Springboard for Business, the workforce transformation company that grows businesses by empowering teams with the skills central to the future of work, today released its first State of the Workforce Skills Gap Report. To support company leaders in their strategic planning for 2024, Springboard for Business surveyed more than 1,000 corporate professionals at enterprise companies with at least 5,000 employees. The study unveils the alarming effects of widespread skills gaps on corporations’ bottom lines, with 70% of executives saying their businesses are suffering financially because their workforces lack the right competencies. The report also finds misalignment between leaders and employees about necessary proficiencies, uncovers the most in-demand skills in today’s job market, and reveals that a “learning & development cliff” occurs around middle management.
This study emerges at a time when the U.S. workforce is rapidly evolving due to macroeconomic pressures, technological innovation including artificial intelligence (AI), and generational turnover as Gen Z enters the workplace while Baby Boomers retire. Companies are struggling to adapt quickly enough to this convergence of sea changes, as improving business performance, innovation, and competitiveness is crucial for survival. About 44% of workers’ skills are set to be disrupted in the next five years and about 60% of workers will require training in the next three. Organizations must quickly pivot to incorporate effective talent development into both immediate and long-term transformation plans or risk falling behind.
“Technology is racing ahead and rapidly disrupting the way we’ve been working in recent years, with the proliferation of AI as just one example,” said Chris Duchesne, General Manager of Springboard for Business. “For businesses to stay competitive in this dynamic, high-stakes business landscape, they need not only technical skills but also durable ones, such as strategic thinking, problem-solving, and decision-making. With the labor market loosening and recruitment a persistent, costly challenge, the companies that will thrive in the next five years are investing now in transformative reskilling & upskilling programs to bridge critical skills gaps while increasing employee engagement and retention.”
Skills Gaps Are Harming Companies’ Bottom Lines – and Are Only Getting Worse
Springboard for Business’s report found that staying ahead of the curve is a challenge for many companies, as nearly 3/4 of leaders at the director level and above (70%) say a skills gap is adversely affecting their business’ performance. Direct impacts of skills gaps on their companies’ financials include revenue loss (cited by 24% of executives), limited innovation and growth (35%), decreased productivity (27%), and higher recruitment costs (39%). More than half of leadership team members (56%) aren’t seeing any progress in closing the skills gaps within their organizations, with 39% saying their companies’ gaps have worsened over the past year and another 17% saying they’ve stayed the same.
However, there is a skills blind spot as employees at the manager level and below don’t seem to be aware of the gaps their bosses see. While more than 1/3 of leaders (37%) believe that hard skills (also known as technical or perishable skills) have a shelf life of less than two years, 96% of managers believe their current competencies will be sufficient for the next year.
The top barrier to solving skills gaps and preventing technical skill decay is finding the time for training – about 1/3 of workers (30%) say they don’t have time to dedicate to learning. This may be because heavy workloads are already causing widespread exhaustion: nearly 2/3 of employees (63%) say they’ve experienced job-related burnout in the past year. Almost half of those workers (40%) say their burnout was severe.
L&D Programs Aren’t Delivering Enough ROI
Unfortunately, nearly half of leaders (48%) say their companies’ existing learning & development (L&D) programs are only somewhat effective, and 10% deem them completely ineffective. Yet, 1/3 of leaders (30%) admit that lack of support from leadership is a significant barrier to solving their organizations’ skills gaps.
Companies can benefit from leaders who prioritize investment in L&D, as workers say lack of learning resources is the #2 barrier to accessing the skills they need. One in five employees (20%) say their employer doesn’t provide enough learning resources. Incredibly, 14% say their employer doesn’t offer any resources at all. Company leaders say that’s because they’re strapped by budget constraints – the #1 barrier to solving the skills gap, cited by 44% of executives – and team bandwidth issues (#2 at 39%).
Data, Project Management, and Strategic Thinking Are the Most In-Demand Skills
In addition to the dissonance about whether the skills gap exists, there is also a bit of misalignment between leaders and employees about which competencies should be prioritized, and workers’ level of interest in learning the skill sets that employers want. For instance, 36% of leaders need workers with software engineering abilities but only 16% of employees want to learn to code. On the soft skills side of the spectrum – also known as durable, non-perishable, or employability skills – more than half of leaders (57%) need workers with strategic thinking chops. While these are crucial for business innovation, only 40% of employees are interested in sharpening their critical thinking. Leadership / management is the top subject that employees want to learn, with 44% of them eager for training but only 36% of leaders deeming it necessary.
The top five technical skills that leaders say their businesses need include:
- Data analysis – 44% of leaders say their companies need these capabilities
- Project management – 44%
- AI / machine learning – 36%
- Software engineering – 36%
- Cybersecurity – 31%
The five most in-demand soft skills (or non-perishable skills) that leaders are seeking in their workforces include:
- Strategic thinking – 57% of leaders say their companies need these capabilities
- Problem-solving & decision-making – 49%
- Verbal & written communication – 46%
- Flexibility & adaptability – 43%
- Emotional intelligence & interpersonal relationships – 40%
Everyone Needs AI Skills – Not Just Tech Employees
There is significant demand for AI skills, which rank as #3 on the list of most sought-after technical capabilities, with 36% of leaders across industries expressing the need for them at their companies. In addition to training workers on how to use AI, nearly a quarter of leaders (23%) see AI as a potential solution for the skills gap and plan to use it in the next year for this purpose. Some employees already have AI anxiety — 11% of them worry that AI will replace their teammates, and 9% are concerned about being replaced by AI themselves.
Employees Fall Off an “L&D Cliff” Around Middle Management
The good news is that workers want to learn. More than 3/4 (77%) would like to acquire new skills for their roles or to advance their careers. The thirst for knowledge is even stronger for first-level managers, with 82% saying they’re eager for educational opportunities. Most companies are primarily focusing on upskilling and reskilling more junior staffers, prioritizing L&D programming for entry-level workers (51% of leaders say it’s a company priority), intermediate-level employees (47%), and first-level managers (47%).
However, a notable “L&D cliff” occurs in middle management, with only about 1/3 of companies (34%) prioritizing training for people at this level. Learning opportunities decrease steadily with seniority from there, with executive leadership training prioritized by only 22% of companies and merely 15% of organizations prioritizing education for C-suite leaders. With 79% of leaders saying the longevity of technical skills is limited to five years or less, everyone at every level needs support for continuous learning and improvement throughout their careers. Workplace training in frequent “skillset sprints” is the way to fight competency erosion in the long term.