McKinsey Quarterly

Three keys to building a more skilled postpandemic workforce

The COVID-19 crisis and subsequent move to hybrid working models have accelerated the need for new workforce skills. Fifty-eight percent of respondents to our recent global survey said that closing skills gaps has become a higher priority since the pandemic began, and 69 percent said their companies engage in more skill building than they did before the crisis.

Intriguingly, the skills companies prioritize most are leadership and managing others, critical thinking and decision making, and project management (Exhibit 1). This suggests that in addition to wanting to be more employee centric, organizations are still coming to grips with the new ways of working forced on them by the virus.

Companies are increasingly focused on developing social, emotional, and advanced cognitive skills.

The challenges will only grow. For example, we estimate that demand for social and emotional skills (ones that machines can’t master) will increase 25 percent in the United States alone over the next decade, compared with a previously expected rise of 18 percent (see sidebar, “A software company gets emotional”). And research from the McKinsey Global Institute finds that 107 million workers may need to switch occupations by 2030—up 12 million from a prepandemic estimate.

Companies need to prepare their people for a future where new and evolving skills and ways of working are a given and where an embrace of continuous learning is the key to relevancy in the workplace. And leaders must do this while embarking on the broader organizational experiment of determining what the workplace even looks like in a post-COVID-19 world.

To help, senior executives can study the practices of organizations that already take workplace skilling seriously. In this article, we highlight three nascent principles drawn from best practices. While relatively few companies have fully mastered the challenges, their examples can serve as useful touchpoints for any organization aspiring to start building its own more resilient, future-ready workforce.

1. Find your true starting point

Leaders at a large insurance company knew they faced a skills deficit. Prior to the pandemic the company was losing top recruits to sexier high-tech firms. Now, with AI and data analytics skills becoming even more important to the industry, company leaders suspected their current workforce was falling behind. But where, how far, and how fast? “We have more than a hundred job families and two thousand-plus different types of roles,” noted one executive. “Where do we start?”

In response, the company took a comprehensive inventory of skills across the organization. The inventory was validated by a combination of human managers and AI, which allowed for an apples-to-apples comparison of people’s résumé inputs, as well as their professional experience and accomplishments.

Importantly, the exercise wasn’t treated as a cataloguing of roles. Collecting job titles is a waste of time when what’s changing are the underlying skills. Similarly, the insurance company didn’t approach the effort as a one-off project but as part of a commitment to a new approach—one grounded in the principle of linking talent to a clearly defined value agenda. The inventory was to be part of the fact base supporting an enterprise-wide supply-and-demand model for current and future roles.

The first test of the database came when the insurer used it to zero in on 15 job families whose skills would be most vital for the company’s long-term success. In parallel, the company used it to pinpoint areas of immediate concern. For example, the company saw it would face big head-count shortfalls for data analysts, systems developers, and IT-infrastructure experts—all roles in which the underlying skills were themselves changing the fastest.

2. Make skill building a way of life

As the insurance company’s talent aspirations took shape, the organization created a “skills hub” to manage, operationalize, and scale them.

The hub, a permanent business unit led by the company’s head of talent, became responsible for balancing the supply and demand of skills—for instance by creating foundational learning programs for everyone, as well as customized programs for reskilling people in particular roles.

As a pilot exercise, the hub started with the company’s finance and call-center units—two important groups in which technology already threatened to make many skills (and roles) redundant. In areas where roles needed to change, the hub offered learning modules to help employees gain necessary skills; when roles were being eliminated, the hub provided upskilling to help people qualify for a different role or to find adjacent roles where possible. Senior executives had feared they would have to resort to widespread layoffs or severance offers, but the hub ultimately redeployed or reskilled nearly everyone in the pilot units.

Similarly, a large telecom company had a high success rate using its skills hub to reskill and redeploy employees whose roles were being affected by technology. The company’s rationale helped. By making clear to everyone that the reskilling was an investment in talent, and in direct support of the company’s regional growth plans, employees were more energized (and reassured the program wasn’t simply a cost-cutting move). Nonetheless, the company’s efforts made financial sense as well. In our experience, hiring new workers can be more than twice as expensive as upskilling and reskilling existing employees.

To be most effective, skills hubs should have a clear remit. This should include candidate assessment, the future allocation of roles, the implementation of the program itself, and the measurement of impact (Exhibit 2).

Creating a skills hub can help companies in four ways.

3. Take an ecosystem view

During the chaotic early days of the COVID-19 crisis, some companies, out of necessity, adopted an ecosystem mindset. In just two days, for example, Dubai-based Majid Al Futtaim reskilled one thousand employees from its cinema business to work in its grocery business. Similarly, HR technology company, together with the US-based Food Industry Association (FMI), created a talent exchange to help furloughed and laid-off workers find open jobs in other member companies.1 The exchange ultimately amassed more than one million job openings, while providing workers access to 700 free courses to help them upskill.

More recently, the European Round Table for Industry launched a pan-European training initiative to help unemployed and at-risk workers. Dubbed Reskilling 4 Employment, the effort aims to reskill one million workers by 2025, and up to five million by 2030. Initial pilot projects are planned in Portugal, Spain, and Sweden, and corporate supporters include AstraZeneca, Iberdrola, Nestlé, SAP, Sonae, and Volvo Group.2

As these examples suggest, integrating skill building with the whole ecosystem in mind can help companies as well as communities and other stakeholders. Cisco’s Networking Academy offers a good example of just such a win–win approach. The company partners with educators and instructors around the world to offer students IT training in a range of areas such as big data, cloud, cybersecurity, and machine learning. The effort connects students to jobs inside Cisco and with its external partners, while creating a much larger pool of skills the company prioritizes.

Companies are more likely to gain an edge in skill building when their leaders are willing to question old assumptions. Legacy approaches are likely to be too slow, too incremental, or too difficult to scale given the challenges ahead.

Organizations must also be willing to question their legacy mindsets, including presumptions of what employees want and what they’re capable of. Employees are often more energized by skills development than senior executives give them credit for. This was true at a midsize European bank, where leaders worried that tellers would be unmotivated by the company’s reskilling program, or even resent it. But rather than balk at the changes, the tellers embraced them, and the bank ultimately created three distinct career paths for the tellers as part of its successful pilot program—one that is now being scaled across the entire organization.

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