Executive brief: Skills are the key to successfully navigating a recession

Skills are the key to successfully navigating a recession

Learn how highly skilled workers increase productivity and profitability, helping your organization thrive during a downturn.
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Skills are the key to successfully navigating a recession

Overview
Transcript

Every organization has a different playbook for a recession. Some might lay off employees and freeze hiring, while others focus on innovation, developing new products and services. But is one approach better — and if so, why?

In this executive brief, learn how skills can help your organization become more productive and profitable, giving you the best ability to weather economic turbulence.

Read our latest insights report to learn:

  • Why and how generative AI and digital transformation are changing work and the skills needed for success
  • How a skills-based talent strategy can help you increase revenue, job satisfaction, and resilience
  • Three steps to implement a skills-based talent strategy in your organization

Higher skilled workers can produce more, helping economies and businesses thrive.

How to out-skill a recession

There are several approaches organizations take when managing an economic downturn: They might hunker down, lay off employees, and freeze hiring, or go all-in on innovation, developing new products and ways of operating. But is one approach better — and why? And how can organizations ensure they’re equipped to succeed?

According to a 2022 Gallup and AWS study, “digital skills provide immense economic value to businesses and workers worldwide, raising gross domestic product (GDP), revenue growth, innovation, wages, job security, and job satisfaction for businesses that integrate these technologies and the workers who acquire the needed skill sets,” but “while both workers and organizations cite strong interest in digital-skills training, companies around the world are struggling to fill vacant jobs that require these skills.”

As AI and digital transformation redefine the skills required in today’s economy, organizations focused on hiring and developing talent with highly sought-after digital skills will have the most productive workforces and the strongest ability to weather economic turbulence.

How skills are changing the nature of work

The half-life of skills — the amount of time before a skill loses half its value — is quickly shrinking. In 2017, the measure was about five years. By 2021, that estimate dwindled to four years. The longevity for technical skills is even shorter at just 2.5 years.

For years, AI has been slowly taking over repetitive tasks that don’t require human supervision or expertise. More recent advances in generative AI — AI that creates content based on data, like ChatGPT or Deep Dream — have accelerated what AI can do. A new report by Goldman Sachs predicted the latest advancements in AI could lead to 300 million jobs being lost or degraded.

As a result, jobs that AI can’t perform will become more specialized. Complex human skills, like problem-solving and creativity, will
grow in value, and workers with these skills will likely have more employment opportunities and command higher salaries in the near future — especially if they can easily work with AI-based tools and technologies. But this also means that the competition for top talent, which is already tough, is going to get tougher.

To acquire the skills necessary for a changing economy, organizations will need to adopt a skills-based approach to hiring and upskilling. As industries evolve, reskilled or upskilled workers will be more likely to transition to new jobs, which will help reduce unemployment and mitigate the adverse effects of economic downturns.

Additionally, upskilling helps employees work more efficiently, produce higher quality work, and improve their problem-solving abilities. These outcomes improve morale, with nearly three-quarters of employees with advanced digital skills expressing high job satisfaction and higherconfidence in their job security.

To create a flexible, teachable workforce, organizations must first identify the job requirements of tomorrow and the people with the potential to do them. With skills-based talent planning, leaders can assess and adjust their workforce strategies to changes, internal or external, by proactively upskilling employees full-time or contingent talent for others.

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