Human resources are assets that do not feature on businesses’ balance sheets. It may be for this reason that people management is often the Cinderella of general management functions in many organisations. However, it is common to hear business leaders declare that their employees are their most valuable assets.

According to the HR consultancy firm Misco, half of Maltese employers said that meeting new salary expectations was the main recruitment challenge they faced. It will be no surprise that even foreign-owned companies based here are facing similar problems as economic growth fuels the demand for qualified staff who expect better salaries because they are often spoilt for choice.

The challenges being faced by employers are not unique, especially in the context of a fast-growing economy. The Misco report argues that employers are being faced with a two-pronged challenge: a demand for higher salaries from employees who do not necessarily have the appropriate experience that meets their requirements and difficulty in attracting talent.

This remark is indicative of some worrying economic factors. There are signs that the economy is overheating. It is also a sign that low labour costs may no longer be such an important competitive factor to attract investment to Malta. Importing foreign labour is a short- to medium-term solution but this gives rise to collateral problems in the form of pressures on the rental property market.

The study by Misco highlights other challenges for employers. Sixty-seven per cent of employers consider retaining staff members to be a top priority. Talent risk can bring a business to its knees, particularly in small companies that depend on highly-skilled workers. Investing in the training and development of lower-level employees is a common HR problem. Some businesses have trouble finding the resources to do so.

Employee engagement and motivation, staff development and fostering a strong organisational culture are among the top challenges for the senior management of a business. It is indeed worrying that 50 per cent of those who responded to the Misco survey lamented a lack of appreciation of the value of the HR function by the rest of the management team.

Change management is another factor that practically all businesses are facing. Technology is constantly changing. Business must be quick to adapt or risk being left behind their competitors. Small business owners need to get employees to embrace innovation and learn new technology.

These challenges call for a better appreciation of the role of HR management. Educators from the University, vocational colleges and even secondary schools need to inculcate in tomorrow’s managers the fact that employees are not disposable assets that can be replaced when they leave a company.

Attracting talent is a huge investment of time and money. Entrepreneurs have to strike a balance between keeping a business running and hiring the right people at the right time. Competition for talented employees is fierce. Start-ups and small companies do not have big budgets like larger businesses.

An overheating economy will ultimately enter a self-correcting phase. This reality should convince policymakers that growth at all costs is not good for business, the environment and the long-term prosperity of society.

Malta may soon be entering the correcting phase as pressures on employers are building up. The need for rational economic planning is overdue.

This is a Times of Malta print editorial

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