In the rapidly evolving business landscape, organisations face a pressing challenge: bridging the skills gap in their workforce. The skills gap, a disparity between employees' skills and those required for their roles, is widening due to technological advancements, market shifts, and changing job roles.
According to the World Economic Forum, 1 billion employees, which equates to nearly 40% of the world's workforce, must be reskilled by 2030 due to disruptions caused by automation and the digital economy. They also suggest that large-scale upskilling/reskilling programs could add $6.5 trillion to the global GDP by 2030.
McKinsey's research indicates that the half-life of learned skills has dropped from 10-15 years to only five years, and for technical skills, this figure is even lower at around 2.5 years. This means technical skills learned today only have half the value in just 2.5 years. They also found that only a third of organisations believe they are prepared for workforce disruptions from market and technology trends.
A recent PwC (2023) CEO survey found that CEOs are cognisant of the disruption, with nearly 40% believing that their companies may not be economically viable in the next decade if they continue their current trajectory. Skill shortages were one of the critical areas of concern. Deloitte's (2023) CEO survey found that labour and skills shortages were the 2nd most cited external factors disrupting their business strategy. They also found that over half (55%) of CEOs evaluate and experiment with Generative AI, and 79% believe it will increase efficiencies. One of the top obstacles in utilising emerging technologies was insufficient workforce skills.
Managers play a pivotal role in engagement and development. Gallup (2022) identifies that 70% of team engagement depends on the manager. Upskilling managers should be a priority, as they highly impact those they manage and will largely influence the implementation and success of a reskilling and upskilling strategy.
These statistics emphasise the importance of continuous learning and development in organisations to keep up with the rapid pace of change in the job market. Companies that invest in strategic continuous learning are better positioned to close the ever-increasing skills gaps and adapt to continuous market changes.
Addressing skills gaps is not just a necessity but an opportunity for organisations. By proactively identifying and addressing skills gaps, companies can enhance productivity, foster innovation, and gain a competitive edge. For example, human skills training cuts staff turnover substantially (Deloitte, 2022). Replacing staff due to poor interpersonal skills costs approximately 2.5 times their salary.
Moreover, it can improve employee engagement, retention, and performance, as workers appreciate the investment in their growth, development, and career. Employee engagement and retention rise as workers feel valued through investment in their development (LinkedIn, 2019).
Here is an overview of the process for identifying and closing skills gaps in the workplace:
Identifying skills gaps
Closing skills gaps
Conducting regular skills gap analysis and closing gaps is critical because:
A well-thought-out skills strategy is a worthwhile commitment and investment, as it pays real dividends through a more capable, agile, and productive workforce.
Talk to our team about supporting your skill strategies, including capability frameworks, competency diagnostics, building skills academies, skills training, coaching, and credentialing.
__________________________________________________________
This article was written by Michelle Ruddenklau, Product Lead Organisational Performance and Senior Consultant on TVET projects for Skills Group.
Further reference
Deloitte. (2021). 2021 Deloitte Global Human Capital Trends. https://www2.deloitte.com/xe/en/insights/focus/human-capital-trends.html
Deloitte. (2023). Summer 2023 Fortune/Deloitte CEO Survey Insights. Retrieved from https://www2.deloitte.com/us/en/pages/chief-executive-officer/articles/ceo-survey.html
Gallup. (2022). State of the Global Workplace 2022. https://www.gallup.com/workplace/349484/state-of-the-global-workplace-2022-report.aspx
Indeed. (n.d.). How to Identify Skill Gaps. Retrieved from https://uk.indeed.com/career-advice/career-development/how-to-identify-skill-gaps
LinkedIn. (2019). 2019 workplace learning report. https://learning.linkedin.com/content/dam/me/learning/en-us/pdfs/workplace-learning-report-2019.pdf
McKinsey. (2023). The State of Organizations 2023: Ten shifts transforming organizations. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-state-of-organizations-2023#/
PwC (2023). PwC’s 26th Annual Global CEO Survey. Winning today’s race while running tomorrow’s. https://www.pwc.com/ceosurvey
Shaikh, N. (n.d.). Transforming into a Skills-Based Organization: Everything You Need to Know. Fuel50. Retrieved from https://fuel50.com/learn/transforming-to-a-skills-based-organization/
World Economic Forum. (2023). The future of jobs report 2023. https://www.weforum.org/reports/the-future-of-jobs-report-2023/
Your details have been submitted and we will be in touch.