Right now, business needs skills badly. A shortage of skilled professionals in broad and emerging tech areas like cloud computing, 5G and IoT, data analytics and programming is slowing business transformation and affecting competitiveness.
HR leaders and business decision-makers are in a bind. Traditional avenues to acquire skills - particularly from international talent on work visas - are less available than they were in a pre-COVID world.
But this critical juncture also provides an opportunity to reassess longstanding practices and optimise the skills and training policies of your organisation to develop, attract, retain and enhance the skills of your workforce for a changing world.
"Traditional avenues to acquire skills, particularly from international talent on work visas, are less available than they were in a pre-COVID world."
An economy-wide demand for new skills
Research from the World Economic Forum estimates that more than half of the global workforce - 54 percent - will require significant upskilling by next year. As many traditional roles are automated, the skills required in the very near future for employees will be very different to those they acquired at university or in the workforce a decade ago, or even five years ago.
This is why major corporations are investing billions in upskilling their existing workforce. PwC has committed USD$3 billion by 2023 towards upskilling their entire global workforce of 250,000 people. They join Accenture, Amazon and Verizon as global enterprise companies investing in company-wide training programs to cultivate the skills mix needed to succeed in the fourth industrial revolution.
It’s important to note that many of these initiatives were announced before the COVID-19 pandemic. While the events of 2020 certainly accelerated and accentuated the need for digital skills in business, there was an existing trend towards upskilling internally because of an economy-wide skills shift that predated the pandemic.
Your people want training
In addition to building the skills an organisation needs to flourish in a changing world, training also contributes to employee satisfaction. Research conducted by Deloitte in partnership with RMIT Online has shown that employees prefer a “learning culture” over a “fun culture” at work. A majority of employees would prefer job-relevant training to enhance their skills over other perks like free meals, or even over a $2500 annual pay rise.
The inverse case is also true - employees are more likely to leave workplaces that do not provide them with training. A decision to prioritise the acquisition of skills through hiring alone rather than training the existing workforce can be counterproductive, prompting current staff to leave and putting your organisation further behind in the skills race.
Hiring has hidden costs
In a talent-constrained environment there is a good chance that your people are already stretched and it can be attractive to hire externally in order to add to your capabilities, avoiding the need to interrupt internal workflows for training.
This approach overlooks some difficult truths about hiring. A person may have the right skills on paper, but not present the right cultural fit in the organisation. The cost of replacing a hire who doesn’t work out has been estimated by Deloitte as being equivalent to 30 months salary for the position they are hired for.
You might think this is relatively unlikely, but separate research from the Wharton School and the University of Pennsylvania found that new hires are 61 percent more likely to be dismissed during a six-month period than long-term staff. They also found a wage premium associated with new starters, who are typically paid 18 percent more than existing staff in equivalent positions, the same research found.
"Wharton School and the University of Pennsylvania found that new hires are 61 percent more likely to be dismissed during a six-month period than long-term staff."
Getting off the hiring treadmill
Employees who feel trapped in an environment that does not invest in their skills are likely to leave. That is why major global corporations are doubling down on skills and training for their entire workforces.
Focusing too much energy on hiring the skills you need and too little on developing them in-house can lead to constant churn. While they may be setting out to augment their existing skills mix, leaders find themselves trying to replace those who are leaving to seek opportunities with a greater scope for development.
Train for change, hire for growth
When undertaking skills forecasting be mindful of the fact that your existing employees are already embedded in your company’s workflow, processes and culture. Hires - even those who look spectacular on paper - are an unknown quantity in many ways.
Training priority should be given to high-performing staff who crave development and progression. It should also, of course, be directed towards areas where your organisation has near-term skills gaps. Telstra is one business who have partnered with RMIT Online to develop a micro-credential for their staff in their key business area of software defined networking.
"Training priority should be given to high-performing staff who crave development and progression. It should also, of course, be directed towards areas where your organisation has near-term skills gaps"
Delivering training in this way will contribute to the fundamentals for an organisation’s future growth, which is where hiring necessarily comes into play. But neglecting the training needs of your workforce can undermine the growth pathway for the organisation, alienate employees and leave you running on the spot when it comes to both hiring and growth.
Want more information on how to build, not buy, talent for the future? Visit RMIT Online’s business development team here.