The Skills Gap: What It Is and Why It Keeps CEOs Up at Night
Are the robots coming for Phil in accounting? A recent New York Times headline proclaimed just that. Here’s why: Automation and other technology are already displacing workers. And we’re not talking about robots doing manual tasks in factories or driving cars. Many highly skilled workers are finding their skills are becoming obsolete.
What is the skills gap exactly?
Humans unable to keep up with the pace of technology is not dystopian fiction — it’s the challenge business leaders worldwide are facing today. The skills gap refers to the distance between the skills your employees need and the skills they currently have. And it’s the harsh reality across many roles and industries.
Many leaders are aware of this — 79% of CEOs say they’re worried about employees’ lack of skills. But here’s why the skills gap should be every CEO’s top priority.
6 reasons the skills gap worries CEOs
You may already understand the importance of the skills gap, but your colleagues and peers may need more education on the topic. Below you’ll find a list of statistics to help you demonstrate the importance of addressing the skills gap today.
1. The technical skills gap is already a major problem
According to European Commission figures, around 37% of workers in Europe don’t even have basic digital skills. Not to mention the more advanced and specialized skills that companies need to adopt digital technologies successfully.
Global respondents tell a similar story. The technology skills shortage is greater than it’s been since 2008, according to a recent CIO survey conducted by KPMG.
2. The pace of change is accelerating
The skills gap isn’t just growing — it’s speeding up. Salesforce notes that advances in artificial intelligence (AI), robotics, and other emerging technologies are happening in shorter cycles.
Just a few years ago, in 2018, 65% of business leaders expected employees to pick up new skills on the job. By 2020, that number had jumped to 94%. And Gartner finds the total number of skills needed for a job is increasing 10% year over year.
3. We’re now facing a “double disruption”
Today’s workers face a “double disruption.” According to the World Economic Forum, this includes two major factors: the economic disruption from the pandemic and the adoption of technologies that transform the workplace. New tasks, jobs, and skills will be needed by 2025.
Workers are feeling the pressure, too. Thirty-eight percent of employees say they feel less confident in their skills now than they did before the pandemic. And 46% predict their current skills will become obsolete within the next three to five years.
4. It’s much more expensive to “buy” than to “build” talent
One of the biggest lessons of recent years? You simply can’t hire your way out of a skills gap. It’s too expensive and time-consuming. Gallup estimates that the cost of replacing an individual employee can range from one-half to two times the employee’s annual salary. When it comes to L&D, companies spend an average of $1,286 per learner.
This cost disparity is why companies like Booz Allen Hamilton commit massive resources to internal training programs. “We couldn’t just rely on hiring data scientists externally, says Booz Allen Hamilton Senior Learning Associate Jim Hemgen. “We had to also train people with data science skills internally,”
5. Leaving roles unfilled is also costing companies
There are other costs associated with the skills gap. When companies can’t find the right people to hire, their business suffers. Nearly 60% of US employers have job openings that stay vacant for 12 weeks or longer. And the average cost to companies of extended job vacancies is more than $800,000 annually.
6. The return on investing in your employees is massive
When you invest in upskilling and reskilling, you’re investing in the future of your company. Of course, you’re saving on future recruiting and onboarding costs for new hires, but it goes beyond that.
Today’s employees aren’t just looking to collect a paycheck. They expect growth and development in their role. IBM finds that 36% of employees say continuous learning opportunities are essential to their engagement in the workplace.
Deloitte research shows there is a new social contract between employees and employers. Employees will commit to being more engaged if their employers agree to invest in their skills and development.
Cultivate a culture of learning to close the skills gap
The ability to learn and develop new skills is the key to success for employers and employees alike. Jobs and roles are changing rapidly. Trying to hire your way out of the problem is slow and expensive. And employees themselves are more engaged when they’re learning on the job.
A culture of learning at work is the most critical step to overcoming the widening skills gap. It involves creating time and space for all employees to learn and tapping into the benefits of mentorship and social learning. Evaluate your organization’s learning culture and build the case for learning with the Workplace Learning Culture Evaluation.