How To Future Proof Your Workforce

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Research shows a competency-centric approach can prevent bad hires and reduce turnover. It communicates a learning culture and shows the company has invested in the infrastructure of its development. If a typical org chart is a roadmap for promotion, a competency framework is a superhighway. 

Last year, a number of well-known consulting firms performed large scale surveys of white-collar workers all over the world. The goal was to get an idea of how technological advances were impacting people’s jobs. 

The results were worrisome. After surveying 4,700 employees in a range of industries, Boston Consulting Group and Adecco found workers are extremely concerned” about the impact rapid technological change is having at work. Employees feel strongly that their employers aren’t investing enough in training to help them keep up with the changes. The survey also found that companies aren’t bothering to identify the gaps between workers’ current skills and those they’ll likely need in the future. 

Other surveys reached similar conclusions. In 2018 Gartner surveyed 7,000 workers in 25 industries and found only four in ten believe employers are helping them develop the skills they need to do their jobs. The American Psychological Association says training “consistently emerges” as one of the areas with which employees are least satisfied. 

These complaints are justified. Business scholar, Peter Capelli, points out that in 1979, the average young worker received 2.5 weeks of training from an employer per year, but that by 1995, that figure fell to just 11 hours. 

So, what’s going on here? Why would so many companies stop investing in the workforce as the rate of technological change is accelerating? How can companies stay competitive if they’re not keeping workers’ skills up to date?

The cost of declining loyalty to workers. 

Companies have always gone through cycles of hiring and layoffs, of course, but Wharton management professor Adam Cobb points out that in the 1980s for the first time ever, companies that were doing well started to lay off workers to further boost shareholder value. As a result, employee benefits began to suffer, pensions were replaced by 401(k)s, and additional health care costs were pushed onto employees.

In 2008 an entire generation saw what a global economic downturn could do not only to the financial well being of their parents but their own job prospects as well. Around the same time, the gig economy started to take off. For many, that was another sign the worker’s position was growing more tenuous. 

Perhaps it’s no surprise that younger generations feel less loyalty to employers than previous ones. People age 25 to 34 stay at a job for an average of 3.2 years whereas those 65 and up stay 10.3 years. A recent survey of over 13,000 Millennials found they are “disillusioned with traditional institutions, skeptical of business’ motives and pessimistic about economic and social progress.” How do you future proof for that? 

A tight labor market provokes an important shift.  

In 2019, near-record-low rates of unemployment may be pushing things in a new direction. LinkedIn’s 2019 survey of 1,200 HR executives revealed training budgets are increasing. A similar survey found training and development is the biggest HR investment area this year. Innovative partnerships between employers and educational institutions are cropping up everywhere. 

Rapidly changing job requirements may be the key motivating factor behind this change. Just a few years ago, the fear was that automation could make workers obsolete. Now, economists are starting to realize that as automation eliminates some jobs, it’s simultaneously creating new ones and those jobs require new, specialized skills. (Historically, technology has created more jobs than it has destroyed.) 

Of course, whenever paying to train employees, companies will still have to deal with the built-in challenge of high attrition rates, but they may not be able to afford to worry about that anymore. Instead of seeing training as a cost that they won’t recover if an employee leaves, companies should view it as one of the most effective ways to prevent an employee from doing so.  

Training is a powerful engagement and retention tool.

Want a potent way to fend off headhunters? Take a good hard look at your training and development program. A recent study found that today’s workers are “thirsty for knowledge and anxious to upskill.” LinkedIn notes a whopping 94 percent of employees would stay at a company longer if it invested in their career development. 

Another powerful way to signal a commitment to an employee’s development is to build more visibility into their options for getting promoted. Some companies are doing that by building a more competency-centric approach to their talent management programs. 

With this approach, a company defines in detail the skills required for each role at the organization including ways of measuring it. That framework then underpins its entire talent management program and acts as an objective way to assess workers’ abilities. 

Research shows a competency-centric approach can prevent bad hires and reduce turnover. It communicates a learning culture and shows the company has invested in the infrastructure of its development. If a typical org chart is a roadmap for promotion, a competency framework is a superhighway. 

What’s surprising about a competency-centric approach is that it can actually lower training costs. It does this by helping you understand exactly where the gaps are in an employee’s skill-set and allows you to train to those gaps. Without a competency management platform, there’s no official way to capture what workers already know, so a lot of money is spent on training they may not need. 

Some companies that introduce a competency-centric approach eliminate huge amounts of redundant training spend. One large healthcare organization reduced its training expenditures by ten million dollars over four years. As it turns out, the organization had been spending the majority of its annual training budget on teaching staff to do things they already knew how to do. Once an official framework was in a place where supervisors could capture the results of their assessments, the organization was able to get far more precise with its approach to development. 

In this way, a competency-centric approach doesn’t just make training spend more efficient, it also makes that spend more strategic. It does this by ensuring those dollars can be devoted to building new skills the organization needs to stay competitive in the future. 

Mobility and flexibility make a company more future proof. 

Workers today definitely want more options in how and where they work, and that demand isn’t going anywhere, according to a new report and many others. Employers that can offer this kind of flexibility and mobility are in a better position to get and retain top talent, particularly in today’s tight labor market.

Your organization’s structure can contribute to that flexibility. Less hierarchical, more collaborative workplaces tend to be an advantage these days, not only because they appeal more to younger applicants, but because they’re better able to make change itself a core competency, which lets them evolve more readily. 

This isn’t to say the role of supervisors is going by the wayside. In fact, there’s good evidence that the presence of a strong supervisor makes employees more likely to feel their employer is providing opportunities to develop skills for the future. 

The competency-centric approach offers an edge as well. Companies that have an official way to measure workers’ existing skills and map out paths for acquiring new skills can easily offer employees a chance to try new positions and locations within their organization. That’s because they can actually quantify how qualified a worker is for a new role. Employees prize this kind of mobility (travel is a top priority for younger workers), so it’s a great way to reward loyalty and snag stellar new hires.

To review, a tight labor market, rapid technological change, and the preferences of younger job seekers are powerfully reshaping work as we know it. It’s time for companies to start viewing the workforce as an audience with high expectations of their own instead of merely a resource to be used.

Companies that align with these important cultural shifts will be resilient in a way their competitors will not. The benefits go far beyond improved recruiting and retention. One study found firms that invested in training were better able to recover from the 2008 economic downturn. So even when markets shift again as they inevitably do, the companies that embrace a competency-centric approach will likely be better off. Future-proofing your workforce, in other words, can future proof your entire organization.  

Want to find out if competency management makes sense for your organization? Let’s chat.

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