There are several approaches organizations can take during an economic downturn. They can hunker down, lay off employees, and freeze hiring, or they can go all out on innovation, developing new products and ways of operating. But is one approach better — and if so, why?
In this insights report, learn how skills can help you become more productive and profitable, giving your organization the strongest 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 to succeed
- How a skills-based talent strategy can help you increase revenue, job satisfaction, and resilience
- Three steps to implement a skills-based talent strategy
How to out-skill a recession
There are several approaches organizations can take when managing an economic downturn: They can hunker down, lay off extra employees and freeze all hiring, or go all-in on innovation and develop new products and ways of operating. But is one approach better, and how can organizations ensure they’re equipped to succeed?
The U.S. Bureau of Labor Statistics defines productivity as how efficiently inputs (materials, knowledge, time, etc.) are converted into outputs (goods or services). The well-being of economies and businesses hinges on productivity, as greater productivity usually leads to higher wages for workers and greater profits — if organizations can produce more, they can sell more goods or services.
Often, the more skilled someone is in a role, the more outputs they can create via a given amount of inputs. Not only do highly skilled workers produce more, but they can also help create entirely new products and services, which, in turn, helps drive greater profitability.
A Gallup and AWS study confirmed that “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 continue to change 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,but by 2021, that estimate dwindled to four years. The longevity for technical skills is even bleaker at just 2.5 years.
Much of this change is driven by digital transformation and AI. For years, AI has been slowly taking over repetitive tasks that don’t require humansupervision or nuance. More recent advances in generative AI — AI that creates content based on data, like ChatGPT or Deep Dream — haveaccelerated 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. Kathleen Davis writes, “There are skills that machines just can’t do and, as Chamorro-Premuzic says, those are the uniquely human skills, like management, which was recently named as one of the top skills employers are looking for.” These complex human skills, like problem- solving and creativity, will leap in value, and workers with these skills will likely have more employment opportunities and command higher salaries. That also means that the competition for top talent, already tough, is probably 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 higher confidence 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.
