforce to perform higher-level work functions and drive economic productivity and growth. Recent initiatives include the SkillsFuture movement, aimed at “developing an integrated system of education and training to provide all Singaporeans with the enhanced opportunities to acquire greater skills proficiency, knowledge, and expertise”.

However, this supply-side approach to skills, while necessary, is inadequate, because “skills do not automatically convert into jobs and growth”. Investments in education and training without first understanding employers’ demand for skills do not guarantee that the skills will be utilised effectively. It thus follows that it is necessary to consider not only skills acquisition and development but also skills utilisation.

Key findings and policy implications

The study provides critical insights into the drivers of skills utilisation, including:

• Value add strategy. The survey findings revealed that skills utilisation is closely associated with the pursuit of a high value add strategy. To make business strategy and high skills work together, policies should encourage high value add production, with a focus on how businesses use workers and their skills to drive productivity and sustainability in the long run. In addition, greater co-operation and co-ordination between agencies and initiatives addressing skills policy and those addressing business strategy would be most beneficial.

• Technological change. The survey findings revealed that technological changes in work processes are associated with higher skills utilisation. This would suggest that innovation and technology adoption are more likely to occur in a high skills environment, and that technological changes should be accompanied by a close evaluation of associated changes in skills demand and needs. The impact of technology on skills should therefore be closely monitored.

• High-performance workplace practices. The survey findings revealed that skills utilisation was positively associated with the use of work practices that encouraged employee participation, involvement, and commitment. Policies and related initiatives, including management training, should therefore encourage the use of these practices.

• Skills gaps can affect performance, but are not a major concern currently. While the survey findings revealed that skills gaps (defined as the reported percentage of existing staff who are unable to cope with their existing duties) were negatively associated with skills utilisation, they also showed that most workplaces in Singapore were not greatly affected by skills gaps. On average, slightly fewer than 1 in 10 existing staff in each establishment showed skills gaps. Nonetheless, monitoring of skills gaps would be vital to inform supply-side policies.

• The employment of comprehensive employee development plans are positively associated with skills utilisation. The survey findings revealed no significant relationship between the proportion of staff that attended classroom-based training and employees’ discretionary effort; however, establishments with formalised employee development plans demonstrated significantly better employee performance. Organisations should be encouraged to put in place formalised employee development plans. As well as addressing training, workforce development initiatives should facilitate the creation and improvement of employee development plans, with particular focus on organisations with fewer resources.

From the BPSS data, we have developed a multi-index barometer to gauge skills utilisation over time, specifically two workplace skills indicators relating to effective skills utilisation that will provide a baseline for tracking skills utilisation at establishment level in the long term:

1. the Establishment Skills Index (ESI), which relates to the demand for high quality and high level job skills through the measurement of skills demand;
2. the Discretionary Effort Index (DEI), which relates to employees’ performance and how effectively their skills are being applied in their jobs.

The relationship between discretionary effort and job skills demand

We examined the relationship between skills demand (ESI) and discretionary effort (DEI). Figure 4 shows the mean DEI examined against the mean ESI. Furthermore, as may be observed from the trend line, there was a positive and significant relationship between discretionary effort and skills demand. This suggests that employees who performed more complex jobs were also more likely to exert a greater degree of discretionary effort. It is highly likely that employees’ technical and cognitive competencies are important prerequisites for them to know what should be done and how it should be done to execute their job roles efficiently and effectively and for encouraging their exertion of discretionary effort above and beyond the baseline requirements. Further modelling was conducted to control for establishment characteristics and the relationship remains positive and significant.

Chosen excerpts by Job Market Monitor. Read the whole story @ Business Performance and Skills Survey