The Employee Skills Gap: How You Can Identify It–and Close It

BY Emily McCrary-Ruiz-Esparza | June 09, 2021

The skills gap is the difference between the skills your workforce has and the skills they need to do their jobs well now and in the future. It’s a risk for any employer. Unless that gap is closed, the business is likely to struggle to compete and grow.

As an employer, you have two ways to close the gap: Hire new employees who have the skills you need or develop those skills in your current employees, a practice called reskilling or upskilling. Upskilling refers to training an employee on new skills that are useful in their current role (or future roles in the same area), while reskilling refers to training someone on new skills so they can do an entirely different job.

To explore ways that employers can identify their skills gaps and efficiently close them, From Day One hosted a webinar, “Mind the Gap: Understanding and Closing the Future Skills Gap to Build the Workforce of the Future,” which featured three experts from the Human Capital Solutions practice at Aon, the professional-services firm. According to Marinus van Driel, an Aon Associate Partner, 50% of all employees will need reskilling by 2025, but only 28% of companies are planning new initiatives to identify future skills gaps.

Aon's Marinus van Driel (Executive photos courtesy of Aon)

Before you start to sweat the impact of training on your P&L, consider this: Upskilling and even reskilling makes good financial sense, according to the Aon speakers. “The biggest risk area is not taking action,” van Driel said. According to a report by the World Economic Forum and Boston Consulting Group, it would cost about $25,000 to reskill a single worker to a new role. The same report includes a cost-benefit analysis that asserts the private sector could reskill some 25% of its workers for less than it would cost to hire new, already skilled employees to take their places. Another study claims it could cost six times as much to go looking for talent outside your doors.

How can employers best approach this process? “Whatever the critical skills are for your organization, take the time to identify them, measure them, and develop them,” said Kathy MacKay, an Aon Associate Partner. “People can do some really amazing things if given the tools and training and opportunity.”

To identify the skills that are critical in your organization, Aon Partner Stefan Gaertner recommended this: “Go through your business forecast, go through your business plan, engage with your business leaders, and they can tell you where the business is going. You can then translate these goals into skills that you need to cultivate,” said Gaertner, the firm’s global lead of people analytics. Van Driel also recommended employers look at labor-market data for their industry to get a sense of skill trends and what the competition is doing.

To measure and evaluate current skills, MacKay said she works with clients to implement assessments that “target specific skills and competencies and to look for fit and potential and ROI.” These assessments help leadership to choose the high-potential employees or teams for skill development and to design job descriptions built on core competencies. After employees go through the reskilling process, managers should make ongoing assessments to track their progress and identify further areas for development–as well as have a consistent flow of data.

Aon's Kathy MacKay

When it comes to making the investment and developing those skills in employees, employers should consider the work environment and employee motivation, MacKay said. “Individuals who are motivated can go down that path of reskilling much faster and much easier.”

The panel shared examples of how Aon has helped clients facilitate, incentivize, and even gamify the process of upskilling and reskilling.

Aon worked with telecom company Vodafone to develop a free app that operates like a kind of skills marketplace. Young workers take an assessment to learn about the skills they have, they can explore the kinds of jobs where they could apply those skills, and they can get access to online learning to develop the skills they need.

MacKay cited an innovative example at another company, which made skills development into a competition. The company currently has “ten teams across four or five different countries competing for $1.5 million or so in order to generate the best and most effective design and demonstration of a rapid training and reskilling solution for those individuals who are most vulnerable to employment loss in the U.S.,” MacKay said.

Aon's Stefan Gaertner

The upskilling and reskilling of the world’s workforce is an evolutionary process bigger than any one company’s efforts, the speakers observed. The future will bring new strategies and tools that connect the dots between people, skills, and business interests. “Once you develop tools that connect people with jobs, people with skills, and skills with jobs, you give people a good reason to use these tools,” Gaertner said. “You can then also collect the data for planning purposes, so you can shift from a very transactional place to a strategic place. You have the data for something broader, to develop workforce strategies.”

Editor's note: From Day One thanks our partner who sponsored this webinar, Aon. You can watch a video of the conversation here and view the slide presentation as well as Aon's guidebook, “Closing the Future Skills Gap to Drive Business Success,” by going to this page.

Emily McCrary-Ruiz-Esparza is a writer, editor, and content strategist based in Richmond, Va.

