Hot and Critical Skills

A critical skill is a skill or set of skills that are essential to the organization’s mission and objectives. These are the core skills the organization must have to be able to function.

A hot skill is a skill or set of skills that are in high demand and/or in short supply. An example might be experienced engineers in a market where many are retiring and too few are available to take their place.

Any particular skill could be either critical or hot or both. Market intelligence will provide the full picture of market pay conditions in terms of supply and demand. Pay Data typically provided by salary survey providers will provide the price in terms of what the going salary rate is for the skills for varying job levels, industries, and geographic regions. Pay Data is based on what locally employed people who are currently employed are paid.

Although exact data is difficult to establish, there is evidence that most organizations pay premiums for critical and hot skills. Most offer premiums of 5% to 20% of base pay. Other organizations offer sign-on or stay-on bonuses to secure such skills. Such premiums are seen as short term solutions as they do not address the underlying problem i.e. the short supply of skills. In most markets a shortage of skills results in more people gaining the skills. However the lengthy time scale to gain the skills and get experience can often mean that by the time individuals have achieved the required level of experience, the demand for the skill has fallen away.

When critical and hot skills are unobtainable locally in the immediate term, organizations extend their search beyond the “national” market and recruit expatriates. The employment of expatriates is used by organizations in parallel with a development program to develop the needed hot and critical skills locally.