What are skills gaps and why do they matter?

The strategies and tools leaders need to equip their workforce with key capabilities

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By Nicole Schreiber-Shearer, Future of Work Specialist at Gloat

While most leaders are aware of today’s competitive talent landscape, there’s less discussion about the underlying demand for skills that’s fueling it. Rather than viewing the challenge as a labor shortage issue, HR teams must see beneath the surface and recognize that it’s skills that are actually in short supply.

Skill shortages are reaching crisis levels, with the World Economic Forum estimating that 50% of the global population needs new skills to meet shifts in demand driven by new technologies. By 2030, this figure may grow to as high as 90%.

As digital innovation continues to accelerate, there’s growing fear that skill building isn’t keeping up and that employees won’t have the competencies needed to take advantage of game-changing technologies. Fortunately, it’s possible to catch up to the speed of digital innovation—but only if leaders start identifying skill gaps and developing strategies to bridge them.

What are skill gaps?

Skill gaps refer to the disparity between the skills an employer expects their employees to have and the actual skills employees possess. This mismatch makes it challenging to fill open positions and execute high-priority projects.

Another way to think about skills gaps is that they’re the difference between the skills required for a job and the skills employees actually possess. Without the right skills, employees may not be able to complete crucial tasks. Leaders are becoming more familiar with skill gaps because they’re increasingly common; in 2022, 69% of HR leaders said their company had a skill gap, up from 55% the year before.

What causes skill gaps?

There are several factors that fuel most skill gaps:

Why do skill gaps pose such a threat to businesses and employees?

Skill gaps can negatively impact both employees and the companies they work for. From an employer’s perspective, if an organization doesn’t have the skills needed to complete high-priority projects efficiently, its bottom line is going to suffer. Leaders will need to either recruit new talent with the skills they’re looking for from outside of their organization or develop talent internally to ensure their organization can acquire the skills needed to achieve success.

At the same time, employees who don’t learn new skills are at risk of falling behind and eventually losing their value to their employer. Given how fast technology is accelerating—especially with recent AI innovations—employees must constantly learn new skills to stay employable. Dynamically learning new competencies is a skill unto itself and it’s something all workers will need to develop in order to be successful in the new world of work.

How can leaders address widening skill gaps?

While skill gaps pose a huge threat to workplaces and have the potential to wreak havoc on bottom lines, there are a few steps leaders can take to prevent this from happening. The foundation for bridging skill gaps is gaining a full picture of the skills within a workforce so leaders can begin identifying what competencies their people should build to remain competitive.

Businesses need skills taxonomies, which are hierarchical systems of classification that break down and organize capabilities into groups and clusters. They can help employers and employees understand what skills they have and what kinds of knowledge they should learn next.

An internal skill gap analysis is another priority for skill-building initiatives, as it helps leaders identify skill gaps within their workforce. The analysis compares the skills an employee needs to the skills they currently have, capturing both soft and hard skills.

3 best practices to bridge skill gaps

There are a few steps leaders can take to help their organization close existing skill gaps and get ahead of new ones.

#1. Prioritize experiential learning opportunities
While educational courses and training are crucial components of upskilling and reskilling, employees can’t just read or watch something to become knowledgeable about it. Instead, L&D content should be paired with opportunities to put the lessons they’re learning into practice, which is where projects and gigs come into play.

Many companies that are committed to bridging skill gaps are harnessing talent marketplaces to match employees to open part-time and full-time projects that align with their career goals and the skills they’re looking to build.

#2. Take advantage of mentoring 
Mentoring is a powerful way for employees to expand their networks while building new skills. It’s a learning experience for both parties involved: the mentor learns how to communicate and train peers more effectively while the mentee learns the skills their mentor helps them build.

The most impactful mentorship initiatives don’t just pair people based on what department they’re in or their seniority level; instead, matches are made based on the knowledge employees have and the skills their colleagues are looking to learn. A talent marketplace can generate suggestions for meaningful mentorship pairings at speed and scale.

#3. Know when to build, buy, and borrow capabilities
Another challenge that HR leaders need to conquer to bridge skill gaps is understanding when it makes sense to hire for new capabilities and when they might have talent who can be borrowed to pitch in on a project or upskilled to meet the demands of a new role. Making strategic decisions about when to build, buy, or borrow talent is challenging, which is why many enterprises are harnessing workforce intelligence, which allows talent leaders to compare internal and external candidates side by side.

To learn more about what it takes to bridge knowledge gaps, check out The ultimate guide to the skills-based organization.

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