Closing skills gaps within your organization is critical to any talent management program. However, gaps in worker skills and knowledge have recently spiked due to technological advancements, labor expectations and global environmental awareness.

Fortunately, once you understand what's behind the skills gaps in your industry, you can begin to address them within your organization. By analyzing your employees' abilities and talents, you can identify ways to close the skills gaps, either by upskilling and reskilling talented individuals or by sourcing other workers.

knowledge gap definition vs. skills gap definition

Before addressing the lack of abilities within your current talent pool, you must determine which gaps exist within your organization — skills, knowledge or both.

Put simply, a skills gap is the disconnect between the skills employers expect from their workforce and the skills employees have acquired through time and practice. In comparison, a knowledge gap refers to an employee's lack of understanding of a process, concept or their role within the company.

Both skills and knowledge gaps can exist simultaneously, especially when new technologies are introduced, and often, one type of gap can lead to another. In the workplace, employees must understand the overall process to improve performance, manage teams or train others. They need hands-on skills to perform the job successfully.

consider the following example:

You’ve instituted a new software program that analyzes production data on-site. Machine operators will need fundamental computer skills (mouse manipulation and data entry) to run the program. In addition, a basic understanding or knowledge of the process (the why behind the procedure) can help ensure compliance and accuracy. 

As businesses evolve to meet the changing needs of society, skills gaps are inevitably created. However, too many holes within the workforce can adversely affect productivity and profitability.

what is causing skills gaps?

Unprecedented technological innovations, the evolving workforce and increased environmental awareness have created the ‘perfect storm’ of circumstances, leading to increased skills gaps.

The transition of workers’ skills was one of the key topics at the Davos World Economic Forum's Annual Meeting, where labor and economic organizations met to discuss ways to future-proof the economy. Of course, you also need a plan for future-proofing your company, and it starts with understanding what's behind the crisis.

increased reliance on technology

During the First Industrial Revolution, machine-produced goods forever changed the landscape of big business. Now, amid Industry 4.0, we’re likewise looking at a similar upheaval with the following innovations:

  • cloud technology
  • digitalization
  • automation and robotics
  • artificial intelligence
  • renewable energy sources

While it seems like all this technology will require fewer workers, many feel it’s simply a shift in roles. For example, jobs in data entry and assembly line work may become obsolete, while new positions in machine maintenance and data security may open up.

However, the resulting skills gaps must be addressed for the available workers to meet the new labor demands. You can’t simply move your office clerk into their new role as a data analyst. It’s more of a gradual repositioning of talent based on their current skills and abilities to learn new ones.

PricewaterhouseCoopers (PwC) performed an in-depth analysis of the job displacement scenario by the year 2030 due to automation and artificial intelligence. Jobs that rely heavily on manual and routine tasks (manufacturing and construction) are at a higher risk for automation than those that rely on critical thinking and social skills (health care). Furthermore, workers with less education will be particularly vulnerable over the long term.

It will take the combined efforts of world governments and businesses to ensure that current workers are retrained (reskilled) and young people are funneled into occupations and trades that will continue to exist.

As Mihir Shukla, Co-Founder and Chief Executive Officer of Automation Anywhere, Inc., stated at the 2023 WEF annual meeting: “AI can create a more equitable society if used right … Reskilling is the most important part of this.”

employees talking
employees talking

greater than usual worker retirement

During COVID-19, older adults left the job market in unprecedented numbers, never to return. Some were close to retirement age and, after taking time away from work, decided to shift priorities, focusing on personal rather than career goals.

As of September 2021, 50.3% of American adults over age 55 are retired, an increase of 2.2% over the number not working before the pandemic. The United Kingdom reported similar results, with large numbers of workers over age 50 deciding to stay home for reasons ranging from health needs and financial resilience to feeling a lack of necessary skills.

