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How Companies Can Close Their Skills Gap

Thursday, July 5, 2018
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The skills gap continues to persist in America. On the last business day of February 2018, there were 6.1 million job openings—little change from the previous month. Both companies and employees suffer when job openings go unfilled, especially over a long period of time. The average cost HR managers say they incur for having extended job vacancies is more than $800,000 annually.

In a new survey by Future Workplace and The Learning House of 600 U.S. HR leaders, with half representing small businesses of fewer than 1,000 employees, we found that almost half of companies are blaming colleges for not preparing students for jobs. A third of those surveyed agree that colleges are most responsible for getting an employee “work ready,” yet more than 40 percent of companies have not collaborated with colleges to make curriculum more responsive to workplace needs. As a result, almost a third of colleges do not have a pipeline of talent with the right skills to fill employers’ current and future roles. The most in-demand skills that employers are searching for include strategic thinking, teamwork, analytical skills, project management, and computer skills.

With the intense pressure to fill critical job roles, some companies are bypassing colleges altogether. The failure to close the skills gap has resulted in stalled growth, a stressed workforce, and a lack of innovation. The study found that companies are turning to other channels and technologies to solve this problem. An entire 90 percent are dropping the four-year college degree requirement and are now more open to hiring candidates with a recognized certification (66 percent), online degree from a MOOC (47 percent), or even a digital badge (24 percent). Both EY and PwC have dropped the traditional college degree requirement and are hiring nontraditional candidates to broaden their talent pools. The smaller companies surveyed, which have less of a brand presence and fewer resources, were more open to hiring untraditional candidates because they have to be more agile and less selective.

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In addition, 40 percent of employers believe artificial intelligence (AI) will help fill the skills gap by making hiring more efficient, eliminating unconscious bias, and taking over routine tasks. The study found that employers are investing only $500 in the training and development of each employee, and 40 percent are outsourcing to vendors to handle it instead. The smaller companies surveyed have less money to invest per employee, which skewed the results, unlike companies like AT&T, who announced they are investing more than $1 billion to retrain over 100,000 workers. Colleges simply can’t keep up with the ever-changing demands of the marketplace, and companies are under pressure to fill their skills gap in new ways.

If colleges were adequately preparing students for the working world, there wouldn’t be so much disruption in the education industry. And, if the cost of college weren’t so high, it wouldn’t limit the talent pool in the first place. For instance, the average per-year cost of a public four-year college has more than tripled from 1987-88 to 2017-18 ($3,190 vs. $9,970). As an alternative or supplement to traditional education, IBM offers a Digital Badge program with free classes and digital credentials for more than 1,000 different activities. Capital One and SAP are paying workers to attend boot camp–style training courses to fill their skills gap. Aside from offering training, companies are hiring candidates who finish coding classes at firms like Codecademy or edX, a MOOC provider started by MIT that offers access to 1,600 free online courses from over 100 top colleges.

Companies will do whatever it takes to close their skills gap, even if it means bypassing colleges altogether. If colleges want to remain relevant, they need to work more closely with companies on curriculum design to ensure that graduates are adequately prepared with the right skills. Closing the skills gap is good for our economy and for citizens, which is why everyone needs to come together to fix the situation.

About the Author
Dan Schawbel is a New York Times bestselling author, Partner and Research Director at Future Workplace, and the Founder of both Millennial Branding and WorkplaceTrends.com. He is the bestselling author of two career books: Promote Yourself and Me 2.0. His third book, Back to Human: How Great Leaders Create Connection in the Age of Isolation, will be published by Hachette on November 13th, 2018.

Through his companies, he’s conducted dozens of research studies and worked with major brands including American Express, GE, Microsoft, Virgin, IBM, Coca Cola and Oracle. He is the host of “5 Questions with Dan Schawbel”, a podcast where he interviews a variety of world-class human by asking them 5 questions in less than 15 minutes.

In addition, he has written countless articles for Forbes, Fortune, TIME, The Economist, Quartz, The World Economic Forum, The Harvard Business Review, The Guardian, and others that have combined generated over 15 million views. He has been recognized on several lists including Inc. Magazine’s “30 Under 30”, Forbes Magazine’s “30 Under 30”, Business Insider’s “40 Under 40”, BusinessWeek’s “20 Entrepreneurs You Should Follow,” and as one of Workforce Magazine’s “Game Changers”.

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