‘Problems are only opportunities in work clothes.’ This quote, attributed to American industrialist Henry Kaiser, is all about perspective. In an era of near-zero unemployment and rapid change due to the digitalization of work, bridging the skills gap and finding the right talent during a time of talent scarcity is definitely one of the problems that is top of mind for organizations. So, where are the opportunities?
According to “Skills Gaps are Opportunities to Develop a Future-Ready Workforce,” a recent research report released by Human Capital Institute (HCI), in conjunction with Randstad RiseSmart, the opportunities lay in developing the right learning and development programs to transform the challenges of scarcity and market volatility into growth by:
- identifying organizational skills gaps
- offering L&D programs that both attract new talent and engage your current workforce
- redefining development for a future-ready workforce
defining skills gaps
Before getting down to the work of turning problems into prosperity, there are four key questions organizations must ask when addressing skills gaps to help define their actions:
1. Are the skills we need now present in the current workforce?
2. Are we prepared internally for the roles/skills we need in three to five—and even 10—years from now?
3. Are we able to externally source and recruit for the skills we need now?
4. Will the skills we need in the future be available externally?
According to research from HCI, almost 60 percent of organizations says external skills shortages will hamper their ability to meet strategic goals, and 62 percent say they already have skills gaps in the current workforce. PwC’s 2019 Annual Global CEO Survey showed similar results, with 55 percent of CEOs saying that their companies aren’t able to adequately innovate due to skills gaps.
“Their ability to get out of this bind will help companies future-proof themselves,” says Jeanne Schad, talent solutions and strategy practice lead at Randstad RiseSmart.
“Having a lens both inside and the outside of the organization—the skills and the interests that are internal and well as in the market—is what’s going to help those company’s move very quickly into the future,” adds Jenna Filipowski, vice president of research and development, HCI.
Part of the challenge has to do with how to predict the skills needed for the future in a rapidly changing work landscape where those roles and their attendant skills may not yet be fully understood or even known at all. For this reason, the days of assembling succession planning organizational charts and doing career pathing are nearly gone.
“The skills needed for the future are harder to predict because the world is changing too fast,” Jeanne says. “Forward-thinking companies are now focused on building the capacity for people to learn, to prepare people to prepare themselves for learning.”
An agile—or growth—mindset will be a prerequisite for success, both for individual employees and their organizations.
With this in mind, let’s look at what companies are facing and how they are responding. In a recent HCI-Randstad RiseSmart webinar on skills gaps and preparing a future-ready workforce, Jeanne and Jenna covered four main trends.
soft skills are highest in demand
The hardest-to-find skills are overwhelmingly soft skills, such as leadership, communication and listening, according to the HCI research conducted in partnership with Randstad RiseSmart. The higher up in the organization, the greater the percentage of soft skills that are required for the role: 67 percent for entry level and individual contributors; 75 percent for mid-level positions and 82 percent for senior leaders. The overwhelming need for these soft skills is tied to employees’ abilities to learn and to adapt to change, and this type of agility is becoming more important than functional or technical skills.
While adaptability becomes a more important quality as an individual moves up in an organization, industry, speed of change in the industry and company growth stage are also factors that influence agility requirements. Established companies in mature industries may do well if senior leaders are able to adjust to new data points by making course corrections. In less mature and disruptive industries, however, it’s essential for everyone in the organization to have an agile mindset to make sense of the incoming information.
From a talent mobility perspective, there are many ways in which a person can develop themselves according to Jeanne. “They might remain in their role, but be agile and mobile in the skills they develop. They might not necessarily move up the org chart, but they can upskill themselves in their current roles to stay relevant internally.”
internal skills development is best for bridging the skills gap
HCI’s research reveals that the most effective way for organizations to close the skills chasm and future-proof their workforces is to develop current employees. Nearly 80 percent of companies are filling their skills gaps internally as an alternative. Surprisingly, increasing the starting salary for new hires was the least effective at 16 percent.
