Revving up the skills engine: A 10-step action plan

Video callIf it’s true that U.S. business growth has stalled in certain sectors, today’s executives are quick to attribute this condition, in part, to their inability to fill critical jobs due to a lack of candidates with the necessary skills.  (See “Solving the skills gap: Who’s got talent?” for a report on the skills gap issue.)

Companies typically measure the costs associated with the skills gap to obvious metrics like the time to fill a position or estimates of lowered productivity.  However, they often fail to take into account other loses such as the costs associated with increased overtime for existing workers, higher risk of voluntary turnover by overworked staff and the cost of churn among recent hires.  As a result, some firms may not view the full impact of the issue to their bottom line.  In other cases, especially for middle market firms, the problem seems overwhelming to address.

Yet, there are a number of actionable steps today’s businesses — including middle market firms — can do to cultivate the workforce they need to continue on a path to growth.

To start, business leaders must embrace an employer-led skills development system, one in which they bring the same level of investment to a talent supply chain as they do to their materials supply chain.  They must also understand that resolving the issue will require a collaborative effort involving a broad group of stakeholders including employers, educational institutions and government.

  1. Be proactive
    Evaluate your firm’s human resource function.  Make sure it is addressing recruitment in a collaborative manner through a lens that is proactive and strategic.  Six out of 10 middle market companies report that HR engages in the talent search out when specific jobs become available, according to the National Center for the Middle Market (NCMM) report, “Help Wanted”. Adopt the practice of “talent pooling”---keeping track of potential internal promotions and external hires.

  2. Adopt strategic talent planning
    Adopt a holistic recruitment approach that includes attraction, performance management and development. Together, these activities ensure that the firm’s strategy, culture, operations and innovation are aligned. Effective programs include a range of activities including the development of competency-based job profiles to succession planning to the development of high-potential workers for future promotion.

  3. “It’s about providing a culture that’s inclusive and agile to support the breakthrough thinking that’s going to move an organization to the next level.”
    Steve Coman, director, Human Capital Management, Grant Thornton
  4. Enhance performance management
    Research by the NCMM demonstrates a clear relationship between effective performance management, faster revenue growth and better profit margins.  Those firms that excel performance management tend to have buy-in from senior executives who believe the process should represent an integral an ongoing part of every working day.  They focus on goal setting, seek input from second-level managers, and align the performance management process with the company’s culture.

  5. Improve your value proposition
    In order to better compete for top talent, mid-sized companies in particular need to step up their game when it comes to creating a compelling employment value proposition for today’s pool of talent.

    Steve Coman, director, Human Capital Management, Grant Thornton LLP, suggested that today’s businesses need to focus on creating a holistic employment package message to candidates. “We need to offer benefits that are holistically evolved to make sure they are reflecting the needs of candidates we’re trying to attract,” he explained.  “It’s more than just having a ping pong table or video games in a break room. It’s really about providing that culture that’s inclusive and agile to support the breakthrough thinking that’s going to move an organization to the next level.”

    Coman also said a quality value proposition requires “looking beyond just the walls of the office in the organization to entice and retain candidates who may have needs that stretch beyond the 9-5 workday.”

  6. Summary of Skill Gap Solutions:

    1.  Adopt a holistic and proactive approach to talent planning

    2.  Align talent planning with the firm’s strategy, culture and operations

    3.  Make performance management part of your firm’s daily culture.

    4.  Build a compelling employee value proposition that maps to emerging talent pool

    5.  Build career ladders to help attract and retain top talent

    6.  Focus on soft skills and incorporate within recruitment and interview processes

    7.  Invest in skill building with current workforce by pursuing alternative training resources

    8.  Develop internship and apprenticeship programs to augment talent planning

    9.  Pursue community outreach to leverage local pipeline of talent

    10.  Partner with industry groups to solve commonly shared workforce issues

  7. Construct career ladders
    Middle market firms, because of their size, may be challenged to offer the opportunities for upward mobility that their bigger firm counterparts provide.  However, career ladders can and should be constructed that provide employees opportunities to be challenged or become involved in different areas of the company.

  8. Focus on soft skills
    Studies consistently report that while many companies hire for technical skills, they tend to fire for professional behavior or the lack of soft skills. A National Bureau of Economic Research paper supports the increasing importance of social skills in the labor market, indicating that between “1980 and 2012, jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force.” In order to assess soft skills, some middle market managers advocate conducting multiple interviews and asking situational questions to determine the candidate’s ability to communicate effectively or think creatively.

    Partnering with organizations that focus specifically on soft skills training is another option. Organizations such as Year Up provides young adults with six months of classroom training on in-demand technology-related skills, including soft skills, and then places those workers in six-month internships where they can apply those skills and gain work experience.

