HR options to combat talent shortages, degree inflation, and skills gaps

HR team at desk pointing at laptop discussing talent shortage and other challenges

"The world is facing a reskilling emergency."

This was the warning the World Economic Forum shared a year ago in January 2020, citing research that nearly one-third of the world’s jobs were likely to be transformed by technology by 2030. They cautioned that this transformation must be met with reskilling and upskilling, so the roles can adapt to keep pace with the tech. And so far, it hasn’t been. Innovation, coupled with a large global population that’s aging out of the workforce, has created a “perfect storm” talent shortage that Korn Ferry predicts could result in $8.5 trillion in unrealized annual revenues.

A few months after this warning, of course, the COVID-19 pandemic made its way to the US. For many companies, surviving the pandemic required accelerating digital technology adoption — often by several years — and reimagining core business practices and offerings. Some companies were focused on innovating to make warehouses and work environments safe; others on the challenges of transitioning to remote work. Some shifted from brick-and-mortar to e-commerce; others invested in diversity, equity, inclusion, and belonging (DEI&B) initiatives and departments. Many tried to support rapidly deteriorating employee wellbeing, and nearly all said that their companies accelerated the share of digital products in their portfolios much more quickly than they had thought possible before the crisis.

What all this really means is that as bad as the skills gap was in 2020, it's much worse now.

There are many reasons the skills gap has compounded in recent years, but our research suggests four major factors are exacerbating it. The first two are steeped in technology and widely discussed — the rapid advancement of AI and the growing need for technical acumen and adaptability. The third is the repercussions of what’s known as “degree inflation.” And finally, rounding out our top four is insufficient investment in employer-based training programs. Let's explore some of these a bit more, and what we can do as HR professionals to start addressing them.


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Degree inflation and economic consequences

Degree inflation has its roots several decades back, but it exploded during the Great Recession, when soaring unemployment rates enabled companies to be much more selective in their hiring decisions. Many employers began requiring college degrees for positions that had never previously required them, essentially using the degree as a substitute for desired soft skills like communication, problem solving, and creativity.

While the importance of these soft skills is undebated, a college degree does not prove emotional intelligence — and a lack of one is certainly no indication otherwise. Yet many hiring managers (especially those who themselves went to college) can be biased towards degree holders, even when it’s not necessary for the role. Harvard Business School researchers concluded that 6.2 million jobs are currently at risk of degree inflation, and that this phenomenon has already had oversized negative impacts on Millennials and Gen Z, hitting economically vulnerable job seekers hardest.

The skyrocketing cost of college is an obvious challenge, amplifying inequity and saddling millions of American with mountains of debt and competing with other priorities, such as getting married, purchasing a home, having children, and saving for retirement. The abysmal graduation rate is another. Last fall, 60 percent of May 2020 US high school graduates enrolled in college — a bit more than half. Based on historical numbers, just 60 percent of them will graduate within six years. Community college rates are even more concerning, as just 30 percent of community college students will graduate within four years.

We need to challenge the “more education is better” bias and focus on attracting and hiring candidates with the right education, skills and capabilities to thrive within each role. In today’s world, that probably comes down to professional agility — willingness to continue learning and growing within the role, to adapt as the industry changes. That is something that can be strengthened in on-the-job experience as well as college coursework.

Reconsidering degree requirements and fighting against degree inflation is a necessary tactic for hiring managers to combat the talent and skills shortages we're all currently experiencing.

Another even more direct and impactful intervention is investing in alternative routes to workforce training, which helps foster inclusive workspaces, new job pathways and workforce development.

Equitable workforce development

Many essential workers who face socio-economic and structural barriers are in industries such as in food services, transportation, healthcare, childcare, and janitorial services, which often means they are low wage earners with no college degree. If we really want to talk about inclusive workplaces, we must talk about equitable access to opportunities in the workplace.

HR must consider how equipping frontline workers with the right skills helps boost economic mobility, helps to improve talent attraction and fill positions, and helps with employee retention. Throughout my experiences in workforce development, I've learned the importance of taking the time to understand the size and needs of staff, as well as how this aligns to overall organizational and business strategy. One of the most critical things to consider is ensuring that it truly serves frontline employees. HR needs to consider different people's situations, such as what it means to be a working adult student for example, and provide flexibility and support services during the development process that match those experiences. Additionally, understanding required knowledge and skills of employees, as well as what's critical for workforce development and for organizational long-term success, is equally necessary.

One of the first steps is looking into alternative pathways and recruitment strategies from bootcamps, community colleges, trade schools, apprenticeships, and on-the-job training programs. Prior experiences are just as valuable, such as military service or prior training programs which plays a significant contribution to alternative pathways.

When we talk about developing our workforce, we must also consider who has access to training opportunities. Throughout my employee development experiences with front-line staff, I would consistently see training programs developed that did not consider things like who had internet at home, who had access to breaks during work hours to go to trainings, who spoke English or were literate in their own language, who had access to transportation to go to training centers or who had diverse abilities and barriers to learning.

Most often when we talk about professional development or skill building, we tend to think of strategies that are only accessible to those already in higher paying positions and have the accessibility to work and reskill in front of a computer. A recent study on telework shows that 2 in 3 workers with a bachelor’s degree or higher could work from home, but that number was only 1 in 10 for workers with less than a high school diploma, and 1 in 4 with only a high school diploma had jobs that supported teleworking.

Like any HR strategy, workforce development must be promoted not only by executive leadership, but also managers and other direct organizational leadership must be involved. Some of the most successful campaigns I have witnessed have been when executive leadership have supported and communicated directly to managers, and then these managers also conveyed the importance of leading and encouraging their employees. Communication can be fostered through various avenues, such as townhalls, videos, signages in workspaces and timeclocks, and through ERGs (employee resource groups).

Developing front-line workers into managers is critical for upskilling, and so is the importance of including front-line managers in workforce development strategies. Front-line managers, like front-line employees, are critical success in a variety of industries, and are responsible for the part of the company that typically defines the customer experience. Front-line supervisors must be empowered to make decisions, coach their employees, and be provided the opportunity to learn new skills.

Apprenticeship programs are also avenues for on-the-job training and can help with recruitment, building and retaining a workforce. The SHRM Foundation’s most recent HR Apprenticeship Program (HR RAP) is an example of how specific industries are shaping up to find the right talent with the right skills. Partnerships are one of the most important considerations for building and sustaining core components of successful apprenticeship programs. Exploring partnerships such as with state apprenticeship agencies, community organizations, community colleges, K-12 systems, or foundations can help build successful programs.

Celebrating employee accomplishments can help employees feel they are part of a culture of recognition and can help with the future success of workforce development programs. Recognition programs must extend beyond being centered on work output and focusing on the organization. Some of the most successful recognition programs involve employee input, make the employees truly feel like they belong, and recognize employee accomplishments or recognize the progress they have made in a new skill. When employees are recognized they tend to perform better and help them feel a sense of belonging in an organization.

Conclusion: Develop a sustainable, inclusive approach to face challenges

As HR, we have the influence to integrate workforce development programs that align with the long-term goals of the organization, as well as those of the employees. As we continue to experience constant changes in the workplace such as talent shortages, degree inflations and skill gaps, it is critical for organizations and HR to develop a sustainable approach that considers inclusive strategies and provides employees with the opportunity to holistically develop themselves.

If you need tips on how to have these kinds of conversations about necessary change with your leadership team, I highly recommend you watch this webinar from my colleague Julie Develin. There are some great tips in there on effective communication methods.

See the webinar