In Focus: Unnatural Selection
Attracting diverse talent for competitive advantage
While today the average person enjoys 20 more years of life compared to a century ago, businesses are not experiencing the same pattern of longevity. “A hundred years ago, the top companies at the Fortune 100 and ASX 100 would stay on the list for 75 years or so. Now it’s about 18 years,” says Dr Chris F. Wright, research fellow at the University of Sydney Business School. “The life of businesses is shortening.”
If those at the top find it challenging to go the distance in the current market, you might wonder where that leaves small and medium enterprises (SMEs). Well, despite the gloomy trend, Dr Wright suggests the future holds fewer challenges and more opportunities for SMEs.
In fact, when probed on what measures small businesses can take to thrive in these testing times, he suggests drawing inspiration from a small collective of disruptive companies that have bucked the downward life cycle trend, such as online design platform Canva or software developer Atlassian. “[Successful] companies pivot their business models to adapt to change,” he says. “They ensure they’ve got employees who will allow them to adapt.”
The value of broad skill sets
It’s important not to dismiss the value of skills-based diversification, especially when it comes to small businesses – which tend to be the first casualties of any economic shift. And it looks like many Australian SMEs are taking notice. A 2016 report by the Office of the Chief Economist shows that small businesses in Australia are among the most likely to report increased productivity and profitability.
One key takeaway from the study is that many of the attributes typically associated with business growth – such as diversifying into the fields of science, research and technology – are not being practised by SMEs. Instead, many young firms have turned to hiring staff with broad skill sets to drive growth. The study concludes: “Future research should investigate the impact of skills diversity on innovation and high growth in Australian firms.”
Business consultant Sue Gold, who works with SMEs across Australia, says business agility can be encouraged through skills-based diversification at both an individual and workforce level. “If you have a skilled workforce – comprised of employees with diverse skills that can be applied to their roles – and you see an opportunity for business growth, you know you have people within your workforce that can help you explore that opportunity and deliver a new product or service to the market,” she says. “You’ve got the ability to seek out new opportunities and quickly take advantage.”
Opportunity through diversification
One company that has capitalised on these opportunities is finder.com.au. Fred Schebesta, CEO and co-founder, puts much of this down to skills diversification within the workforce. He says that, through targeted training and smart hiring, the company has adapted, diversified and expanded. In short, skills diversification has had a “huge bearing on the productivity of the business”.
The company’s growth is impressive. After its launch as a credit card comparison site in 2006, finder.com.au was born in 2009 and gradually expanded to offer comparisons on everything from personal loans to mobile phone plans. The site also directs customers to deals on a variety of retail and leisure products, including travel and fashion. With over 1.7 million hits per month, the company employs more than 80 people and launched in the United States last year.
Skills diversification, says Schebesta, is key. Although it may involve an initial drop in productivity, it often leads to long-term gains. “It’s important for modern businesses because it ensures employees can perform their work to the highest possible standard, which ultimately builds customer retention and brand loyalty.”
Diversification of skills can also equip businesses to respond more readily to market trends. In the case of finder.com.au, this meant optimising its content for an increasingly mobile-focused market. The company’s strict on-boarding process, which ensures new recruits have “the most relevant and recent skills across a number of fields”, meant that Schebesta could rely on his existing employees to optimise the site at short notice – even if it was beyond the scope of their primary role. In this instance, it was those with SEO, publishing and back- and front-end development skills who drove change.
Retaining the elusive millennial
Another emerging trend that’s convincing small businesses to take skills diversification seriously is the rise of the millennial worker. According to social research, most ‘baby boomers’ in Australia will retire by 2020, and millennials – also known as Gen Y – will make up 42 per cent of the workforce. But what effect does this have on skills diversity?
Consider these statistics: the 2016 Deloitte Millennial Survey indicates that 46 per cent of Australian millennial workers are considering leaving their current employer within the next two years to join a new organisation, or do something different. And they’re not too satisfied with the leadership training on offer, either – 58 per cent report that their leadership skills are not being developed to their potential.
Hiam Sakakini, co-founder at ThinkChangeGrow, says that keeping the millennial workforce engaged through skills diversification is an effective and inexpensive way of retaining better talent. It also has a great knock-on effect within a company. And she should know, having spent almost a decade at Google Australia, running the tech giant’s leadership development and diversity programs.
Millennials today bore easily, she says. “They don’t want to be pigeonholed into one area for too long and constantly want to learn.” When searching for their next dream job, they want an organisation that believes in helping its people develop. They want plenty of opportunities to learn, both in-house and externally. “That’s a huge attractor – it’s even more exciting than remuneration or huge benefits.”
This organisational churn is something more businesses will experience and poses a continued challenge for SMEs, which will need to constantly reinvest in new talent.
“One solution I suggest for SMEs is opening up the doors to peer-to-peer learning, so anyone within an organisation feels enabled to teach something they are very good at,” Sakakini says. This not only imparts expert knowledge, but empowers those who teach.
Indeed, facilitating staff development at every opportunity is a smart strategy. It needs to be simple and fair for employees to access learning. One method to ensure this is to give workers an individual training budget, which they can spend on any type of training that interests them, while helping to diversify the company’s skill set. The less process, the better.
Other methods that can answer the demands of millennials include introducing rotations, ambassador programs and linear movements.
“When you encourage people to naturally move between teams, they develop a really unique perspective of the business that nobody else has,” Sakakini says. “They have this really beautiful, high-level viewpoint. They’ll spot opportunities faster than anyone else.”
When it comes to implementing these changes, small businesses are at a distinct advantage. Unlike larger organisations, SMEs rarely need to negotiate a complex hierarchical structure and are able to adjust company protocol in a timelier, flexible manner. Ultimately, it just comes down to a shift in mindset.
If you’re considering skills diversification as a growth driver, it’s important to weigh its benefits and detractors on an individual level. As Schebesta notes, you may see an initial drop in productivity, and altering company culture can sometimes prove difficult. But this is a long-term investment. Implement skills diversification correctly and you could dramatically increase flexibility, enter new markets with ease and retain exceptional staff – all of which can help your business grow into the future.