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This post summarizes the findings from Springboard for Business’s The State of the Workforce Skills Gap 2024.
Springboard surveyed over 1,000 corporate professionals working at companies with at least 5,000 employees to understand where their workforce transformation priorities lie, how skills gaps are thwarting progress, and what employees are most eager to learn.
To grab a free copy of the full report, click here.
The state of the workforce skills gap in 2024
The way we work is changing. Technology is advancing at a rapid pace, one that’s disrupting old models of work and reconfiguring the working relationship between humans and machines. Add to this a permanent move to flexible working arrangements, major economic and geopolitical disruptions, and growing social and environmental pressures, and it becomes evident that we are in the midst of a true paradigm shift.
It’s not only the way we work that’s evolving. These forces are also changing job content, needed skills, and which jobs are being displaced, according to the World Economic Forum (WEF). Since 2015, skill sets for jobs have changed by around 25%. By 2028, employers estimate that 44% of workers’ skills will be disrupted.
Of all the macrotrends driving business transformation, the adoption of new technologies like artificial intelligence is the most influential, expected to drive changes in over 86% of organizations, according to the 2023 WEF Future of Jobs Report. As new technologies emerge and begin to dominate the future of work, companies need to ensure their workforces are properly equipped in order to remain competitive in a globalized economy. Yet, there’s a dearth of talent. According to Deloitte, organizations are struggling to find the technical talent they need to drive innovation-focused initiatives.
It’s not just technical skills that are increasingly in demand. Cognitive skills like problem-solving and creative thinking are actually growing in importance most quickly. As the pace of change accelerates, businesses need to remain agile. Few could have predicted today’s complex landscape of work; the way we’ll be working even a year from now is equally unpredictable. It’s no surprise, then, that organizations are prioritizing fortifying their workforces with the critical thinking capabilities required to adapt quickly and strategically.
Six in 10 workers will require training before 2027, according to the WEF, so organizations must forefront talent development in both immediate and long-term transformation plans. It’s more than a safety plan; it’s a strategic imperative. The majority of the world’s employees are ‘quiet quitting’, costing the global economy $8.8 trillion dollars, according to Gallup. This trend underscores the fact that employees are disengaged at work – a problem that’s only going to get worse as more skills become obsolete.
This retention problem will get costly, fast. The cost of replacing an employee ranges from half to twice an employee’s salary. And since the labor market shows no signs of improving, this cost is likely to increase. There are still significantly more open positions than potential employees, according to the U.S. Bureau of Labor, an imbalance that has been present since May 2021 and has only worsened since.
An investment in human capital is a clear-cut move. Not only does training and development drive employee engagement and improve retention (thus decreasing recruitment and opportunity costs), but it also safeguards organizations and readies them for the future landscape of work. This future may be amorphous today, but we know one thing for sure: it will undoubtedly be dominated by change.
Without immediate action, organizations will fall behind. An underskilled workforce will be ill-equipped to navigate a business environment that’s marked by constant disruption. This outlook requires a high degree of adaptability in order to mitigate risk and drive continual innovation. Businesses must transform their human capital into a competitive advantage by investing in durable cross-functional skill development that will withstand future market demands and capitalize on new opportunities.
To aid organizational leaders in strategic workforce transformation planning that will safeguard their businesses for years to come, Springboard for Business surveyed over 1,000 corporate professionals to understand where their priorities lie, how skills gaps are thwarting progress, and what employees are most eager to learn. Keep reading for key findings. To see all of the findings, grab a free copy of the report here.
About this workforce skills gap survey
The analysis in the report was compiled using results from a survey of 1,031 U.S. corporate professionals working at companies with at least 5,000 employees. The survey was conducted by Centiment in December 2023 and included 510 organizational leaders with the title of Director and above (referred to as “leaders” or “leadership” here), and 521 junior-level employees with the title of Manager or below (referred to as “junior employees”).
Here are the key findings.
