Focus on Skills to Grow Your Workforce

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As the threat of an economic downturn looms, we are entering the fourth consecutive year of uncertainty and rapid change. Three years ago, a global pandemic upended supply chains, and quarantines transformed how we work. Months later, a racial justice reckoning compelled businesses to make unprecedented commitments to building inclusive organizations. Sustained remote work again challenged the status quo in the workplace and, in some cases, became a vehicle for accessibility. The ongoing tight labor market has forced companies to reconsider and adapt their efforts to attract top talent. And now advances in AI are poised to reshape the skill sets required for nearly every job in every sector.

All of these changes have brought HR to the center of C-suite conversations, with employers thinking differently about how to spot, foster, and grow talent. Rapidly, skills have come to dominate the conversation; the average number of posts mentioning skills-first-related topics on the LinkedIn networking platform roughly doubled from October 2021 to October 2022. And employers are working hard to put skills at the center of their talent strategies — from hiring to advancement — as evidenced by groups like OneTen and the Business Roundtable. As talk of a possible recession dominates many business circles, a key question hangs in the balance: How can employers maintain their growing investments in skills-first approaches to maximize a return on investment for their workers and their business?

New data from LinkedIn provides a compelling case for doubling down on skills-first efforts. The 2023 Workplace Learning Report revealed that Gen Z and millennial workers are the most likely to value opportunities for career growth and skill-building, even more than they value work-life balance. Findings also showed that internal mobility has become the second-highest workforce priority among C-suite leaders, with learning and development (L&D) leaders reporting closer collaboration with executives than ever before.

With the youngest workers demanding skills-driven career paths and executive attention following suit, businesses that fail to maintain their investments in skills-first talent strategies will get left behind. However, there is a tendency during economic slowdowns to hunker down and revert to old, predictable patterns and playbooks. Businesses’ survival instincts compel many to, in essence, choose stagnation over innovation. During the Great Recession of 2008, the practice of insisting on a college degree for jobs that formerly required less education — known as degree inflation — accelerated. This backslide directly hurt businesses’ bottom lines through increased hiring costs and turnover rates while exacerbating an economic landscape that benefits the few and denies opportunity to many.

Expanding Opportunities for Diverse Talent

Today, business leaders have an opportunity to do things differently — and they’re in a stronger position to expand a skills-first strategy — even if the economic outlook remains uncertain. Whether you are still struggling to get talent in the door or your hiring has significantly cooled off, there are ways to embed a skills-first approach in all aspects of your business that can drive stronger long-term outcomes even during an economic slowdown.

Finding people to fill open roles used to be a tedious, manual process. Without sophisticated ways to find and grow talent based on actual skills, the college degree became one of the few blunt instruments employers had available to verify that a candidate had certain skill sets and abilities — but it was one that left out the majority of the U.S. workforce, especially workers of color.

Today, more data is available than ever before to accurately pinpoint the skills we need and to then find the people — whether internal or external — who have those skills. LinkedIn’s data shows that organizations that embrace this shift and focus on skills can see an outsize impact: Organizations on LinkedIn who take a skills-first approach can expand their talent pipelines by nearly 10 times. Employers are already starting to pick up on this: Over 45% of businesses on LinkedIn are now explicitly using skills data to fill open roles.

Removing unnecessary degree requirements from job descriptions is foundational to skills-based talent acquisition, but it is not enough.

To build the diverse, high-functioning teams that the future demands, employers must focus on skills — an approach that also has an outsize impact on diversifying talent pipelines. When employers require a college degree for a role, they automatically exclude 60% of Americans, including 76% of African Americans and 83% of Latino Americans.

Removing unnecessary degree requirements from job descriptions is foundational to skills-based talent acquisition, but it is not enough. Talent acquisition leaders must also invest in expanding sourcing channels and revising language in recruiting materials to ensure that it is inclusive and inviting. Further, interview questions and hiring processes should be anchored in the fundamental skills needed for a role on day one, not just on credentials or experience, and they should be crafted intentionally and equitably to uncover those skills.

Investing in Learning and Internal Mobility

While getting new hires with the right skills in the door is one way to invest in skills, there is an opportunity to renew focus on supporting current employees’ growth and development, especially in sectors where hiring has cooled off. The latest findings from LinkedIn’s Workplace Learning Report suggest that 2023 could shape up to be a significant year for expanding upskilling and internal mobility programs, given renewed urgency to effectively redeploy talent to priority business areas. In fact, survey findings show that budget forecasts remain strong, with 41% of L&D leaders expecting to have more spending power this year and only 8% expecting their budgets to decrease.

Investing in skills and skills-based career pathways for your employees now can pay off down the line. Companies have a nearly 7% higher retention rate at the three-year mark among employees who have learned skills on the job, according to LinkedIn’s findings. According to the Workplace Learning Report, an employee who has made an internal move by their two-year mark has a 75% likelihood of staying with the company, while an employee whose role hasn’t changed has a 56% likelihood of staying on.

Similar to skills-first hiring, skills-first talent management requires that companies make a set of complementary changes to existing processes and invest in new ones. A key step to driving skills-first internal mobility is defining which skills are required and preferred for a given role and how skills across roles overlap. From there, leaders can help their teams build robust career paths that empower employees to advance in their careers by building and applying the skills that align with their goals. Finally, communication and transparency across the business — and, importantly, to employees directly — about the career paths available and skills needed to access them is imperative to seeing increased rates of retention and advancement.

While momentum is building for upskilling and reskilling initiatives, there is a clear need to speed up progress. LinkedIn’s findings show that 40% of companies are still in the early stages, selling their programs to stakeholders and forming their teams; 54% are at the midstage, developing and activating programs; and only 2% say they have completed a program. Four percent have not started at all.

While momentum is building for upskilling and reskilling initiatives, there is a clear need to speed up progress.

Beyond the operational changes, fostering an inclusive, learning-oriented culture is also a core shift companies are making. Through work with leading employer clients, Grads of Life has learned that it takes more than financial investments in L&D to ensure that employees from underrepresented populations stay and grow within a company. The organization’s research reveals disparities in both pay and promotions for Black talent compared with their White counterparts. It is critical that, alongside operational changes, organizations also invest in change management and remove bias from pay and promotion systems to strengthen organizational culture. Taking a skills-based approach to hiring and retention is a significant departure from the status quo for most employers, and the implementation teams faced with putting it into practice will need guidance, training, and support to be successful.

Amid a cloudy economic forecast, CEOs are engaged in a careful balancing act between where to pull back and where to double down. Investing in skills-first approaches to bring on great people and grow the great people they already have will not just help them weather a current storm. Making skills core to your company’s strategy will set your workforce up for long-term resilience in a world where all of our jobs keep changing.

Data from LinkedIn shows that skill sets for jobs have changed by about 25% since 2015, and that percentage is on pace to double by 2027 — which means the core skills required for a job today look very different from the same job just a few years ago. And today, the new era of AI we are about to enter could accelerate this change even further, with 82% of leaders acknowledging that their employees will need new skills for a new way of working with artificial intelligence.

It’s now, when the seas are choppy, that the corporate leaders set to succeed in this new world of work will show how it can be done. Now is not the time to wait around for better conditions to make a change. There has never been a better time for businesses to update their thinking and rise to the challenge by focusing on a skills-based workforce.