You have likely heard it before: The world of work is changing — and at breakneck speed. The workforce is in a constant state of disruption, compounded by a record-low unemployment rate and low levels of employee engagement.

These challenges are requiring business leaders to rethink their people strategies. The ramifications of failing to do so are clear, from lost business opportunities caused by position vacancies to recruitment costs incurred from external searches for talent. Misalignment of succession planning and business goals can lead to higher turnover, corporate instability and poor performance, and disengagement of top talent can be detrimental to an organization. On the other hand, organizations with “high-quality development plans” experience 27% lower turnover and see double the revenue per worker, according to 2015 research by Josh Bersin.

In PwC’s 22nd annual global CEO survey, respondents affirmed that the “availability of key skills” affects their growth prospects. To refine and refocus their talent strategies, organizations need to focus on two closely related talent issues: the skills shortage and the leadership pipeline. With so much at stake, it’s important for business leaders to think and act strategically to mitigate the skills gap and develop a leadership pipeline while rethinking leadership potential.

Addressing the Skills Shortage

According to PwC’s survey, CEOs now rank “availability of key skills” as one of the most significant business threats to their organization’s growth prospects. Allaying these fears will require a shift in the approach to skills development and recruitment.

While every employee enters the workforce with a set of skills, it’s critical for an organization to proactively manage how they develop and grow those skills throughout their tenure. Investing time and resources in continued education and employee development pays dividends. Not only does it ensure the workforce is constantly growing and evolving, but research suggests it can also contribute to employee engagement and retention. Employees appreciate when a company supports their career interests and professional development.

An effective skills development program will:

  • Engage current employees rather than seek new talent.
  • Retain experienced and older workers and managers.
  • Provide tools that keep leaders engaged with their team members.

Another effective way to offset the skills gap is to attract seasoned talent. The share of workers age 55 and older has doubled over the past 25 years, according to the Society for Human Resource Management, with older workers finding better job opportunities in this tight labor market. To help older workers bring their skills and experience to bear in an organization, consider the following:

  • Job postings should avoid instructing applicants with more than the required years of experience not to apply.
  • Interviewers should steer clear of asking applicants questions that hint at age, such as when they expect to retire.
  • Organizations should retain and attract leaders who want to work past retirement age and come back part time.

With all these factors at play, organizations need not only to develop powerful solutions to the skills shortage but also to prepare and grow leaders to manage an increasingly dynamic modern workforce.

Developing a Leadership Pipeline and Rethinking Leadership Potential

Leadership development programs typically focus on the most senior levels of the organization. But when organizations broaden their reach to be more inclusive of all employees, they reap the benefits. In fact, multiple research studies have found that when companies embrace diversity and inclusion, they outperform their peers.

Talent leaders should consider the following factors when developing leadership programs:

Transparency: Despite the fact that many other areas of business operations practice transparency, the talent and succession pipeline tends to remain opaque. Many employees lack clarity around how they develop and grow into leadership positions. Transparency needs to become part of the talent calibration process; for example, managers should provide more frequent feedback on development and initiate development conversations earlier in onboarding programs and training.

Career mobility: Consider incorporating career pathing or succession features into the applicant process. For example, Generation X has the lowest promotion rate, since baby boomers are staying in their jobs longer and millennials are moving up quickly. By incorporating career pathing into the applicant process, companies can prevent the loss of high-potential Gen X talent.

The human touch: Use technology in moderation. Organizations can leverage artificial intelligence (AI) to improve engagement and personalize employee communications, but they shouldn’t be overly reliant on technology. Encourage person-to-person contact, and remember that younger workers are still developing their communication skills and need one-on-one communication to help them grow.

Holistic brand: It’s important to have both an external and an internal brand that is consistent and well communicated. Often, the focus of an organization’s brand is external, and it fails to address the internal candidate and employee experience. If the internal brand is weak, organizations risk a negative impact on their pipeline. It’s important to make sure the company has feedback loops in place to engage employees and make them feel heard.

To help workers grow and thrive within an organization, the employee experience can’t miss a beat. That means taking strong actions to address the skills gap and supercharging the leadership pipeline. Doing so can help improve employee engagement scores, diversify leadership, improve business continuity, aid in critical skills retention and enhance management’s visibility to the talent pipeline … all of which will help ensure that you are developing next-level leadership.

It is unsurprising that organizations with “high-quality development plans” experience 27% lower turnover and see double the revenue per worker. Yes, the workforce exists in a constant state of disruption — but an organization can thrive only by embracing the change and adapting toward the future.