The big step businesses need to take in 2020 to fix the skills gap
In 2019, as I’ve traveled around the world working with businesses, I’ve seen powerful signs that when it comes to confronting one of their most pressing challenges – perhaps the most pressing challenge – they’re finding themselves in the same proverbial boat. Leaders and managers, across all sorts of industries, are realizing that to compete in the future, their workforces must constantly be engaged in learning new skills.
Workforces are not adequately prepared for the future. With new technologies bringing disruption at an unprecedented pace, any organization can lose market share and face a sudden downfall when a competitor springs up that offers a whole new, better way to provide a product or service. Skills gaps are threatening the future of numerous businesses, and can drag down economies, both at the national and global levels.
Early in 2019, the Society for Human Resource Management made clear what a struggle this can be for the United States. In a survey, the vast majority of HR professionals (83 percent) said they were having difficulty recruiting suitable job candidates. Among those who reported having this problem, three quarters said candidates had skill gaps and more than half (52 percent) said the problem was getting worse.
This same problem is rearing its head just about everywhere. “Skills gaps across all industries are poised to grow in the Fourth Industrial Revolution,” the World Economic Forum reported earlier this year. More than half (54 percent) of all employees “will require significant reskilling by 2022,” the forum said.
A wide array of efforts are underway. In India, for example, the forum has created a task force to tackle the skills gap. The need for reskilling is having a major impact on, among other things, global corporations that set up offices in the country. Talent availability “is the single most important factor in determining job locations for international businesses with operations in India,” the forum said, adding that “67 percent of businesses surveyed expected to outsource functions by 2022 in response to changing skill requirements.”
All these new efforts, and the slew of studies pointing out the scope of the problem, show that the message is starting to penetrate. New efforts in L&D are needed. Degreed, where I serve as Chief Learning Officer, pointed out in our How the Workforce Learns report that 80 percent of business leaders believe more innovation is needed learning and development.
Mixed reports on financial commitment
But are these leaders putting their money where their mouths are? On this question, the reports are mixed.
Spending on workplace training dropped this year to $83 billion in the United States, a decrease of 5.3 percent from a year earlier, according to Training Magazine. But globally, a different picture emerges. Industry analyst Josh Bersin reports that learning and development worldwide is “now over a $240 billion market,” up seven percent from a year earlier. And “LinkedIn research shows that 87 percent of organizations are growing or flat, only 13 percent reducing cost,” he notes.
We also may see a big increase in spending on L&D in the coming years, including inside the United States, given announcements from prominent corporations in 2019.
Among the latest is PricewaterhouseCoopers, which has committed to spending $3 billion on job training for all its 275,000 employees over the next three to four years. Earlier in 2019, Amazon announced that it will spend $700 million by 2025 to train 100,000 workers. Accenture plans to “retrain nearly every worker at risk of losing a job to automation, using a large portion of the nearly $1 billion the firm spends on training each year,” the Wall Street Journal reported.
JPMorgan Chase, meanwhile, announced that it will spend $350 million on a “global initiative” to help develop a variety of programs to help people build critical skills for the future of work. “The new world of work is about skills, not necessarily degrees,” CEO Jamie Dimon said.
It’s time for companies to embrace the new science of learning. Instructor-led training – in which employees pack into a room to sit through lectures and watch powerpoint presentations – are rarely very effective
Spend it wisely
All this pledged money can make a big difference. But the key is to spend this money wisely.
Fortunately, on this front we’re seeing positive developments. For example, companies have been moving away from older methods of learning and investing more in modern tools. The 2019 Workplace Learning Report from LinkedIn found that most companies have increased their spending on online learning (59 percent reported an increase, while only nine percent reported a decrease). And 39 percent of companies have reduced their spending on instructor-led training, while 24 percent report an increase.
This is good news. It’s time for companies to embrace the new science of learning. Instructor-led training – in which employees pack into a room to sit through lectures and watch PowerPoint presentations – are rarely very effective.
