According to a recent survey by McKinsey, 87 percent of companies worldwide are aware that they either already have a skills gap or will experience one within the next few years. Disruptive technologies like AI and automation have certainly played a big role in reshaping the way the American workforce looks today. Additionally, the COVID-19 pandemic has caused the economy to shift more dramatically as employers adopted technology at an even faster rate than before. As the nature of work has changed, so too have the skills employers most value and rely on.
As businesses look to bounce back after the COVID-19 pandemic and plan for future growth, it’s clear that new skillsets and capabilities will be needed. Yet many states are currently facing labor shortages—or can’t find workers with the right skills to fill open positions. In the McKinsey survey, 53% of executives said that reskilling existing employees is the best way to close the skills gaps. Respondents from high-growth companies participating in Asure’s recent HR Trends Survey of small businesses agree. More than half of growing companies said they plan to cross-train existing employees to meet new needs or skills gaps in their workforce.
According to our recent HR Trends Survey Report, higher growth companies are doing more to address workforce skills gaps than businesses that don’t anticipate growth. Here are the most popular strategies they are using to build competencies:
Cross-train existing employees (51% of growing companies vs 39% overall)
Hire new employees (43% of growing companies vs 31% overall)
Upskill existing employees for new challenges (43% of growing companies vs 31% overall)
Utilize contingent labor including gig workers, freelancers, and contractors (19% of companies overall)
In this article, we’ll explore the current workforce skills gap situation including where gaps exist now, where they are predicted to emerge, and what businesses can do to meet workforce skill gaps and build competencies needed for future growth and long-term success.
Overall workforce shortfall and growing skills gap
A recent report found that employers seeking architectural, engineering, computer, and technology workers will face significant recruiting challenges within the next few years while there will be a surplus of candidates for office support and administrative jobs. For example, employer demand for candidates in computers and mathematics will soar from 571,000 now to 6.1 million by 2030. The overall workforce shortfall is predicted to be between 600,000 and 12.5 million workers by 2030.
In the 2021 Talent Trends Survey, 40% of businesses indicated that talent scarcity had negatively impacted their organization already. A survey conducted by CompTIA predicts a wave of escalating skills gaps to continue in the coming years with IT and computer-related occupations leading the pack along with a growing demand for soft skills like communication, creativity, leadership, adaptability, and flexibility.
What’s more important: skills or credentials?
According to a new study by the U.S. Chamber of Commerce, hiring managers are prioritizing skills over credentials even though it’s increasingly challenging to find workers who have them. While hiring managers seek these technical skill competencies and core human abilities that can’t be replicated by technology, 78% acknowledged that they will need to reassess the way they hire. Despite the importance of skills, many businesses still rely on credentials when evaluating job candidates which isn’t always a good predictor for success.
To overcome the skills gap, many businesses are considering candidates from non-traditional backgrounds to find workers who are resilient, flexible, and able to adapt. Candidates who possess these soft skills can be trained to learn the technical skills needed for company growth. “If you can stretch your budgets to manage your expenses and you have been working two part-time jobs, you have a motivation and an energy and an instinct that is well-suited to some of the urgent, and sometimes crisis, problem-solving required within tech departments,” one CEO told CIO Dive earlier this year.
Practical ways to address the skills gap
Who is responsible for ensuring workers have the skills needed to drive business growth now and into the future? Like with many things in life, there will need to be some teamwork and commitment from multiple parties to ensure America is able to successfully close the skills gap:
Government should play a role in predicting how the workforce will change and develop appropriate training programs to upskill displaced workers.
Universities and higher education should play a bigger role in getting students workforce ready.
Businesses need to make bigger investments to ensure employees have and develop desired skills. By anticipating future needs, employers can build a culture of lifelong learning within their organization.
Workers. Any training program needs buy-in from workers who desire to learn new skills and improve existing talents.
Fortunately, there are numerous strategies small businesses can use to address the skills gap. Cross-training is a great way to improve skill gap areas because it leaves you with more highly skilled talent throughout your business. Strategic hiring and partnerships with recruiters and schools can help position businesses for hiring success; for example, offer internships or apprenticeships to source new talent. It is also common for growing businesses to encourage employees to pursue outside training and developmental opportunities and provide f
inancial support for earning digital skill badges, certificates, and degrees.
Though used less frequently by the businesses we surveyed, using contingent workers is also a great way to close the skills gap. Freelancers and contractors provide “skills for sale” so they are often a cost-effective alternative to hiring full-time employees. Since they are already equipped with the skill you need, contingent workers can jump right in to fill an immediate short-term project need or bridge the gap as your business seeks a longer-term solution.
As a small business owner, it’s important to stay on top of important employment issues and trends—especially when it comes to workforce talent. Whether your business is planning to expand hiring or simply fill existing job openings, it is critical to understand broader issues affecting labor supply, programs designed to strengthen recruiting and talent pipelines, and how you can reskill or upskill existing employees to improve retention.
Businesses need to grow and that means you need human capital that can get you to the next level while allocating your financial capital on growth. Asure can help. Asure builds HCM software and services that help companies attract, develop, and retain great people and deliver it in a way that aligns with your financial goals.