The Workplace Skills Gap has Become a Canyon

The COVID crisis has highlighted the magnitude of the skills crisis. Despite millions of people sitting on the sidelines, employers are challenged to find workers with the skills needed to be successful on the job.

“2030 has gotten pulled forward to 2020…”

Tobi Lutke, CEO, Shopify

As the U.S. economy recovers from the COVID crisis, significant distortions in the labor market are creating headaches for executives. The secular shift away from many entry-level service jobs (driven in part by health concerns, government incentives, and other considerations) has left a huge number of employers scrambling to fill delivery positions, warehouse roles, and a range of other important jobs.

In many other professions the move towards remote and hybrid work has driven a dramatic acceleration in the pace of technology adoption. The cold, hard reality is that many workers were inadequately skilled to use technology before COVID hit and are acutely underprepared now. In a study by Microsoft entitled “Unlocking the UK’s Potential with Digital Skills,” 38% of employees surveyed stated they lack the digital skills needed to be successful in the workplace. According to a January 2021 study by McKinsey, “Most companies worldwide—87 percent—are aware that they either already have a skills gap, or will have one within a few years…

There are several key points to be made about the growing skills gap.

  • The fallacy of the Digital Native. The term ‘digital native’ is commonly used to describe Millennials and Gen-Zers. While it is true that many are more comfortable with technology than their more experienced colleagues, we should not assume that they arrive with all of the practical technology skills they need to thrive in a business environment. An excellent report by ICDL Europe (an international not-for-profit dedicated to raising digital competence standards in the workforce, education and society) makes a distinction between ‘lifestyle’ and ‘workplace’ digital skills. The younger generations may have plenty of the former, but are often sorely lacking the latter. Ask them to quick turn a PowerPoint presentation or pull together some scenarios using lookup tables in Excel and see for yourself. They need upskilling too.
  • Older Generations are not Always Resistant to Change. This is another common misconception around upskilling and reskilling. Many executives and managers have an implicit bias that older and more experienced members of their team may be more resistant to change. Like every cliche, “You can’t teach an old dog new tricks…” has an element of truth. That said, COVID has changed many minds over the past two years. More experienced employees who may have resisted live video, for instance, came to recognize very quickly that their job (and career) would be in jeopardy if they didn’t learn how to use it – quickly. This mindset now extends more broadly to other technology as well. Do not make the mistake of assuming more experienced employees won’t be willing to change their ways. They are increasingly cognizant of the fact that their livelihood depends on it.
  • Soft Skills, Hard Impact. When referring to a skills gap in the workplace, many of us think (appropriately) about hard technical skills. As important as they are, and as critical as the gap in hard skills has become, there is also an acute shortage in soft skills. Quoted in a report by the U.S. Chamber of Commerce called Bridging the Soft Skills Gap, Economist and Nobel Laureate James Heckman is quoted as saying “We now have very hard evidence that you have to have soft skills in order to succeed.” While technical skills are often industry-specific, soft skills are invaluable across industries. And as texts, emails, and chats replace phone calls and face-to-face meetings, we are losing many of the skills we need to be successful as a manager and leader of other people. COVID has, in many ways, intensified this soft skills gap. There is certainly a generational aspect to the soft skills gap as well. HR executives we speak with regularly discuss younger workers who have excellent technical skills being promoted prematurely before they have had a chance to develop the soft skills required to be successful in their new role. The managerial vacuum being created by retirements has served to accelerate this trend.
  • We Have Only Just Begun. The adoption of machine learning, artificial intelligence, and additional automation is continuing to accelerate. We are arguably in the early innings of this Fourth Industrial Revolution. Unfortunately, as many as 100 million American workers will lack the competence and confidence they need to be viable in the workplace without significant upskilling and reskilling.
  • Build versus Buy. In today’s job market, it is increasingly difficult and expensive to hire new employees. According to a study by Bersin by Deloitte, the average cost to hire a new employee is $4,000 when you factor in search costs, onboarding costs, and the time it takes for the new employee to ramp up the productivity curve. In today’s virtual and hybrid environment, there are a broad array of innovative learning solutions to consider, making the investment required to ‘build’ internal talent much more appealing than making new hires.
  • Companies Have a Responsibility. Companies have an obligation to invest in their employees to prepare them for the workplace of the future. Company-provided healthcare has been premised on the fact that workers need to be healthy to be productive. In today’s knowledge-based economy, companies need to look at (and invest in) employee learning in a similar manner. The societal consequences of failing to prepare our people for tomorrow’s economy, in which a hundred million American workers may be vulnerable to automation and job displacement, are truly unthinkable.

“Employers are recognizing the clear positive impact that skill-based training can bring to both their workforces and the bottom line.”

Kerri NelsonSHRM Researcher