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Prior to the COVID-19 pandemic, employers around the country were experiencing challenges as a result of the historic tight labor market. At the beginning of 2020, there were more job openings than available workers to fill them. The U.S. Chamber of Commerce Worker Availability ratio found that for every 10 open jobs, there were fewer than nine candidates available to fill them—and that is before considering qualifications.
To find the talent they need for the future, employers and hiring managers need to start thinking outside of traditional hiring practices and start preparing for a world where skills—not degrees—are the focus when filling a job.
Employers have begun shifting their hiring and training practices and programs as a result of the increasingly dynamic labor market, where skills have shorter half-lives and lifelong learning and the ability to communicate the value of that learning is critical. Instead of only looking externally for talent, employers are increasing retention through new upskilling and reskilling initiatives to support their existing workforce.
Companies such as AT&T, Amazon, and Walmart are perfect examples. Upskilling is a strategic move to grow the competitiveness of a company’s workforce and prepare workers for success in new, emerging, or changing job roles, or to advance in their careers. These companies are making multi-year commitments to make learning a lifelong endeavor and keep their workforce relevant.
A study by PricewaterhouseCoopers on the future of the workforce discovered professional development was ranked as the No. 1 benefit an employer can offer—above both flexibility and financial incentives. With 74 percent of employers agreeing that a skills gap exists in the U.S., upskilling has grown into a critical tool for both employers and employees.
Amazon recently pledged to upskill 100,000 employees by 2025. While the cost and time investment in upskilling initially may be high, it can pay off tenfold for companies in the long run. A 2016 study by the Society for Human Research Management reported that it costs up to 50 to 60 percent of a new hire’s salary to fully onboard him or her into the new role. If companies were to integrate upskilling into the general business practice by reinvesting the money spent on training a new hire back into their current employee pool, they would become a desirable workplace for current and future candidates in the process.
Tips for Successful Upskilling
Companies looking to invest in upskilling should consider what type of employees they would like to see advance in roles and focus their efforts on those key employees to see a return on their investment. To ensure upskilling is a success, employees and employers should view it as:
- A Shared Burden: Upskilling is most productive when it is mutually beneficial to both employers and employees alike; therefore, both parties should have a stake in the process. Mandating that every employee participate in upskilling programs would be a waste of company resources. Much like employers have helped workers manage their healthcare and retirement benefits, employers now must manage employee skills both as a benefit and as a strategic investment to support business agility. Employees can advance their careers and mitigate risk of unemployment or underemployment, while employers can reduce cost of filling internal job vacancies.
- A Beneficial Partnership: Upskilling should be done in partnership with education and workforce development providers. New open education pathways inside companies have the potential to reach greater populations and improve skill attainment and credentialing outcomes where typical education institutions have struggled previously.
- A New Mindset: Change can be hard, especially change that occurs as a result of workforce automations, but they are a part of the modern workplace. It’s crucial that workers and employers keep an open mind to new training programs and technologies that can prove to be beneficial for both parties down the road.
Stepping Up
Upskilling programs are a major step in the right direction toward increasing competitiveness and agility in a changing economy, whether it be a shrinking workforce or automation. However, upskilling alone won’t be enough. Employers and educators must work together to strengthen future talent pipelines. By knowing what skills and qualifications employers need in new hires, educators can better prepare the future candidates they’re teaching so they can enter their careers and hit the ground running.
It’s evident that the way we look at hiring and training employees in the United States needs to be reworked as the skills gap continues to expand. According to the U.S. Chamber of Commerce Foundation’s report, Hiring in the Modern Talent Marketplace, more than three-quarters of respondents (78 percent) agree that they will need to reassess the way they hire, and nearly half (45 percent) report that changing hiring processes is a priority in their organization. Now is the time for employers, hiring managers, and educators to step up and redefine the talent marketplace together.
Jason Tyszko is vice president of the Center for Education and Workforce, U.S. Chamber of Commerce Foundation.