Episode 106
The difference between labour, talent, and skills shortages | with Kevin Green
Three different shortage types demand three different solutions. Kevin Green, Chief People Officer at First Bus, breaks down the definitions—and why conflating them costs organisations millions in turnover and wasted recruitment spend.
Episode Key Takeaways
Labour shortages exist where roles require no prior experience or qualification—barista, delivery driver, bus driver—and can be solved through training, retention focus, and competitive pay. The real constraint is full employment: more vacancies than unemployed people, which triggers salary inflation across entire labour markets and forces employers into a zero-sum competition.
Skill shortages are fundamentally different: they’re gaps in qualified, experienced talent in fields like software engineering, data science, and hybrid vehicle engineering. Growing your own through apprenticeships and graduate programmes costs money upfront but breaks the poaching cycle that keeps wages inflated and the talent pool stagnant.
Talent shortages—the hardest to define—describe roles requiring not just technical competence but strategic thinking, change orientation, and the ability to inspire teams. Kevin uses a 22-point competency framework where only three or four dimensions are hard skills; the rest measure leadership presence, creativity, and team dynamics.
Retention beats recruitment. Culture is ten times more likely to drive someone to leave than pay alone. Before hiring hundreds of replacements, audit why people are leaving: unappreciated frontline staff, poor manager relationships, or shift changes made at pace without human consequence.
Workforce planning across three to four years unlocks internal development. When managers demand six engineers in a month, development is impossible. Predict requirements early, build training pipelines, and surface internal candidates alongside external hires—most organisations fail at this structural step.
Frequently
Asked
Questions
What's the difference between a labour shortage and a skill shortage?
Labour shortages occur when roles need no prior experience or qualifications—you train on the job. Skill shortages exist where there aren’t enough people with the right qualifications and experience available in the labour market. Labour is about volume and willingness; skill is about scarcity of expertise.
How do you retain bus drivers when turnover hit 38%?
First Bus tackled retention by fixing manager-to-staff ratios (over 50:1), running quarterly engagement surveys, articulating purpose and values, investing in manager training, and improving benefits and shift flexibility. They also deconstructed jobs to attract women and part-time workers, not just traditional full-time male candidates.
Why does poaching talent make the shortage worse?
If employers skip upfront training investment and only hire externally, no new talent enters the system. The pool stays constrained, so companies compete by raising salaries 20% above competitors. This creates wage inflation across the industry without solving the underlying shortage—a zero-sum game.
How do you define and hire for talent, not just skills?
Use multiple interviewers, activity-based tests closer to the actual job, and a competency framework that explicitly measures strategic thinking, change orientation, and team leadership. Single interviews are ‘slightly better than random.’ Test candidates on soft skills as rigorously as hard ones.
What's the 'crashing plane' exercise for identifying talent?
Ask leadership teams: if two planes crash and kill your top talent, which 20 people from your next 500 would you pick to restart the business? Rarely do all selections match your official talent list. It reveals overlooked experts, client-facing staff, and the complementary skills teams actually need.