Much has been said about the looming skills gap, but the reality is: it’s here. A quarter of employers recently surveyed by Salary.com said the skills gap is already impacting their business. Almost half said it will hit them within the next two years. So why haven’t more organizations addressed it? The focus on short-term profitability often overshadows long-term planning when it comes to learning and development (L&D). Rising costs and inflation further pressure organizations to cut costs, exacerbating the problem.
These survey findings, however, place some urgency on the issue. The persistently tight labor market and employee willingness to simply move on from jobs that do not pay well or aren’t viewed as fulfilling, are making talent acquisition and retention challenging. Upskilling and reskilling represent a critical path forward for employers.
Now is the time to look at how to close the gap and create the kind of career progression opportunities that define successful organizations.
What’s Driving the Skills Gap?
Advancing technology is the No. 1 contributor to the skills gap. This isn’t surprising, given the recent example of generative artificial intelligence (AI)’s rapid adoption. Almost a third of employers surveyed say ChatGPT will change the type of skills they seek a year from now. Those who train internally will reap the benefits. Hiring new tech talent costs far more than growing those skills within the existing talent base.
Technology training that evolves with the market is key. Companies may be hesitant to do so in the early stages, concerned that the technology will change before they fully adopt it. But doing so ignores the value it brings today. And those companies will find themselves falling further behind. When that happens, they must resort to acquiring expensive talent with the necessary skills instead of nurturing talent from the entry level. This reactive approach, driven by the fear of missing out, has its costs.
Technology Adopters
Think about first movers like Apple, Google and Microsoft. All were early adopters of emerging technologies, setting the standard and attracting significant venture capital investment. This led to a groundswell effect, influencing small and medium-sized businesses to invest in skills training.
Of course, late adopters, while benefiting from the groundwork laid by the pioneers, must also bear the higher costs associated with hiring proven talent in new technology fields.
In an ever-changing technological landscape, organizations must adapt as swiftly as the technology itself and stay nimble in their training and upskilling efforts.
Lack of Preparedness
Despite already experiencing the negative impact of the gap, most organizations surveyed are not prepared to address it. Only 14% have conducted a skills audit. Just 24% have a skills and competency framework to support their efforts. Without these foundational elements, any investment in L&D initiatives can be misguided.
L&D teams that conduct a skills inventory are often surprised to realize they have critical skills they’re seeking in-house. So why don’t more companies take this step? The survey found that learning professionals regard conducting a skills inventory and creating career pathways as their top challenges. Fortunately, software and data can play a key role in operationalizing the process. AI-powered and backed by data, software solutions can create a skills and competency framework that manages the measurement of proficiency levels for each skill and provides employees with incentives for advancing their competencies.
Creating and sharing career pathways with employees is also becoming more important to both employee retention and fair and accurate compensation practices within an organization. People need to understand the internal movement that can happen inside their company, which can mean a promotion or a lateral move to a different job that requires similar skills. Once created, managers need to be trained on who to communicate these pathways and helping employees see how their performance can influence their career path.
3 Steps to Address Skills and Competencies With Your Organization
Two-thirds of organizations are investing in L&D initiatives designed to reskill and upskill their employees, a wise investment during a labor shortage. Other top approaches include recruiting outside the organization with skills-based hiring, which also requires reworking job descriptions and hiring requirements.
- Conduct a skills audit and review job architecture to ensure it is still relevant today. This process reveals if there are gaps in an organization’s understanding of how work gets done. In all likelihood, job descriptions will need updating.
- Once the foundational job descriptions are done, the correlating skills need to be incorporated into job descriptions. Job descriptions should reflect current needs and differentiating skill levels within each job. By telling the story of how skills translate into real job duties, organizations can prepare their workforce effectively.
- Evaluate the current staff’s skills based on their job requirements and identify gaps. Understanding their acumen and how it measures against those desired behaviors is invaluable. Deficits and surpluses will emerge.
This assessment informs decisions on training and reskilling to bridge these gaps. There are various mechanisms for testing, including direct skills testing and personality assessments to match employees with the roles best suited to their abilities.
This process creates an understanding of bench strength and succession planning by shedding light on who has the potential to take on new roles within their existing department or even outside their department.
Taking measures to close the skills gap is essential to future-proofing an organization against labor shortages and economic instability. Ignoring the gap essentially limits the ability to have the right people in the right jobs. By addressing barriers, conducting skills audits and leveraging technology, companies can bridge this gap and secure a competitive advantage. Now is the time to be nimble and forward-thinking.
