From Tolerance to Strategy: Building Organisational Capability That Actually Works
After years of tolerating skills gaps, watching training fail to close them, and losing high performers who are exhausted from compensating—what actually works?
Not another training catalogue. Not another recruitment drive. Not another "we'll manage" conversation. And definitely not another survey that asks questions everyone already knows the answers to.
What works is what most Australian organisations aren't doing: independent, evidence-based diagnosis of skills gaps and their root causes, integrated with leadership judgment, followed by action-oriented strategy.
The Diagnosis Problem
"After years in this field, here's what I know: organisations don't lack solutions for skills gaps, they lack accurate diagnosis of why gaps persist," says David Williams, Principal Consultant at Regional Capability Systems. "They've tolerated skills gaps so long they don't know what solving them actually requires. That's where independent assessment changes everything—not analysis paralysis, but clear diagnosis that drives action."
The Lindorff research—surveying over 2,000 Australian managers—reveals why accurate diagnosis is rare:
Only 15% strategically predict skills needs
Only 14% use skills inventories
Only 38% use training and development as their primary approach
71% of small firms report inability to find qualified candidates
29% have skills gaps across the entire organisation (34% in large firms)
Most organisations are operating reactively—firefighting skills crises rather than diagnosing why gaps persist and what's needed to close them sustainably.
You can't solve what you haven't accurately diagnosed.
The Training Isn't a Silver Bullet Reality
Let's address the core issue: training has long been the default answer to every skills gap—despite most people knowing it rarely delivers promised results.
The Lindorff research quantifies this: If training is the solution everyone claims, why do only 38% of organisations actually use it as their primary strategy?
The answer: organisations have tried training, watched it fail to close persistent skills gaps, and quietly moved on.
They've learnt through expensive experience that:
Training addresses individual skills but often fails when organisational systems prevent skill application
Training people who then leave wastes investment
Training without systematic skill development capability produces sporadic results
Training can't compensate for leaders who lack development skills
Training doesn't solve retention problems, cultural barriers, or structural issues preventing skill development
"I see organisations that have done training for years, wondering why skills gaps persist," Williams observes. "The answer is usually that training was never going to solve their problem. They need to examine why people leave after being trained, why leaders can't develop others, why the organisation lacks systematic skill development capability, why culture prevents learning. But defaulting to training feels like action and avoids harder questions."
This isn't dismissing training—it has its place. But it's one intervention in a larger equation. When used as the default answer, it becomes "spray and pray": spray training around, pray it somehow closes persistent skills gaps.
It rarely does.
Beyond Training: The Real Skills Gap Conversation
Closing skills gaps sustainably requires honest diagnosis of root causes:
Why do skills gaps persist?
No systematic skill development: Your organisation lacks structured capability to identify needs, design development, measure results
Retention failures: You develop skills, then lose people to competitors
Leadership skills deficits: Your leaders lack skills to develop others, coach, create learning environments
Structural/process barriers: Organisation design prevents skill application or development
Cultural barriers: Culture punishes admitting gaps, doesn't value learning, lacks psychological safety
Business model constraints: Can't compete for skilled talent or afford to develop skills
Recruitment capability gaps: Can't identify, attract, or assess for skills needed
Most organisations jump to "we need training" without diagnosing why previous training failed to close gaps or why skilled people leave.
"We don't survey staff endlessly about perceptions or ask questions we already know answers to," Williams emphasises. "Our approach integrates analysis with leadership judgment to diagnose why skills gaps persist—then we work WITH you to build solutions. We work for management and boards. We're on your side. Our success depends on yours. That means clear diagnosis driving action, not reports on shelves."
Why One-Size-Fits-All Fails
The Lindorff research proves: skills gap challenges vary dramatically by organisation size and sector.
By organisation size:
Small firms (under 20): 62% report gaps, primarily in finding qualified candidates (often a recruitment capability issue) and professional skills
Medium firms (21-200): 73% report gaps, particularly leadership and management skills
Large firms (200+): 78% report gaps, with 34% organisation-wide, significant leadership deficits (39%), greatest morale impacts
By sector:
Charities/not-for-profits: 100% report gaps, particularly management and technical skills—yet often overlooked
Public administration: 86% report gaps (55% organisation-wide), highest stress despite high training investment
Mining: 84% report gaps, primarily professional/industry-specific skills
Information/media: Highest leadership gaps (53%)
Utilities: 81% report gaps
"Every organisation's skills gap challenges are unique—the research proves it," Williams notes. "Cookie-cutter solutions fail. We start with independent assessment every time, integrated with leadership judgment about context and constraints."
