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50 statistics that explain why skills should be every CEO’s top priority

‍Skills, not jobs, must become the currency of work for organisations that want to thrive in the future, say experts

In the past couple of years, technology has reshaped the way we work irrevocably, forcing a corresponding shift in the way we look at – and use – skills at the workplace. The skills needed at work, for instance, are changing rapidly, requiring organisations and people to stay agile so that they remain relevant. All this hasn’t been easy. While some organisations and workers have embraced these changes, others have been forced to adapt, kicking and screaming.

Whatever our attitude towards it, the workplace’s “new normal” is here to stay, and it has highlighted an old problem: How do you match individuals to opportunities in the most efficient manner?

Several experts (see here, here and here) have suggested that shifting to a skills-based workplace is the best way forward. Skills are the “currency” of the new labour market, they argue, urging business leaders to embrace a skills-first approach.

“Shifting to a system where skills are the core currency of the labour market thus has the potential to tackle existing inefficiencies in job-fit between employers and employees; help prepare for a near-future of greater volatility in the labour market; and enhance opportunity, prosperity and equality for workers,” said a WEF report in 2019.

More recently, in an article titled A Skills-First Blueprint to Better Job Outcomes, LinkedIn’s Chief Economist Karen Kimbrough wrote: “As jobs evolve and demand new skills, hiring managers will need to increasingly focus less on traditional proxies like degrees, and more on finding talent whose current skills match the role. We’ve started to see this take off on LinkedIn – as 40% of hirers now use skills data when hiring on LinkedIn, up 20% compared to a year prior.”

But organisations are woefully ill-equipped to shift to a skills-based system.  

Business and HR leaders from more than 4,000 organisations surveyed for PWC’s 2021 Future of Work and Skills Survey said that one of the most significant challenges they faced in the workforce was identifying the skills workers will need in the future due to changing technology. They also indicated they were uncertain about the most effective way to deal with it. 

“It’s imperative that businesses make investments in systems that inventory and maintain an inventory of current skills and that support visualisation of gaps in future skills,” the PWC report recommended.

Another report, Building the future-ready workforce, by Deloitte, said:  “Only 17% of organisations believe they’re able to anticipate the skills they’ll require to any great extent, and only 16% expect to make significant investments in learning over the next three years. Combined, this lack of information and investment threatens to thwart organisations’ efforts to build the workforces they’ll need in both the short and long term.”

As business leaders across the globe consider whether they need to make a shift to a skills-based workplace, we have collected a few skills statistics to help you make an informed decision.

The list has links to the actual sources wherever available. Please go to the “Sources” section at the very end of the article to view all the sources.

Why skills should be every CEO's top priority

The changing nature of the workforce

  1. The world will need to reskill more than 1 billion people by 2030 because of technology-led changes in the workplace. (WEF, 2020A)
  2. By 2025, Covid-19-related economic uncertainty and increasing automation and digitization will cause 85 million jobs to be displaced across the world and 97 million new ones to be created. (WEF, 2020)
  3. For workers who will remain in their roles till 2025, the share of core skills that will change is 40%, and 50% of all employees will need reskilling. (WEF, 2020)
  4. 58% of the workforce needs new skills to get their jobs done. (Gartner, 2021)
  5. The skill sets for jobs have changed by around 25% since 2015. By 2027, this number is expected to double. (LinkedIn, 2022A)

Organisations are unprepared to tackle challenges of skills shortages

  1. 54% of companies globally are struggling to find skilled workers – the highest in a decade. In the US, this figure is 69%. (Manpower Group, 2020)
  2. 74% of CEOs were concerned about the availability of key skills (vs 79% in the previous year’s survey). Of those, 32% were “extremely concerned”.  (PWC, 2020) ‍
  3. 87% of executives said they were experiencing skill gaps in the workforce or expected them within a few years. But less than half of the respondents were clear about how they planned to address the problem. (McKinsey, 2020)
  4. Only one-third of respondents say their companies are prepared to cope with the workforce disruptions resulting from technology and market trends. (McKinsey, 2020)
  5. Only 28% of respondents say their organisations make effective decisions on how to close skill gaps. (McKinsey, 2020)
  6. 46% respondents say the skills gap is wider at their organisation (up 4 percentage points) since 2021. (LinkedIn 2022)
  7. 90% of respondents said that the accelerating need for organisations to change at scale and speed was important to their success over the next 10 years, yet only 55% felt that their organisations were ready to change at the scale and speed required. (Deloitte, 2020)
  8. 83% of respondents reported that they had trouble recruiting suitable candidates in the preceding 12 months, with 75% of those reporting recruitment difficulties saying that they believed there was a skills shortage among their applicants. (SHRM, 2019)‍
  9. 49% respondents say executives are concerned that employees do not have the right skills to execute business strategy (up 9 percentage points from 2021). (LinkedIn, 2022)

Benefits of a skills-based approach

  1. Using a skills-based approach predicts job success for entry-level employees five times better than education requirements. (Hunter & Hunter, 1984)
  2. In the 12 months ending June 2021, LinkedIn has seen a 21% increase in job postings advertising skills and responsibilities instead of qualifications and requirements in the US, and the number of positions that don’t require a degree increased by nearly 40% in 2020 compared to 2019. (HBR, 2021)
  3. Companies that excel at internal mobility [because they follow a skills-based approach] retain employees for an average of 5.4 years, nearly twice as long as companies that struggle with it, where the average retention span is 2.9 years. (LinkedIn, 2022).
  4. Skills-based hiring is believed to reduce turnover. Employees without a traditional four-year degree stay 34% longer than those with such a degree. (LinkedIn, 2021)