“Being able to follow your strengths and interests to do what you’re passionate about is far more important than salary, especially for Gen Xers and millennials,” Jeanne says. “Employees want the opportunity and the experience of performing well on projects and successfully handling what their managers ask of them. Providing the time, tools and ability for employees to develop their skills and future-proof themselves is the best avenue for organizations that want to plan for a very hard-to-predict future.”
multiple L&D approaches to training yield the best outcomes
The three most popular approaches for addressing skills gaps among respondents in the study were training programs, leadership and high-potential employee and leadership development programs, and flexible work arrangements.
Training can utilize many methodologies. What’s most important, says Jeanne, is that a company provide pathways for reskilling.
While ‘access to professional coach practitioners’ was toward the bottom of the list of upskilling approaches, it’s worthwhile noting that combining training programs with coaching increases the effectiveness of the former. Notes Jeanne, “When you put the two together, the training provides the learning and the coaching provides the support for behavior change. This is when we see employees developing the ability and desire to learn, which reflects a growth mindset.”
Another critical success factor revealed by the research is the ability of companies to think holistically about closing skills gaps by considering the overall employee experience, which may include offering benefits such as flexible work arrangements, tuition assistance and employee assistance programs.
Inclusivity in learning and development has also been rising in popularity. By offering learning opportunities and tools across the organization, companies can reach employees who may have been missed by traditional talent identification processes, which can have bias built in. By including everybody in learning and development, hidden gems can emerge from the talent pool in surprising places. This talent and these skills would be unknown and unutilized in traditional high-potential talent programs. Such an approach can create a more inclusive environment, which in turn enhances employee engagement and retention.
redefining talent fluidity
Companies want their employees to apply their skills and talents in different ways, rather than just working within their job description. This requires employees to think ahead about their future roles within the company and how their skills can be used by the business—essentially, to adopt an entrepreneurial approach within their organizations. Forward-thinking companies also encourage and enable employees to apply their skills and interests in different ways that are not always within their defined roles, including project teams, stretch assignments or internal gigs.
tactics to address skills gaps
There are three steps organizations can take to address skills gaps.
Focus on current skills gaps first. There are a variety of methods that can be used: take a talent inventory, conduct engagement surveys, research hiring trends, consider what are the widest skills gaps and how these affect the business.
Be aware that compliance may be the biggest challenge because skills assessments depend upon employees to self-report and to provide observations of their peers. To bolster compliance, Jeanne recommends that HR simply tune into company culture and ask people how they prefer to supply this information. One alternative is to form a team and use design thinking methodology to create an approach that will be effective for the company culture.
Before doing assessments, be sure to define commonly used terms. For example, what does it mean to be more strategic or more communicative? Geographically dispersed organizations should also look at market data and trends in various geographies to determine the specific skills that may be in short supply in those areas.
Consider not only formalized training programs, but less formal on-the-job training, to build skills. This can include internal gigs, project-based teams and dynamic teams that come together to get high-priority work completed. Jeanne says organizations are looking more closely at these options to allow and encourage people to utilize their skills and interests outside of their work team or senior management relationship.
“Combining learning with getting the work done is increasingly important in organizations with aggressive growth objectives,” Jeanne says.
To avoid challenges that can arise with less formal programs, such as difficulty in doing performance reviews and the possibility of exclusion from opportunities, HR will be best served by having a degree of governance in place that encourages skill development without stifling flexibility and dynamism.
deploy formal opportunities
As mentioned earlier, the avenues for learning and development are many. Apprenticeships, formal and informal mentoring, and online learning are just a few of the methods for helping employees build skills and develop aptitudes that are not necessarily part of their job description but are valuable to the organization.
When it comes to online learning, says Jeanne, the key to it being effective is to provide a locally enabled, micro-learning format in which employees can learn in small increments and build it naturally into the flow of work. Add to this the time to think and reflect — to take the disparate pieces of information and synthesize them — and organizations will allow the learning to be sustained and applicable to the work at hand.
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