Solutions for a 50-person professional services firm won't work for a 2,000-person public sector organisation. Mining solutions won't work for charities. Sector-specific and size-appropriate strategies are essential.
The Four Things Internal Teams Cannot Provide
Internal teams operate under constraints preventing accurate diagnosis:
1. Political independence
Naming that skills gaps persist because leadership lacks development skills, business model can't retain talent, or culture prevents learning—politically fraught from inside.
2. Diagnostic frameworks
Diagnosing why skills gaps persist despite training requires frameworks most organisations lack. It's not about identifying gaps—it's understanding root causes.
3. Cross-sector benchmarking
How do you know if your skills gaps are worse than competitors? Whether your approaches work? Internal teams lack this data.
4. Integration of judgment with analysis
Best diagnosis integrates analysis with leadership judgment. External reviews bring both: independent analysis respecting leadership's understanding of context, creating actionable insights.
"We value professional experience and judgment of leadership highly," Williams explains. "Our research capability provides evidence-based analysis—but that integrates with leadership's understanding of strategy, culture, constraints. That integration generates insights and solutions that work. We're not here to tell you what to do—we provide diagnosis and frameworks for informed decisions."
The Skills Gap Closure Framework
Based on Lindorff findings and two decades of experience:
Phase 1: Independent Skills Gap Assessment
Examining both gaps and root causes:
What skills gaps exist (technical, leadership, professional, interpersonal)
Why gaps persist (development systems, retention, leadership capability, culture, structure)
What previous efforts have failed and why
Sector benchmarking
Integration with leadership judgment
Data collection driving insight, not paralysis:
Strategic interviews with leadership
Targeted data collection (not endless surveys)
Skills inventory where useful
Performance analysis
Retention analysis
"We don't survey for surveying's sake," Williams emphasises. "We collect data needed to diagnose accurately, integrate with leadership judgment, move quickly to actionable insights."
Output: Evidence-based assessment leadership can act on
Phase 2: Root Cause Diagnosis
Breaking through tolerance with evidence:
"When leadership sees skills gap analysis alongside professional judgment and benchmarks, conversation shifts," Williams reflects. "From 'we need training' to 'why does training keep failing?' From 'we can't find skilled people' to 'can we retain them?' Evidence integrated with judgment breaks through years of tolerance."
Diagnostic phase translates analysis into insight:
Specific skills gaps (by role, function, level)
Root causes (why gaps persist despite awareness)
What's preventing closure (development systems, retention, leadership, culture, structure)
Cost (quantified impact)
Sector comparison
Leadership judgment about feasibility and priorities
Not analysis paralysis—diagnosis driving action.
Phase 3: Action-Oriented Strategy
Customised by size and root causes:
Organisation size:
Small firms: Recruitment capability development, retention strategies, external partnerships, multi-skilling approaches
Medium firms: Internal skill development systems, leadership development, strategic skills planning
Large firms: Systematic skills prediction, talent pipelines, leadership academies, organisation-wide capability
Root causes identified:
Retention failures → Retention strategy, career development, competitive compensation
Leadership skills gaps → Leadership development (especially developing others), coaching skills, creating learning environments
No development systems → Build systematic skill development capability
Cultural barriers → Culture change enabling psychological safety and learning
Recruitment capability → Improve identification, attraction, assessment of skilled talent
Individual skills deficits → Targeted training (not spray-and-pray)
Critical point: Training might be part of solution, but it's rarely the whole solution or even primary solution when root causes are systemic.
Phase 4: Implementation With Clear Accountability
Measurable outcomes aligned to research:
Based on Lindorff impacts, measure:
Employee stress reduction (baseline: 52% report increased stress)
Staff morale improvement (baseline: 39% lowered morale)
Retention of high performers (baseline: 32% lost)
Customer service standards (baseline: 31% reduced)
Strategic planning effectiveness (baseline: 30% compromised)
Productivity indicators specific to sector
Leadership development skills (baseline: 34% have leadership gaps)
Implementation approach:
Clear accountability for action
Integration with leadership execution
Progress monitoring against metrics
Adjustment based on results
Speed over perfection
"We work for management and boards," Williams states. "Success depends on implementation, not reports. We help you act."
