The skills gap is widening as technology advances at a pace that outstrips the workforce's ability to keep up. This shortage of skilled talent can hinder growth, innovation, and competitiveness.
87% of companies are already experiencing a skills gap or expect to within a few years—are you prepared to tackle this challenge?
Understanding the Skills Gap
The skills gap is a multifaceted issue, encompassing a lack of technical expertise, soft skills, and industry-specific knowledge. Factors contributing to this gap include:
Technological Advancements: Rapid technological innovation creates a demand for new skills that the current workforce may not possess. According to the World Economic Forum, half of the global workforce will likely need reskilling by 2025.
Aging Workforce: As experienced employees retire, there is a gap left in their wake that is hard to fill. Bain & Company projects that, by 2031, workers aged 55 and older will exceed a quarter of the workforce.
Educational Gaps: The education system sometimes lags behind industry needs, producing graduates without the necessary skills for today's job market. Roughly half of university graduates end up in jobs that don’t make use of their skills.
Changing Job Roles: Jobs are evolving, and roles that didn't exist a few years ago are now critical, requiring a different skill set. The World Economic Forum predicts that 85 million jobs may be displaced by a shift in the division of labor between humans and machines, while 97 million new roles may emerge that are more adapted to the new division of labor.
Strategies to Address Skills Challenges
To effectively address workforce skills challenges, HR leaders, talent acquisition professionals, and hiring managers must prioritize skills in every business decision. This new mindset demands rethinking traditional approaches to skill development and ensuring that skills are a central part of organizational strategy.
Identify and Analyze Skills Gaps
Many companies struggle to identify exact skills gaps. Addressing this issue requires an in-depth understanding of both supply (existing internal and external skills) and demand (required skills); a well-structured skills taxonomy helps categorize and evaluate required skills. Using tools like skills matrices, employee surveys, and performance reviews, companies can identify current capabilities and pinpoint gaps.
Advance Workers Through Upskilling and Professional Development
Ongoing training is crucial to avoid outdated skills. By upskilling and developing existing talent, companies not only retain valuable employees but also address skill gaps more cost-effectively than hiring for skill sets that are not easily available in the labor market. Past data from BCG indicates that 68% of workers, feeling their jobs are at risk, are willing to retrain.
Promote Talent Mobility Within the Organization
Siloed teams can stifle innovation and limit the flow of new ideas and skills. Promoting talent mobility within the organization encourages collaboration and knowledge sharing, fostering a more innovative and cohesive work environment. Talent mobility also reduces complacency by challenging employees with new roles and responsibilities, keeping them engaged and motivated.
Implement Skills-First Hiring Practices
Traditional hiring methods often overlook potential talent by placing excessive emphasis on formal qualifications. In the past two years, skills-based hiring has emerged as a more effective standard for success. This approach recognizes individuals for their unique skills and competencies rather than their academic credentials alone. By focusing on the practical application of skills, organizations can design roles that better align with the abilities and potential of their workforce.
Leverage Learning Technology
Learning technology allows employers to seamlessly integrate upskilling into their workforce development initiatives. It offers personalized, relevant, and accessible learning paths, along with microlearning capabilities.
According to the 2023 Training Industry Report, organizations, on average, allocate 16% of their budgets to learning tools and technologies; among the most utilized tools are Learning Management Systems (LMSs), rapid eLearning tools, mobile applications, application simulation tools, and Learning Content Management Systems (LCMSs).
Cultivate Soft Skills
While technical skills are essential, soft skills like communication, teamwork, and problem-solving are equally critical. The World Economic Forum predicts that creative thinking, analytical thinking, and curiosity and lifelong learning will be amongs the top in-demand skills by 2027. Incorporate soft skills training into your development programs to ensure a well-rounded workforce prepared to navigate complex interpersonal dynamics and drive collaborative success.
Foster Educational Partnerships
Bridging the skills gap requires stronger partnerships between employers and educational institutions. Engaging with universities and vocational schools allows employers to help shape curricula to meet industry needs, ensuring that students are learning relevant skills. These partnerships also offer internships, co-op programs, and apprenticeships, providing students with practical experience and creating a pipeline of skilled talent ready to enter the workforce.
Adopt a Blended Workforce Model
As specialized skills become increasingly in demand and qualified candidates harder to find, employers must explore new work arrangements and innovative talent engagement strategies. A blended workforce, combining full-time employees with contingent workers, enables companies to access a broader range of skills, adapt to changing needs, and leverage expertise without the long-term commitments of traditional hiring.
Closing the skills gap demands commitment, foresight, and a willingness to adapt. The skills gap is more than just a hurdle—it's an opportunity for organizations to innovate and redefine their workforce strategies. Those who rise to the challenge will not only enhance their competitive edge but also position themselves as leaders in their industry.
About LevelUP
LevelUP Human Capital Solutions was founded in 2012 with the mission to modernize talent acquisition. We design customized, sustainable, and DE&I-focused talent acquisition and workforce solutions for our clients that promote a true partnership. Our solutions prioritize the identification of essential skills, while our dedicated talent intelligence team continuously monitors in-demand skills and market trends to provide you with critical insights needed to stay ahead of the competition.
With a global reach, we support some of the best-known companies within technology, ad technology, fintech, wellness, financial services, management consulting, production, data and analytics, retail, biotechnology, and healthcare.
