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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

• Map future business strategy and skill, knowledge, and performance requirements
• Conduct skills gap analysis to compare current capabilities to future business needs
• Inventory existing skills across the workforce using diagnostic tools for a holistic, unbiased view of your capability – these can cover cognitive and personality competencies, values, and team fit, as well as job-specific skills
• Analyse the root cause of capability gaps to understand why they exist – this helps address any systemic causes to future-proof investment in capability development

Closing skills gaps

• Adopt a skills-based approach, including human skills development, rather than just job-related or technical knowledge acquisition.  This supports talent to stay agile as business needs evolve
• Build your own Skills Academy to provide an organisational approach to skill acquisition
• Create customised employee development journeys to support motivation and engagement in performance
• Reskilling/upskilling through training programs to build missing capabilities
• Hiring to bring in new talent where gaps are too wide to close through training
• Track training effectiveness and iterate on programs to continually close gaps
• Invest in coaching and mentoring to embed the effectiveness of the training
• Provide credentialing – this allows the organisation to snapshot capability, and the recognition improves employee engagement, motivation, and morale

Conducting regular skills gap analysis and closing gaps is critical because:

• Skills gaps will continue to evolve, as will the businesses and the landscapes they operate in continually change
• It enables organisations to pursue new opportunities and innovations
• Helps meet changing customer expectations and market demands 
• Improves employee performance, engagement, and retention, building a resilience capability base
• Allows businesses to stay competitive in the face of constant change

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.

Enquire Now

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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/