When these seasoned veterans left, they took with them decades of on-the-job knowledge, leaving skills gaps in various departments. Moreover, as many of these long-term employees had reached a higher-level status, companies also lost experienced managers.

Enticing these workers back into the field is possible with the right incentives. For example, training programs aimed specifically at older adults can help bridge the gap between their on-the-job knowledge and recent innovations. Offering part-time or flexible hours is another option, letting workers enjoy a work/life balance more in tune with their stage of life while maintaining social interactions and mental challenges.

revised work ethic of millennials and generation Z

With the exodus of older workers, younger generations became responsible for the prevailing workplace attitude — and their viewpoint, on average, is radically different from that of their older counterparts. Randstad’s Workmonitor 2023 found that almost 55% of workers aged 18 to 34 would quit a job that was making them unhappy as opposed to 40% of those over 55. Furthermore, more than a third of Gen Z and Millennials admit to ‘quietly quitting’ a job — doing the bare minimum to remain employed. The percentage of workers over age 55 willing to use this tactic was significantly less, at 24%. 

Rapid turnover and inefficient workers can cause productivity to plummet in your organization. One solution is to promote well-defined career paths within your company that match the desires of younger workers. Then, by offering robust upskilling and reskilling programs, you can keep these unpredictable employees engaged, productive and loyal to your brand.

Randstad RiseSmart career development solutions offer programs to help you retain key talent, including personal assessments and career coaching.

the need for sustainable business practices

The drive for companies to become environmentally accountable has created a ripple effect leading to increased global skills gaps.

  • businesses must adopt sustainability goals to remain competitive in talent, investors and sales
  • leadership must then institute company-wide changes to meet these goals 
  • new skills and positions are needed to expedite these changes

The International Energy Agency estimates that by 2030, the net-zero transition could create 14 million new jobs and another 16 million openings in current jobs. While some of these will replace obsolete roles, such as those in fossil fuels, workers with skills in sustainability, new energy forms and energy-efficient construction will be in high demand.

As you meet with company leadership to discuss sustainability goals, consider how you will budget time and money to upskill and reskill your workforce to keep pace with changes.

skills gaps in different industries

Skills gaps exist across all types of organizations and in all departments. McKinsey & Company ranked potential skills gaps by the percentage of businesses reporting deficiencies. Unsurprisingly, data analytics and digital skills gaps topped the list. The next three — differing by only three percentage points — concerned management. The list went on to mention skills gaps in HR, sales and marketing and product or service design, to name a few.

Obviously, each industry will have unique challenges, and as an HR representative, it’s your job to identify and prioritize skills gaps in your company’s talent pool. For example, are you looking for a data scientist to spearhead a people analytics program in the upcoming months or in immediate need of upskilling 200 factory workers on recently installed machinery?

Attempting to address skills gaps in your company without a well-thought-out strategy can waste time and money. So, follow these steps to ensure your talent management plan is on-track to succeed.

1. how to perform a skills gap analysis

Start by designing an assessment questionnaire to identify the current skills represented within your workforce. This skills survey can be administered by management or an HR staff member. To ensure accurate results, you need the input of everyone, from the leadership team to the entry-level worker who may be your next candidate for upskilling.

Randstad has developed a skills matrix template that can be completed using your survey data. The resulting table provides you with a comprehensive skills inventory of your workforce so you can begin to address skills gaps. You can revisit the survey and update your skills gap matrix as often as necessary to stay up-to-date with your teams’ assets.

smiling male employee
smiling male employee

2. sourcing talent to close skills gaps within your organization

All skills gaps aren't identical and, therefore, may be resolved differently. Randstad’s approach to talent acquisition is highly personalized, with knowledgeable consultants supporting your staffing requirements through a variety of proven strategies. Contact an HR specialist today to schedule a meeting.

borrowing talent

Consider hiring a contract worker for short-term, one-and-done projects, especially if you need a highly skilled professional to spearhead the venture. Once everything is in place, your in-house management teams can take over.

outsourcing workers

If your talent shortage is in an outlying division of your business, you may want to consider outsourcing to a company specializing in that industry. That way, you can focus on what your company does best, and they can do likewise. For instance, delivery, IT support and customer service are all departments that may benefit from outsourcing.

