Research

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Research

Project no: nr9036

Publication title: Going boldly into the future: Skills and Australian high technology start-up firms

This study examines 14 new Australian high technology start-up companies in terms of their required skill needs. It examines the following questions:

How many workers would be required to support the companies forming from the outputs of public sector research and development in this area?
What are the types of training needed to ensure that the supply of skilled workers would be sufficient to meet the need of companies formed as an outcome of this research conducted in the Co-operative Research Centre?
What skills would be required?
When would workers be needed?
What level of training for workers would be required?
Would workers need to be university qualified?
What attitudes to training did new companies have?
Could new companies articulate their needs?
Do the people who start new companies know anything about VET?

The study also fundamentally seeks to assess the inherent ability of these companies to access the VET system or indeed have their needs met by the Australian vocational education and training system.

The study does not seek to assess the companies' management approaches, nor relies on any particular theoretical model of innovation or commercialisation, but rather seeks to describe these companies as and how they relate to the VET system at a particular moment in time. In that vein it is a preliminary look at innovation and skills where 'the light hits the tunnel' so to speak. It paves the way for more theoretical examinations but leaves open the possibility of national changes in policy for the VET system in terms of innovation and emerging industries.

The data show clearly a strong demand and role for VET in the establishment and development of small global high-tech companies. Training provided by the VET system is implicated in the following areas:

technical skills in photonics and biomedical/diagnostic areas
electrical and mechanical engineering
production and manufacturing
project, financial and team based management
recruitment and human resources
quality assurance
sales and marketing
occupational, environmental health and safety.

The need and demand for VET qualifications is very strong.

Many of the companies reflected the culture of US-based operations and a number of companies in the study are no longer wholly owned in Australia.

In terms of management skills Interestingly, the mix of senior executives is strongly Australian, with most being drawn from leading Australians in the telecommunications industry and a significant number who had also had start-up experience.

Management styles and skills changed significantly as the company moved from start-up to mass-manufacture. However the traditional management competencies of teamwork, project management, financial management, problem-solving skills, resources management, health and safety awareness and high communication skills were implicated for all workers in the company, not just those in management positions.

TAFE/VET qualified jobs created by the photonics companies by 2002 will number at least 283 and the number of university-qualified positions will be 575. Of these, 419 are postgraduate qualifications. The proportion of VET jobs in the cluster now is 16% but will rise to a minimum of 27% and is in fact likely to be higher by 2002.

Companies noted that the qualification demands were not necessarily for new workers. In fact many noted that they required graduates from both university and VET with experience. The preference of companies was not to recruit fresh from the universities or TAFE. Where this had occurred, in most cases, students were undergoing classes to obtain recognition via a qualification of their existing skills.

There are a number of ways these companies could interact with the VET system that would be beneficial to both organisations. By all accounts, the interviews indicated that these organisations are engaged as fully as they can be with the VET system, within the limitations of existing conditions. Further involvement would be assisted by the inclusion of photonics competencies in training packages and government subsidies for short course delivery to new workers in high-technology-based companies.

Not one company anticipates the need for apprentices or trainees in the short, medium or longer term and most see a TAFE/VET Diploma as a minimum standard of qualification for entry to employment, with one company strongly indicating it requires a minimum standard of university graduate.

No organisations identified entry-level workers as having a place in the company, and many companies were quick to point out that the staff without Australian recognised qualifications had, in general, degree or VET level qualifications from overseas institutions.

Current involvement in training activities is sporadic and is fundamentally dependant upon the stage of development of the company. Companies in the research and development phase or at very early stages of development are not inclined to view training as such a great priority as those about to commence manufacturing operations.

Most importantly, the degree of awareness of the VET system predetermined the way the companies described their needs. Those who understood the system would describe their needs being fulfilled by registered training organisations and the courses accredited under the training package system, while those who did not described their perceptions of the TAFE system, its courses and its colleges. All shared one thing in common: they fundamentally believed that the education system would provide the right people at the right time, but were a little hesitant as to how.

While demand for training may be high, the need is often poorly articulated and riddled with misconceptions about the training system, as the system is generally not well understood. Generally, we found that the attitudes of chief executives and human resource managers to training and training providers were fairly positive, with all respondents keen to assist in the development of such training because they perceived it as advancing the industry in Australia.

Many factors affected a company's need and demand for training including: investment and growth; new processes and systems; new management approaches.