  9. Invest in training
    Businesses, big and small, will necessarily need to play a more active role in training its workforce.  However, currently only a minority of firms invest in skill-building for potential employees. In the Harvard Business School survey, “Bridge the Gap: Rebuilding America’s Middle Skills”, only 45% said their firms offered internships or apprenticeships for middle skills jobs. Just over a fifth of companies said they would always consider bringing someone on who requires additional training when they’re having trouble filling a role. Even fewer small companies (14%), those with annual revenues of less than $250M, said they were willing and able to do so.

    There are a number of resources middle market firms can leverage to ensure their current workforce possess the right mix of skills to help the organization thrive. For example, Capella and CareerBuilder launched an initiative called RightSkill, which enables workers to upskill and reskill for in-demand jobs within 60 days or less. The program, which is currently free for candidates, teaches competencies online based on real-time data and guidance from employers. The National Retail Federation Foundation introduced RISE Up, a 15-module training and credentialing program that helps people of all backgrounds, education levels and ages acquire skills needed for a range of retail jobs. Programs like these enable workers to quickly develop in-demand skills, but they can only truly be successful if employers are willing to accept candidates who have been trained through alternative methods and if employers are willing to shoulder some of that training themselves.

  10. Develop internship and apprenticeship programs
    Middle market companies are missing out on opportunities to build brand awareness and connect with top talent by not offering internship and apprenticeship programs.  In fact, fewer than half (42%) of mid-size firms make internship programs part of their talent planning program, according to NCMM research.  Partnering with local universities and schools and developing relationships with professors can provide a gateway to promising candidates.  Because middle market firms are deeply rooted in their communities, they can easily develop these connections and participate in related activities such as job fairs.

    While some attention is paid to internships with mid-sized firms, apprenticeships are often completely overlooked as a way to recruit top talent.  “There is a need to demystify and destigmatize the whole concept of apprenticeships,” said Grant Thornton’s Coman.  “Companies such as BMW which uses an apprenticeship program to encourage middle and high school students to pursue an early STEM track, have adopted a true apprenticeship mindset.  In the U.S., there’s this mentality that you must enter a college-type environment if you want to be successful and have an upward career.”

    Coman suggested that part of the hesitance to expand its talent planning options is that some middle market firms adopt a victim mentality.  “Middle market firms often do not reach out and have the wherewithal to market, influence and persuade where needed,” he explained. “They have this ‘woe is me’ attitude.  They believe because they are in a remote area or are not the size of an IBM, Microsoft or Amazon, they can’t compete.”  Instead, firms should proactively reach out to local community colleges or other educational organizations and ask for help in connecting with emerging talent.

    In fact, an October 2017 poll conducted by staffing firm Adecco shows that close to 90 percent of American executives believe apprenticeship programs can help close the skills gap. In 2016, President Obama allocated $265 million in grants for apprenticeship programs through 2019. More recently, President Trump funneled an additional $100 million into those efforts.

  11. Pursue community outreach
    Building a strong employer brand is a key approach to promoting career opportunities and maintaining an advantage when it comes to recruiting top talent. However, too often, mid-sized firms fail to reach out to the community or other external organizations to develop the types of partnerships that can help address workforce problems.  Universities, community colleges, private-sector training groups, public sector projects and governmental agencies all offer options to bolster capabilities of internal HR staffs. Despite these opportunities, research found that less than one-third (30%) of firms partner with education and training organizations to either upskill current employees or recruit qualified candidates and fewer than a quarter of firms take advantage of local or national trade groups or chambers of commerce to address their workforce needs.  Middle market firms can start partnering with local colleges and universities by sponsoring a campus event, hosting an information session, serving as a guest speaker or inviting students to visit company operations. They should also not overlook the opportunity to leverage local educational institutions to provide training for current managers and employees. Social media can also be an important recruitment tool by communicating your unique employment brand story.

  12. Consider partnerships with other firms or industry groups
    Perhaps not surprisingly, research found that only 14% of middle market businesses work with other companies to address workforce needs, with only about 20% partnering with local or national trade groups. However, connecting with other firms can be a good way of addressing commonly shared workforce issues. One industry partnership for advanced manufacturing links manufacturers to local talent if another plant is moving its operations or experiencing layoffs. Retailers can work together to develop new career pathways to change the perception that retail is only a summer or part-time career option. Some industry-led partnerships, such as The Manufacturing Institute, have taken on the task of standardizing skills and credentials for occupations and career pathways.

To solve this critical workforce issue, businesses must collaborate with a variety of public, private and government stakeholders to avoid the competitive risks posed by a skills gap. Developing strategic and structural solutions to the problem is essential in order to balance the interests of both businesses and workers.

Steve Coman
Human Capital Management
T +1 214 561 2374