If you face skills gaps in human resources, consider outsourcing your HR management to Randstad Inhouse Services. Our industry experts work on-site to handle all your HR needs, from high-volume staffing to management reporting and people analytics.

hiring new

You may need to invest in new talent, especially if you’re planning a long-term project that interacts with other divisions of your company. However, with an ongoing labor shortage, it’s time to think outside the box. A knowledgeable, experienced recruitment partner like Randstad can help you revamp talent acquisition strategies.

For example, you may need to restructure your parameters to encourage diversity. Finally, when searching for new talent, choose employees who demonstrate potential for change, making them ideal candidates for future reskilling programs.

laughing employees
laughing employees

3. inhouse skilling (reskilling and upskilling)

Using current employees to fill skills gaps and other holes in your organization is the gold standard of effective HR management. You can accomplish this by reskilling or upskilling. Reskilling involves training employees to perform a different job, whereas upskilling helps them fulfill their current role better and take on more complex duties.

Both of these programs save you the cost of recruiting and onboarding and let you make use of an already proven employee. In addition, successful reskilling and upskilling programs create an enhanced view of the company’s brand, letting other employees know that management is behind them. Finally, incentivizing the process and providing career coaching can help ensure employees are invested in continued growth within your organization.

One way to enhance the upskilling and reskilling process is through training games and videos. The Society for Human Resource Management (SHRM) recently gathered evidence that employees not only like to play games but learn and retain skills better during the process. According to James Micklethwait, a vice-president with Kahoot!, games are engaging — much more so than basic online learning scenarios. Game-centric learning also provides an opportunity to interact with coworkers.

And games don’t have to be specifically designed for training and development to provide or sharpen skill sets. Randstad recently analyzed eight popular gaming platforms to identify ‘soft skills’ development among their participants. The top skills associated with the chosen games were self-motivation and teamwork, traits highly sought after by employers. Adding gaming questions to your recruitment assessments could be a valuable tool in discovering desirable skills.

are reskilling and upskilling programs successful at reducing skills gaps?

Yes, the good news is that in-depth skills analysis and the resulting reskilling and upskilling strategies are working to reduce gaps in knowledge and tech. McKinsey & Company’s recent survey found that reskilling programs are paying off with improved employee satisfaction, customer experience, brand perception and employee retention. Furthermore, almost 70% of business leaders felt that their investment in reskilling has equaled or been exceeded by the benefits the company experienced.

Unilever, a British global consumer goods producer, is creating a future-fit workforce by setting a goal to ‘reskill or upskill our 148,000 employees by 2025.’ The Unilever leadership team envisions each role at the company as a collection of necessary skills, which can then be deployed as needed.

In a recent interview with Claudia Azevedo, CEO of Sonae, a Portugal-based multinational company, she discussed the advantages of offering employees upskilling and reskilling opportunities. ‘We like to zigzag people around the company to give them exposure to many different businesses and professional experiences. It’s incredibly important.’ Claudia’s own trajectory within the company followed this rewarding pattern. 

Simply put, upskilling helps employees advance, reskilling takes them in a different direction and additional upskilling provides more forward momentum. It’s a win-win situation for the employer and employee.

about the author
philipp vogel
philipp vogel

Philipp Vogel

district manager

Philipp Vogel started his career as a polymechanic EFZ. Various further training courses led him to strategic purchasing and most recently to Randstad. Philipp has been working at Randstad for 15 years and, as District Manager, leads the branches from Basel to St.Gallen so that they achieve their goals. In his role, Philipp appreciates the daily variety and the great responsibility. In his free time he does kickboxing and is an active Basel carnival participant.

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