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In pursuit of greater agility and resilience, about 55% of organisations surveyed across the globe have already started the shift to a skills-based approach, with an additional 23% planning to do so within the next 12 months.
With technology and the Generation Z entering the workplace by storm, organisations worldwide have come to realise that traditional workforce management strategies are not keeping up.
Workday's recent Global State of Skills report revealed that more than half of business leaders (51%) surveyed are worried of a future talent shortage, driven by the fact that only 32% strongly believe that the skills within their organisation today will remain relevant and necessary for future success.
The survey reported six major findings, as follows:
- Leaders are bracing for a talent shortage.
- Skills-based strategies are taking hold.
- Productivity, growth, and agility are top of mind.
- Digital skills are key to future success.
- Leaders are working to overcome challenges.
- AI has a vital role to play in the transition.
Leaders are bracing for a talent shortage
According to the report, a key contributing factor for this anxiety is the lack of visibility, with only 54% of business leaders reporting that they have a clear view of skills within their organisation.
Other contributing factors include:
- 51% of business leaders are somewhat or very concerned about a potential skills shortage within the next three years.
- Only 32% of leaders strongly believe that the skills within their organisation today are the ones that they will need for future success.
However, even before the advent of AI, and in order to stay one step ahead of the market and competition, companies have come to realise that they are hurtling into the future without a clear vision of where they are headed, or what obstacles they may face.
Business leaders also indicated some concerns about upcoming skills shortages which are stemmed from factors such as the following:
- Pace of technological change,
- Evolving skills requirements, and
- Competition for talent.
In fact, 56% of organisations within the APAC region are concerned about skills shortage, which is more than that in comparison to EMEA (53%) And North America (40%).
The survey also found that HR leaders are the most concerned about skills shortages (59%). With HR on the front line of skills transformation, they have a likely to have a sense of the wider picture of evolving talent needed within the organisation, resulting in higher levels of concern about the potential skills shortages that could emerge within the next few years. The IT (49%), finance (48%) and operations (44%) industry fall closely behind.
In addition, industries most concerned about a skills shortage, including technology, media and retail, are also at the forefront of the current AI revolution. By comparison, industries that rely on human-centric skills, such as healthcare and education, are less concerned — especially as the core skills required to succeed are less likely to change in the near future.
Some other findings from this report are as follows:
Today's skills versus tomorrow's needs
The top most common skills groups within organisations today are:
- Operational (64%)
- Digital (60%)
- Specialist (51%)
- Leadership (42%)
- Social (37%)
- Individual (45%)
The skills categories that leaders identified as the main areas of expertise currently missing from their workforce include:
- Social skills (35%)
- Individual skills (32%)
- Digital skills (31%)
Biggest skills gaps by industry
The most pressing skills gaps vary by sector, reflecting the unique challenges and opportunities faced by a myriad of organisations. For instance, the need for digital skills is most pressing in higher education and healthcare where organisations have long struggled with the need to balance technological modernisation with budget concerns.
Skills-based strategies are taking hold
In pursuit of greater agility and resilience, 55% of businesses have started transitioning to a skills-based organisation, with an additional 23% planning to do so within the next 12 months, and a majority (81%) of business leaders believe that transitioning to a skills-based approach will increase the company's potential for economic growth.
Some of the top drivers that organisations have observed when shifting towards building a resilient, adaptable and high-performing organisation are as follows:
- 47% expect improved productivity and business growth
- 46% expect greater innovation and creativity
- 45% expect increased organisational agility and internal mobility
Furthermore, some of the expected benefits from adopting a skills-based approach closely mirror the drivers outlined above:
- 51% of organisations expect improved employee performance and productivity
- 50% expect increased profitability and growth potential
- 45% of companies expect better employee skills alignment with organisational goals
- 45% expect enhanced innovation and ability to solve complex problems
How organisations are future-proofing their workforce
With AI proving useful in supporting skills-based initiatives, organisations are actively deploying various strategies to address skills gaps and prepare for the future.
Here are some of the key strategies organisations are implementing to address skills gaps:
Accelerating the transition to a skills-based future
Transitioning to a skills-based organisation is a complex process, and
organisations face several challenges related to a lack of organisational
and technological maturity:
- 43% of leaders believe that building new skills can strain time and resources, resulting in strained existing workflows.
- 38% of employees and leaders feel hesitant to adopt new strategies, fearing disruption or uncertainty.
- 34% of leaders struggle to ensure skills strategies match business objectives.
Despite these challenges, the momentum of skills-based strategy is clear. To accelerate success, leaders are prioritising approaches combining leadership, communication, and technology.
The top programmes seen as most likely to accelerate success are as follows:
- Effective change management strategies to help organisations navigate the shift with structured plans and support (48%)
- Clear communication of benefits and goals, ensuring leaders and employees see and understand the "why" behind the transition (48%)
- Adoption of technology for skills assessment, management, and measurement to help act on workforce insights (45%)
While most organisations are embracing a skills-based approach, progress varies. Some are moving cautiously, with 8% planning to transition in over a year, while 13% have no plans to shift at all.
For those yet to embark on this journey, is it imperative to focus on creating value for a particular part of the organisation. This could mean adopting skills-based hiring to close critical gaps in a department, reskilling teams through personalised learning and development, or improving retention by aligning employee skills with growth and development opportunities across the organisation.
Some value-driven approaches that were shared in the report include:
- Focusing on business ideas,
- Solving key use cases,
- Advancing skills data, and
- Evolving talent practices.
AI as a catalyst for change
In the era of AI, skills create a common language to connect how work gets done. And AI, in turn, maps that skills language to the most important things that workers want to do — get hired, develop new skills, and advance their career.
In addition to accelerating the transition to a skills-based approach, business leaders see AI as a way to help address current gaps, with 41% strongly agreeing that AI has the potential to mitigate skills shortages.
The survey found the top three benefits of using AI as part of the transition to a skills-based approach:
Building an accurate picture of workforce capabilities through skills identification
While preparing for the growing role of AI and the changing nature of technology maintains a focus on hard skills, business leaders continue to prioritise a mix of skills that includes soft skills:
Methodology
The findings from the Global State of Skills report are based on a global study of 23,000 business leaders in director-level positions or higher from organisations employing at least 100 people across the globe.
All respondents were employed full-time across North America, EMEA and Asia Pacific and Japan.
Lead image / Workday Global State of Skills report
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