If you thought keeping your company afloat during 2020 and 2021 was your biggest business headache, don’t sit down yet. 2022 is about your talent strategy: do you have one, and does it include upskilling your current workforce?
The problem most businesses are facing right now isn’t simply the “mass resignation.” Instead, it’s the mass skills gaps, underpinned by the absence of a comprehensive talent strategy that delivers on business goals. This article will cover what a talent strategy is and how to design one that strengthens the existing workforce. We also share seven steps leaders can take to equip their employees with skills critical to business resilience.
Gone are the days when we lump everything to do with people under human resources. As the interest in ‘human capital’ has grown, so has the business terminology. Here are a handful of terms you need to know:
1. HR: Human resources (HR) is a catch-all term covering the team responsible for recruiting and hiring employees, compensation and benefits, onboarding employees, training, organization development, and workplace culture
2. L&D: Learning and development functions are primarily responsible for managing people’s development in a company and ensuring a workforce's capabilities, skills, and competencies are in line with top-level business goals. A good L&D function will design capacity-building initiatives to grow or get these and integrate their work with HR and performance management
3. Reskilling: Reskilling refers to someone building a different skill or set of skills to perform well in a different or evolving role. For example, reskilling trains employees to do another job in the same company
4. Upskilling: Upskilling is about teaching new and advanced skills, which usually means training in one skill or more. The goal here is to make employees better at their current position. In talent strategy language, employee upskilling is the ‘build’ in the “buy-build-borrow” model
5. Talent: Talent refers to individuals who have a significant impact on organizational performance. While some companies like to describe their entire workforce as ‘talent,’ for many, it’s a term that refers specifically to people who add more significant value than the rest because of their skills. Reminder: the ‘potential’ in your workforce is one step away from becoming your talent, so don’t exclude them when scouring your employee matrix to identify your talent
6. Talent Management: Talent management describes developing and retaining employees with skills training and succession planning
7. Talent Acquisition: Talent acquisition is about appealing to and recruiting new skilled employees
8. Talent mobility: Talent mobility is about movement: actively moving employees into different jobs, projects, and geographies. And while this sounds easy to implement, it’s not.
Internal mobility is difficult because most companies operate in hierarchical structures, where employees come in at the bottom and work their way to the top. This doesn’t serve the needs of agile, project-based workforces who might want to staff quickly from across different departments. It’s a skills thing over a job title thing.
“With so many jobs disrupted by the pandemic and digital transformation, we have to search for skills and culture fit, not just experience. Many of the new positions we’re creating don’t have large pipelines of experienced candidates.” - Josh Bersin, 2021
At the start of 2020, a McKinsey Global Survey reported that 87% of executives were experiencing skill gaps in their workforce or expected them within a few years. And yet, under half of the respondents had a clear sense of how to address the problem.
LinkedIn’s Global Talent Trends report cited internal hiring as one of four trends that would reshape talent acquisition in the years to come. Since then, unsurprisingly, internal development and mobility have become more critical than ever in the pandemic hiring freezes. The exception, of course, is the USA, which is experiencing what is now known as the “Great Resignation.”
A few months later, the WFE Future of Jobs report confirmed that the window of opportunity to reskill and upskill workers had become shorter in the newly constrained labor market. The report predicted that for those workers set to remain in their roles, 40% of their core skills would change by 2025, while 50% of all employees would need reskilling to perform effectively. The WEF predicts closing the gap could result in an additional $11.5 trillion to global GDP in 2028.
Key takeaway: even if your workforce is highly qualified by standards set in 2020, they might not be by 2025. An Ivy League education hire is only as valuable as the skills that hire brings. Think twice before investing if they don’t have the ones specific to your future business niche in the digital economy.
“In a more normal labor market, you would typically look for someone who has done this job before. Today...it’s ever more likely you will hire someone who has some of the experience you need, but is more likely to be hired based on skill, not experience. So this means you’re hiring for culture, intelligence, ambition, and potential.” - Josh Bersin, 2021
The types of skills needed in the new economy have changed. Historically ‘highly skilled’ implied someone who had the education and intellect to do ‘thinking’ type jobs. It now means someone who has the right mix of skills the digital economy value.
Upskilling could propel the transition to an economy where human labor is not replaced but complemented by new technology. Which essentially means less mundane work for humans. Interestingly, the number of jobs that require creativity, innovation, and empathy will rise, according to the WEF Future of Work report.
The Institute for Corporate Productivity's (i4cp) talent mobility study of 650 global companies found that prioritizing talent mobility directly correlates to market performance. LinkedIn data has shown that employees stay 41% longer at companies with a lot of internal hiring versus those that don’t.
Below are the ten top skills outlined in 2020 by the World Economic Forum:
Reskilling also helps organizations hold on to institutional knowledge that takes time to build with new hires.