These companies had unique demands for skills, including the following:

The need to take PhD and Masters 'virtuosos' (who were often found to be unemployable, because of their single-person project focus) and infuse team work, leadership and communication skills.
Reliance on foreign investment and the links and ties to the established markets in photonics through investment, creating a possibility that manufacturing jobs will be located offshore. Training demand will suffer as a consequence.
A perceived greater difficulty to find the time or resources to release staff for training activities that larger or more fully developed companies could afford to do.
The high level of underpinning knowledge and skill required even at the manufacturing technician level.
Training is not seen to be an enabler of business success in this (research and development and niche manufacture) phase of development of the company.

Many of the impediments to training in these companies were fairly traditional and can be found in the literature on investment in training. Reasons given for not investing in training can be explained as:

within company factors
external to company factors.

Within company factors were:

state of development of the company (If manufacturing or development processes were not in place, a person's skill level could not be evaluated nor his/her training requirement.)
perceived time constraints within production line deadlines
high-level knowledge workers who could self-manage and learn on the job
knowledge transferred outside the organisation
perceived value to the company at its point in development
cultural bias toward traditional VET providers.

External company factors were of greater interest in this study and included:

a lack of available courses
a lack of available trainers/instructors
the cash cost of training and lack of government support
a lack of a cohesive industry to support cooperation amongst companies on training issues
significant structural weaknesses in the education system in identifying and anticipating needs
a lack of knowledge transfer between the higher education and VET systems

The study concludes that these technologies are in their incubation stage for a sufficiently long enough time for the VET system to be 'on notice' to provide skilled workers. Disruptive technologies, such as photonics, start with small student demand even when their economic impact is considerable. If one waits for large student demand to appear before developing the educational resources, one creates the likelihood, caused by the time lag between development and delivery, that the demand will be met some other way, i.e. by moving the technology development and manufacturing offshore to a country that already has the education resources or, indeed, has made the investment in the education system.

It makes the following recommendations:

VET agencies (including ANTA, state training authorities and state departments should improve the skills of VET planners in identifying emerging industry trends and determining rapid changes in technologies, so as to be better able to anticipate the need for training in early stage start-up companies and therefore be more vigilant in identifying these companies and the clusters they form.

VET agencies need to focus on providing training at Australian Qualifications Framework (AQF) 5 and 6 as entry-level workers are not required in the formative stages of high-technology industries. Trainees and apprentices are also not expected to have a place in the industry.

VET providers should provide trained workers who can articulate their needs, be aware of cultural differences, undertake problem solving and participate in teamwork; provide industry relevant (i.e. up to date with the latest technology and business processes) customised - just in time - on the floor shop Ò training to new firms that focus more strongly on providing training at AQF 5 and 6; create stronger links with research organisations and participate in applied research and development projects; establish partnership arrangements with researchers in industry as well as and other educational institutions Ò to assist in the timely development and delivery of pre-emptive vocational education and training.

Industry training advisory bodies need to be better able to anticipate the need for training and therefore more vigilant in identifying new organisations and companies and clusters of these companies around new economic activity as they form and focus more strongly on articulating the need for providing training at AQF 5 and 6. This will support the development of training packages that incorporate the needs of new small to medium-sized industries who may not be sufficiently represented to articulate their needs to the appropriate bodies and have a mechanism for developing and incorporating competency standards from new and emerging industries in Training Packages in a timely and responsive manner.

The Australian National Training Authority needs to develop funding mechanisms for training for emerging industries and companies, particularly those that are a result of the publicly funded national innovation system. It also needs to develop mechanisms for the transfer of knowledge from the higher education sector to the VET sector, place greater emphasis on collaboration rather than competition between training institutes and states in 'new or thin' training markets and promote and support efforts of VET providers working with science and technology innovators where there is an undefined training market and expensive Intellectual capital entry.

Future research could examine this topic in other industries to validate consistent issues so as to design a workable and systemic approach to the skill supply issues of Australia's emerging Industries. It could study the diffusion models used by Australian research and development organisations for their effectiveness of knowledge flow into the VET system and a study on the effect of foreign investment into company development cultures and training choices would assist in assessing the training needs and demands of these types of companies.

In short, continual economic renewal is a feature of the new millennium. An investment at the beginning of the economic innovation funnel (i.e. research and development) without a corresponding investment at the end of the supply chain (i.e. skills and people) is like setting sail in a boat with no means of propulsion. The VET system must become more pre-emptive and anticipate the needs of these companies and new industries so that their skills needs and demands can be met when they hit the water.