May 25, 2017 – It’s been nearly a decade since the great recession, and with unemployment rates less than half of what they were in 2009 and 2010, everyone can breathe a little easier. But this doesn’t mean that the future of the American workforce is in the clear. As one challenge subsides, another is surfacing.
Companies of all shapes and sizes agree on a central issue: The skills gap is real. Unemployment may be the lowest it’s been in a decade, but when combined with the growing skills gap, it can cause hiring headaches. According to the ‘Definitive Guide to Building a Better Workforce’ by Adecco, a staggering 80 percent of companies acknowledged that workforce skills are seriously lacking.
How Big Is the Skills Gap?
It doesn’t take a statistician to reveal the key message today’s corporate leaders are communicating: There is an obvious mismatch between the supply and demand of both soft and hard skills within the American workforce. In fact, McKinsey & Company predicts that by 2020 the global lack of skilled workers will reach 85 million. Making matters more difficult, a wide variety of factors are driving this shift in demand for a more highly skilled and well-rounded workforce.
New and emerging technologies have revolutionized the workforce, said the Adecco report. From the introduction of electricity to the boom of social media and cloud computing, technology has long demanded that the workforce reinvent itself. As ways of doing business and interacting with audiences and customers are shifting, employers are looking for a highly skilled and adaptable workforce that can keep pace with technological advancement, said the report.
Skills Gap Costing Employers Nearly a Million Dollars Annually
More than two thirds of employers who said they were increasing headcount in Q1 now have open positions for which they cannot find qualified candidates. Here’s the problem, and four solutions.
This speaks to the need for hard skills, but technological advancement also heavily relies on solid soft skills. New technologies cannot be created, tested and launched, for example, without effective project management, marketing and sales engines supporting their growth. Further, as social media grows more prevalent, customers are turning to the profiles of their favorite — and least favorite — products to provide real-time feedback and inquiries.
This calls for effective communicators to step in as intermediaries to ensure the brand experience is consistent across all channels. But new technologies do not always translate into fewer workers. In contrast, they often create demand for a more sophisticated resource with the right mix of both technical / computing and communication and collaboration skills.
Leaner Payrolls Mean Broader Job Descriptions
As companies hemorrhaged millions of jobs in 2008 and 2009, individual workloads failed to decrease along with headcount, according to the report. To manage this effectively, many organizations asked more of their staff, looking for employees to take on additional responsibilities they may have been uncomfortable with and had no experience with.
Acting out of caution, some employers have not rehired to the same level as before. Today, they want new hires that can step out of their silo to deliver results across a broader job scope, said Adecco. As a result, employers tend to hold out for the “perfect hire” with a more holistic set of skills than may have been required 10 years ago. By way of example, the report said that an accountant with strong math and analytical skills is helpful, but an accountant who can also effectively manage challenging client relationships and continuously evolve with new technologies and processes is far more valuable.
What Candidates Want. Shifting Priorities for Job Seekers
Organizations need talented employees to drive strategy and achieve goals, but with an improving economy finding and recruiting the right people is becoming more difficult. It’s clear that the changing global economy has created a demand for new jobs.
The global workforce increases competition, said Adecco. As higher education and economic development continue to spread to emerging markets, talented workers in places like China, India and Brazil are competing directly with Americans for jobs. The report said the continued rise of a highly educated global talent base combined with improved communication capabilities via email, video and web-based conferencing is making it easier for employers to hire anywhere in the world based solely on finding the skills to get the job done most effectively.
This can create an advantage for employers, but it will continue to challenge the American workforce. According to the 2017 Global Talent Competitiveness Index, the U.S. is the fourth most competitive country in the world in which to do business. This may be a sign of the power of the American workforce, but many countries are determined to “leapfrog” the U.S. and land atop the list. As economic equality spreads and more countries invest in domestic talent, the skills gap within the U.S. workforce will only become more evident and continue to hinder job growth, said Adecco.
Narrowing the Gap
A company’s workforce is clearly its most valuable asset. The largest expense on any employer’s balance sheet is headcount, and investing in employees and their skills are absolutely critical to an organization’s success. Smart employers are acting now to ensure they have the most highly skilled and productive workforce to ensure their organization is prepared for whatever business challenges are coming.
According to the ‘Definitive Guide’ report, nearly half (48 percent) of best-in-class companies are already increasing training in critical skill areas to help combat the skills gap. Employees likely want to fill any holes in their skill set, but cost can be a prohibitive factor. These programs are certainly not cheap. But for companies, the initial investment in alternative training programs may pay lasting dividends, especially where global competition is concerned, said Adecco.
Employees Will be Easy to Lose and Hard to Hire in 2017
It’s become clear over the last several years that the job market has been not only recovering, but transitioning. Consequently, the latest changes wrought have given way to an entirely new type of candidate profile, report recruiters from the field.
Much of the skills gap starts with the hiring process. Hiring managers frequently seek replacements or new hires to fill a specific and immediate gap in their workforce, the report said. A new hire might be able to adequately perform in the current role, but the individual may not be adaptable enough or have the variety of skills necessary to succeed and add value in the long term.
Recruiting for future demand is challenging and requires a more strategic approach to the hiring process. This extra step, however, can save attrition and recruitment costs in the long run while building a more effective workforce.
Consider a strategic workforce planning assessment to evaluate the future needs of your business. According to Adecco research, only a slight majority of organizations have conducted such an assessment in the past two years, with more than a third having never completed one at all.
Today’s temporary workers are extremely versatile and have diverse skill-sets, from administrative and clerical support to highly specialized talent in fields like engineering, technology and finance. It’s not always necessary to hire a permanent employee for specialized skills that may be needed for a finite or undetermined period of time.
Looking to temporary workers to match an organization’s ever changing supply-and-demand challenge can benefit both workers and employers seeking more flexibility. Fifty nine percent of organizations, in fact, are now using contingent labor year-round to supplement their existing workforce, according to the Adecco report. The best companies are 44 percent more likely to increase the size of their temporary workforce in the next 12 to 24 months. Contingent labor is no longer an exclusively seasonal phenomenon; it’s here to stay.
What Do America’s Best Companies Think About the Skills Gap?
When We Close the Gap, the Future Is Wide Open
Governments, businesses and employees can learn a lot from what the U.S. economy and workforce endured during the great recession. What is certain is that American workers will show resilience in the face of a daunting labor market, said Adecco. By applying that same resilience, innovation and reinvention to the current skills gap challenge, the report concluded, the American workforce will undoubtedly evolve to meet the needs of the new global economy.
A significant part of the challenge will be balancing the development of soft and hard skills; both will be required to effectively navigate and tackle new industries, technologies and global competitors. And while these are the same dynamics responsible for widening the skills gap, the report said, they will also help connect the American workforce and economy to a greater success and prosperity.
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Managing Editor – Hunt Scanlon Media