It sounds like an oxymoron, but the “skills gap” is real and growing at an alarming rate.
According to Fortune magazine, there is likely to be a shortage of about 40 million high-skilled workers and 45 million medium-skilled workers by 2020. At the same time, analysts predict that there will be a surplus of 95 million workers who do not have the training to fill most vacant jobs.
What’s Causing the Gap?
Experts across all industries cite four issues contributing to the skills gap:
- A mismatch between workplace needs and the training offered to college students
- A lack of needed training for current workers
- Rapid changes in technology, which can quickly make some training obsolete
- A loss of workers who retired from companies with critical knowledge and skills current workers do not have
A Wall Street Journal article on the topic notes that “ageism” in hiring has taken a lot of important skilled workers out of the workforce, often before they were ready to stop working. The article notes that this may change as more employers recognize that these older, experienced workers can help reduce skills gaps and labor shortages.
Why Employer Engagement is Critical
An analysis published in the Harvard Business Review shows there is much at stake for individual companies if they are not willing to contribute to a solution. Author David Smith says the skills gap can lead to:
- Delays in product releases
- Lower customer satisfaction
- Loss of revenue
Experts generally recommend five effective approaches for employers looking to help reverse this trend:
- Work in collaboration with trade associations within the employer’s industry
- Coordinate with community colleges so they can train students for vacant jobs
- Provide apprenticeships, which have shrunk by 36% since 1998, according to the Harvard Business Review
- Offer more in-house training for existing workers
- Leverage the talent of older workers looking for employment in retirement
The Value for Employers
Some employers question the value of training and ask: “What if we train people and they leave?” The more compelling question should be, “What if we don’t train people and they stay?”
Companies ahead of the curve are quantifying the value of training with research. For example, a study by IBM shows that when teams are well trained, the resulting value to the business was equal to $70,000 in annual savings and a 10% increase in productivity.
One key element that employers should remember: training programs that are structured to reward “training and staying” with financial incentives are typically more successful.
For example, a case study presented in this Harvard Business Review article highlights a hospital that rewarded licensed practical nurses financially for advancing their training to become registered nurses. They received raises approximately 18% higher than the norm. After two years, 95% of the nurses were retained by the hospital after graduation, an increase from 85% before the program was initiated.
Economists say that closing the skills gap will benefit far more than the individual companies involved. It is also projected to have a positive ripple effect on workers, their productivity, and the national economy.
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