In today’s tight labor market it can be challenging – and costly – to hire and retain talented new employees. However, many companies are recognizing that there is a ready pool of talent they don’t need to spend a dime recruiting: their own workers.
Businesses today need the ability to quickly adapt to an ever-changing work environment. To this end, it is imperative that companies employ the right mix of technology and human capital. According to a study conducted by the World Economic Forum in 2019, sixty percent of companies in the U.S. believe that gaps in knowledge and skills in their workforce prevent them from implementing the right technology, thus preventing them from adapting to a changing business technological environment.
The challenge many companies face is greater than in-house skill and knowledge gaps. Hiring a workforce to bridge the gap is not a feasible solution anymore due to skill gaps across the global labor market. There are six key areas that tend to be affected by the lack of employee of skills, and, as a consequence, impact business performance overall.
A recent McKinsey survey found that four out of five CEOs recognize that the lack of skills is a top threat to the growth of their organization. For these reasons, many executives see reskilling and upskilling their workforce as a top priority. Most believe they will need to reskill at least one-fourth of their workforce by 2023; a majority of U.S. companies are willing to increase investments in workforce training in order to improve productivity.
However, the McKinsey survey also found that only sixteen percent of U.S. companies are prepared to initiate training programs to address critical skill gaps in their employees. There are two reasons the majority of U.S. companies are not ready to develop reskilling training initiatives.
Reskilling training programs are costly, though not as expensive as firing and hiring. The WEF report found that, of the 1.37 million workers that will be displaced out of their jobs within the next ten years will cost companies $34 billion. This calculates out to $24,800 per worker in training costs. If companies can reskill one-quarter of their workforce, they will experience a positive cost-benefit balance.
Companies simply are at a loss of how to approach the reskilling question. Most executives don’t know what it will take to reskill their workforce at the kind of scale that the next decade will demand.
Some businesses are already mapping out their reskilling strategy. Companies that are experiencing a lack of talent are defining critical areas where talent is needed and creating reskilling programs with the right incentive programs.
Companies that recognize a lack of specific skills are focusing on the required skills rather than job roles. Through available data, they are mapping the existing skills of their workforce and implementing reskilling for mission-critical skill sets through personalized learning.
However, these strategies may not work for all businesses. Some companies that experience a fast-paced work environment, limited budgets and uncertainty about the required future skills often experience additional challenges.
Here are two ways even budget-challenged businesses can develop a smart performance management strategy.
A personalized staff development program focuses on each individual’s performance. For this, you will need data and technology to work together to track the progress of your workforce reskilling program. Using this model is an advantage because you don’t need to rush to obtain future skill sets if you’re continuously assessing and developing them in the present.
The right performance management tools for your business will help you improve your current workforce productivity through upskilling, but also will yield long-term benefits in the form of an in-house talent pool and a strong return on investment.
Many businesses see the lack of clarity about current and future skills as the most pressing problem. An important first step in addressing this issue is to develop a strategic workforce planning team within your company. To encourage upskilling and reskilling, close collaborations with academic institutions and certification programs should be investigated. Most businesses will need a specific focus on digital and data science skills while not forgetting about agile ways of working. This would allow multi-skilled talent to form new work teams according to the emerging needs of the company.
Here at Lanier Upshaw, we understand your employees are your most valuable asset. We are here to help you focus on all components of a cost-effective employee benefits program. Using a highly consultative approach, we are here to guide you to the best benefit solutions for your organization. Contact us here to learn more…