The Sectors Needing Focus
Based on Lindorff research:
Charities/not-for-profits (100% report gaps):
Often overlooked despite universal gaps
Need efficient, targeted solutions
Often lack leadership development capability
Public administration (86% gaps, 55% organisation-wide):
Highest stress despite high training investment—training isn't solving it
Need leadership development and systematic approaches beyond more training
Mining (84% gaps):
Professional/industry-specific shortages
In catch-up mode despite training
Need strategic skills prediction and pipelines
High-change sectors (information/media):
Highest leadership gaps (53%)
Need leadership development and adaptive approaches
Cost of Tolerance Versus Action
Cost of tolerance (annual, 200-person organisation):
Productivity loss from skills gaps: 10-15% = $2-3M
Turnover of high performers: 3-5 roles at $150k = $450-750k
Lost revenue from service issues: $500k-1M
Failed strategic initiatives: $300-500k
Leadership time compensating: $200-400k
Total annual cost: $3.5-5.6M
"Organisations say they can't afford to address skills gaps," Williams observes. "But they're already paying through productivity losses, turnover, failed initiatives. They can't see the cost because it's distributed and normalised. We help them see it, diagnose root causes, and fix it."
From Tolerance to Sustainable Skills Development
Research and experience confirm:
1. You almost certainly have skills gaps (75% do)
2. They're probably not closing despite awareness (only 38% effectively using training)
3. Root causes likely aren't diagnosed (only 15% predict needs, 14% use inventories)
4. Costs are higher than visible (productivity, turnover, stress, strategic failure)
5. Training alone won't solve it (especially without addressing retention, leadership development capability, culture, systems)
6. Leadership skills gaps multiply everything (34% have them, cascading through organisations)
7. You need independent diagnosis (breaking through tolerance and politics)
8. Strategy must be customised (one-size-fits-all fails)
9. Action beats analysis (diagnosis must drive implementation)
10. External expertise works WITH leadership (integrating analysis with judgment)
What Regional Capability Systems Brings
"We don't sell training. We don't place candidates. We don't survey endlessly," Williams explains. "We diagnose why your skills gaps persist despite previous efforts, working WITH leadership judgment, then help build solutions that address root causes. That's what organisations need."
Regional Capability Systems provides:
Independent skills gap assessment:
Examining gaps and root causes
Research-based methodology
Cross-sector benchmarking
Political independence
Integration with leadership judgment
Evidence breaking through tolerance
Action-oriented strategy:
Customised by size and root causes
Evidence-based and judgment-informed
Implementation-focused, not endless analysis
Measurable outcomes
Speed and clarity
Partnership approach:
Work FOR management and boards
On your side
Success depends on your success
Value leadership judgment and experience
Drive action, not analysis paralysis
The Bottom Line
You can continue tolerating skills gaps—watching training fail to close them, losing people after developing them, wondering why gaps persist despite investment.
Or you can diagnose why skills gaps persist and build systematic solutions addressing root causes.
That requires what most organisations lack: objective diagnosis of both skills gaps and why previous efforts have failed—integrated with leadership judgment producing actionable insights.
"Organisations that succeed aren't those with biggest training budgets," Williams concludes. "They're those willing to examine skills gaps honestly—with external help working alongside leadership—diagnosing root causes and building evidence-based strategies addressing what's actually broken. They replace tolerance with systematic skill development capability."
Seventy-five per cent of Australian organisations have significant skills gaps. Most are tolerating them. Many keep trying the same failed approaches.
What will you do differently?
Ready to move from tolerance to systematic skills development?
Book an independent skills gap review with Regional Capability Systems. We'll bring frameworks, sector benchmarking, and political independence—integrated with respect for your leadership judgment—to diagnose why skills gaps persist and build strategies that address root causes.
Visit www.rcap.com.au to discuss your organisation's skills gap challenges.
This article series is based on research by Professor Margaret Lindorff, "Skills gaps in Australian firms," Journal of Vocational Education and Training, 63:2, 247-259 (2011), combined with two decades of organisational capability consulting experience across Australian industries.