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Using Skills to Shape the Future of the Workforce

After two years of major upheaval in workplaces, more is coming. In just three years, by 2025, an estimated 97 new types of jobs will need filling, 6% of the workforce will be displaced, and one in two employees will need reskilling. “The future of work has arrived,” said Cynthia Stuckey, VP of professional services and growth for the upskilling platform Degreed. In a presentation at From Day One’s December virtual conference on the future of work, Stuckey focused on using skills to shape the workforce, stressing that the pandemic has changed how employees see themselves. “If there’s one takeaway I’d ask you to think about, it’s the employee as a ‘market of one,'” she said. Skills and upskilling can help address many of the new worker expectations coming out of the pandemic. Workers are feeling burnt out, are willing to take less compensation for more flexibility, are becoming more disillusioned by climbing the career ladder, and want control over how, when, and where they work, Stuckey said. New policies should prioritize flexibility and virtual resources, as well as support new skills and different levels of skill proficiencies, she said. Other workplace transformations, according to Stuckey, include new digitized work processes, ESG and human capital accounting, and the growing urgency around skills management and upskilling. “All of these changes indicate one common theme: new skills, reskilling, the need to understand technology, the need to personalize the way we serve an employee,” Stuckey said. “It’s far easier to upskill and reskill someone committed to your mission, driven and passionate about what you do, than it is to go hire,” Stuckey said. She pointed out that the annual cost of worker attrition comes in at an estimated $47 billion. Cynthia Stuckey, VP of professional services and growth for Degreed (Photo courtesy of Degreed) So how can companies reimagine workplaces that respond to these different changes and prioritize reskilling? “My belief is that in talent, L&D and HR, there’s a challenge in front of you to really reflect on your life cycle,” said Stuckey. “Map that life cycle and your employee proposition against that ‘market of one.’” Work, she said, must be reimagined around the human-centric expectations of the employees. One of the biggest priorities should be investing in a “culture of learning,” Stuckey said. She pointed to a few companies–JP Morgan Chase, Accenture, Amazon and AT&T–that have made big investments in upskilling and retraining. “Many of them have decided to look at how they’ll do a skills-management strategy and how they’ll upskill employees to stay competitive,” she noted. Continual learning is important too, as the half-life of a learned skill is 3.5 years and for a technical skill, just two years. “There’s new software, new complexities that my current skills won’t align to,” Stuckey said. “Skills are decaying faster and faster, and new skills are being required, and that requires continual learning.” Skills in high demand, she noted, include “power skills” like communication, teamwork, and flexibility, as well as technical skills like cybersecurity and artificial intelligence. She described another important skill as “learning management.” Said Stuckey: “What I want to call out is that it’s about learning agility and an intense desire to learn.” Looking ahead, companies will need up-to-date data about employees’ current skills, as well as a willingness to engage employees in learning, retraining, and empowerment. “We need better integrations and experiences,” Stuckey said. About 75% to 80% of workers don’t complete their HR system’s talent profile and more than 60% of the workforce isn’t getting regular feedback on their performance or skills. Eight of ten CEOs say lack of key skills is a serious threat to their growth, Stuckey said. She recommends that employers connect skills development to employee expectations and technology. That means collecting current data on the supply of skills and skills demands, as well as integrated learning systems, the sources of learning content, and real-life opportunities to put skills to work. “It’s about underpinning your business with knowing what capabilities and skills you need, so you can prepare for the work that needs to get done today, tomorrow and next year,” she said. “It will enable you to get ready for some of these shifts, like Covid, like new strategies, like new market changes.” Emily Nonko is a Brooklyn, NY-based reporter who writes about real estate, architecture, urbanism and design. Her work has appeared in the Wall Street Journal, New York magazine, Curbed and other publications.

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Removing the Obvious (and Not So Obvious) Barriers to Unlock True Upskilling

Ninety percent of corporate leaders know they will face a skill gap in three to five years, according to a report from McKinsey & Company. The challenge is giving workers a sense of urgency about addressing their own skill gaps.“The world is changing with new demands. We see this every single day. Skill development has not kept up with the pace of change,” said Steve Gilman, co-founder and CEO of OneRange, during a thought leadership spotlight session at From Day One’s September virtual conference. OneRange’s mission is to ensure employees receive the right resources.Workers are also aware of the skill gap. A PwC report found that 77% of employees know they need to upskill and do it today. However, many company leaders say that although they offer employees online courses they can take at their desktop or allow them to go back to school to build their skills, their workers aren’t engaged, Gilman said.So, what’s the disconnect, and how can businesses overcome it? Gillman said the key is to remove barriers to upskilling so all employees can participate and unlock their true potential.The Problem of Low Engagement One reason employees aren’t participating in upskilling opportunities is a mismatch of professional development content, says Gilman. Steve Gilman, co-founder and CEO of OneRange led the session (company photo)“If you think about everyone’s diverse functions, their needs, their flexibility, where they are in their careers, the advancement level of everyone, there’s no possible way that one format or piece of content could satisfy everyone,” he said.A lack of time is another barrier to taking advantage of professional development programs. Employees might say, “It’s difficult to find time for training and upskilling. It gets in the way of my sales process,” or “It’s the end of the month. We’re trying to close this out. How can I possibly work on soft skills?” Gilman said the obvious answer to this issue is flexibility and making sure people can get the resources they need to work on professional development in a way that fits their schedule, which may be different than other employees because of the time of work they do or the fact they are in a different time zone than everyone else. Managers also must be aware that barriers to upskilling impact employees with less power and fewer resources disproportionally, says Gilman. “We often talk to enterprise companies that have reimbursement type programs, right up to a certain dollar amount (for professional development),” he said. However, “not everybody’s able to access those dollars, flip the credit and wait for reimbursement.”What Talent Leaders Can Do Democratizing learning is one of the most important ways for companies to ensure everyone has access to professional development, according to Gilman. He said decentralizing discovery is an essential way to accomplish this.“Where do I find those elements that helped me get used to the tech stack that my company operates on?” Gilman said. “If you can centralize it, you’re more often going to get the utilization that you need from people looking for anything.”To make sure internal skill development content is flexible and personalized for employees, company leaders should consider personal interests, cultural context, job roles, learning styles, and schedules.Another critical step is to streamline approvals for employees to access the outside tools they need, whether it is grad school classes or professional conferences.Managers have a key role in aligning what employees want and need with what the company needs, says Gilman.“Those are the folks that know that work functions the best, the folks that can identify the next skills that are needed, and also have the unique ability to tie it to company strategy,” he said. “They are able to give recommendations and learning pathways, things like team-based learning to get that culture going. And then learning should be instilled throughout team meetings, regular check-ins quarterly, and annual reviews.”At OneRange, “we have seen the barriers, whether they are obvious or not, within your organization,” Gilman said. “But if you concentrate on them, and you believe your role is to make sure you take them down, you’ll have your hands full, at least for some time before you start to feel the impact. But when you do, everything gets easier and better.”Editor’s note: From Day One thanks our partner, OneRange, for sponsoring this thought leadership spotlight. Mary Pieper is a freelance reporter based in Mason City, Iowa.