Employees are aware the workplace has changed and want to learn new skills

  1. 87% of workers surveyed said that they believe they will need to develop new skills throughout their working lives to keep up with the changes in the workplace. (Pew, 2016)
  2. 74% of employees surveyed are ready to learn new skills or re-train to remain employable in the future. (PWC, 2017)
  3. 90% of workers say they need to update their skills at least yearly. (Deloitte)
  4. 41% of respondents recognise that they have the skills they need to thrive professionally for a maximum of four years. (Deloitte, Research Report, 2020)
  5. Employees who feel that their skills are not being put to good use in their current job are 10 times more likely to be looking for a new job than those who feel that their skills are being put to good use. (LinkedIn, 2022)
  6. Only 47% of workers surveyed think that their company is making a significant investment in their professional development. Less than 40% of executives are happy with their organisation’s investment in their development. (Deloitte Research Report, 2020)
  7. Only 34% of surveyed workers are satisfied with the level of skills development investment received from their organisation. (Deloitte Research Report, 2020)

In the new world, essential human skills/soft skills/power skills rule

  1. Demand for transportable skills –­ those that are applicable across departments and industries – outpaces that for all other skills. The transportable skills of communication, problem solving, collaboration and critical and creative thinking are the four most-required skills in the entire labour market. A fifth transportable skill – ethical reasoning and mindset – is in greater demand than 99.8% of all skills tracked. (PLTW and Burning Glass, 2018)
  2. 85% of all industries across the economic spectrum seek out at least one transportable skill. (PLTW and Burning Glass, 2018)
  3. 74% of occupations at low risk of automation request transportable skills in a majority of openings, whereas jobs with a high risk of automation request transportable skills in just 48% of occupations. (PLTW and Burning Glass, 2018)
  4. 89% of those surveyed said bad hires typically have poor soft skills. (LinkedIn, 2019)
  5. As automation changes the job market, 92% of talent professionals and hiring managers agree that candidates with strong soft skills are increasingly important. (LinkedIn, 2019)

Organisations are aware of the importance of reskilling, but…

  1. 73% of respondents feel organisations are primarily responsible for workforce development. (Deloitte, 2020)
  2. 74% of organisations say reskilling their workforce is important or very important to their success over the next 12-18 months, while just over half (53%) say that between half and all their workforce will need to change their skills and capabilities in the next three years. (Deloitte, 2020)
  3. 79% of L&D professionals agree that it is less expensive to reskill a current employee than to hire a new one. (LinkedIn, 2020)
  4. Several global companies have invested in reskilling and upskilling. Amazon announced in 2020 that it is investing more than $700 million to provide upskilling training to its employees. In 2019, JPMorgan Chase announced a $350 million, five-year initiative to upskill its workforce.

Why organisations must invest in skills analytics

  1. Identifying the skills workers will need in the future due to changing technology was cited as one of the most significant challenges business and HR leaders face in the workforce. Only 26% of respondents strongly agreed they can identify the skills the organisation will need in the future due to technological change. PWC, 2021‍
  2. Fewer than half of respondents say their organisations have a clear sense of their current skills, and just 41% report that organisations have a clear understanding of the roles that are likely to be disrupted. (McKinsey, 2020)
  3. Only 15% HR and business executives surveyed indicate their organisations are highly effective at analysing the gap between current workforce capabilities and future business requirements. (i4CP, 2021)
  4. 27% believe LinkedIn knows more about their workforces than their organisations do. (i4CP, 2021)
  5. 39% respondents say it's easier for their employees to find jobs externally than internally. (i4CP, 2021)
  6. Companies that excel at internal mobility retain employees for an average of 5.4 years, nearly twice as long as companies that struggle with it, where the average retention span is 2.9 years. (LinkedIn, 2022)
  7. High-performance organisations – those in the study that have better revenue growth, profit, market share, and customer satisfaction than their competition – are 2x more likely than their low-performing counterparts (47% vs. 21%) to indicate that their workforces are ready for the future. (i4CP, 2021)
  8. 53% agreed that insufficient data about the current skills and capabilities of the workforce was one of the primary barriers to building workforce readiness in their organisation. (i4CP, 2021)
  9. 47% said a lack of clarity about the skills and capabilities that will be most important going forward was another of the primary barriers to building workforce readiness in their organisation. (i4CP, 2021)
  10. Only 18% of survey participants said they currently have an employee skills database or inventory. Of them, 8% said their organisations have such a database only for critical roles, leaving only 10% that have a database with profiles for all employees. (i4CP, 2021)
  11. 53% of respondents said that the inability to identify needed skills was the No. 1 impediment to workforce transformation. (Gartner, 2020)
  12. Only 28% surveyed strongly agreed they could rapidly adjust the workforce in response to changes in the market. (PWC, 2021)
  13. 31% reported that they have no way to identify market leading skills. (Gartner, 2020)
  14. Only 23% of respondents strongly agreed they use workforce analytics to monitor and predict skills gaps. The same percentage strongly agreed that they analyse business data to determine near-term skills needed in the organisation. (PWC, 2021)
  15. Only 17% of organisations believe they’re able to anticipate the skills they’ll require to any great extent, and only 16% expect to make significant investments in learning over the next three years. (Deloitte)
  16. 30% of companies say their employees have needed skills, but few understand workforce capabilities today. (i4cp, 2021)

SOURCES

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