The future of work, skills for the future, digital skills and skills gaps are all terms we are hearing constantly. But what does this really mean, and more importantly how do we go about addressing these needs as business owners, leaders and human resources professionals? Over the last 2 to 3 years, the focus for many has been pure survival, for others, particularly the technology sector, it has been all about growth. In 2022, the tables have turned as global economies are significantly impacted by worldwide events.

As governments and businesses around the world grapple with increasing costs of living, workforce and skills shortages, rising interest rates, wars and a pandemic that hasn’t quite gone away, they must also turn their minds to innovation, job creation, talent acquisition and growth. Business leaders must focus on the future and reinvention (not just disruption) for sustainable growth and in some cases, survival.

The discussion around future of work is often focused on the new technologies and deep technology advancements such as artificial intelligence, machine learning, automation and human capabilities augmented by AI. The World Economic Forum predicts that AI and automation will lead to the creation of 97 million new jobs by 2025. For the workforce and employees, this is certainly not about a shortage of jobs. This is most definitely about a shortage of people with the right skills to perform these jobs.

For one of our recent engagements, we were asked to undertake a strategic review of the organisation’s workforce planning and resource management approach, including talent attraction and retention. Like most organisation’s, they faced a severe talent shortage, particularly in the fields of technology, engineering and cyber-security. In addition, they had a high reliance on a contingent workforce and were in an industry undergoing significant external and environmental pressures. As part of our research, some of the following statistics were alarming.

  • Based on a study from ACS they called for an extra 60,000 ICT workers every year in Australia.
  • According to Engineers Australia, engineering job vacancy rate has gone up 97 per cent in just 12 months, while the economic recovery is hinging on the delivery of major infrastructure projects.
  • Cyber Security Connect talk to a shortage of 1.5 million cyber professionals, with this figure growing by approximately 250,000 per year.
  • It is estimated that Australia may need around 16,600 additional cyber security workers by 2026.

For those of you working across these industries, these statistics are probably of no surprise. For business leaders and HR leaders, this poses a major dilemma and if not addressed, a severe stagnation of business and economic growth.

Is this only about digital skills?

The short answer is ‘no’. Research by the McKinsey Global Institute has looked at the kind of jobs that will be lost, as well as those that will be created, as automation, AI, and robotics take hold. Their research focuses on the foundational skills that all current and future employees will need to have fulfilling careers no matter what industry sector or occupation they work in. Their research found 56 foundational skills that will enable employees to:

  • add value beyond what can be done by automated systems and intelligent machines
  • operate in a digital environment
  • continually adapt to new ways of working and new occupations

They identified 4 broad categories; 13 skill sets and 56 distinct elements of talent they called DELTA’s. The full report is well worth the read. Interestingly only 3 out of the 4 categories are specifically related to digital skills. To save you some time, the four categories are:

Cognitive – critical thinking, planning and ways of working, communication, mental flexibility

Interpersonal – mobilising systems, developing relationships, teamwork and effectiveness

Self-Leadership – self-awareness and self-management, entrepreneurship, goals achievement

Digital – digital fluency and citizenship, software use and development, understanding digital systems.

Not only are the current skills gaps not just about digital skills, but proficiency in digital skills was not proven to be the key driver of getting a job. ‘Softer’ skills such as adaptability, coping with uncertainty, synthesizing messages and achievement orientation were much more correlated to the likelihood of employment. Proficiency across the 56 foundational skills was also not necessarily linked to education – particularly, once again with the non-technical skills such as humility and inspiring trust.

Soft skills are critical to future-proof your business.

Whilst there is absolutely no doubt we need to focus on improving the digital literacy of our future and current workforces. McKinsey identified that only 11 out of the 56 foundational skills required for the future were related to a digital competency. Whilst the literature did not weight the relative importance of the skills, they did look at the correlations between proficiency and education, employment, income and job satisfaction. Digital skills and education were the most highly correlated.

