Organizations can get reskilling right. This McKinsey survey shows how

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Bill Schaninger, Senior Partner, McKinsey & Company & Angelika Reich, Partner, McKinsey & Company & Nicole de Locarnini, Engagement Leader, McKinsey & Company & Jutta Bodem-Schrötgens, Engagement Manager , McKinsey & Company & Aaron De Smet, Senior Partner, McKinsey & Company & Fabian Billing, Senior Partner, McKinsey & Company

• As jobs are transformed by the technologies of the Fourth Industrial Revolution, we need to reskill more than 1 billion people by 2030.
• A recent McKinsey survey highlights the benefits of reskilling to organizations, but lays bare the difficulties in getting the design and implementation of skill transformations right.
• A holistic approach to reskilling is critical – where efforts are iterative, multi-layered and embedded into everyday work practices.

The COVID-19 pandemic has quickly and dramatically accelerated the need for new workforce skills and clarified the urgency of addressing skill gaps at the organization level. As jobs are transformed by the technologies of the Fourth Industrial Revolution, we need to reskill more than 1 billion people by 2030.

But how can organizations get their reskilling efforts right in a largescale and programmatic way, to realize a fully-fledged skill transformation?

A recent McKinsey survey Building workforce skills at scale to thrive during—and after—the COVID-19 crisis suggests core practices that are critical to a successful skill transformation.

First, the good news: half of respondents say that their organizations have begun a skill transformation to support employees’ skill building. And the benefits are clear. Between 71% and 90% say their skill transformations have had a positive impact on four organization outcomes: the ability to realize the organization’s strategy, employees’ performance, employees’ satisfaction, and reputation as an employer.

Despite the enthusiasm, the successful design and implementation of skill transformations is difficult to get right: additional analysis from the survey shows that out of nine practices suggested as critical to reskilling success, organizations on average only apply three.But there shouldn’t be short cuts when organizations are building their reskilling muscle. The more of the nine practices an organization pursues, the higher its overall likelihood of having an effective skill transformation.

So where is the best place for organizations to start their skilling transformations? Here are some takeaways from the survey.

Mindset shift: skilling is an everyday exercise

In our experience, organizations lay the foundation when they are being conscious about the mindset shift needed in the long-term and recognize that skilling is not a sporadic exercise. Rather, organizations need to develop mechanisms and incentives that make basic upskilling a part of employees’ everyday lives at work rather than a programme where up- or reskilling employees happens only every five years.

Workforce planning

But before organizations start to design skill strategies, they first need to “scout” the skills they have and identify the skill gaps. This involves comparing the organization’s current supply of skills with the demand for certain skills, based on its strategic ambition, market demands, and overall business model.

To do this, organizations need to have a structured view of their employees’ actual skills and not only the roles the organization needs. Our survey indicated that small organizations are more effective at reskilling, since they tend to have more transparency and visibility on their employees’ current skills. Larger organizations can catch up though in our experience with the use of AI-based technologies for skill transparency at scale.

Build and redeploy

As organizations “shape” their strategies to close anticipated skill gaps, building skills and redeploying employees where they are most needed—rather than hiring or contracting—have become even more important since the beginning of the COVID-19 crisis as the new McKinsey reskilling survey underlines.

Partner on delivery of learning – and keep doing it

Successful organizations have started to take more of an ecosystem approach to their skill strategy both when it comes to designing learning journeys but also when it comes to delivery plans. For example, they partner with other companies or stakeholders in the public and social sectors, such as employment agencies and universities to continuously prepare employees for roles inside but also outside their current organizations. Importantly, though, also on this aspect, creating these partnerships cannot be a one-time-only exercise.

Blended learning

When designing delivery plans internally, organizations should go beyond digital learning and apply a mix of blended learning formats. Digital learning feels ubiquitous, especially during the pandemic. But the top 5 learning formats that are significantly correlated with a successful skill transformation go beyond digital learning and also include, in-person workshops, peer learning teams, expert coaching and performance support.

Dedicated internal skilling hubs

The execution and delivery of skill-building efforts at scale then means a step change and “shift” of how learning happens at most organizations. Creating dedicated organizational structures such as skilling hubs and developing a business-case-backed approach to tracking the impact of learning are good examples.

Conscious investments

Currently, most human-resources departments are heavily underinvesting in reskilling, don’t have a reskilling arm, or don’t know how to provide learning opportunities both effectively and at scale. But to get this right requires conscious investments in the appropriate infrastructure and methodologies for learning.

While all these practices matter, the McKinsey survey also finds that some are implemented successfully more often than others. According to respondents, companies tend to be most successful at the three practices related to workforce planning and assessment: assessing demand and need for specific skills in the future (which 56% say their companies do well), determining the current supply of skills (56%), and analyzing skill gaps (54%).

But companies appear to struggle most with practices related to the infrastructure and delivery of skilling efforts. For instance, just 23% of all respondents whose companies have started a skill transformation say that they have implemented dynamic tracking of the workforce’s performance and overall impact on the business. This shows it is critical to perform each of these practices to reach the full benefits of a skill transformation.

Many companies are now at a critical juncture when it comes to talent development and skill building. To emerge stronger from the pandemic, now is the time for organizations to invest in rethinking skilling holistically and apply the lessons of the past year to crystallize their current and future skill needs.