The importance of understanding the skills within your organization
Written by Peter Olive, CEO and Founder, Vortex 6
The past two years has seen a significant shift in the demand for new and innovative technologies on the back of the change to business practices accelerated by the pandemic. Today, technology improvements are moving at a faster pace than we have experienced ever before.
As a result, we are now facing a significant skills shortage across the world. According to the Open Access Group, 54 percent of global IT organizations reported that talent shortage was holding them back. Seven in ten employers have a hard time employing skilled workers and 75 percent of large companies with 250+ workers reported dealing with a skill shortage. Likewise, a 2020 McKinsey Global Survey on future workforce needs, found that nearly nine in ten executives and managers say their organizations either face skill gaps already or expect gaps to develop within the next five years.
Therefore, organizations are having to fiercely compete to attract and retain skills, by improving the investment they are making in their people. It has always been the case that salary and investment in training were major factors around employee retention. Now, add to that home working, flexibility and having a great company culture, as well as meaningful Corporate Social Responsibility (CSR) initiatives.
Rotating employees is costly
Historically, some major organizations, particularly in the IT industry, have planned to rotate between 5 – 10 percent of their employees every year, replacing those who no longer have the relevant skills they need to drive their businesses forward. These employees would typically be replaced with the same number of new hires, albeit with a different skillset.
This always struck me as a costly way of doing business. It does have the potential to reenergize the organization with fresh thinking and a different approach, but it also leads to a loss of experience and expertise that can’t be always replaced quickly. The cost of recruiting and training a new employee is typically 6-9 months of their annual salary. For an employee earning £40,000 a year this could be as much as £30,000 – a significant sum.
The challenge organizations face today is that the people they need to replace their exiting staff are no longer readily available, and they tend to be significantly more expensive given the competitive job market.
Reskilling the workforce
This is forcing companies to change their way of thinking and look at reskilling people rather than replacing them. This isn’t a new idea, but it is gaining more traction following the pandemic. Again, according to the McKinsey Global Survey, of the respondents whose companies have delivered a reskilling program, 46 percent say their organizations will reskill more than one-fifth of their workforce in the years ahead. Nearly three-quarters of respondents say they expect their organizations to invest more in learning and development over the next five years.
The skills within an organization define the capabilities of the business in a way that can be quantified. Knowing what certifications, skills and experience an organization has within their business will define how they take products and services to market and how customers rate the company. This is known as an organization’s Skills Taxonomy.
Understanding the true capabilities of employees is more important now than it has ever been and those businesses that are able to do so will have a clear advantage over their competitors. However, this isn’t easy to do as there are many sources of information that make up a comprehensive view of an employee and their skills. Skills Taxonomy information can be gleaned via an employee’s CV, from the organization that holds their certifications, from HR systems and most importantly, from the employees themselves.
Gathering this information and keeping it current will place any business in a position to be able to optimize their competitiveness through their employees. It will enable them to understand where pockets of skill lie within the organization and how they might transfer that around the business. It also shows where training investments should be focused and where gaps exist.
Government pledges to help
Earlier this year the UK government published its much-anticipated Levelling Up White Paper, promising to tackle the UK’s growing digital skills shortage and close the gap. In the white paper, the government promised that, by 2030, the number of people successfully completing high-quality skills training will have increased in every region of the UK. In England, that would mean 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more completing courses in the lowest skilled areas. While this is encouraging, there is a role for organizations to play in helping to successfully plug the skills gap and this means employers thinking strategically about their needs, starting with understanding what skills you already have within the organization.
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