For our book The Expertise Economy, my co-author David Blake and I looked into what the research teaches about the most effective training. William Jeffries, Senior Associate Dean for Medical Education at the University of Vermont’s Larner College of Medicine, explained that he was once a big advocate of lectures, but has changed his mind. “We’ve seen much evidence in the literature, accumulated in the last decade, that shows that when you do a comparison between lectures and other methods of learning—typically called ‘active learning’ methods—that lectures are not as efficient or not as successful in allowing students to accumulate knowledge in the same amount of time,” he explained. Jeffries and his colleagues set about phasing out lectures in favor of “active learning,” in which employees put their learning into practice.
We recommend that companies make similar changes. First, rather than focusing on compliance training – required courses that all employees must take – give them the chance to choose which skills they want to learn. Put them in the driver’s seat. When they make these choices, they’re much more likely to be devoted to learning.
Next, give them the time and resources to engage in learning by reading articles, watching TED Talks, listening to podcasts, and more. Also, help them find subject matter experts (SMEs) inside the organization who are willing and excited to teach the skills they know. Teaching is a great way for people to brush up on the skills that they have expertise in.
Then, make sure these employees have the chance to practice the skills they’re learning, and to get helpful, thoughtful feedback from people they trust who are already experts. This kind of feedback will help them hone, improve and fine tune as they go.
Then comes the next big step. And it’s here that businesses need to take especially big steps forward in 2020.
Put those skills to work - at work
For newly learned skills to last, employees need the chance to apply them to real life situations. So once people have gone through the process of learning, practicing and fine tuning, they need opportunities inside their company to put those skills to use.
Far too many businesses are failing to do this. Many don’t collect even data on which employees are even learning which skills, let alone search for ways to help them implement those skills.
This often leads employees to leave a company. They want a chance to apply their new skills, and if they can’t find it at their current business they’ll look elsewhere. As Gallup notes, millennials in particular “want jobs to be development opportunities.” And part of that development is having the chance to make using new skills a part of their workday.
To make this happen, companies should continuously collect data on who is learning what. This is a necessity to determine where the skill gaps lie and what’s being done to fill them. Next, build an internal career marketplace that helps employees match their new skills to jobs and projects at the company. A good example of this kind of marketplace is eBay, where employees are allowed to keep their current role while taking time to work on a different project. In the year ahead, businesses of all kinds should build similar systems. They also need to make sure that their L&D operations are focusing on the full gamut of skills that businesses need today.
Skills gaps across all industries are poised to grow in the fourth industrial revolution, the world economic forum reported earlier this year. More than half (54 percent) of all employees “will require significant reskilling by 2022,” the forum said
Value and address 'power skills'
When we talk about skills, we often think of the traditional “hard skills” that involve the details of how jobs are done. These days, for example, data science often comes to mind as companies respond to technological disruption.
Fresh reminders of gaps in traditional “hard skills” pop up all the time. The National Center for Education Statistics recently released a striking report about findings in a major international study: 29% of U.S. adults performed at the lowest level of numeracy and 19% performed at the lowest levels of literacy. Among those who felt comfortable taking the assessment on a computer, 24% lacked “basic digital problem-solving abilities.”
Obviously, these are huge gaps that must be addressed. But they aren’t the only kinds of skills in demand. In fact, there’s an even greater need for what I call “power skills.” In the past, these have been referred to as “soft skills.” But there’s nothing soft about them. In the digital transformation, as technologies are taking over more and more of the jobs that exist today, the uniquely human skills will become even more important for people to have. These include communication; empathy; the ability to give and receive feedback; thinking creatively and critically; curiosity and more.
In fact, LinkedIn found that “creativity is the single-most in-demand skill for companies to cultivate in their employees.” Some of the fastest-growing roles, such as sales development, customer success, and customer experience jobs, are largely based on skills like creativity, persuasion, analytical reasoning, collaboration and adaptability.
In talks for corporations and conferences, I often explain that the most important skill of all these days is learning agility, the ability to continuously learn and build skills all the time. The future is unpredictable. But one thing we can count on is that as artificial intelligence, machine learning and other emerging technologies change how business is done, companies that learn to harness them most quickly - and use them to innovate - will have a huge leg up on the competition.
We’ve entered a new era. Skills are the currency of this economy. In 2020, let’s aim to make big changes take hold. Let’s work to build societies in which workers have what they need to learn, develop and contribute in entirely new ways – to help their companies, industries, nations and the world build a stronger future.