Soft skills (which are not really soft at all) are where we need to focus our attention. Perhaps they are more appropriately labeled non-technical skills. These are human skills. Non-technical skills such as those listed in the above study are highly transferrable. Once you have them, you don’t tend to lose them, and you can improve and develop them further. Transferrable skills enable people to do work that perhaps they never imagined they might do.

What next?

The silver lining to the pandemic has been the increased focus on employee wellbeing, flexibility in terms of how we work, and a realisation that in fact we are all human. The education system (at all levels, not just the tertiary sector), governments and business need to work together to define and address ALL the skill gaps and capabilities required for the future. For the last 6 to 12 months, most organisations have focused heavily on talent acquisition. This is not sustainable and ineffective at best. Essentially in a market as small as Australia, everyone is tapping into the same talent pools and whilst for many employees this has proven lucrative, it does not necessarily future proof business or the economy. It creates churn and instability. On the positive side, it may finally lead to an increase in employee wages (a topic for another day).

Gartner have identified three areas of focus for business and HR leaders in order to address the skills shortages:

  • Increase transparency of current employee skill sets
  • Identify and mobilise non-obvious skills adjacencies
  • Adjust career pathing strategies to encourage flexible career progression

These are not easy things to do. They go on to say that “Leading organisations are using machine learning and large data to identify and unlock the power of skills adjacencies at scale. Some progressive HR leaders have partnered with their own internal data science teams to ground upskilling efforts in current knowledge of employee capabilities and prioritise immediate skills application”.

The role of HR

Not all organisations have a human resources function and for those that do, the HR team is often completely overwhelmed with the day-to-day requirements of supporting their leaders and workforce. This is the most strategic work HR can and should be doing right now.

Capture the current skills of the workforce, agree the skills needed for the future and for growth, undertake a gap analysis and build a plan to address those gaps. Sounds easy, but it is not. In HR speak, this is strategic workforce planning (SWP). Earlier strategies focused on the buy, build or borrow approach to addressing skill gaps. This has evolved to Buy, Build, Borrow, Bind, Bounce and Bot strategies. Increasingly the HR function needs to think beyond the traditional approach to hiring and focus purposefully on retaining (bind) the people they have and using technology and role design to look differently at how work and jobs can be done (bounce and bot). The lessons learned during the pandemic should not be forgotten, particularly in respect of the choices and control employees had over how, where and when they worked.

HR needs to embrace technology. There are some great products in market that capture employee skills, technical knowledge, experience and competencies. The sophistication in strategy and technology solutions comes in finding those people with transferrable and foundational skills and matching them to roles for which they may not have been traditionally considered. This requires a companywide approach to talent, an appreciation for the latent and untapped technical and non-technical skills across the workforce and a move away from roles and jobs that group un-related skills to a focus on key skills required to drive competitive advantage.

The Future is People

At shilo. we fundamentally believe in people, and the value they bring to business. We know that people are the key to economic prosperity and business success. We work with HR teams and business to ensure their people are working to their full potential. The future workforce will look different, but we also know, based on the research that many of the core skills already exist today. It is incumbent on all of us to understand the skills our people have today (non-technical and technical), and where necessary provide the resources, tools, training and development to upskill our people with new skills and digital literacy, that equip them to not only survive in a new world of work but to thrive.

Business will have no choice but to embrace technologies such as artificial intelligence, automation and machine learning, not only to undertake new and different roles and work, but to truly understand the skills their workforce currently has, how they might leverage these into new ways of working and newly designed roles and to identify skills gaps today and for the future. There are no easy ways to address these issues, however the work must start in earnest now. Leaning on traditional methods of hiring for vacant roles no longer works, the vicious cycle of fast growth, restructures and redundancies, then growth again does nothing to engender trust and is a wasteful approach to what is often claimed to be the ‘most valuable resource’ – people. Human’s will always be needed in the workforce; we must therefore utilise all the resources and tools we have to truly understand the skills of the people we already have and ensure we are maximising their potential across the whole organisation.