70% of leaders say there’s a skills gap
The vast majority of U.S. companies are underskilled, according to company leaders. 70% of corporate leaders report a critical skills gap in their organization – one that’s having a negative impact on business performance.
Two industries, in particular, have above-average skills gaps. In Financial Services, over 75% of leaders say there’s a lack of skills, and in Tech, over 73% of leaders agree.
Among leadership, members of the C-suite are most likely to think there’s a workforce skills gap that’s thwarting organizational goals. Nearly 75% of C-level executives surveyed here report a skills gap. Other leadership groups are slightly more optimistic: 70% of directors and 64% of VPs say their companies are operating with a skills deficiency.
Data analysis and project management are the most in-demand hard skills
When leadership was asked about the top hard or technical skills their companies needed most right now, data analysis and project management rose to the top, with AI/machine learning and software engineering pretty much tied for third.
There’s a significant overlap between the skills leaders need most in their workforces and those that employees are eager to learn. Project management, data analysis, and AI/machine learning are top areas for both groups.
These three core technical competencies are function-agnostic and critical for work today. Companies have been amassing an abundance of data across virtually every function, yet the vast majority of workers are unable to turn that data into actionable business strategies. Similarly, employees know that AI technology has the capacity to bring key efficiencies to critical processes, but most are struggling when it comes to AI literacy. And project management skills are a must to execute initiatives that leverage data insights and AI advancements to drive innovation and develop competitive business advantages.
Yet, most workers are operating with a lack of formalized training in these three domains. Leaders may garner immediate buy-in for company-wide training and development programs (and expediently resolve skills gaps) if they prioritize project management, data analysis, and AI/machine learning in upskilling programs. To drive participation at a faster rate, companies may consider offering incentives or bonuses to employees for pursuing development opportunities.
Interestingly, there is far greater demand for software engineering skills from leadership than there is interest from employees: only 16% of employees want to learn software engineering, but leaders view it as a top priority.
The U.S. Department of Labor estimates that the global shortage of software engineers may reach 85.2 million by 2030. Now’s the time for organizations to capitalize on the internal interest that does exist and deploy software engineering reskilling programs, especially considering the recruitment challenges in this field. Talent development executives can take inspiration from industry leaders like Amazon and Walmart, who are simultaneously empowering frontline workers and remedying skills gaps by offering all employees tailored training programs for in-demand careers.
Companies are severely lacking cognitive skills
There’s a severe lack of critical business skills preventing growth at America’s largest companies. A majority of leaders say that strategic/critical thinking is the top soft skill needed in their workforce today, with the related skill of problem-solving and decision-making coming in second. Communication is also lacking: 46% of leadership say this is a top 3 needed skill.
This decade, which started with a global pandemic that upended virtually all aspects of our lives, has already been a whirlwind for businesses across industries. We quickly learned the importance that adaptability and agility have to our capacity to thrive – both in our personal and professional lives. With the global business environment in a state of flux for the foreseeable future, companies that can strategically evolve will have an edge. Leaders see this opportunity, and recognize that critical thinking and problem-solving skills are essential to operate with this mindset.
Junior-level employees also see the opportunity to grow in their critical business skills, but the development of strategic thinking is a slightly lower priority for them than skills needed for career growth. 44% of junior employees say they are most interested in developing leadership/management skills, and 42% want to get better at communicating.
This is good news for employers: junior employees are clearly interested in developing leadership capabilities as they’re prioritizing the skills that are most closely tied to making a visible organizational impact. Business leaders should invest in high-potential employees (HIPOs) to quickly capitalize on this enthusiasm. Companies that meet the development priorities of junior employees are likely to see positive impacts on employee happiness, engagement, and retention — which together have a disproportionate impact on business performance.
