Disruption. Did you wince with frustration or did you grin with confidence at the word “disruption”? It likely depends on how you’ve responded to the latest disruption—the digital revolution.
Companies that realize business-changing technology has been democratized are continuing to invest in technology like never before, disrupting their own organization from within, and ferociously pursuing and developing intellectual property. As a result, they’re reaping the benefits of tremendous growth. Meanwhile, companies that have become too comfortable or too slow to change are seeing their growth shrivel, and some have closed their doors all together.
Economic growth does not come out of thin air. People have to “do something.” But too many organizations are waffling on what “something” is because they don’t have the skills and knowledge to attack challenges head on. And that’s led us to where we are now—a global skills gaps epidemic in the area that provides the greatest opportunities and risks to an organization’s success—information technology.
IT skills gaps are self-inflicted wounds
In one of the largest global surveys of IT professionals focused on skills, certifications and professional development, the 2018 IT Skills and Salary Report revealed that 70 percent of IT decision-makers said their teams presently face a shortage of necessary skills. Of the 30 percent who are not currently facing a skills gap, 25 percent expect one to form in the next 12 to 24 months.
IT analyst Cushing Anderson, of research firm IDC, said that he estimated that as of 2018, “more than 70 percent of all organizations have adjusted project plans, delayed product or service releases or lost revenue from lack of IT skills, resulting in more than $200 billion of lost revenue annually worldwide, and both the percentage and the lost revenue will increase through 2020.”
Underfunded training budgets and the rise of skills gaps have shown the value of training in IT
For the past four years, the number one explanation for IT skills gaps has been “we have not invested enough in training to develop the skills we need.” Simultaneously, we’ve seen the largest jump in skills gaps, going from 31 percent to 70 percent around the world (and rising to 75 percent in North America).
The top five impacts of skills gaps on organizations
- Increased stress on existing employees
- Difficulty meeting quality objectives
- Delays in developing new products or services
- Delayed deployments of new hardware and/or software
- Declining customer satisfaction
All of these impact the top and bottom lines of an organization, and lack long-term sustainability. Behind each of these are people—that’s why they are the heart of your organization. If you don’t care for your heart, it will not take care of you.
Growth stalls when change occurs and skills development does not
Training budgets need to be viewed as a strategic advantage for organizations, which requires investment. Research has found that training expenditures between 2016 and 2017 skyrocketed from $70.6 billion to $90.6 billion—a 32.5% increase. Organizations are catching on. According to an IDC report, IT training spending is growing at a rate slower than the overall IT market.
Today’s operating environments are more complicated than ever, so even one change can be felt across the organization. At the same time, businesses need to be able to react, adopt and embrace change.
Nimble organizations have more flexibility to pursue technology changes and can push the success across the organization or “fail fast.” But for larger organizations, it’s more complicated. Pursuing marginal gains are a less risky and more stable approach as they try to turn the ship. However, marginal gains are not an excuse for moving slowly when seeking growth.
In a Harvard Business Review article, author Michael Mankins discusses the strategic differences between productivity and efficiency, and how it affects businesses “starved for growth.” Mankins believes leaders should be focusing on increasing outputs by “removing obstacles to productivity, deploying talent strategically, and inspiring a larger percentage of their workforce.” Training accomplishes that.
Skills development through training provides the knowledge, skills and abilities to eliminate obstacles hindering productivity and finding innovative ways to overcome challenges. The global IT Skills and Salary Report also found that training increases job satisfaction; employees who trained in the past year were 30 percent more satisfied in their roles compared to those who didn’t train. Also, nearly 70 percent of unsatisfied employees look for another job within 12 months. Losing employees not only affects morale and productivity, but you lose tribal knowledge only learned from working at a company.
Train employees for a specific purpose and outcome
The HAYS Global Skills Index highlights that with new technology comes new questions, one of them being who will do the work? The disruptive digital economy takes no prisoners with organizations that do not pursue the right people with the right skills. So how do you find the right people with the right skills while keeping an eye on the bottom line?
Your bottom line and finding the right people with the right skills
When top-line growth falters, the bottom line receives an eagle-eyed focus, which can make it difficult to infuse new skills into the organization. Fortunately, the best way to introduce new skills is also the most holistically bottom-line friendly and what IT decision-makers prefer.
There are three ways to infuse skills into an organization: build, buy or rent.
IT decision-makers prefer to build. According to the report, 62 percent prefer to train existing staff, 16 percent prefer to hire staff with the appropriate skills, and 16 percent prefer to rent the skills (aka hire a contractor). Yet, when the training budget is miniscule, you’re in a tough situation.
The cost of training is a fraction of the cost compared to hiring or replacing employees. Hiring is also plagued with issues—65 percent of IT decision-makers reported that hiring qualified talent is a significant issue. It is the third-largest reason behind skills gaps; businesses can’t afford to pay what candidates demand. So, hiring isn’t a quick, easy or budget-friendly solution. It’s much cheaper to train than it is to replace.
Growing a business means closing skills gaps, investing in and disrupting yourself, and hard work
There is not a silver bullet to closing skills gaps—you’ve got to roll up your sleeves and get your hands dirty. You have to focus on investing in your organization and maintain an unwavering and relentless drive to develop your people.
People find new ways to seize marketing opportunities. People create intellectual property which in turn enables the creation of products and services that no one else has, and enables higher margins and higher profits.
How do companies such as Amazon, Apple, Alphabet, Intel and Johnson & Johnson continue to be so successful year after year? They are leaders in research and development spending. Why? R&D is a contributing factor to the kind of productivity that positions you for success. Research and development also doubles as an investment in skills development.
Higher investments in R&D have shown to have strong links to improving the ability of employees to better evaluate opportunities and make decisions. By developing new ideas and finding better ways to utilize technology, you are more enabled to disrupt yourself, and disrupting yourself is critical.
Technology is an enabler, but not THE enabler
In order to develop new perspectives and approaches to deal with challenges that inhibit economic growth and opportunities that give way to growth, an organization must truly embrace that people are its heart.
Technology is an enabler of growth, but it’s only as powerful as the people trained to use it. The greatest enabler is an organization’s leadership building a culture that is committed to investing in its people because they know the more talented they are, the more likely success is to follow. If you want economic growth, invest in your people.