Here’s why the world of work urgently needs to put skills first

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

Author: Neha Agarwal, Global Diagnostics Program Co-Lead, PATH & Evan Spark-DePass, Deputy Portfolio Director – Market Dynamics, PATH

• The pandemic has led to unprecedented change in the world of work, with the skills required for many jobs changing.
• Employers need to change their approach to recruitment, focusing less on degrees and more on skills.
• Employers who invest in training and upskilling find it easier to retain staff.

In the last two years, many of us have had to rethink not just how and where we work but also why we work. This moment of unprecedented economic and behavioral change has led to a complete reset in the relationship between employers and employees, with higher expectations and aspirations for work.

The world around us has also been shifting. If you look across the economy today, it’s clear that almost all businesses are either technology businesses or technology-enabled businesses. Recent LinkedIn data shows that the skills sets for jobs have changed by around 25% since 2015 – and by 2027 that number is expected to double. That means your job is changing, even if you aren’t changing jobs – just as business demands are changing even if you’re not changing your business.

Like every other CEO and leader, I have spent a lot of time thinking about how best to navigate this new world of work. And it’s become increasingly clear to me, alongside a growing coalition of leaders, that the best way forward – for individuals, businesses, economies and societies – is a skills-first mindset.

The good news is that it’s starting to happen. President Biden recently called for skills-first hiring in his State of the Union address. A growing number of CEOs are highlighting the need for companies to shift how they hire. And organizations like Opportunity@Work have shown the benefits of a skills-first economy for communities that have been historically disenfranchised.

People have traditionally been hired based primarily on the degree they earned, the job they had, or the people they knew. Skills were not a big part of the conversation when hiring, or in the economy overall. That’s changing. Workers better understand the need to articulate the skills they have and the skills they want, especially as we all seek work that is more rewarding. And businesses, eager to fill roles in this historically tight labor market, have started to focus on whether people have the skills to get the job done. A skills-first labor market is emerging all around us.

Making hiring easier and more efficient by focusing on skills

We need to take advantage of this momentum. Skills-first hiring needs to become the new way to connect talent to opportunity. The World Economic Forum estimates we will need to reskill more than 1 billion people by 2030. In addition to digital skills, specialized interpersonal skills will be in high demand in the new hybrid workplace. As jobs evolve and demand new skills, hiring managers need to focus less on degrees, and more on finding talent whose current skills match the role.

This requires a complete reset of long-engrained hiring practices. According to recent research from Harvard Business School, 88% of hirers are still filtering out highly-skilled candidates just because they lack traditional credentials. This urgently needs to change. As new data in our latest skills report shows, the pandemic provoked a great acceleration in the advancement of workplace technology.

That means the demands of work – and the skills needed for constantly-evolving roles – are significantly different than they were pre-pandemic, for both individuals and companies. In fact, according to OECD estimates, more than 1 billion jobs, or almost one-third of all jobs worldwide, are likely to be transformed by technology in the next decade. The good news is that many of the top skills in fast-growing and higher-paying roles are similar to skills in other fields. For example, a cashier has 70% of the skills needed to be a customer service representative, and a driver has 57% of the skills needed to become a supply chain associate.

Even in industries not considered traditionally tech-focused, we’ve seen the top skills transform to reflect this new age of hybrid workplaces, in which all functions are increasingly dependent on digital tools to collaborate and perform day-to-day tasks. Take construction, for example. With automation, machine learning, and collaboration tools quickly becoming integrated into the way construction projects are managed, workers with tech skills are necessary.

Improving retention by focusing on career development

Employers are struggling to keep great talent, with the share of US LinkedIn members changing jobs rose to 30% in 2021 compared to 2021. Employers are struggling to fill open roles fast enough and retain employees. This is in large part because of changing expectations – workers are more willing to walk away now if companies don’t invest in the things that matter to them.

Employees consider opportunities to learn and grow as the primary driver of great work culture, yet our data shows only 52% of employees feel their manager encourages the use of work time to learn new skills. This major disconnect will start to impact employers as the skills-economy continues to grow. By caring about employees’ careers, investing in their skills development, and helping them pivot into new roles, companies benefit too. When leaders offer growth opportunities through internal mobility, they retain their employees nearly twice as long as their peers.

A focus on upskilling requires a mindset shift at the management level. Everyone from the top down needs to understand how critical ongoing learning and upskilling is, not only from an employee’s growth perspective, but also for maintaining a company’s competitive edge. The organizations that keep their employees on top of new technologies are the ones that will see success in this new world of work.

For instance, cybersecurity professionals need to regularly update their skills due to the ongoing and evolving threat landscape. New security technologies are constantly being introduced, and to stay relevant in the job marketplace, employees need time – and employer permission – to learn the new technologies and study for certifications.

Giving your employees the opportunity to learn and grow is no longer a benefit, it’s a must-have. Employees now expect it. And companies that focus on upskilling, and excel at internal mobility, are able to retain employees for an average of 5.4 years. That’s nearly twice as long as companies that struggle with it, where the average retention span is 2.9 years.

What’s the World Economic Forum doing about diversity, equity and inclusion?

The COVID-19 pandemic and recent social and political unrest have created a profound sense of urgency for companies to actively work to tackle inequity.

The Forum’s work on Diversity, Equality, Inclusion and Social Justice is driven by the New Economy and Society Platform, which is focused on building prosperous, inclusive and just economies and societies. In addition to its work on economic growth, revival and transformation, work, wages and job creation, and education, skills and learning, the Platform takes an integrated and holistic approach to diversity, equity, inclusion and social justice, and aims to tackle exclusion, bias and discrimination related to race, gender, ability, sexual orientation and all other forms of human diversity.

The Platform produces data, standards and insights, such as the Global Gender Gap Report and the Diversity, Equity and Inclusion 4.0 Toolkit, and drives or supports action initiatives, such as Partnering for Racial Justice in Business, The Valuable 500 – Closing the Disability Inclusion Gap, Hardwiring Gender Parity in the Future of Work, Closing the Gender Gap Country Accelerators, the Partnership for Global LGBTI Equality, the Community of Chief Diversity and Inclusion Officers and the Global Future Council on Equity and Social Justice.

Rallying around the opportunity ahead

At LinkedIn, we have a unique view of the economy and the way that skills are becoming foundational to employment. Our 800M+ members have added more than 36,000+ unique skills to their profiles. With our learning courses aimed at building new skills, we have an incredible opportunity to help create, support and propel a whole new kind of job marketplace.

Never in the history of the labor market has there been a clear or reliable way to understand whether people and jobs are matched in the most efficient way. The labor market has worked from some, but not for all – skills can change that. By harnessing new data and tools that make it easy for people and companies to identify talent based on skills, along with the access to building more diversified and equitable networks, we have the ability to help fill the most in demand jobs based on what a candidate can do. This will not only create greater equity in our economy, but also greater dynamism. It will create new levels of progress and prosperity.

As the saying goes, talent is evenly distributed but opportunity is not. If we come together across sectors and societies, this can be the moment when we finally address that imbalance once and for all.