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How to Unlock Talent: Orchestrate Your Company’s Skill Development

HR leaders understand that developing employees’ skills is necessary to prepare a company for the future. What few understand yet is how to operationalize the development of those skills. Begin by reimagining learning and looking for the many places skills are acquired. “Organizations historically have been tracking skills based on the job someone’s doing for the organization, but people develop skills in a variety of ways, through projects, activities, and learning opportunities,” said Jason Cerrato, the senior director of product marketing at Eightfold, an AI-powered talent intelligence platform. “By giving better visibility to the skills that are required and the skills that people have, skills-based organization can be more nimble, adaptable, and responsive, especially as business needs change and fluctuate very quickly.” During From Day One’s recent virtual conference on reskilling, upskilling, and building a culture of continuous learning, Cerrato and his colleague, Eightfold’s director of customer experience Carly Ackerman, gave a brief, astute presentation, titled “Understand Skills, Unlock Talent,” on how HR leaders can operationalize skill development and propel their companies into a successful future. 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It also allows for the development of teams more broadly, as well as greater exposure for who’s already on the team and could potentially be upskilled or reskilled and redeployed into other areas,” Cerrato said. The Expanded Role of the Leader Many companies are under-planning for succession. Eightfold ran a survey of 260 HR leaders and 1,000 employees and found that although respondents believe that identifying high-performing talent for promotion is a priority, 64% said succession planning is focused on only the top jobs, and 44% said they’re succession planning only once per year. 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Carly Ackerman, Eightfold’s director of customer experience Employees now expect their employers to prepare them to adapt to and excel in the quickly changing job market. Skill development increases “transparency and understanding of how people can grow their careers, what’s expected of them, how they’re measured, and maybe even how managers and leaders view and evaluate talent,” Cerrato said. “Help people create aspirations, but manage expectations.” When employees know what skills they need and the proficiency they need to achieve for promotion, it helps them plan for the future and “reduces the feeling that they are spinning their wheels when they think they’re doing everything they should, and they’re not getting these opportunities. That creates frustration.” Putting the Skills to Good Use Once a company helps employees map and gain the skills they need, those employees should see their hard work applied, or they may bounce. According to LinkedIn’s 2022 Workplace Learning Report, employees who feel their skills are not being put to good use are ten times more likely to be looking for a new job than are those who feel their skills are being put to good use. To reinforce learning and give employees the chance to flex their newly developed muscles, Ackerman and Cerrato recommended “democratizing skills” so that employees have a say in their development, by way of tools like skill marketplaces. “Give workers the keys to their own careers,” said Ackerman And finally, cultivate enthusiasm for skill-building across the organization, not just among HR, so that company culture rewards upskilling. “It’s imperative that organizations embed skills throughout the entire talent lifecycle all the way from hire to retire,” said Ackerman. “Skills can and will become the fabric of an organization, tying the work, the culture, the value, everything, together.” Editor’s note: From Day One thanks our partner who sponsored this Thought Leadership Spotlight, Eightfold. Emily McCrary-Ruiz-Esparza is a freelance writer based in Richmond, Va. She writes about the workplace, DEI, hiring, and issues faced by women. Her work has appeared in the Washington Post, Fast Company, and Food Technology, among others.

Emily McCrary-Ruiz-Esparza December 02, 2022