Nearly 40% of leaders say workforce skills gaps are getting worse
More than a third of leadership believe that skills gaps are growing quickly: 38% say that the skills gap at their company has gotten worse in the past year. Another 17% say that progress on resolving workforce deficiencies has been stagnant. Fewer than half of leaders report a noticeable improvement. (Figure 7)
This survey also reveals that the vast majority of leaders are aware of the impending obsolescence of most technical skills. Fewer than a quarter of leadership (22%) believe that hard skills have a shelf life longer than five years; nearly 40% say the current shelf life of these skills is under two years (Figure 8). This viewpoint is in stark contrast to the level of employee self-confidence that surfaced in this report – while 78% of the leaders surveyed say today’s hard skills will become obsolete in under five years, only 21% of junior employees are worried that skill depletion will impact their employment in this same time frame.
Skills gaps are hampering company innovation and growth
Organizations are facing significant workforce challenges because of company-wide skills gaps. Recruitment (59%) and retention (53%) are the top two challenges organizations are facing due to a lack of skills (Figure 9). The labor market is imbalanced – there have been more jobs than available workers for over two years now. Companies are struggling to find the talent they need to operate effectively.
This is having spillover effects onto existing workforces. 63% of junior-level employees say they’ve experienced job-related burnout in the past year, and 40% say this burnout was severe (Figure 10). The global business landscape is getting increasingly competitive, and as companies are forced to operate with leaner teams, the burden is clearly falling on the remaining employees. Recruitment challenges are undoubtedly exacerbating this issue and are likely contributing to the increased employee turnover organizational leaders are reporting.
The unsustainability of these trends cannot be overstated. Already, over a third of leaders are reporting limited innovation and growth as a result of existing skills gaps and nearly a quarter say they’re seeing decreased revenue and productivity. Additionally, 1 in 5 companies are having difficulty keeping up with technological change because of skills gaps. (Figure 11)
With employee burnout at extremely concerning levels and persistent recruitment and retention shortcomings, companies must take action fast. A majority of leaders appear to see that the solution lies within their workforce. Over 63% of leaders say that upskilling is the top priority for solving their company skills gap in the next year, and 43% plan to invest in reskilling to help employees acquire a new set of skills to transition to wholly new roles.
Of concern is that 58% of companies still plan to search externally to fill vacant roles that are contributing to their skills gap (Figure 13). Recruitment is more costly than talent development in the long run, especially when considering the opportunity cost of operating with open roles – not to mention the contributions this positioning has to fuel burnout amongst existing staff.
HR leaders (77 of whom were surveyed for this report) seem to be most attuned to this reality. For this group, recruitment is deprioritized. According to this survey, upskilling (75%) and reskilling (62%) are the top two tactics HR leaders want to employ in the next year to address company skills gaps – hiring full-time talent comes in third.
Bridging the skills gap in 2024
This report paints a clear picture: companies are struggling with severe skills gaps that are hindering performance, fueling burnout, and stifling innovation. With the rapid pace of technological advancement projected to accelerate, the likelihood of existing skills gaps widening and posing an existential threat to organizations is great.
As the future of work evolves, so will the technical skill sets required to succeed. But these hard skills are hard to predict, and, more importantly, they’re fleeting, with a shelf life that’s dwindling as technology progresses. On the other hand, cognitive skills like strategic thinking, decision-making, and communication are enduring and critical to success in business. Companies should certainly equip workers with necessary technical skills – perhaps by reskilling employees whose roles are most at risk for obsoletion – but should consider prioritizing a focus on durable business skills so that their workforce is ready to tackle any future challenge head-on.
With the labor market loosening and recruitment a persistent, costly challenge, the companies that will thrive in the next five years are those that invest now in transformative upskilling and reskilling programs to bridge critical skills gaps while increasing employee engagement and retention.
To see all of the findings, grab a free copy of the report here.
To go more in-depth on the topics covered in the report, check out these related posts:
- Top Corporate Training Programs to Prioritize in 2024
- 6 Strategies to Address Skills Gaps in Your Workforce
- Why is Critical Thinking Important for Business Growth?
- 5 Ways to Develop Strategic Thinking Skills
- Data Literacy for Every Employee: Top Strategies
