As businesses undergo digital transformation, growing pains are almost inevitable. Rapid adoption of emerging technologies, automating traditional human processes, building a new strategy around data science and analytics – all of this gets complicated, and expensive, at the enterprise level. Full-scale digital upheaval isn’t easy. In fact, Forbes estimates that 70 per cent of transformation initiatives will fail, leaving a $900 billion hole in the collective budget.
There are dozens of reasons for this failure, but experts believe many of them boil down (ironically) to people. Having the right team in place, with the right skillset to avoid unnecessary hiccoughs and capitalise on emerging market opportunities.
“Many Australian businesses today still have a lot to accomplish in moving their business to harness the power and opportunities of Industry 4.0,” says Martyn Toney, Managing Director at Accenture. “Current jobs are evolving, and new ones require more flexible training systems. Businesses need to create a workforce with the right skills, as well as connecting devices, data and experiences to unlock and deliver more value.”
So how do you go about building that 4.0 workforce? And what specific skills should you be looking for?
“Many Australian businesses today still have a lot to accomplish in moving their business to harness the power and opportunities of Industry 4.0”
Build vs Buy
The first question you should ask is: should we hire externally, or develop our existing workforce? If you have an acute skills shortage, the obvious answer is to bring on fresh talent, but the obvious answer isn’t always the right one. Studies have found that the cost of replacing a bad hiring decision within six months is around 2.5 times the worker’s annual salary. Not only that, but research indicates new hires are more expensive (they tend to earn 18% more than equivalent internal promotions), 61% more likely to get fired, and take nearly two years to reach the performance standard of current employees. So even if you make a good hiring decision, which is no sure thing, it’s generally better to promote from within.
The benefits of training
So the big question: does internal or external employee training actually work? Can you upskill your existing workforce to meet new technological demand? Most businesses leaders believe you can. RMIT Online surveyed more than 600 professional industry companies and found that 45% of leaders are delivering comprehensive internal skills training, and 44% are using external providers (like Udacity and RMIT Online). Almost all the businesses surveyed (around 95%) said that they, as an employer, received some benefit from staff training. Putting an exact dollar figure on that benefit isn’t easy, but studies have shown that for each hour of informal learning, businesses get a productivity increase of around 1%.
Which skills are missing?
When it comes to emerging technologies, there’s a well-documented skills gap in Australia. Companies are short of data scientists, product managers and even cyber security experts. Every year, according to Deloitte, Australian businesses spend $7 billion recruiting new workers to fill these gaps (and around $4 billion on training existing employees). It’s helpful to think of this gap in terms of hard skills (learned abilities that can be easily measured) and soft skills (abilities that are more human, like leadership and creativity). Which hard skills your business needs will depend on your workforce and your overall digital strategy, but most leaders surveyed by RMIT Online listed data analysis, coding, programming and digital literacy as the most important.
Soft is better
You might think ‘hard skills’, like data analysis and Python coding, would be more valuable than amorphous qualities, like empathy or teamwork, but business leaders tend to disagree. LinkedIn CEO Jeff Weiner believes ‘soft skills’ are the biggest shortage currently facing global employment. “Somewhat surprisingly,” Weiner told CNBC, “interpersonal skills is where we’re seeing the biggest imbalance. Communication is the number one skills gap.” LinkedIn has conducted a ‘soft skills’ survey every year for the last few years, and consistent trends emerge time and again. Of all the employee attributes valued by business, creativity, persuasion, emotional intelligence and adaptability top the list. As technology changes, the half-life of hard skills becomes smaller and smaller (experts now put it around five years). Qualities like creativity, meanwhile, increase in value.
Leading the way
For education to keep up with the break-neck speed of Industry 4.0, it can not work in a silo. Partnering with industry has never been more critical to make sure the skills that are being taught, are relevant for the workplace. The partnership between RMIT Online and Telstra is a great example of this, through a co-designed six week micro-credential for existing Telstra employees called Software Defined Networking. The course is part of a broader $25 million investment by Telstra into upskilling their workforce. Telstra’s HR Director, Rebecca Holden, says companies need to shift their mindset away from traditional hiring practices, towards something more evergreen, sustainable and creative. “As technology evolves so too does the need for lifelong learning. Gone are the days where we can ‘set-and-forget’ once we have a degree or diploma. This micro-credential will play an important part in making sure our workforce is ready for the future.”
Want to find out more about how RMIT Online works with business to upskill teams? Get in touch here.