You Can’t Close Skills Gaps Without Labor Market Data
WEF predicts that 44% of workers’ skills will be disrupted in the next five years, while an EdX survey found that 49% of the skills that exist in their workforce today “won’t be relevant in 2025”.
Meanwhile, 87% of companies worldwide report experiencing skill gaps now, or say they expect to within the next five years.
We are living in the skills economy. As we move to a world of “skills-based everything”, more and more companies are using data about people (their actual and potential skills) and work (the skills actually needed to carry out a role) to make sure they can fill (and predict) skills gaps more effectively. This data relies on a common language of skills – holistic “skills intelligence” to match talent to tasks effectively and efficiently.
But does anyone really have the full picture?
The building blocks of Skills Intelligence
Deeply understanding the skills you have, and the skills you need, is essential for making informed decisions about when and where to hire, who and when to train, and how to reduce talent-related risk.
It’s challenging to get a clear view of the skills you have in your talent pool (both your employee workforce and candidate pipeline), as people move roles, learn new things, and change their preferences.
And building a dynamic, scalable Job Architecture – a real-time view of the skills needed for all the tasks in your business – also isn’t easy, especially as the nature of work is changing so quickly.
But even if you do have this important foundation when it comes to skills intelligence, you are still only seeing one part of the picture. Without comprehensive, real-time labor market insights, you are missing an important piece of the puzzle… and will find talent acquisition, talent management and strategic workforce planning all the more difficult.
Labor market insights for a holistic view of talent
Your workforce is the heartbeat of your organization, but it exists within the context of a larger labor market.
Your skill ‘demand’ (skills you need to meet your goals) needs to be met with the right skill ‘supply’ – and this means the skills possessed by your employees, your talent pipeline, and also the wider labor market. You need real-time data around where relevant skills exist, how much they cost, and how popular they are with competitors.
And you need to be able to do something with that data. You need technology that helps you visualize skills gaps in your business, mapped to those live labor market insights.
From here, you can see how best to invest in talent – and can effectively build a workforce that is fit for the future.
The benefits of embedded labor market insights
Ideally, all talent management operations can be based on both organizational and wider-market data. This lets leaders make smarter, better informed decisions about hiring new people or upskilling their workers, and makes it easier to close skills gaps, and build a future-fit workforce.
With the combination of internal skills data and labor market insights, you can also:
Validate Your Hiring Strategies
In a dynamic job market, talent trends also change rapidly. By tapping into labor market insights, you can identify emerging skills, preferences, and expectations within the workforce. This foresight is invaluable for adjusting your talent acquisition (and development) strategies to align with the evolving demands of the labor market.
Knowing the top emerging skills for a given role will help you keep job profiles in line with market expectations and keep you hiring for skills that are most in-demand for a specific role or industry.help you keep job descriptions relevant. And, with up-to-date salary benchmarks (by geographical location), you can also ensure your remuneration is competitive.
Enrich Your Job Architecture
It’s not easy to keep on top of what skills are really needed for which roles. With real-time market trends and suggestions, it becomes easier to enrich the skills underpinning your Job Architecture.
With rich and dynamic skills intelligence in one place, you have peace of mind that your Job Architecture, job adverts, recruitment activity and candidate nurture campaigns are all aligned and accurate.
Get Competitive Intelligence
To stay competitive, you need to know what other organizations in your industry are doing in terms of talent acquisition and management. Labor market insights offer a window into your competitors’ workforce strategies, allowing you to benchmark your practices against industry norms.
This knowledge empowers you to make informed adjustments to your own strategies, ensuring you attract and retain top talent – with the skills to help you compete.
Anticipate Skill Gaps
As noted, one of the most significant challenges for organizations today is addressing skill gaps within their workforce. But the pace of technological innovation means there will be skills you need tomorrow that basically don’t exist today.
It’s worth noting that, by the time you have a skills gap, it’s already too late. It suggests a failure in your workforce planning, which labor market insights could've helped solve for (by showing you trends ahead of time).
Labor market insights help you anticipate these gaps, by providing a detailed analysis of skill demands in your industry and how they are changing over time. Armed with this knowledge, you can proactively invest in training and development programs to equip your employees with the skills needed to navigate the evolving landscape.
Indeed, once you can visualize any potential gaps or skills “deficits” that persist in the workforce, you can also see whether upskilling someone internally would be a more viable route based on historical internal mobility patterns, or faster, than external hiring. It all becomes straightforward when your skills data – internal and external – live side by side.
Be Ready for Economic Shifts
Economic conditions can, and will, have a profound impact on the labor market. During economic shifts, businesses that are well-informed about labor market dynamics can adapt more effectively.
Whether it’s scaling up or down, tweaking hiring vs upskilling strategies, or changing market composition, by understanding the broader economic context – and predicting the impact of trends and shifts – you can make strategic decisions that position your organization for long-term success.
Enhance Workforce Diversity
Labor market insights, as part of the wider skills intelligence ecosystem, play a crucial role in promoting diversity and inclusion within your organization. Using skills as the atomic unit of measurement, and putting skills and potential at the heart of talent-related decision making, is already a huge step towards reducing bias and promoting fairness in the workplace.
Embedded labor market insights extend that impact. When you understand demographic trends and diversity metrics in the broader labor market, you can develop targeted strategies to create a more inclusive workplace.
Do More Strategic Workforce Planning
Incorporating labor market insights into your strategic workforce planning is a forward-thinking approach. It allows you to move beyond reactive decision making, helping you to proactively shape your workforce to meet future challenges. Whether it’s adapting to technological advancements or demographic shifts, a data-driven approach to workforce planning ensures that your organization remains agile and resilient.
Hiring, redeploying and upskilling talent, to close growing skills gaps, means knowing what you have, what you could have, what’s out there, what you need – and what you don’t need. While internal data about your workforce and talent pool is vital, it’s only part of the puzzle. Comprehensive labor market insights provide the external perspective needed to make strategic decisions that position your organization for success in a rapidly changing world.