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HR leaders and managers are under growing pressure in a tightening labour market, writes Todd Hammington.
Critical roles are harder to fill, recruitment timelines are blowing out, and wages are being pushed upwards as businesses compete for a shallow talent pool.
Two major factors are driving a big part of these challenges: the productivity crisis and widespread skills shortages.
Productivity has slowed significantly in Australia over the past few years and it’s being felt at every level of the economy. Productivity growth has slowed to just 0.1 per cent between 2022–23 and 2023–24, below the 20-year average of 0.3 per cent per year.
And where skills are concerned, there is a growing mismatch between the skills workers have and the capabilities businesses need. Roles are evolving faster than traditional training pathways can keep up and many organisations are still underinvesting in the kind of learning and development (L&D) programs that could close these capability gaps and reignite productivity growth.
What’s being done about it?
The federal government has responded with major investments to tackle the issue head-on: a $3.7 billion National Skills Agreement and a $900 million National Productivity Fund. Both are aimed at strengthening the workforce and reducing pressure on critical industries. These measures, announced ahead of the 2025 federal election, are a step in the right direction.
With Labor recently securing a second term, Treasurer Jim Chalmers has made it clear that “the second term will be primarily [about] productivity without forgetting inflation”. In other words, productivity is not just a policy priority, it’s a national agenda.
But there’s one thing these policies can’t do: execute.
To translate policy into practice, it’s time for Australian businesses to look inwards. If we’re serious about productivity and capability, we need to invest in our people. And that means rethinking how we approach L&D.
L&D is no longer a ‘nice to have’
L&D is still too often treated as a perk or peripheral activity, something HR teams do when there’s leftover budget or extra time. But in the context of the skills shortage, it should be treated as core business infrastructure.
Smart L&D doesn’t mean sending everyone on costly off-site training. It means delivering practical, job-relevant, and in-time learning that builds capability where it’s needed most. It’s about creating a learning culture where people are equipped and empowered to grow in their roles and where that growth translates into improved business outcomes.
And just as importantly, it gives employees a reason to stay.
When people feel like their employer is investing in their growth, they’re more engaged, more loyal, and more likely to go the extra mile. In tough times, that kind of discretionary effort can make the difference between a business that weathers the storm and one that falls behind.
From tick-the-box to strategic capability building
Outdated or disengaging L&D programs don’t just waste time and money; they fail to deliver real value at a time when it’s needed most. In today’s climate of economic uncertainty, that’s more than a missed opportunity, it’s a risk.
But too often, workplace learning is too slow to build, hard to scale, and unengaging. It can take months to build internal training materials from scratch and often it doesn’t take long for that training to become out of date. It can also be hard to expand and extend training if your business is growing quickly and especially if you’re entering new markets. And finally, and arguably most importantly, the training that employees are subjected to is dull, unengaging, and (quite frankly) forgettable. That’s not good if you’re trying to address a skills shortage or productivity decline!
Modern L&D needs to be embedded, accessible, and aligned to the way people actually work. When learning is engaging, practical, and contextual, employees not only retain more knowledge but are also better equipped to apply that learning in their roles, ultimately boosting productivity.
And when done right, the business impact is substantial. A 2022 research report by DeakinCo., in partnership with Deloitte Access Economics, found that for every $1 invested in L&D per employee, businesses saw an average return of $4.70 in additional revenue per employee.
We’ve seen the tangible benefits firsthand, with Douglas Pharmaceuticals. By transitioning to a ‘digital first’ model, using engaging e-learning modules as their key learning solution, the organisation saved an estimated $600,000 in travel costs. Beyond that, the change turned L&D into a profit centre for the first time in the company’s history, with $60,000 internally charged to the research and development team for the development of modules, demonstrating a clear link between smart learning design, employee engagement, and business growth.
What HR leaders can do
As economic headwinds build and skills shortages persist, the demand for soft skills, leadership capabilities, and adaptability is only rising.
Businesses that wait for external solutions or try to hire their way through the gap will fall behind. But businesses that act now and embed learning as part of their core operations will be better positioned to grow, innovate, and retain great people.
First, start with your people, not a platform. Before investing in tools or tech, take the time to understand where the most critical capability gaps exist across your teams. What skills are missing? Where is performance lagging? What kind of learning will actually move the needle? Tools can help, but clarity comes first.
Second, make learning part of the flow of work, with strong leadership support. Traditional classroom training is no longer enough. Microlearning, on-the-job coaching, and short-form content are often far more effective in today’s fast-paced environments but only when backed by leaders. For real behaviour change, leaders must actively support learning initiatives, setting the tone for the rest of the organisation.
And finally, measure impact, not just completion. Track how learning translates into behavioural change, performance improvement, and business results. This is what gets executive buy-in and sustains long-term momentum.
Todd Hammington is co-founder and CEO of Chameleon Creator.
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The practice of actively seeking, locating, and employing people for a certain position or career in a corporation is known as recruitment.
Kace O'Neill
Kace O'Neill is a Graduate Journalist for HR Leader. Kace studied Media Communications and Maori studies at the University of Otago, he has a passion for sports and storytelling.
