How Organizations Are Tackling the Skills Gap

The skills gap problem plagues every industry across the globe. Partly due to the rapid digital transformation wave, many organizations are still struggling to find the right people with the right skills for specific jobs.  

A global survey by McKinsey found that nearly 87% of organizations say they are facing a skills gap while the rest expect to experience it within the next five years. Additionally, McKinsey predicts that roughly 375 million workers around the world will have to switch jobs in the next 10 years to meet shifting organizational demands.

   

Which industries have the biggest skills gap? 

 

The biggest skills gap that businesses are struggling to close is data analytics, IT, executive management, and HR and talent management. The need for these talents is ever-growing but it seems unlikely that the demands will be met in the near future.  

In fact, IBM found that in Europe, the AI skills gap alone is growing with about 23% of tech recruiters having trouble finding the right candidates for a career in AI. This is a problem that will only become worse as AI moves into the mainstream.  

Additionally, the 2022 Global Talent Shortage report noted that the top five in-demand roles are IT & Data, Sales & Marketing, Operations & Logistics, Manufacturing & Production, and Customer Facing & Front Office. This shortage is seen almost evenly across industries from education to banking & finance, retail, F&B, and construction.  

The problem is well documented. However, bridging the gap is proving to be a challenge. Though organizations say that closing the skills gap is a priority for them, only a few are prepared to actively respond to the problem. McKinsey noted that only 28% of respondents say that their organizations are making effective decisions on how to close the gap, while only 41% said that they have a clear understanding of the roles in their company that will likely be disrupted.  

For those organizations that want to tackle this issue head-on, what can they do? 

 

Skills training & development 

 

One of the key approaches to addressing the talent gap is by reskilling and upskilling the current workforce. As new technology makes its way into industries, workers need the right support and training so that they can continue to contribute to the organization’s success.  

For example, German giant Henkel offers targeted learning programs to its over 50,000 employees around the world. It’s Digital Upskilling Program started out with just IT and Finance learning journeys. It has now expanded to include learning programs tailored to marketing, sales, purchasing, and corporate communications, with more in the pipeline.  

Henkel’s training program functions in tandem with the organizations Digital Talent Experience and Digital Talent Sourcing programs which include talent management and sourcing functions. The company is able to monitor and manage the talent lifecycle while redirecting the employees to roles that best fit their skills profile and interests.  

Another example is the Urban Renewal Authority (URA) in Hong Kong which consciously cultivated a culture of learning and development by introducing a learning platform that allows experts to share their experiences and knowledge in interactive e-learning programs for their staff to access at any time. URA have also implemented mandatory learning programs which are constantly reviewed to ensure that employees are being equipped with the right skills at the right time.  

Beyond that, they are also using people analytics to build a skill-based pool and understand where they are lacking in terms of talent placement and which employees are best suited for those roles. With the use of an HR system and people analytics program, the URA can fill in their skills gap more efficiently.  

 

Apprenticeship programs 

 

Besides investing in developing existing talent, organizations are also introducing and expanding apprenticeship programs. The benefit of an apprenticeship program is that talent can be nurtured from scratch and with tailored development based on the organization’s needs.  

Siemens in the US noted that “the skills gap cannot be correct by a strong economy; it can only be correct by a strong community” which they are building via their apprenticeship program.  

Through the Siemens Foundation’s STEM Middle-Skill Initiative, the organization works with various partners in the US to build a nationwide support system to help them scale their apprenticeship programs.  

Similarly, DHL Supply Chain in the UK and Ireland have expanded the types of apprenticeships that it offers to develop the next generation of talent for the logistics industry. They also have a leadership apprentice program which aims to develop future logistics leaders. 

 

Partnering with educational institutions 

 

Externally, organizations are also playing a more active role in cultivating talent outside of the organization via educational programs. For example, Siemens USA has granted billions of dollars to various educational institutions such as the Rutgers Engineering School to help equip students with the tools and skills of the future they need before entering the workforce.  

Global finance firm JPMorgan Chase & Co is doing the same by investing over USD 350 million in its New Skills at Work initiative in an effort to address the global skills gap and prepare future talent with the right skills. The company has worked with community colleges to design a curriculum that is aligned with in-demand skills for jobs of the future.  

Similarly, DHL Supply Chain also engaged with schools, colleges, and universities to help develop employability skills and support career education within the logistics industry. The company’s VP of Talent Acquisition and Learning & Development noted that the business hopes to inspire interest in careers within the industry through its partnerships with educational institutions.

 

Tapping into the gig economy 

 

While digital transformation is part of the reason behind the skills gap, it can also be the solution – at least in the short term. Increased global connectivity has opened a whole new world of talent for organizations and boosted the gig economy to new heights. According to Eurostat, there are roughly 27.6 million freelancers in the EU alone as of 2020.  

When there is a talent shortage that cannot be filled by reskilling or upskilling, organizations are now able to cast a wider net and look beyond their geographical borders for the right skills. While they may not be long-term hires, freelancers could be the solution for some jobs that require highly specialized skills.  

An Australian software company did just when they realized they didn’t have the right developers in-house and decided to hire freelancers instead. This enabled them to not only improve their products but scale it as well in a short period. The freelancers had the exact skills that the company needed for that time.  

 

Bridging the skills gaps requires proactive solutions 

 

As industries continues to transform, the type of skills required from the workforce will evolve as well. Organizations and business leaders are at the forefront of trying to figure out the best ways to bridge the skills gap and secure the future of their companies.