So, what stops companies from investing in upskilling? The issues that keep businesses from investing in reskilling and upskilling programs broadly include:
1. Identifying relevant skills gaps.
2. Finding the time for employee training
3. Budgeting enough money for learning and development programs
With the right plan in place, a company of any size can make reskilling and upskilling opportunities possible.
“There is evidence of a growing performance gap between companies with digitally enabled, agile business models and those with traditional, legacy business models.” - MIT
Map the skills you have against the skills your business needs in the next 3-5 years
Skill data is a tool for creating targeted initiatives and personalized learning plans to develop the talent you need in your workforce. Assessing your skills gap is the essential factor in determining the success of a growth strategy.
Whatever your business strategy is, you will need a set of skills and talents in your company to deliver on it successfully. By mapping what you have against what you need, the big picture can inform the road to get there. Your HR and L&D teams can then easily see which skills within a category people have — and where people need to upskill.
The process to get this is sometimes called 'skills mapping' and is much more efficient than drawing up competency data which is often out of date by the time it's ready. Measuring progress against skills development is much more straightforward than measuring competencies against courses completed or learning data. You can track an upskilling development journey within your departments, and learning then becomes a supported activity within this, rather than an ad hoc initiative.
"Only 40 percent of companies say that their learning strategy is aligned with business goals. For 60 percent, then, learning has no explicit connection to the company’s strategic objectives." - MIT
Make sure your L&D plans are transparent and widely shared across your business. Ask people to give input and feedback. And above all, share your company's future vision in an inspiring way to show employees there is a rationale for change and development requirements. According to one McKinsey survey, when leaders ensure that frontline staff members feel a sense of ownership, the results show a 70% success rate for transformations.
These results make sense. People are far more likely to get enthusiastic and back your vision if they feel their opinions matter and their career development stands to benefit. Finally, don't forget to share your L&D success metrics - nothing works better as a motivator for disengaged staff to see others jumping on a learning bandwagon and excelling.
According to McKinsey, "only 40 percent of companies say that their learning strategy aligns with their business goals. For the other 60% percent, learning has no explicit connection to the company's strategic objectives...companies that invest in developing leaders during significant transformations are 2.4x more likely to hit their performance targets."
In other words, don't roll out boring, asynchronous videos to your company that will switch off on day one. To make training effective, you have to make it engaging, and it also has to appeal to the specific diversities within your workforce.
Offer classes, workshops, or other formal learning opportunities regularly that uses a blended learning approach. Introduce "flipped classrooms," which allow people to play a more active role in applying their skills and teaching others. Use tools such as podcasts, gamification techniques, immersive skill-building, and quizzes.
The goal of any talent development is two-fold: retaining a loyal, motivated workforce and setting your employees up to rapidly apply their new skills. The outcome? Adaptability, resilience, and proactive problem solvers in your teams.
There is usually much overlap between the goals of HR, recruitment, and L&D teams. Unfortunately, these departments don't have shared objectives that align with top-level business goals in many companies. The most crucial step is to bring these teams into executive conversations and make sure KPIs for training deliver outcomes to support the business vision. Consider merging departments in this area and reduce unnecessary in-house time on admin that can be outsourced.
Importantly, centralize the information that your cross-functional teams need. Working from one, not multiple systems, makes teams more efficient and accelerates results. It also reduces planning time and cuts down meetings.
Collaborate with online education platforms to offer your employees virtual learning opportunities. It is relatively easy to create your organizational training programs by outsourcing delivery to 2-3 agile, relevant learning partners. This reduces the burden on internal teams and makes a jigsaw of different people and training methodologies that offer fresh thinking to diverse groups.
The top hard skills outlined by the World Economic Forum are:
For these to work successfully in the 'new world,' soft skills are now recognized as an integral factor. These types of skills show up in teams able to emphasize, collaborate, communicate clearly and think creatively when faced with problems. Interestingly, collaboration is now one of the most in-demand soft skills.
One perfect example of training to promote collaboration is teaching teams to listen actively. Teach people to listen to understand, not respond and allow others the opportunity to be heard without interrupting or feedback. Listening training is readily available and has a considerable ROI versus cost and effort.
A key hallmark of a learning organization is leaders who encourage experimentation throughout the company and reward individual input. If your organization isn't a learning one, your workforce will repeat old practices. In a learning organization, information is shared and accessible to everyone. People are expected to learn constantly, and learning is a continuous process. Learning organizations emphasize the value of learning and motivate people to do so.
What are workforce skill gaps getting in the way of your company's success? It's the million-dollar question every business leadership team is working on at the moment. If you think about developing talent for future skills, you'll have a larger talent pool rather than recruiting workers with fixed skills. So now is the time for doubling down on learning budgets and committing to reskilling.
Interested to read more about upskilling? Check out our recent blog for more: "What are Codified Skills and Why Do They Matter To Business Performance?"
Companies rebuilding their workforces need to apply strategic, data-driven approaches if they are to survive and thrive in the 'future' of work.